TheStreet.com Q2 2007 Earnings Call Transcript

TRANSCRIPT SPONSOR

TheStreet.com Inc. (TSCM)
Q2 Earnings Conference Call
July 26, 2007 11:00 am ET

Executives

Thomas Clarke – Chairman and Chief Executive Officer
Eric Ashman – Chief Financial Officer
Chaela Volpe – Investor Relations Manager

Analysts

Mark May - Needham and Company
Colin Gillis - Canaccord
Richard Fetyko - Merriman Curhan & Ford
William Morrison - JMP Securities
Mike Musgrove – MRM Capital
George Grose - American Capital Partners
Ursula Moran - Bear Stearns
Brian Murphy - Sidoti & Company, LLC
Joseph Gardner - Amwood Advisors
Mark May – Needham and Company
Sean Jackson – Avondale Partners

Presentation

Operator

Good day ladies and gentlemen, and welcome to TheStreet.com second quarter earnings conference call. My name is Brandy and I will be your operator for today. (Operator Instructions) I will now like to turn your call over to Chaela Volpe, investor relations manager. Please proceed, ma’am.

Chaela Volpe

Thank you. Some of the statements made on this earnings call, not related to historical fact, may be deemed to be forward looking statements. (inaudible) are defined in the Private Security Litigation Reform Act of 1995. Such forward looking statements, which may concern TheStreet.com financial performance, as well as it’s strategic and operational plans, are subject to rifts and uncertainties that could cause actual results to differ.

The company undertakes no duty to update any such statements. The rifts and uncertainties are described in the company’s SEC filings, and available at its website at www.SEC.gov. Additional information will also be set forth in TheStreet.com’s quarterly report on Form 10-Q for the quarterly period ending June 30, 2007, which will be filed with the SEC in the near future. I’ll now turn the call over to Tom Clarke, TheStreet.com’s Chairman and Chief Executive Officer. Tom?

Thomas Clarke

Thank you Chaela. Good morning and thank you for joining us to review our second quarter 2007 financial results. On the call with me today is Eric Ashman, our Chief Financial Officer. Eric will provide an in-depth look at our financial performance after I spend some time talking about our strategic initiatives. This was an exciting quarter for TheStreet.com as we delivered several record breaking metrics, including revenue hitting an all-time high of 14.9 million. Advertising revenue, which grew by 48%, reached a record 5.5 million, and the company attained its greatest reach ever, delivering 307 million page views and 5.4 million average monthly unique visitors.

Eric will speak to these metrics in more detail a bit later in the call. And now I’ll move over to an overview of our strategic initiatives. Our strategy is focused on two areas. We want to provide broader ranged content to our audience, and services to our advertisers, across a full range of distribution platforms. This strategy is grounded in our desire to expand beyond the world of just stocks, bonds, and ETFs, and become a destination for everything related to money.

I have talked about this strategy in the past, and many of you have asked how we’ll get there from where we are today. There are several key initiatives we are working on that will redefine TheStreet.com in the near future. First, we are redesigning our site. This is our first full redesign. I’m sure many of you would agree that this is long overdue. We have engaged Huge LLC, an award wining design firm, to lead the design efforts, and internal development is already well under way.

We expect to launch the new site in early 2008. Based upon what we’ve seen so far we are confident that our audience and advertisers will be extremely pleased. Turning to the development of new sites that further expand into the overall money category, I am pleased to announce that TheStreet.com is currently in the process of developing MainStreet.com, which we also expect to launch in early 2008. MainStreet.com will provide mainstream news in the context of how events affect one’s financial life, and will provide our audience with the online ability to take action where appropriate, in areas related to insurance, banking, etc.

The initial site will consist of 23 money in motion topics under four primary categories: beginnings, endings, windfalls, and catastrophes. Main topics range from buying a home to winning the lottery, to losses suffered in a natural disaster. There is no shortage of news in these areas. Similar to the way we work with StockPickr.com, MainStreet.com is not intended to be a subset of TheStreet.com, but rather a sister site with a revenue model that will be advertised and supported with a lead generation component. The site will utilize a combination of evergreen content and current news, leveraging cross-promotion from TheStreet.com, and TheStreet.com advertising sales infrastructure.

We have retained the services of wealth manager, author, and creator of Armchairmillionaire.com, Lewis Schiff, to design and oversee the build out and ongoing management of the site. Lewis is a senior managing principal of the event planning group, where he leads a team of private wealth experts. He’s also contributed to Investment Advisor magazine, and was a long time contributor to CNNMoney.com and CNNFM. As we work on these future site initiatives, we will continue to see ongoing innovation on both TheStreet.com and StockPickr.com.

In Q2, the continued expansion of our content scope at TheStreet.com has enabled us to meet both consumer and advertising demands as we move toward making the site a place where all money concerns are addressed. Throughout the quarter we significantly increased the amount of content on the site related to real estate, politics, entrepreneurships, small business, and luxury living to name a few. With regard to real estate, we recently launched Fabulous Real Estate, an exclusive corporate real estate listing available on the home page of TheStreet.com, which we look to further expand upon in the near future.

We have also been building our inventory of luxury living content, with features such the Millionaires Zone with Jennifer Openshaw, where she discusses creating and enjoying wealth, available in both video and Podcast. Along these lines, we have continued to expand the Good Life section of the site, which provides everything from an inside look at the Plaza Hotels private residences to a review of the newest high end technology gadgets. And most recently, we have launched a Podcast series with Loral Langemeier, the author of the Millionaire Maker and the Millionaire’s Makers Guide to Wealth Cycle Investing.

In terms of politics, we recently launched a politics blog written by John Fout, and the effects of politics on the market. We also produce One Step Ahead, a column and video program that examines the potential market impact of noteworthy politic, scientific, sociological and other non market developments. We have been so successful in attracting viewers to our political content that in May, TheStreet.com was listed as the number two website on the Neilson Net Ratings Top site buys and impressions by John McCain’s 2008 campaign. No comment on the current state of the McCain campaign.

Regarding entrepreneurship, we have a small business channel that provides advice and suggestions to entrepreneurs and people who are considering starting a business, including strategies and tips for profitability. We also launched a small business blog, sponsored by MasterCard, and created a small business management series of articles sponsored by Visa. Video segments covering the above topics are also produced for additional advertising opportunities.

We’ve mentioned previously that we are very excited about our multimedia opportunities. As we look to build upon the success of the past, and leverage it towards a successful future, I would like to extend a warm welcome to Bill McCandless, who recently joined the company’s management team as our first executive editor of multimedia. Bill joined us from CNBC where he was a senior producer of ‘On The Money’, a show that he also helped develop. Bill is a 15 year veteran of local and network TV news, including time spent at NBC and MSNBC. Bill has been honored in his field as an accomplished producer, having won both an Emmy Award and a National Headhunter Award for breaking news. We are pleased to have him on board and to lead the company’s multimedia strategy. You can expect to see his produced news short run original programming, featuring the best personalities in money today. These shows will not only be a potpourri of our programming at TheStreet.com, it will also be attractive to our syndication and distribution partners.

