Ferris, Baker Watts analyst Murray Arenson wrote the following to clients outlining and reacting to Hollywood Media's 4Q '04 earnings results:
Hollywood Media reported 4Q results. The top line was higher than expected, at $23.7 million compared to our expectation of $21.5 million. The bottom line loss was wider than expected, at $(0.13) per share compared to our forecast of $(0.02) per share. The wider loss includes $0.5 million of expenses associated with the Studio Systems acquisition that have since been eliminated. In addition, the company had $0.7 million of expenses related to Sarbanes Oxley control requirements and $0.5 million in increased audit fees. The remaining shortfall of about $0.9 million was due to higher than anticipated expenses from the Broadway ticketing business.
In our view, the most important points were revealed in the press release and on the conference call, including:
- 1Q05 Guidance – 1Q05 revenues are tracking ahead of expectations following the launching of the new Broadway.com website. Although 1Q is a seasonally weak quarter, revenues are on pace to rival 4Q revenues.
- Broadway Ticketing – At this pace, Broadway ticketing revenues for FY05 could exceed $80 million, compared to $60 million in 2004 and our recent FY05 forecast of about $70 million.
- Internet Advertising – Traffic at Hollywood.com reached a record level of 5.1 million unique visitors in February 2005, up from 1.8 million a year ago
- Internet Advertising – The company has already obtained advertisers' commitments for ad buys totaling more than 60% of ad sales for all of 2004
- Data – The company is on track to hit a $5 million run rate in EBITDA for the data business, up from just over $1 million.
- Television – Hollywood.com Television topped the 10-million subscriber mark in February 2005, about four months ahead of schedule, including many of the country's largest markets.
- Television – The company can now begin implementing an advertising business model for Hollywood.com Television with revenue expected in the second half of this year
- MovieTickets.com – MovieTickets.com had 5.8 million unique users in February 2005, up from 3.0 million a year ago.
We will be updating our model and issuing a revised forecast for Hollywood Media. We reiterate our Buy rating.
Full disclosure: at the time of writing I'm long HOLL.