Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

TheStreet, Inc. (NASDAQ:TST)

Q3 2011 Earnings Call

November 2, 2011 4:30 PM ET

Executives

Erica Mannion – Sapphire Investor Relations

Daryl Otte – CEO

Thomas Etergino – EVP and CFO

Analysts

Michael Moskoff – MRM Capital

Jason Beaird – Gala Capital

Mohammed Aman – Dean Capital Management

Operator

Good day ladies and gentlemen and thank you for standing by. And welcome to TheStreet’s Third Quarter of 2011 Earnings Conference Call. This call is being webcast live on the Investor Relations section of TheStreet’s website at www.t.st. This call is property of TheStreet and any recordings, reproduction or transmission of this call without the express written consent of TheStreet is strictly prohibited. As a reminder, today’s call is being recorded. You may listen to the webcast replay of this call by going to the Investor Relations section of TheStreet’s website.

I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations, for TheStreet.

Erica Mannion

Good afternoon. Thank you for joining us to discuss TheStreet’s Financial and Operating Results for the Third Quarter of 2011. With me today are Daryl Otte, Chief Executive Officer; and Tom Etergino, Executive Vice President and Chief Financial Officer. Today Daryl will begin with an overview of the third quarter’s progress and achievements and he will also outline the company’s strategy for new listeners. Tom will then review third quarter financial results.

All statements made on this call, other than statements of historical facts, are deemed to be forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, including those described in the company’s filings with the Securities and Exchange Commission that could cause actual results to differ materially from those reflected in the forward-looking statements.

Although the company believes that the expectations reflected in the forward-looking statements are reasonable, the company cannot guarantee future results or occurrences. The company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise. You may obtain copies of the company’s filings with the SEC at the SEC’s website at www.sec.gov. Any additional information related to matters discussed today will be set forth in the company’s quarterly report on Form 10-Q for the third quarter of 2011, which the company expects to file shortly.

Now, I will turn the call over to Daryl Otte.

Daryl Otte

Thanks, Erica. Welcome to our Third Quarter of 2011 Earnings Call. As you will have seen from earnings release sent earlier, we made significant progress in executing on our strategy this quarter, namely leveraging our investment in high-quality content or our vertical against larger and larger audiences while building the monetization tool to drive incremental revenue at a high operating margin.

For the quarter, we recorded $14.3 million in revenue essentially flat year-over-year in a market where little was going right for the vertical we cover. The company delivered good year-on-year gains and adjusted EBITDA and cash flow as we carefully managed those two.

During today’s call, I will provide an overview of how we see the market conditions and our performance given those market conditions. I will also discuss the milestones we achieved over the past 3 months and reiterate our overall strategy for those listening to our call who may be new to TheStreet. Tom will review for you, our financial results in detail and then we’ll take any questions there may be from our listeners today.

In the third quarter, retail investors and advertisers exhibited a cautious sentiment as uncertainty in the global financial market and consumer confidence continued on from the conditions of the second quarter. That said, we have built a business where we endeavor to outperform these conditions, and in many instances we did. In particular, I’d note the continued traffic growth, lower subscriber churn, ongoing subscription bookings growth and stable consolidated revenue, all as key proof points to support this.

This quarter is an example where the value to investors of our diversified revenue streams is clearly evident. We earn roughly two thirds of our revenue from subscription and one third from advertising. The stability of subscription revenue growth helps to dampen volatility on the marketing services side of our business.

As noted above, we delivered progress on many of our key strategic initiatives during the quarter. We remain convinced that we have the right strategy for the long haul and also have the proof points to demonstrate traction. We remain committed to investing in the strategy. However, we are also mindful of the need to adjust to the changing environment. And I believe the result demonstrates a thoughtful balance between investing for the future, while managing costs and cash flow to match the times.

Before going on to key points covering traffic development, marketing services revenue and premium services revenue, I’ll highlight that the company continued its dividend payment policy during the quarter, providing a cash return and a good yield to investors as we manage through the environment and continue to build the business.