Turning to innovations on the Stockpickr site, we successfully penetrated the social networking space with Stockpickr.com, which is rapidly approaching 100,000 portfolios, and was recently named one of the 50 best websites of 2007 by time.com. Since acquiring Stockpickr in April, we have launched three new features on the site. First, in June we launched StockBlogger, the first blog search engine devoted to accessing the top financial blogs on the internet today. Next we launched Three Dancers, a free interactive search platform where people can ask questions about stock and investment ideas. In response, professional and self directed money managers, traders and investors who make up TheStreet.com social networking community shared their research. Most recently, continuing to incorporate TheStreet.com ratings across our websites, we introduced StockPickr portfolio ratings in which Stockpickr portfolios are linked to the street.com ratings, and are rated with a letter grade based on our proprietary models. This enhancement will allow anyone who enters the portfolio on StockPickr.com to compare their overall portfolio rating to that of any other portfolio on the site. This includes the ability to see how a portfolio would compare to the more than 800 professionally managed funds on the site.

The addition to our focus on the redesign and development of news sites, as well as ongoing innovation across our current network of sites, we continue to leverage new distribution partners and platforms. Recently we expanded our reach among the nation’s college students, a demographic that is highly attractive to advertisers, to a distribution agreement with the university network. This relationship will distribute our educational personal finance, related video content, across a network of high definition televisions, located throughout major university campuses, reaching more than 4.3 million viewers nationwide.

We are also very excited to have signed a deal with Quattro Wireless, under which Quattro will develop and power TheStreet.com’s upcoming mobile website. The mobile site will provide users with TheStreet.com content, including video and market updates throughout the day. Delivering all of this dynamically integrated and diverse content across a variety of distribution platforms is especially important to helping us partner more aggressively with advertisers to provide unique advertising solutions. In Q2 we did exactly this with Holiday Inn, in creating content based on specific campaign messages. We created Business Traveler Update, a weekly article and video on business travel that runs every Wednesday, sponsored exclusively by Holiday Inn, as well as the business etiquette update, which we created to tie in with Holiday Inns brand awareness goal for this campaign. This type of customized ad program is becoming increasingly prevalent, and we believe that our ability to deliver what advertisers demand will further help us to expand our ability to attract a more diverse group of advertisers, as we look to further monetize our core competency, content creation.

In summary, we are moving aggressively and strategically to really broaden both our content and advertiser opportunities. Additionally it is our intention to both of these developments with a creed of acquisitions over the next few months. Now let me turn the call over to Eric for a complete review of the quarter.

Eric Ashman

Thanks John. Let’s start by reviewing the top line results. This quarter we delivered revenue of $14.9 million, an increase of 20% over the second quarter 2006, and the highest quarterly revenue total in our history. This increase was primarily driven by advertising, which accounted for 71% of the growth. Adjusted EBITDA, excluding stock based compensation expense, was $3.9 million, an increase of 13% over the 3.5 million in 2006. Our second quarter net income on a gap basis was $3.6 million, an increase of 10% over the 3.2 million we delivered in the second quarter 2006.

Earnings-per-share was $0.12 on a fully diluted basis, equal to the $0.12 of fully diluted share of the second quarter of 2006. Adjusted earnings per share, excluding stock compensation expense, on a fully diluted basis was $0.14 per share, as compared to $0.13 per share in 2006. Turning to our three revenue streams, advertising revenue increased to 37% of total revenue in the quarter, compared to 30% of total revenue in the second quarter of 2006. Subscription revenue was 58% of total revenue, and other revenue which includes syndication and licensing revenue, made up the remaining 5%. This shift is consistent with our goal of having advertising revenue reach 45% of total revenue by the end of 2008.

We were pleased with the performance of the advertising business in the second quarter. Advertising revenue totaled $5.5 million in the quarter, the highest advertising revenue we have ever delivered, and a 48% increase over the same period last year. With respect to the ongoing diversification of our advertising base, advertising revenue from non financial advertisers increased by 206% over the same period last year, and represented 39% of total advertising revenue in the quarter, an increase from 19% of total revenue from non financial advertisers in the second quarter of 2006.

We had a record 93 advertisers on the site in the second quarter, an increase of 33% from last year. This included 23 new advertisers, the highest number of new advertisers we’ve ever added in a quarter. New advertisers included MasterCard, Jaguar, Intel, Holiday Inn and Blackberry, adding to our roster of blue chip advertisers on the site.

Meanwhile, our percentage of revenue from our top five advertisers in the quarter dropped to 30% of advertising revenue, down from 40% in the second quarter of 2006. These results reflect the initial impact of our decision to invest in increasing the size of our advertising sales team in Q1, as well as our ability to continue to effectively monetize the ongoing growth in unique visitors and paid views on our network of sites. We delivered 307 million paid views in the second quarter, representing 42% growth over the same period last year. We had 5.4 million average monthly unique visitors, an increase of 23% over the prior year. Both of these metrics, paid views and average monthly unique visitors, are quarterly records for us.

We are pleased with the momentum we are seeing in our audience and traffic metrics. According to HitWise, TheStreet.com network was ranked as the number three website in the Business and Finance, Business Information category, behind Yahoo!Finance and MSN. And for the first time since we started tracking Nielsen net ratings reporting on our category, we moved into the top ten in the Financial News and Information category.

We continue to grow traffic and unique visitors through a combination of efforts, including an increase in number of business development deals we have in place with distribution partners; continued development of new content that attracts a broader audience to our network of sites; and a focus on a search engine optimization and search engine marketing efforts.

With respect to SEO and SEM, in the first quarter we found a number of activities that worked well for us. We continue to execute against our SEO and SEM strategy in Q2, and we expect to see continued improvement in our performance in these areas. We also believe that the launch of our redesigned website will only add to our gains.

Finally, our revenue per thousand page views in the second quarter was $17. 91, an increase of 5% as compared to the $17.10 we delivered in the second quarter of 2006.

Turning to the subscription side of the business, subscription revenue in the second quarter of 2007 was $8.6 million, a 2% increase over the same period last year. We booked subscription orders of 8.6 million during the quarter, a decrease of 7% over the same period last year.

In the quarter, customer loyalty remained consistently high, with 90% monthly renewal, and 61% annual renewal rates. This is reflected in part by the increase of average annual revenue per subscriber, which was $379 in the second quarter of 2007, 4% higher than the $366 per subscriber in the second quarter of last year.

As you can see from our retention rates, our customers continue to value our products and offerings. The challenge for us is in customer acquisition. We are undertaking several initiatives to address this, including utilizing outside subscription consultants to evaluate internal and external signup flows and to assist us in the development of marketing strategies that will improve our customer acquisition rates.

