TheStreet.com (TSCM) dropped more than 10% at the end of the week following its Wednesday earnings report. Earnings came in at 12 cents/share, beating estimates of 9 cents/share, and revenue at $12.4 million, also beating estimates. So why the big fall?
From the press release (emphasis added):
The average number of unique visitors per month in the quarter was 4.4 million, a 57% increase over the year-ago period and a 3% sequential decrease. Subscription bookings for the quarter totaled $9.2 million, an increase of 39% over the $6.6 million in the same period last year and a decrease of 9% from last quarter's $10.1 million.
From the conference call transcript:
Bill Lennan - Wedbush Morgan
So despite a nice upside on revenue and EPS, the stock isn't acting that well right now. I think people are looking at bookings, page views and unique visitors, probably focusing on the negative. Those three items were down sequentially.
Could you tell us if you're concerned about that, whether or not you're concerned, and what do you think that means in those metrics going the wrong way for one quarter?
Yes I'm not overly concerned about the page views being down a little bit. We're down sequentially so we're down 3% sequentially; so really you're talking about 7,000 page views or something like that. So you're not talking about a big number as opposed to being up 98% year-over-year.
Same thing with unique visitors, you're talking about a 2% sequentially decrease. For the page views unique visitors, no I'm not concerned about that. I think that you saw a little fall off in June because of the market conditions so I think I'm not worried about that.
When you talk about the bookings I think while there is a sequentially decrease, I think you have to put it in the parameters of where we were and where we came from.
I mean, when you look at the bookings we did $10.1 million in the first quarter, which is much higher. We had an exceptional first quarter and in this quarter we did $9.1 million, which would have been the second highest we've ever done as opposed to what happened in the first quarter.
You're talking about a 39% sequentially increase, so frankly I'm not worried about it. I think we had a very good strong quarter in bookings. I think the inference we want to make on the subscription business, but look at the deferred revenue at 13.2 million. So no, I don't have any concern or any worries about it.
Bill Lennan - Wedbush Morgan
Okay and just on that note, internally if someone held a gun to your head and said I can only pick one metric that's going to be good, either bookings or deferred revenue, which do you feel is a better indicator of where your business is going?
It depends on the time frame. I think if you're looking longer term it might be the booking numbers; and I think if you're looking shorter term it's deferred.
Scott Patterson added in the Wall St. Journal's 'MarketBeat' column that while some see the downtick in page views as a mere seasonal matter, Lennan of Wedbush Morgan
is still cautious, pointing out that last year, page views increased by 5% in the second quarter (probably because Mad Money had launched late in the first quarter of 2005). Though he thinks results were strong overall, Mr. Lennan is maintaining his "hold" rating on the stock, due to some bearish overtones in the market.
The analyst's caution is a clue to what could trip up TheStreet.com's robust growth rate: A sharp decline by stocks, which could cut into Mad Money's viewers and give people little reason to read about the dismal performance of their portfolios on the Web site -- though a little volatility is always good for traffic.
Could it also be that Cramer's popularity is simply waning? Or that, in this age of user-centered web experience, readers have become frustrated with being forced to click through four pages of ads to read one average-sized article?
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