Now on to some detail. With respect to traffic, in the third quarter, the size of the audience to our sites grew by more than 40% year-over-year according to our internal measurements, demonstrating both the continued demand for our content and the improved distribution power we have been building. This internally measured growth is corroborated by industry recognized external rating services which show even larger growth.

In September, we were ranked in the Top 10 of the financial news and research sites competitive set as defined by comScore. This represents a movement upward of two ranking points compared to the same period last year. I would like to note also that according to comScore, TheStreet was among the only larger sites in our competitive set which grew in audience size for the period.

TheStreet sites performed well in terms of user engagement as measured by time per visit for the quarter, ranking among the top of the leaders in our field. Engagement is an important measure of the intensity and interest with which users consume content on a site. And our performance in this statistic shows that as we grow audience size, we are retaining quality.

Our robust traffic growth is due in part to investments we have continued to make in improving natural search discovery of our content, the rollout of our new mobile offering and expanded third party content distribution arrangements. These three sources deliver new high quality qualified users, and as a group have become an important source of audience for us in recent quarters.

Listeners who follow our business will know that we are increasing the size of our audience via content distribution agreements. To this end, some important new deals were signed in this past quarter. Among them are arrangements with a variety of horizontal news outlets including large newspaper chains, such as GateHouse, Media Network and Freedom Communications.

These agreements when fully implemented present an opportunity for significantly expanded distribution of the company’s content putting it in front of incremental quality audiences. Many of these arrangements were signed in conjunction with the rollout of our newly launched TheStreet Business Desk service, which is the right offering at the right time in my view for horizontal quality publishers seeking comprehensive business and market coverage for their audiences.

We ended the quarter with agreements for the service, which will bring the number of instances for the service to over 300. You will begin to see them online soon as we have built some proprietary technology to develop and manage these quite efficiently. Even after its current early stage of our build-out, TheStreet Business Desk, will reach an unduplicated national business audience of scale reaching underserved audiences in high economic pockets in 2016. With the rollout of this new service, TheStreet is becoming the Internet business section.

With regard to mobile, earlier in the quarter, we launched another new offering, an iTunes newsstand version of our flagship TheStreet Service. This is a daily digest of our best content delivered to your iPad each morning. I believe we were the first of our peers to take advantage of this new periodical functionality through iTunes and adoption thus far has been positive. All these traffic developments are important because we believe that increasing the size and quality of the audience visiting our sites is the single most important factor in determining long term revenue momentum for both subscription and advertising revenue.

With respect to advertising, while traffic grew robustly in the quarter, our ability to monetize the audience through advertising during the quarter fell short of our ambition at 7% lower than the same quarter last year. We aim to do better even in less than ideal environments like that of the third quarter and particularly given the momentum we are seeing in building the size of our audience. The mood of advertisers certainly played a part.

Also, for a good part of the period we had a couple of key sales and marketing leadership positions open and this undoubtedly contributed to the quarter’s performance. We now have filled these key positions and we’ve also made some organizational changes intended to bolster our sales efforts into Q4, our seasonally strongest quarter traditionally. And the time when we prepare for the upcoming, upfront advertising sales season for next year. On the positive side, the number of advertising clients doing business with TheStreet site during the quarter reached a higher level than we had seen in some time. We interpreted this as a good sign. We are reaching larger numbers of accounts who see the value of our offerings and are launching trial campaigns with us.

We’d note also that the growth of TheStreet Business Desk product is intended in part to put our content in front of an incremental more general business audience, an audience we believe to be more stable and an advertising market broader and less volatile than the pure finance vertical. They’ve also added a number of new advertising products to our offerings focusing on non-traditional advertising units and supportive of our consultative value added selling strategies for advertising clients.

Additionally, we are also in the process of rolling out a number of high engagement sponsored content unit like our ETF alternatives tool which is both highly engaging for users and a sponsorship opportunity for advertisers, right at the point where users are making investment decisions. While advertising results in the third quarter were less than optimal, our pipeline going into Q4 has been improving to get to at this time of better performance in Q4, although we would caution this cannot be assured.

We continue to see momentum already into 2012 as well in terms of both our upfront selling for our core advertising clients and an RFP flow reflective of the more fully staffed team hitting its stride and some improving advertiser sentiment.