As I mentioned on our last earnings call, in May we entered into an exclusive licensing agreement with Grey House Publishing, a leading independent reference publishing house, to outsource the sales, printing, publishing, distribution and marketing of specific TheStreet.com ratings directories, as well as to market and sell online access to these directories to the public, college and specialty library markets. I am pleased to report that this relationship has gotten off to a strong start and we are encouraged by the results so far. Strategically, this relationship is very positive for us, as it allows management to focus on our core electronic publishing business. This agreement will also contribute to higher margins in the future, as we eliminate cost specifically associated with the lower margin print business.

This change has an impact on our subscription revenue. Where previously the full value of a subscription associated with these products was recorded as subscription revenue, we will now recognize a royalty that will be recorded as other revenue. Additionally, as of the date of this transition, we removed approximately 5,200 subscribers to the ratings print directories from our subscriber count. Excluding these 5,200 subscribers, we had approximately 86,200 subscribers at the end of the second quarter of 2007, which is 8% lower than the 93,800 subscribers we had at the end of the second quarter of 2006. As I mentioned, this loss is due in large part to the customer acquisition challenge we faced in the quarter, and is a loss we have already begun taking steps to rectify for the future.

Our deferred revenue, which represents subscription bookings that will be primarily recognized as revenue over the following 12 months, was $14.2 million at the end of the second quarter, an increase of 8% over the same period last year. Other revenue, which is comprised primarily of syndication and licensing revenue, was $836,500 in the second quarter, 197% higher than the same period last year.

On our first quarter earnings call, we discussed the investments we made in the business to drive long term growth, including investments in our advertising sales team and editorial staff for areas of our site where we could not meet advertiser demand. I am pleased to report that we began to leverage those investments in the second quarter to deliver sequentially expanding margins.

Our gross margin for the quarter was 62.1%, compared to 61.2% in the first quarter, and 63.4% in the prior year. Our operating margin was 20.1% in Q2 of 2007, compared to an operating margin of 17% in Q1, and 22.2% in the second quarter of 2006.

Our net profit margin was 23.8% in the quarter, versus a net operation margin of 20.7% in the first quarter, and 26% in the second quarter of last year.

Adjusted EBITDA margin, excluding stock compensation expense, was 26.5% in the second quarter, compared to 24% in the first quarter, and 28.1% in the second quarter of 2006.

Turning to the balance sheet, we generated $828,00 in cash flow in the second quarter of 2007. Our free cash flow in the quarter was $2.3 million. Our cash and restricted cash for the second quarter of 2007 totaled $50.1 million.

As many of you know, we continued to carry net operating losses totaling $132 million through the end of 2006, with a full valuation allowance on the deferred tax asset associated with these NOLs. Given the strong performance and consistent profitability over the business over the past two years, it is very likely that we will adjust that valuation allowance in the second half of 2007. This will require the one-time recognition of income which will raise our EPS in the quarter this adjustment is made. This will have no impact on our actual tax rate, which will continue to be approximately 2%, as our NOLs continue to offset any taxable income we may generate in the near future. While it is uncertain whether this will occur in the third or fourth quarter of this year, we wanted to let you know that it is coming, so that it’s not a surprise when that impact hits our bottom line.

Finally, the company paid its sixth consecutive quarterly dividend of $0.025 per share in the second quarter of 2007. And with that, I turn it back to Tom.

Thomas Clarke

Thanks Eric. As we’ve said, we’ve delivered a solid, record-breaking quarter. We’ve moved forward on our strategy of broadening our content offerings, distribution platforms, and advertising opportunities. We’re looking forward to continuing on this path, remaining innovative and acquisitive, to further carve out a position in the marketplace as the leading independent site where money concerns are addressed. And now I’d like to open up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) And you first question comes from the line of Mark May with Needham and Company. Please proceed.

Mark May - Needham and Company

Thanks for taking my question. Hopefully you can hear me. Can you hear me?

Eric Ashman

Yes Mark, no problem.

Mark May - Needham and Company

Thanks. One of the questions, had a couple here; operating expenses in the second quarter, the cash operating expenses were down slightly from the March quarter. In the second half you have a number of initiatives that you talked about that all seem very positive; site redesign, you’re looking to continue to enhance content etc. Just wonder what the trend would be in operating expenses? Should we expect those to pick up in the second half and maybe give us a directional feel for that?

Eric Ashman

In the second half of the year, our expectation for operating expenses will be consistent with what you’re seeing in the first half of the year. The Q2 and Q1 results are a pretty good average for where we expect to lie. Many of the initiatives that we talked about on call ultimately are capital initiatives for this year that will start to impact in 2008 as some of these initiatives come live on the site.

Mark May - Needham and Company

OK, and you talked about acquisitions as a vehicle for growth and you seem to suggest that something, that your pipeline there is pretty active. Can you talk about sort of the pricing environment? Are you happy with the types of businesses that you’re finding out there? Because a lot for the deals that have been done recently have been done at valuations that are higher than your own I’m just wondering, you mentioned a (inaudible) if you could maybe add some flavor.

Eric Ashman

Yea Mark, I think you and we’ve said this in the past; we will not do a deal that is not going to be accretive to us. So, what we referenced to that what we’ve seen in the pipeline and the deals we’re looking at will be accretive to us and we’re kind of stretched pretty wide in what we’re looking at but we’re pretty confident that in our pipeline now will come to fruition on one or two of these in the not too distant future, that will be accretive to us.

Mark May - Needham and Company

OK, and then on the advertising business, which continues to be very strong and impressive, the monetization or the RPM rate up 5% year-over-year, can you talk about where do you think that can go over the next couple years looking out a little further, you’re in the high teens today. What do you think is a reasonable growth rate or number than you could achieve a couple years out?

Eric Ashman

I think, you know, that when we look at that similar to kind of what we saw last year we would expect that trend to continue to move upward over the course of the year. When we get out a couple of years, we would expect that number to probably move into the low 20 to mid-20 range if I had to say where it’s going to go.

Mark May - Needham and Company

OK, and then as you begin to focus more on FCO, FCN and other forms of marketing and driving traffic, can you give us a sense of the breakdown of the sources of the traffic to the sight?

Eric Ashman

When you say sources, meaning, how traffic comes to us?

Mark May - Needham and Company

Yeah.

Eric Ashman

You know, SEO, SEM is still a very small portion of us and this has more to do with probably our site design structure than anything else and I think we’ve said on a previous call that one of the reasons why we’re taking some of these initiatives and why the site kind of our full site re-design is so important to us is because it will address a lot of those issues.

That traffic today is still probably in the 8% range. We get a good amount of traffic as you can imagine from our distribution partners and then the rest of the traffic comes through some one directly book-marking or typing in www.TheStreet.com.

Mark May - Needham and Company

Yea, I guess what I was thinking is the breakdown between distribution partners, paid marketing and just direct type.

