TheStreet Reports Fourth Quarter and Full Year 2018 Results
Fourth Quarter Highlights
- The Company announced the sale of its Business-to-Business (B2B) business (TheDeal/BoardEx) to Euromoney.
- Net loss from continuing operations totaled
$3.0 million , or$0.06 per diluted share. - Total Revenue from continuing operations was
$13.9 million . - B2B revenue totaled
$6.7 million , an increase of$0.4 million or 6% over same quarter last year. - Business-to-Consumer (B2C) revenue totaled
$7.2 million , a decline of$0.4 million or 6%; B2C subscription revenue increased$0.2 million over the same quarter last year and B2C premium deferred subscription revenue grew$1.1 million , or 12%. - Adjusted EBITDA totaled
$2.4 million , a year-over-year increase of$0.6 million .
Full Year Highlights
- Net loss from continuing operations totaled
$6.8 million , or$0.13 per diluted share. - Total Revenue from continuing operations was
$53.1 million . - B2B revenue totaled
$25.6 million , an increase$1.8 million or 8% over full year 2017. - B2C revenue totaled
$27.5 million , a decline of$3.5 million or 11% over full year 2017. - Cash, cash equivalents, restricted cash and marketable securities totaled
$39.4 million , an increase of$25.5 million fromDecember 31, 2017 . - Adjusted EBITDA totaled
$2.6 million , a decrease of$1.5 million from full year 2017.
Summary of Financial Results
Q4 2018 |
Q4 2017 |
% |
FY 2018 |
FY 2017 |
% Change |
||
Adjusted EBITDA |
$2.4m |
$1.8m |
33.1% |
$2.6m |
$4.1m |
(36.6%) |
|
Revenue |
$13.9m |
$14.0m |
(0.6%) |
$53.1m |
$54.8m |
(3.1%) |
|
B2C Revenue |
$7.2m |
$7.6m |
(5.7%) |
$27.5m |
$31.0m |
(11.3%) |
|
B2B Revenue |
$6.7m |
$6.4m |
5.6% |
$25.6m |
$23.8m |
7.6% |
|
Net (Loss) / Income from continuing operations |
($3.0m) |
$3.5m |
(187.1%) |
($6.8m) |
$0.3m |
(2,289.7%) |
|
Diluted Net (Loss) / Income per share from continuing operations |
($0.06) |
$0.59 |
(110.1%) |
($0.13) |
$0.60 |
(122.2%) |
|
Operating Expense |
$38.3m |
$14.0m |
174.4% |
$82.4m |
$57.2m |
44.2% |
|
Adjusted Operating Expense(1) |
$12.7m |
$13.3m |
(4.8%) |
$55.1m |
$55.0m |
0.2% |
|
(1) Adjusted Operating Expense excludes non-cash goodwill impairment, transaction costs, restructuring charges and non-cash / stock-based compensationfor key employee retention efforts |
"Our results for 2018 reflect important structural changes to our business," said
Fourth Quarter Results
For the fourth quarter of 2018, the Company reported revenue of
Operating expenses for the fourth quarter of 2018 were
Business-to-Consumer Revenue
B2C revenue totaled
Business-to-Business Revenue
B2B revenue totaled
Full Year Results
For the full year 2018, the Company reported revenue of
Operating expenses for the full year 2018 were
Business-to-Consumer Revenue
B2C revenue totaled
Business-to-Business Revenue
B2B revenue for the full year 2018 totaled
Tax
The Company recorded a tax benefit of
Cash on hand
The Company ended the full year 2018 with cash and cash equivalents, restricted cash and marketable securities of
Conference Call Information
To participate in the call, please dial 877-260-1479 (domestic) or 334-323-0522 (international). The conference code is 8798880. This call is being webcast and can be accessed on the Investor Relations section of TheStreet website at. http://investor-relations.thestreet.com/events.cfm
A replay of the webcast will be available approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.
About
Non-GAAP Financial Information
(1) To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company also uses "EBITDA" and "Adjusted EBITDA", non-GAAP measures of certain components of financial performance. "EBITDA" is adjusted from results based on GAAP to exclude interest, income taxes, depreciation and amortization. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes that the non-GAAP EBITDA results are an important indicator of the operational strength of the Company's business and provide an indication of the Company's ability to service debt and fund acquisitions and capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. "Adjusted EBITDA" further eliminates the impact of non-cash stock compensation, impairment charges, restructuring, transaction related costs, loss (income) from discontinued operations, severance and other charges affecting comparability. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets and investment spending levels. "Free cash flow" means net income/loss plus non-cash expenses net of gains/losses on dispositions of assets, less changes in operating assets and liabilities and capital expenditures. The Company believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a view of the Company's ability to generate cash.