Now, moving on to Premium Services, Premium Services bookings were up 5% compared to the prior year a nice step forward for the business. I’d add as a reminder for new listeners in the call that bookings the best metric by which to evaluate our current period’s performance on the Premium Services side of our business. It is a measure of the dollar value of new and renewal subscriptions recorded for the quarter net of cancellations and charge-backs. We generally sell annual subscriptions so that last 12 months bookings serve as a guide to any particular period’s revenue.

With that in mind, revenue growth for the quarter registered 4% higher compared to the same quarter last year. This period’s results show why we like the subscription business as it adds stability, predictability and good cash flow characteristics to our business model. We saw strength derived from new channels we have built particularly our telesales and search marketing channels and a steady momentum in our nascent institutional business, which are continuing to gain ground. This is offset in part by lower performance from our e-mail channel, a result of some technical issues now resolved.

On institutional, there were a number of instances in the last quarter in which our Chat on TheStreet services reported on market moving event well ahead of traditional media. And our subscribers were under a position to capitalize on these opportunities well ahead of the market.

As to the mix of business, we have said previously, and I bored [ph] out this quarter as well, that in times of increased market volatility, our paying subscribers stay with us, more effort is required to acquire new subscribers. The proof point here is that average monthly churn dropped substantially to 2.7% from 3.8% last quarter. This 110 basis points drop or almost 30% takes us to a level we’ve not seen since we started disclosing the statistic. Subscription levels flattened but average revenue per user was up as we emphasized renewals, higher value products and upsells to telesales.

And key development during the quarter in this line of business was the migration of our two flagship premium services RealMoney and Real Money Pro, at the end of August to a new publishing platform and a new look and feel. We talked about this last quarter but I would like to reiterate the benefits of this change. These new services are launched on our new content management system which allow us to publish content more quickly and with greater flexibility than our legacy systems offering a substantially better user experience and cost us less to maintain.

These launches leverage development work previously undertaken related to earlier launches of our options profit and ETF profit services while adding new functionality. Those listening who use our services will surely have seen the robust commentary about the changes both the suggestions for improvements and recognition that the change was long overdue. Migrations to new user interfaces can be controversial. This is especially true when sites have not been updated for a long time as was the case with RealMoney and Real Money Pro.

Our users offered a number of excellent suggestions for improvement which we have added to the product roadmaps. We also received feedback on the challenges some users had in relearning how the sites worked. And it was great to see this level of passion from our users and also rewarding to see the vast majority of this feedback taking place on the site’s social media function, a functionality that largely had been unavailable to users in the site’s old incarnation.

We took each customer’s input seriously and our ongoing effort to provide the best user experience. The sites will continue to evolve and we have a number of enhancements in the works. Given the changes, you might imagine that we have been monitoring site behavior and renewal rates closely. We’re happy to report that overall metrics for the two sites have been great, usage, engagement, renewal rates and other collective measures of user acceptance of the sites are solid.

That covers our Premium Services business. Now for those new to TheStreet, I’d like to take a moment and review our strategic plan to build long-term profitable growth and value for the business and describe how we are executing on that plan.

We are applying the proven and profitable business model inherent in vertical media against our key assets which are TheStreet’s strong market position and brand in the finance vertical, our robust editorial content and our strong advertising and subscription monetization skills. We’re focusing on generating original top quality timely content and monetizing the consumption of that content with diverse and robust revenue streams. We create a large volume of content over 3,000 original articles and 500 videos a month, produced to high journalistic standards with deep domain expertise and overlaid with strong digital publishing skills.

We offer a growing suite of data tools and utilities and a growing number of mobile versions of our content. All this content is produced by our professional in-house editorial team and through a select group of hand chosen practicing professionals. This content, because of its quality and relevance, attracts highly engaged users, affluent educated professionals who come to our content for a purpose.

These users attract both endemic advertisers in the financial category and non-endemic advertisers that are attracted to the demographic characteristics of our audience and high level of engagement they have at their site. We have been an industry leader in building a large scale consumer subscription business in digital media, having both subscription revenue and advertising revenue allows us to monetize our high quality content in a superior manner. Our diversified revenue sources add stability and positive cash flow characteristics to our business model relative to advertising only supported businesses.