Eric Ashman

You know, paid marketing is probably 4% of the traffic that we get. It’s still very minor. You’re probably looking at somewhere around 40% to 50% is probably within that range of traffic that comes from our distribution partners and then the rest of the traffic comes directly to us.

Mark May - Needham and Company

OK, sounds like a good mix. Thanks.

Eric Ashman

You’re welcome.

Operator

Your next question comes from the line of Colin Gillis with Canaccord. Please proceed.

Colin Gillis - Canaccord

Yeah, good morning gentlemen.

Thomas Clarke

Good morning Colin.

Colin Gillis - Canaccord

Hey, Tom, can you just talk about any trends on the video RPM side and your thoughts on experimenting with frequency of ads as users are watching video?

Thomas Clarke

Yes, that’s a good question Colin. You know, the RPMs on the video, we had a very strong quarter in that, typically we’re still seeing it being one and a half time to sometimes two times what we’re seeing on the site itself. I don’t think that’s changed. We’re still kind of a leader in that area. We produce a lot of programming today. I think as you heard on the call with the announcement of Bill McCandless coming over from CNBC, you know our intention is really to create these originally programmed shows which we can now use for syndication and revenue opportunities for us.

As for the video itself, I don’t think we’re in test phase, you know we’ve seen a lot of eight second kind of videos where advertisers have great success. I guess predominantly, you’re still looking at that 15 second spot, occasionally we’ll have an advertiser who wants to go, who produced a TV spot and wants to use the full 30 seconds, but I think in video that’s becoming less and less prevalent.

I think the real challenge will be, currently we’re still producing a video or every video is containing an advertising segment today, and we’re still kind of fooling around with whether it’s two videos in a row, have an ad, and then the third one comes free to get somewhat further into the video channel. But I think, add to the discussion, we’ll work out with Bill who bring a wealth of experience to this from the TV side, and probably over the next quarter we’ll fluff that out a little further.

Colin Gillis - Canaccord

I might have missed this earlier, but you’ve got a new production studio in the New York office. Is that going to help you drive more content generation?

Thomas Clarke

Yes, absolutely.

Colin Gillis - Canaccord

Great, thank you.

Thomas Clarke

You’re welcome.

Operator

Your next question comes from the line of Richard Fetyko with Merriman Curhan & Ford. Please proceed.

Richard Fetyko - Merriman Curhan & Ford

Hey guys.

Thomas Clarke

Hey Richard.

Richard Fetyko - Merriman Curhan & Ford

Just curious about the traffic, drivers of traffic growth that we’ve seen in the second quarter and first half of the year and what do you expect in the second half of the year? To what extent do you expect Stockpickr and the blogs and some of the other new features on the Stockpickr site to contribute to that traffic growth versus some of the other sources like search engine marketing, optimization, distribution and so on? And also the roll-out of the ratings content, how helpful has that been in traffic growth?

Thomas Clarke

I think both of the previous acquisitions we’ve made; Street.com ratings earlier at the end of last year and August and Stockpickr earlier this year, I think both of them continue to be traffic drivers for us. Both are performing exactly as we thought, in fact in both cases they’re performing better than we thought in terms of the modeling we did when we originally acquired them.

As for the rating, what we’re really trying to do Richard, is to take that content and make sure that we integrate all the networking sites. In fact yesterday we announced that -- actually if you look at it overall in Stockpickr, you actually can now have your portfolio rated. So if someone’s got a portfolio that has a dozen stocks in it, you can see an individual rating on any one of the individual stocks, but in addition we give you a rating of the portfolio itself, and we think that’s a great integration of the content because what a lot of people want to see is how they rate to others, or how their portfolio rates. But if you think about it, we have a lot of hedge fund portfolios on that site. It may be not the most sophisticated way yet because we’ll still work on it.

We are now actually rating hedge fund portfolios and you probably don’t see that too many places out there today. So if you’re an individual on the site and you want to see how you rate to a Warren Buffet portfolio or a SAT Capital portfolio you now have the ability to do that. And I think that’s going to be very meaningful, and certainly a page driver for us going out. So we look at stock blogger, street answers as enhancements that have certainly been big page view drivers, as you can see the year over year growth that we had and we continue to see that carrying through the rest of the year. We expect that as we get more coverage on these things, and more people interested, and we do a better job integrating between the content that’s on TheStreet.com and these other sites, pages should continue to rise.

Richard Fetyko - Merriman Curhan & Ford

Would you expect that to continue grow at the same pace that we’ve seen in the first half of the year?

Thomas Clarke

Well, that’s always hard, you know you’re going into the third quarter which traditionally is a weaker quarter for traffic because of vacations, some people walk away from the market a little bit in the summer, so I don’t know that I would say specifically you’re going to see that change of growth in the third quarter. But lets put it this way, we expect that the traction we’re seeing on each of those areas will continue, and there’ll continue to be a driver for pages for us going out, so whatever happens in the third quarter, or you see a bigger increase in the fourth quarter, I think if you look at the year, or the year comparisons and sequential growth that we’re going to see in pages, its going to be positive.

Richard Fetyko - Merriman Curhan & Ford

Ok great. And could you also give us a little more flavor on the -- a little more color on the mobile website, the timing of the launch, how extensive that will be.

Thomas Clarke

Well, part of that is development, we’re working with our partner Quattro on this. So not controlling all of the development efforts there it’s hard for me to put a time frame on it, because we just recently signed it. But I would be safe to say that given a couple of quarters we’ll have it all, and we want to get as deep and as integrated as we can with making sure that our content is there, that market updates are there, if you are a subscriber to any one of our services that ultimately we have that there also. Really make it as fully integrated as we can, and I think that we’d wait a little bit of time to make sure that all that is working when we launch it. So to be safe, let’s say that is an end of year only initiative.

Richard Fetyko - Merriman Curhan & Ford

And finally if I may, what is the intended impact of the website redesign that you’re planning to roll out? Is it to increase page views per visitor? Is it to increase the content categories and to make it more visible on the site? Just maybe a couple of things --

Thomas Clarke

You know that it actually has many benefits. I mean, as you’ve been around on the site as you know it’s been a long time, in fact we’ve never really done a full redesign. We’ve kind of cobbled things together and made enhancements to the site, but I think this is the first time where we really want to look at the site and look to accomplish a couple of things.

First and foremost, we want to make it more accessible and easier for advertisers to interact with our content. Right now because of some of the layout and template issues that we have, we think there are advertising opportunities that we can capitalize that we are not doing so today because of the fact that the site doesn’t lend itself, or render itself, to that regard. I think on the contents side, I think we want to be more integrated on the site with community aspects that we don’t do a lot of on TheStreet.com site today. I think when you think of community for us you think of Stockpickr. We do very little on the current Street.com site, so it think the redesign will help that.