A key part of our strategy has been to build the size and engagement levels of the audience that visits our site while maintaining the targeted and highly valuable demographic characteristics of that audience. The quality audience growth is a precursor to revenue growth for both our Premium Service business and advertising businesses, which in turn allows us to earn a higher return on investment on a relatively fixed cost of our business.

Let me conclude by thanking our employees and contributors for their great work this quarter. I would also like to thank our shareholders, subscribers, advertisers and distribution and content partners for their support.

With that, I’ll hand the call over to Tom, who’ll provide some additional financial details. And then, we’ll take any questions you might have.

Thomas Etergino

Thanks Daryl, and welcome everyone. The company recorded revenue of $14.3 million in the third quarter of 2011, essentially flat compared to the prior-year period with $4.3 million in revenue contribution from Marketing Services and $10 million in revenue contribution from our Premium Services business. The company’s Marketing Services revenue declined 7% compared to the same period last year. Although we are not satisfied with the decline we do attribute it largely to a mix of macroeconomic factors and the internal staffing and organizational issues that Daryl mentioned earlier.

The third quarter had larger than normal asymmetry to it with post holiday September, the most important month. While there certainly is no theory on how macroeconomic conditions will evolve, we were glad to see that we gained strength at the end of the quarter as compared to the prior year period with year-over-year revenue growth in the mid-single digits for the month of September.

Throughout the quarter, we continued to experience solid demand from our repeat advertisers, are also seeing towards the end of the quarter good traction with new advertisers, producing the largest number of advertisers we have had this year. We feel this should bode well for us with any market recovery. As Daryl mentioned regarding our traffic, the size of the audience to our site grew by more than 40% year-over-year according to our internal measurements speaking well of the long term prospects for our business and the investments we made in improving our distribution, content quality and technology infrastructure over the past year.

Moving on to the company’s Premium Services business, subscription bookings were $8.4 million for the third quarter of 2011, an increase of 5% as compared to the third quarter of 2010 with particularly strong contributions from our telesales and search marketing channels.

These bookings’ growth includes year-on-year growth in bookings from both our investing-oriented Premium Services as well as our RateWatch bank rate information service, which, notably has built a nice book of business with non-traditional clients. Bookings performance during the quarter exhibited the same asymmetry that we experienced in the advertising business. And this despite the adverse effects of certain technical issues with respect to e-mail marketing systems which we experienced in September, now largely resolved.

Revenue from our Premium Services businesses increased 4% year-over-year. The increase was primarily attributable to a 1% increase in the average number of subscriptions during the quarter, as compared to the prior-year period. Additionally, average revenue per subscription or ARPU increased almost 4% as compared to the prior-year period. This increase in ARPU was supported by a favorable product mix and the benefits of higher renewal pricing, again, showing the value of our telesales force in the execution of our up-sell strategy.

Our average monthly churn rate was 2.7% in the third quarter of 2011 compared to 3.8% in the third quarter of 2010. We are pleased to see churn down so low but as a reminder, we expect that there will be moderate quarterly fluctuations in churn, due to the quarterly fluctuations in the size of the subscription renewal pools and other factors with the third quarter results being at the low end.

Operating expenses were $16 million in the third quarter of 2011, a decrease of 3% as compared to the prior-year period. The decrease in operating expenses is primarily a result of $900,000 decrease in G&A expenses resulting from reduced professional, recruiting, consulting and compensation cost combined with a cost of service decrease of $200,000, all this partially offset by $400,000 increase in sales and marketing expense, and a $200,000 increase in depreciation and amortization. The increase in sales and marketing was driven by our continued investment in revenue producing headcount, including one time recruiting fees associated with this headcount increase.

As for cost expectations around the set up of the new TheStreet Business Desk service is an excellent example of the return on investment of our new Drupal platform that we’ve installed over the last several quarters. We’re able to launch the business desk service with new partners utilizing existing resources without material incremental costs.

The company reported a net loss of $1.5 million in the third quarter of 2011 as compared to a net loss of $1.8 million in the prior-year period.

Adjusted EBITDA was a positive $500,000 in the third quarter of 2011 as compared to an adjusted EBITDA of negative $300,000 in the prior-year period. Adjusted EBITDA was a positive $800,000 for the 9-month year-to-date as well. As stated in our Q1 and Q2 calls, we believe adjusted EBITDA will be positive for the full year of 2011.

The company ended the quarter with cash, cash equivalents, restricted cash and marketable securities of $76.8 million, a decrease of $600,000 compared to June 30, 2011. The company generated $1.3 million in cash flow from operations for the quarter and $800,000 in free cash flow.

For the 9 months ended September 30, the company generated $3.3 million in operating cash flow and $1.8 million in free cash flow. There has been no change to our Q1 and Q2 views that we will be free cash flow positive for the year.

As Daryl mentioned, I’d also like to highlight that the company continued its dividend payment policy during the quarter providing a cash return and a good yield to investors as we managed through the environment and continue to build the business.

Now, I would like to ask the operator to open the line for questions.

Question-and-Answer Session

Operator

Thank you sir. (Operator Instructions) Our first questioner in queue is Michael Moskoff [ph] with MRM Capital.

Michael Moskoff – MRM Capital

Hi Tom.

Thomas Etergino

Hi, how are you doing Mike?

Michael Moskoff – MRM Capital

Okay. Regarding the bookings, can you give a dollar figure?

Thomas Etergino

A dollar figure for?

Michael Moskoff – MRM Capital

Can you quantify the bookings as far as it was up 5% year-over-year, what was the dollar figure?

Thomas Etergino

Sure. Bookings year-over-year increase was, I have my percentage here – sorry about this.

Daryl Otte

Mike, you’re actually asking for the actual dollar amount or?

Thomas Etergino

About $400,000, Mike.

Operator

Well, thank you sir. Next questioner in queue is Jason Beaird [ph] with Gala Capital [ph]. Your line is open. Please go ahead.

Jason Beaird – Gala Capital

Hi, guys, thanks for taking my questions.

Thomas Etergino

Sure.

Jason Beaird – Gala Capital

My question is about the level of cash you have. Just to confirm, you guys have roughly $2.40 of net cash per share and no debt, nothing to offset that?

Thomas Etergino

Yeah, that’s true, yes.

Jason Beaird – Gala Capital

And I guess, okay, so what’s the level of cash do you feel you need to run the business here – you’re running things well, you’re free cash flow positive. Why the need for such a high cash balance?

Thomas Etergino

The company raised the cash in 2007. And we weren’t here when that happened. But that’s, you know, they raised it I assume for the purpose of acquisition.

Jason Beaird – Gala Capital

Is that something, well, since you guys now are here, I mean, what do you intend to do with that other than pay out a modest dividend?

Thomas Etergino

We’re looking, you know, I think we feel there is a lot of growth opportunity organically and we’re focused on those right now. We’re happy to have the strength of that cash behind us. And if there are opportunities to acquire businesses that are accretive, we will certainly love to do so.

Jason Beaird – Gala Capital

Okay. So, but, is that to imply that your CapEx needs going forward are going to increase substantially. I mean, you’re already free cash flow positive this year in a pretty subdued operating environment. I would imagine, you know, I mean, can you – what could you spend that much money on other than an acquisition internally?

Thomas Etergino

No, I think the limitations are more operational. We want to be sure that we have our internal operations in order and that we are focused on maximizing our existing assets before we reach out and acquire more assets.

Jason Beaird – Gala Capital

Yeah. I mean, you guys have held the dividend constant since I believe 2008 and then certainly that made sense at the time. But I mean, have you thought about potentially increasing the dividend?

Thomas Etergino

We have a slug of preferred shares in our cap table which restricts our ability to raise the dividend.

Jason Beaird – Gala Capital

Okay. And I assume, does it also prevent you from doing share buybacks?

Thomas Etergino

Yes.

Daryl Otte

Yes.

Jason Beaird – Gala Capital

Okay. Does it prevent you as management from buying stock in the free market?

Thomas Etergino

Can you repeat that question?

Jason Beaird – Gala Capital

Does it prevent you guys as managers from acquiring stock?