We also will make it so that it will be easier for people to find content and go deeper into the site, so let’s talk about stickiness. Right now there are areas of the site where we have a wealth of content that because of the design and the cobbling of things we’ve done over the years it’s very difficult for people to find stuff. And we think that people want to find the content, they tell us when they do find it they find it very valuable. We have to make that more accessible to them, so another area we expect to help us would be in the stickiness.

And then the last thing it’s that our site has never been, because again we came out of a subscription background, it’s never really been set up for either SEO or SCM. And those things will certainly benefit from a site redesign. So if I can leave you with those four things and if we can accomplish three quarters of those I think we will have hit a home run.

Richard Fetyko - Merriman Curhan & Ford

Ok thanks a lot.

Thomas Clarke

You’re welcome.

Operator

Your next question comes from the line of William Morrison with JMP Securities. Please proceed.

William Morrison - JMP Securities

Good morning. A few questions. One, and I mean this as a (inaudible), can you comment on how many videos roughly you guys are producing during every day during the quarter. I think you commented last quarter that you produced 15 a day or something around that area. Could you give us an indication of what kind of production level you’re at? And also on the video side, I was wondering if you could talk a little bit about the economics of video. I mean you know the RPMs are strong. You’ve hired Bill to come on board and help out. Are the margins on video roughly comparable to the rest of your business? Higher, lower? Maybe if you could give us some guidance. Thanks.

Thomas Clarke

Ok. Let me take it in the three parts you kind of outlaid it. Number one, in the production of video with the new production studio we have its made the production easier, so we’re producing more videos than we did in the previous quarter, we’re probably safely -- depending on what we categorize, because we’re changing some of the format of how we do video, we’re probably in the 20-25 range a day, in the production of videos.

When you think about the video itself, the margins on video and what’s happening with it, the revenue on video has gone up significantly for us, that’s one of the reasons why we want to even bring a professional such as Bill on, to kind of help and further lead our developments there. The margins are at least what we see on the site and in some areas a lot better. It really depends on the type of advertising sponsorship we get, and we’re doing a lot more video outside of the office. If you’ve looked recently, you’ll see that we want to be much more engaging with the community aspect of it to bring more people into it in a general nature.

So we want to make our videos not only ones where you’ll make money, but we would also want to bring them an entertainment value to it. And we think that’s important. So we think overall the margins in video are going to be very good and probably better than what you see on the site and over the long term. I think we still got some investment to make, obviously bringing Bill on as an investment in that future, but we’re pretty confident that its going to move in that direction.

William Morrison - JMP Securities

Great.

Thomas Clarke

But we’re pretty comfortable that it’s going to move in that direction.

William Morrison - JMP Securities

Can you comment on the sell through or that inventory during the quarter?

Thomas Clarke

Sure, I mean, you know the sell through rate was again in 90 something percent range, again we increased as you know Bill, better than most we probably lag behind a little because you sell historically. So we’ve had another big increase in page (inaudible) that will help us with ad sales going into the third and fourth quarter of the year with as you know the fourth quarter being the strongest one so we think it sets us up pretty nicely for it and the 90% sell through. We are looking for more monetization opportunities now and more engagement with our advertisers like the Holiday Inn example I said on the call so we think we’re in pretty good shape.

William Morrison - JMP Securities

I was wondering if you could comment a little bit on the new MainStreet site that’ll be coming out next year that there will be a lead gen. on it and could you maybe elaborate on that what kind of lead gen. what kind of CPA products we might se on that site.

Thomas Clarke

If you think about the concept of what we are really creating is the fact that we’re going to use general news and really create things of the day so god forbid there was a fire or a catastrophe or something like that and you talk about homeowners insurance and then we write a corresponding story about what type of homeowners insurance you need, what levels you need, where do you go to get it. We think there’s a lead gen component there where we have the insurance companies bidding for a placement on that or where their rates are and stuff like that. And we think that’s the lead gen component we do and we think that there are many areas you could do it. You could do it in insurance, you could do it in banking, you can do it in real estate so there’s a lot of places that we think we can go with that and that will be the lead gen component. And we also think there’ll be sponsorship opportunities for that. We’re actually pretty bullish on the fact that we’ll have both types of advertising models in it.

William Morrison - JMP Securities

And one last question. I think that you are still on track to generate 45% of your revenue from advertising by the end of ’08. I thought that you used to say that you’d get to 50% of your revenue via advertising by then. Did I just get it wrong or have you lowered you expectations?

Thomas Clarke

We haven’t lowered it, we’ve been pretty consistent that we said we would get to 45% but I can tell you right now if it was 45% or 50% we are going to be in that range. We are not coming off that, in fact we feel more bullish about that today than we probably have previously with the strong performance of our advertising sales force and the ability of the content creation we have that’s creating these advertising opportunities. We’re bullish about it, we’re not coming off those numbers and if you can see where we are at the end of this quarter I think you can see a perfectly modelable, well you can model it down but we can get that pretty quickly.

William Morrison - JMP Securities

Right, thanks a lot.

Operator

Your next question comes from the line of Mike Musgrove with MRM Capital

Mike Musgrove – MRM Capital

Total subs for currently is how much?

Thomas Clarke

86,000

Mike Musgrove – MRM Capital

Ok, so that dropped from 95 from last month, the last quarter I mean.

Thomas Clarke

That’s correct, and a part of that is as you recall is 5200 subs that came out of the business associated with the transition of the ratings print business to Grey Publishing. That was the largest piece in terms of the sequential change in that number.

Mike Musgrove – MRM Capital

Ok, so out of the 9000 you’re saying 5200 was the ratings?

Thomas Clarke

That’s correct. And if you’re looking sequentially its probably, you’re looking at about a 3400 number decrease.

Mike Musgrove – MRM Capital

Total Advertisers for this quarter were how many?

Thomas Clarke

There was a record 93. And 23 new advertisers came on.

Mike Musgrove – MRM Capital

You guys obviously did away with Street Insight; you’re now doing the Real Money thing so the product gets cut dollar wise at least for the pro that gets the real money for $1000 what have you. I’m just mulling over, if you could quantify or elaborate on how that’s going to look going forward because obviously the revenue number should go down I would assume.

Thomas Clarke

I don’t necessarily think that. If you look at our revenue per subscriber is up and part of the reason for that Mike is because you accurately talked about street insight. What we did was created a different product called real money silver that we think was a more compelling offering, not only for the professional but also for the very active investor and we’re seeing more and more take up of that product. It’s kind of a volume game. We get more people to take that product so that while the price of the product may be lower than the street insight was we think the volume will make up the difference.

Mike Musgrove – MRM Capital

Ok. How many Street Insight subs did you have?

Thomas Clarke

We never break up product specific subs, we always talk about it in the aggregate.

Mike Musgrove – MRM Capital

Ok. Can you just talk about media bistro came out with this thing a couple of months ago, or a month ago, talking about Kramers ratings had gone down dramatically for May, I don’t know what June’s were. What are you guys seeing as far as the show if the ratings are dropping cost that’s been a big part of the potential growth for getting new people in. I. love the way the site is now, I was a little worried at the beginning with the way everything was set up and I’m looking forward to the other things you guys are doing.

Thomas Clarke

Thanks, I think you know Mike, as we said before, number one I don’t comment specifically on the ratings because that’s a CNBC owned property but the one thing I can tell you about is that the impact that the show had on us, and remember that the show has not been around for three years, where everybody attributed all of the gain or page use to the show, I think that people, after the last performance of the last four or five quarters of page use were consistently risen.

Let’s assume that that the ratings of the show haven’t moved one iota in the last year. Or let’s assume they are going down. We are still producing enormous page year growth and I think that’s more attributable to the content we produce than anything that the show gives. So while we are an indirect beneficiary of the show with the night that Jim does the show, we do get exposure from that, when he talks about his charitable trusts (inaudible) at (plus?).com. As a big traffic driver to us, it’s not one of our top five, let’s put it that way. It hasn’t been for a long time so we think the ratings are still very strong, I know that Jim is especially pleased with the show that he’s doing. So I think that from our perspective, we really see no change whether the ratings are up or down its not going to affect us.

Mike Musgrove – MRM Capital

And would you guys say the revenue per thousand was 1795.

Thomas Clarke

1791

Mike Musgrove – MRM Capital

And last but not least, the acquisition of Stockpickr. Can you quantify how much it cost?

Thomas Clarke

For Stockpickr it was a total of dollars of consideration of 5 million and I’ll just break it up for you. You can find it in our filing. It was 1.5 million in cash and 330,000 unregistered shares.

Mike Musgrove – MRM Capital

Thank you so much.

Thomas Clarke

You’re welcome.

Operator

Your next question comes from the line of George Grose with American Capital Partners. Please proceed.

George Grose - American Capital Partners

Good morning. I guess on Stockpickr, now that you’ve had about six months of operating history behind Stockpickr, can you talk a little about what your expectations for the site were at the time of the launch versus what you’re seeing now, and what you anticipate the site evolving into?

Thomas Clarke

Let me just clarify one thing for you, George, just so we understand, while we’ve got kind of a six month history with it, you really have to divide it into two components. In the very beginning it was a joint venture, and while our expectation for the joint venture was X, I think our expectation changed a little bit when we brought it all in, because I think both James Altucher, the president of Stockpickr, and myself, changed our expectation when we saw that by bringing it together, the collaboration that we could have with the sites would really take the site to a new level.

All I can tell you is that the modeling that we did for the first year of Stockpickr, Stockpickr has already exceeded that in the first couple of months. And if you think about just the competitive landscape, you know, Stockpickr in the next couple weeks will surpass over 100,000 individual portfolios loaded on the site. That’s probably three times the nearest competitor that’s out there in the marketplace, and they’ve been out there for over a year and a half, so I think you can see from the viral nature of what’s happening there, it has really been very successful.

As to what we think it will go future, I think that there are things that occur every day there that gets us more excited about what the future could be. It’s got a very strong social networking concept. In fact, if you happen to go on Facebook, you’ll see that there’s a Stockpickr community of Facebook now that talks about what they like about Stockpickr. So there’s a very strong community aspect to it. I think that the addition of us putting TheStreet.com ratings on Stockpickr, so that everybody can look at that portfolio now. I think if you’re looking for stock ideas it’s a very unique place, and actually, something interesting, I’ll tell you, George, is that when we put the ratings up there, if you go look at the portfolios that we would consider an A rated portfolio, the majority of them are individuals.

They’re not the professionally managed portfolios that we have on the site, so I think you’re starting to see a very smart, articulate group of people who love the market in that universe. For us, longer term, that gives us great advertising opportunities that we could certainly go after that market with a very targeted advertising opportunity. For us, it’s just an expansion that we think the Stockpickr platform can lead us into a couple of other money categories that will develop over the next year or so.

George Grose - American Capital Partners

Did you break out the revenues that were generated from…

Thomas Clarke

We do not.

George Grose - American Capital Partners

OK, and on the Charles Schwab licensing agreement there, can you provide a little more granularity on that?

Thomas Clarke

You know, it’s content that we produce for their newsletter, that they send out to the Schwab universe of customer. We participate in that, we think that’s going to give us exposure to the universe of Schwab customers, that maybe they’ll see something there that they find interesting, they’ll come to our website, and hopefully the offerings we have on our own website or Stockpickr will make it a place that they ultimately want to see and use in conjunction with what they do on Schwab. So we think over time it will build, it’s a syndication deal at this point, and it’s brand new, so our expectations will really be built over the next couple of quarters.

George Grose - American Capital Partners

Should we expect to see maybe more agreements of this type with other brokers?

Thomas Clarke

You know, we’re constantly in dialogue with the online brokerage community, we think we’re a natural partner of theirs in producing content, whether it be generic that they send out, or customized pieces of content that they want to use for very specific promotions, so I would hope that the answer to that would be yes as we continue to beat the bushes with that.

George Grose - American Capital Partners

So with the Charles Schwab you could start cross-selling a lot of your expertise there.

Thomas Clarke

Oh, absolutely, and I think it lends itself to a further platform other than just text. I think video and pod casts are also an area where we could create original programming that could be syndicated to that group of people.

George Grose - American Capital Partners

OK, and I guess in the past you mentioned about being able to protect your gross margins last year of about 64%. Is that still the plan for 2007?

Eric Ashman

Yeah, our expectation continues to be that for the full year we’ll deliver margins that are equal to or better than the margins we delivered in 2006.

George Grose - American Capital Partners

OK, thank you.

Operator

Your next question comes from the line of Ursula Moran with Bear Stearns. Please proceed.

Ursula Moran - Bear Stearns

Hi. Thanks. Congratulations on all the good things in the quarter. Tom, I have sort of a philosophical question, which is, I really admire your discipline on acquisitions, I think that’s great, but I wonder if philosophically, are there any circumstances where you could imagine doing a deal even if it was dilutive for a limited period of time.

Thomas Clarke

Well, first of all, thanks for your compliments Ursula, I really appreciate that. It’s really, that’s an interesting question. You know, philosophically, the only way I think that I would look at that, is if I knew it was a game changer. Meaning that the combination of whatever the acquisition could be was really more than 1+1=3, it would be 1+1=4 to 5. I think if it was a game changer where you looked at the landscape and you said putting these two together would really take the company, the combined entity, to a place that would give you a definitive market advantage that had a barrier to entry. Then I would say, Ursula, yes, we would look at that. I haven’t seen that today. I haven’t seen that type of acquisition. I’m not saying it doesn’t exist out there, but in what we’re seeing in the pipeline, we haven’t seen that, and I think that’s why we continue to say we’ll only look at acquisitions that would be accretive.