Thomas Etergino

No, there are no limitations in that agreement for us.

Daryl Otte

Okay.

Operator

Thank you sir. Next questioner in queue is Mohammed Aman [ph] with Dean Capital Management, please go ahead.

Mohammed Aman – Dean Capital Management

Hi, good afternoon.

Daryl Otte

Hi.

Mohammed Aman – Dean Capital Management

Can we assume that you know, a good portion of the shortfall in the marketing revenue was due to shortage or a lack of proper staff and those positions that has been, as of this quarter remedied as mentioned? Is that a safe statement to assume?

Daryl Otte

It was a mix between the two. I think it’s pretty hard to quantify the exact percentages between the two. They’re both contributing factors. We publish for the finance vertical and obviously there have been a lot of volatility in our market. So and that clearly affects advertiser sentiment. And also we had some key positions open which we have filled. And we, you know, and some of the kind of precursor to revenue elements that Tom mentioned in terms of our September performance relative to the earlier two months in the quarter. And the numbers of accounts that we have brought in albeit or initially low dollar amounts suggest that the new team is in place and gathering momentum.

Mohammed Aman – Dean Capital Management

I guess, a follow up to that particular answer is, how far in advance do you sell your content?

Daryl Otte

On the subscription side?

Mohammed Aman – Dean Capital Management

No, on the marketing side.

Daryl Otte

Okay. How far in advance do we book advertising?

Mohammed Aman – Dean Capital Management

Correct.

Daryl Otte

There are two elements to our advertising sales strategies. The first is every year there is an upfront selling season which occurs November, December and into January, where we lock in our largest advertisers into annual commitments. And second, there is a much shorter market where the RFP, which is RFP driven, which has a shorter selling cycle. Generally, you know, we’ll depend on the advertiser but generally a month or two.

Mohammed Aman – Dean Capital Management

Got you. And one final thing, regarding your Business Desk, new syndication product, how soon or when will that, you know, contribute to the bottom line?

Daryl Otte

We’re up and we’re beginning to implement the sites now. We have a couple of handful of sites up and we’re headed you know, north of 300 between now and the early part of next year. And we will start then generating traffic against that. And when we do, then we will start selling advertising against it. And that, you know, largely falls to the bottom line after our partner share to the extent we pay partners.

Operator

Thank you sir. (Operator Instructions) Our next questioner in queue is Michael Moskoff. Please go ahead.

Michael Moskoff – MRM Capital

Hi Tom, the line item where it said provision doubtful accounts of $133,000. I didn’t see that in the previous quarter?

Thomas Etergino

We always have a provision for doubtful accounts. I don’t know that -- we always have a provision. And I think, you saw accounts receivable on the balance sheet right?

Michael Moskoff – MRM Capital

On the cash flow statement, it showed $133,089 and when I looked at it last quarter, I didn’t see that line item. So…

Thomas Etergino

That could be us -- that’s us just truing up our provision for the quarter for doubtful accounts.

Michael Moskoff – MRM Capital

I mean, what I’m saying is that for the 9 months, it was $133,000 what was it, you know, after Q2 because I didn’t see the line item in Q2?

Thomas Etergino

That’s probably true actually. We actually took the charge in quarter in Q3. I think year-to-date we had, if anything it was a very small number.

Michael Moskoff – MRM Capital

Okay. And that’s for people who just don’t pay their subscription?

Thomas Etergino

Yeah, exactly. Or advertisers actually. You know, again, it’s very small. In a company that has $60 million in revenue, the amount of AR collection issues that we have, it is actually very minor.

Michael Moskoff – MRM Capital

This TheStreet Business Desk, is that the same thing as the deals that you cut with Metro and Freedom, is that like…

Daryl Otte

Yeah, that’s exactly.

Thomas Etergino

Yes. Those are some of our partners.

Daryl Otte

Those are some of the people under that.

Michael Moskoff – MRM Capital

All right. Let me ask you this last question. Like the second quarter you have a stock that pays dividend after today close at $1.84 or 5.43%. You have a stock that back in ‘09 when the world was coming to an end, traded as low as a $1.69. So, and then, if you go back to, right after 9/11 when I first got involved in your company, this is the second time now while the stock was trading right around cash per share. You didn’t have a dividend, didn’t have the exposure like you do now et cetera, et cetera. And TCV got involved with you guys back in ‘07. Between 11.75 and 14.75 is where the stock was trading at that month when they put it.