Ursula Moran - Bear Stearns

Now when you say you haven’t seen it, you haven’t seen it, or you haven’t seen it at the right price?

Thomas Clarke

I haven’t seen it.

Ursula Moran - Bear Stearns

OK, so it’s not because, you know, looking at the market today, a lot of people are under some pain, and it would be interesting to think about is there a combination that would work at the right price? And I realize even at a lower price, I’m not trying to contradict the question about dilutive, but…

Thomas Clarke

Right, it’s not so much about, and I understand where you’re going with it, I appreciate it. It’s not really about the price, it’s that we just haven’t seen it. If in fact we did see it, and it really was a game changer, I think we could figure out a way to get there on price. The nice thing about us is that, as you know, we’ve got a lot of cash, we’ve got a lot of currency power that hasn’t been used.

Ursula Moran - Bear Stearns

And no debt, right?

Thomas Clarke

No debt. So if it’s out there, we could leverage up and do something that would be much bigger than us, if it’s the right fit for everybody.

Ursula Moran - Bear Stearns

OK, that was what I was curious about. Thank you.

Operator

Your next question comes from the line of Brian Murphy with Sidoti and Company. Please proceed.

Brian Murphy - Sidoti & Company, LLC

Hi, thanks for taking my question. Tom, you mentioned about possibly getting the RPM’s to the low 20’s. low to mid 20’s. I know some of that is seasonal, but could you talk a little more about how you get there? Is it just more video in the mix or is it sales execution? What are your expectations?

Thomas Clarke

I think a lot of it is that we get there, one of things, I think Brian and this goes again to one of the four things I talked about why we need a site re-design, there are advertising opportunities for us that we can not get engaged in today because the interactive nature of what the advertiser wants is not a skill set that we can provide. And if you look at the type of advertisers those are, they’re much bigger campaigns. These are the large campaigns, national advertisers that are looking f interactive components that really has not been something we can provide and frankly if you look at getting that revenue per page number up there, it’s those type of advertisers we want. So I think the site re-design and some of the other things we’re working on over then ext month or so will certainly help us get there in a way that will help us get to the point of looking at that low 20 to mid 20 level.

Brian Murphy - Sidoti & Company, LLC

Great, and one follow-up if I could. Can you talk about the status of the sales force? Are you guys fully staffed now and have you experienced any attrition of turnover in the sales force?

Thomas Clarke

You know, over the last year I think the only attrition we had was one person so the attrition level has been almost nil and I attribute that to just having a great sales force and leadership and management of the sales force team so we’re, let’s put it this way Brian, if there’s an opportunity for us to bring in other talented individuals on to the sales force we’ll continue to do that. We’re driven by the traffic that we have so you can see we’re up to 307 million, the reach is the farthest both with unique visitors and use, these are record levels for us, so if we think we can continue to drive that and take those numbers up then we’ll continue to add sales people into the mix, but right now we’re pretty good about where we are. We’d like to add, let’s say one or two through the rest of this year.

Brian Murphy - Sidoti & Company, LLC

Great, thanks a lot.

Thomas Clarke

You’re welcome.

Operator

Your next question comes from the line of Joseph Gardner with Amwood Advisors. Please proceed

Joseph Gardner - Amwood Advisors

Good morning gentlemen. Couple questions for you. First of which, I believe Eric, you mentioned in your comments that you will be taking some actions to rectify the situation with the subscription business. Was wondering if you could elaborate on that a little bit, give us an idea of what you may be doing there?

Eric Ashman

There is a couple of areas that we’re focusing on and we’ve been working with one outside consultant, we just recently brought in two others that have a significant amount of experience in driving the subscription side of the business. And the two areas where we’re primarily focused; one is subscription flows throughout the site. So, doing a lot of analysis on how people move through the site, how today we’re acquiring new subscribers and trying to find opportunities to change our approach in terms of internal marketing and the way we push people through a subscription flow to try to enhance that and try to improve our acquisition rate from within the site.

The other area is external marketing. It’s something that we haven’t done a lot of and we think that there’s opportunity there in terms of reviewing the external marketing campaigns we’ve used in the past and also looking at new places that we can go. Looking for outside and third party organizations that we can partner with that might ultimately have an audience of their own that would be interested in the products that we have.

So that’s an ongoing effort that we started in the second quarter, we’re hoping to see the results of that in the third and fourth quarters.

Thomas Clarke

Hey, Joe, if I can just add to something that Eric said. I think fundamentally, you know that we like the sub-business. But I think you also should know that we’re seeing such unbelievable opportunities on the ad side of the business that that’s where the money is going. And I think when you have sub-businesses, we work with some very talented external consultants today, that there is opportunities. You saw recently AOL got kudos because they pulled stuff out from behind the subscription wall, you see the New York time recently is debating whether their, you know, make more money with the sub-business or whether you can unlock it and do it with the advertising business.

We’re a long way from getting there because we do think there is opportunity in the sub-business, however if we still, a year from now are seeing the fact that the advertising opportunity is just so great, then we’re just going to take advantage of it. So, I just wanted to put that color out there because as part of our strategic direction, as we mentioned probably 18 or 24 months ago to move to get more of our overall revenue into the ad business. It’s not that we were, we saw some of this coming certainly on the acquisition side because I think you’re seeing a trend that there is some segment of the population that just doesn’t want to pay for content. You know, we view the sub-business as our annuity, as our cash cow that continues to give us the ability to be as innovative and as flexible as we can on the ad side of the business to really drive the overall side of the business.

Joseph Gardner - Amwood Advisors

Certainly understood and it appears that some of the efforts you’ve been doing in bringing some of the content on a time-delayed basis from the subscription side to the free side of the site seems to be helping you page-view wise.

Thomas Clarke

Absolutely it is.

Joseph Gardner - Amwood Advisors

But just one last question on the ad business. The numbers have been dropping off a little bit quarter-to-quarter. Is that a trend that you expect to continue? Or how should we be thinking about that going forward?

Thomas Clarke

That’s a good question Joe. As you know in the past, we have less visibility in to the, we’ve got great visibility into the sub-business when it comes to modeling the, kind of the turn rate, the renewal rate. We give them to you every quarter and you can see, that they haven’t changed, two or three percentage points over the last couple of years. Where we don’t have such great visibility is on the acquisition side. You know, so it’s hard for me to comment, to say whether we’re going to continue to see that trend or not. We think that with the initiatives and with the people we’re working with today, we can stem that and probably grow that but right now we’re just too early into the quarter for me to give you any clarity on that and I try not to mislead people about where we are at any point in time.

Joseph Gardner - Amwood Advisors

Ok. On the ad business, you seem to have a number of positive drivers there. In the past you’ve seemed that kind of flat on the quarter-to-quarter basis, as you go from the second and third quarter. Should that type of seasonal trend continue, or is the possibility here for some of the growth you’ve seen to offset that a little bit.

Thomas Clarke

Well again you still have a little seasonality especially in the third quarter where you know the world [inaudible] advertising, second is thought being that last year we did grow the advertising third quarter to second quarter. I would expect it would do the same again this year.

Joseph Gardner - Amwood Advisors

Ok, Ok. And then finally on the page growth you sited, a phenomenal number that you put out this quarter. I’m wondering if you can break that down at all in terms of, how much of that you’re seeing coming from sort of the core street.com in real money, web sites versus some of the newer content, newer sites that you’ve been putting out there.

Thomas Clarke

A good amount of it is coming from the newer applications that we have, certainly Ratings has been a good driver, Stock Picker has been a good enhancer there. Those continue to put up numbers quarter over quarter that surpassed the previous numbers so that’s helping. Some of those newer things we talked about like real estate, and politics, and stuff like that, are all contributors, they’re relatively new in the mix, and I think still people are [View One] has a site that specifically is levered to the market and talks about the market but I think as we start expanding this category and getting into the [philharmonic] category, I think that it will help us long term but I would say we are seeing growth in unique visitors, as you saw in the numbers, and I think that’s just bringing in a new audience that hasn’t been here before, and I think that’s primarily the driver of what we’re seeing in [page use]

Joseph Gardner - Amwood Advisors

Great. Thanks a lot, Tom

Thomas Clarke

Thanks, Joe

Operator

The next question is a follow-up question from the line of Mark May with Needham and Company. Please proceed.

Mark May – Needham and Company

Ok thanks, just real quick. Would some of the investments planned for the second half of the year being more capital investments, which we expect cap backs to do in the second half of the year I think it was just around $2 million in the first half, and then in terms of the tax rate adjustment in the second half of the year; I would assume this means from a GAAP perspective we should start to use the full tax rate beginning in ’08?

Thomas Clarke

To your first question, the cap back levels in the second half of the year will be consistent with the first half of the year, so it’s an ongoing, you know, the web development started earlier in the fiscal, it will continue through the end of the year and you’ll see pretty much a similar level of cap backs throughout the year. With respect to the tax asset adjustment, the adjustment of the valuation allowance, actually you’ll see because we've got so much on the books, we actually will go back out and stay at a minimum tax rate even for a GAAP reporting purpose and we’ll essentially be adjusting the valuation allowance from quarter to quarter, because we will not be taking all of it.

Mark May – Needham and Company

Ok. Thanks.

Operator

The next question comes from the line of Sean Jackson, with Avondale Partners. Please proceed.

Sean Jackson – Avondale Partners

Yea, a real quick question on the sub business again, but the way to turn that around entirely, due to the marketing side, or do you have newer products that you intend to create? Just real quick, what’s the plan there?

Thomas Clarke

It’s not a product issue, I think the one thing that gives us some comfort internally is that the renewal rates are very high and the products of these, these are not product issues and I’m not running out to introduce new products, because I don’t play the game, look if all I want is to get new subs, I’d drop the price, I’d go push it off on someone else’s site, and I could get new sub numbers. Again, it’s always about us driving additional revenue and seeing that revenue per subscriber number move upward.

So I’m not rushing out to introduce some new products. If there were something that we find that we thought is compelling we’d do it. For us it’s more the marketing aspect of it and to find places where people reside who are willing, number one, willing to pay for content on the web and two, that would see this as a way to help their financial well being going forward, so I think with the consultants we have we’ll have a much better and clearer picture of t his as we get towards the end of the year as what we can be successful and where the opportunity may be.

Sean Jackson – Avondale Partners

Can you quickly quantify the amount of resources you’re allocating toward the sub side versus the ad side? Just on a percentage basis?

Thomas Clarke

Can you just repeat the question? I want to make sure I get it right.

Sean Jackson – Avondale Partners

Yea, the amount of resources that you’re allocating for both the sub side versus the ad side.

Thomas Clarke

Let’s put it this way, I think if you, Sean, when you listen to the call and you think about the initiatives we all talked about other than us working with the consultants to figure out what the acquisition opportunity is or is not, all of the initiatives we have are all advertising supported. That should give you some indication of where we see the market going.

Sean Jackson – Avondale Partners

Ok, thank you.

Thomas Clarke

You’re welcome.

Operator

(Operator instructions)

Your next question is also a follow-up question and it’s from the line of Richard Fetyko, with Merriman, Curhan & Ford. Please proceed.

Richard Fetyko - Merriman, Curhan & Ford

Hey Guys. On the discussion of revenues, just a small thing, but the impact of the print outsource that you did, starting in May, obviously the impact of the second quarter for two months so we should see a little more impact on the third quarter from that?

Thomas Clarke

That is correct.

Richard Fetyko - Merriman, Curhan & Ford

Ok, thanks.

Operator

Your next question is also a follow-up question, from the line of Ursula Moran with Bear Sterns. Please proceed.

Ursula Moran – Bear Sterns

Hi again, sorry to keep us on the call.

Thomas Clarke

Not at all.

Ursula Moran – Bear Sterns

So, a day like today of course prompts the following question. Is volatility good for your business, bad for your business, or is it good for a while, and then bad?

Thomas Clarke

Volatility is good for the business.

Ursula Moran – Bear Sterns

Ok.

Thomas Clarke

What I always describe as a situation that would not be good, and again, I am more, Ursula, just so we’re clear about this, I’m really more talking about the subscription side of the business when I say that.

Ursula Moran – Bear Sterns

Ok.

Thomas Clarke

The advertising side of the business is less levered than to any of the things that really happen with the market per se, and I think the yanks the people used to have with us on the ad side of the business which are about the financial advertisers, I think we’ve taken that off with the last two quarters, and certainly with this quarter with non-financial advertising being up over 200%, that’s gone away.

But on the sub side of the business, volatility is good for us. What’s not good for us is up 50, down 50, up 50, down 50, where people don’t have a direction to the market, because then it becomes a little bit more problematic, because as you know, being in the game, this isn’t an easy game for someone to decipher, and to the extent that we can lend a helping hand in either direction or a steadying and when there is a volatility, that’s always good for us.

Ursula Moran – Bear Sterns

Ok, thank you.

Thomas Clarke

You’re welcome.

Operator

(Operator instructions)
At this time if there are no questions, I would now like to turn the call over to Tom Clarke, for closing remarks. Please proceed, Sir.

Tom Clarke

Well I’d like to thank everybody for the invigorating question and answer because I think that it’s always good for you to understand where we’re going and what we see as the opportunity for us. We produced a great quarter, we’re very excited about it, and we’re really looking forward to the future of where theStreet.com can go, so thank you.

Ladies and Gentlemen, thank you for your participation in today’s conference. This concludes the presentation, you may now disconnect.

Copyright policy: All transcripts on this site are copyright 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.