Daryl Otte

So, Mike, is there a question in there?

Michael Moskoff – MRM Capital

Yeah, the question is very simple. Do you think your stock is cheap?

Daryl Otte

We are definitely going out to shareholders to promote the value of the stock. I’m personally surprised at where it is. I think some of the issues revolve around it are that we are just now starting to build analyst coverage. And we need to introduce the stock to new investors and build trading volumes, that the share price is determined by a relative small number of shares. And if someone decides to sell, they can affect the price pretty dramatically. And that’s my personal assessment of what’s happened over the last couple of months.

Operator

Thank you sir. Next questioner in queue is Jason Beaird. Please go ahead.

Jason Beaird – Gala Capital

Thanks guys. I was just curious, how much of your revenue comes from products directly tied to Jim Cramer?

Daryl Otte

We don’t disclose that.

Operator

Thank you. Our next question comes from Mohammed Aman. Please go ahead.

Mohammed Aman – Dean Capital Management

Hi, Mohammed again. Following up on the previous caller question regarding acquisitions, I know it has been, it is under consideration as you said. But have you done an analysis versus you know, leveraging up the existing business as you had indicated versus in essence buying EPS you know, in accretive acquisition that is being offset by your quite substantial tax loss carry forwards. And its, you know, effect on the bottom line, EPS and the PE multiple and affect the share price. Have you looked at this in this prism?

Daryl Otte

We’re spending less time focusing on financial engineering to drive the share price and more on driving the share price through their strategy. And you know, and we think we made great progress on the strategy this quarter. And that’s where we’re spending our time.

Michael Moskoff – MRM Capital

That’s definitely a fair answer. So, I guess looking forward in the next 12 months, do you anticipate that the organic growth of the business will basically – you know, will be more beneficial than any other acquisition or financial engineering like you said?

Daryl Otte

I can’t, I don’t have a crystal ball, I can’t tell you what the future will hold. But we are very encouraged by the, you know, kind of solid performance we’re seeing in the precursors to revenue, particularly, you know, the adoption of TheStreet Business Desk by our partners, by then, you know, kind of high quality growth, very, very aggressive growth in our audience. And we think that the monetization opportunities around that are very encouraging. And we will only entertain distracting acquisitions or other activities if they can add substantially higher value than the track that we’re on now.

Operator

Thank you, sir. Our next questioner in queue is Jason Beaird. Please go ahead.

Jason Beaird – Gala Capital

Thanks guys. I just wanted if you had a view of why your founder continues to sell stock, I know it’s a 10b5-1 plan. But he’s essentially selling stock at a price that’s cash, you know what your net cash is. I mean, do you have any thoughts on that, he’s supposedly a smart investor?

Daryl Otte

(inaudible) you’ll have to ask him that question. You know, my observation is that it’s a relatively small number of shares and not particularly material to his holdings.

Jason Beaird – Gala Capital

Okay, great. It would be nice -- it will be great if he would acquire some. Thanks guys.

Daryl Otte

Yes.

Operator

Thank you. And with that, that does conclude our time for questions and answers. I’d like to turn the program back over to Daryl Otte for any closing remarks.

Daryl Otte

Sure. Thanks everyone for participating in the call today. I just want to kind of headline some of the key points we think from the -- you know, that you can take away from the release today. You know, we feel that Q2, you know, while a little bit challenging on the environmental front, we demonstrated great progress strategically. Solid revenue performance given the environmental particularly helped by the balance sources of revenue that we have, good cost and cash flow management and a dividend which very clearly has an attractive yield. So, we look forward to speaking with everyone soon. And have a good afternoon.

Operator

Thank you, sir. Ladies and gentlemen, this does conclude today’s presentation. Thank you once again for your participation. You may now disconnect. Have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: TheStreet's CEO Discusses Q3 2011 Results - Earnings Call Transcript
This Transcript
All Transcripts