2) Average churn is defined as subscriber terminations/expirations in the quarter divided by the sum of the beginning subscribers and gross subscriber additions for the quarter, and then divided by three. Subscriptions that are on a free-trial basis are not regarded as added or terminated unless the subscription is active at the end of the free-trial period.
Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding planned investments in our business, improved premium subscription products and expectations for 2018. Such forward-looking statements are subject to risks and uncertainties, including those described in the Company's filings with the
Contact:
THESTREET, INC. |
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CONSOLIDATED BALANCE SHEETS |
||||
As of December 31, |
||||
ASSETS |
2018 |
2017 |
||
Current Assets: |
||||
Cash and cash equivalents |
$ 37,029,262 |
$ 11,684,817 |
||
Accounts receivable, net of allowance for doubtful accounts of |
||||
$296,443 at December 31, 2018 and $278,997 at December 31, 2017 |
4,889,164 |
4,546,308 |
||
Other receivables |
3,801,553 |
389,353 |
||
Prepaid expenses and other current assets |
2,489,389 |
1,615,720 |
||
Current assets of discontinued operations |
- |
230,116 |
||
Total current assets |
48,209,368 |
18,466,314 |
||
Noncurrent Assets: |
||||
Property and equipment, net of accumulated depreciation and |
||||
amortization of $6,240,110 at December 31, 2018 and $5,475,077 |
||||
at December 31, 2017 |
1,489,132 |
2,092,669 |
||
Marketable securities |
1,850,000 |
1,680,000 |
||
Other assets |
1,164,388 |
306,465 |
||
Goodwill |
2,016,417 |
23,568,472 |
||
Other intangibles, net of accumulated amortization of $18,668,307 |
||||
at December 31, 2018 and $15,702,665 at December 31, 2017 |
12,461,416 |
12,966,569 |
||
Deferred tax asset |
18,050,971 |
1,865,453 |
||
Restricted cash |
500,000 |
500,000 |
||
Noncurrent assets of discontinued operations |
- |
7,564,606 |
||
Total assets |
$ 85,741,692 |
$ 69,010,548 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current Liabilities: |
||||
Accounts payable |
$ 2,796,855 |
$ 1,999,772 |
||
Accrued expenses |
3,962,220 |
3,690,337 |
||
Deferred revenue |
21,187,320 |
19,201,693 |
||
Other current liabilities |
691,774 |
1,835,679 |
||
Current liabilities of discontinued operations |
- |
4,246,891 |
||
Total current liabilities |
28,638,169 |
30,974,372 |
||
Noncurrent Liabilities: |
||||
Deferred tax liability |
- |
803,917 |
||
Other liabilities |
1,535,066 |
1,543,602 |
||
Noncurrent liabilities of discontinued operations |
- |
741,856 |
||
Total liabilities |
30,173,235 |
34,063,747 |
||
Stockholders' Equity: |
||||
Common stock; $0.01 par value; 100,000,000 shares authorized; |
||||
57,586,227 shares issued and 49,741,269 shares outstanding |
||||
at December 31, 2018, and 56,891,551 shares issued and |
||||
49,181,462 shares outstanding at December 31, 2017 |
575,862 |
568,916 |
||
Additional paid-in capital |
262,037,815 |
259,569,737 |
||
Accumulated other comprehensive loss |
(5,418,635) |
(4,845,650) |
||
Treasury stock at cost; 7,844,958 shares at December 31, 2018 |
||||
and 7,710,089 shares at December 31, 2017 |
(13,754,559) |
(13,484,924) |
||
Accumulated deficit |
(187,872,026) |
(206,861,278) |
||
Total stockholders' equity |
55,568,457 |
34,946,801 |
||
Total liabilities and stockholders' equity |
$ 85,741,692 |
$ 69,010,548 |
||
Note: The consolidated balance sheet as of December 31, 2017 reflects an immaterial adjustment to increase deferred tax assets and a corresponding increase to stockholders' equity as a result of the continued assessment and application of the recently enacted federal tax reform. |
THESTREET, INC. |
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
For the Three Months Ended |
For the Year Ended |
|||||||
December 31, |
December 31, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
Net revenue: |
||||||||
Business to business |
$ 6,711,948 |
$ 6,357,896 |
$ 25,578,345 |
$ 23,776,148 |
||||
Business to consumer |
7,205,856 |
7,638,165 |
27,511,107 |
31,018,693 |
||||
Total net revenue |
13,917,804 |
13,996,061 |
53,089,452 |
54,794,841 |
||||
Operating expense: |
||||||||
Cost of services |
5,802,601 |
6,045,273 |
22,779,755 |
25,307,050 |
||||
Sales and marketing |
3,208,048 |
2,960,741 |
14,225,829 |
12,226,288 |
||||
General and administrative |
3,237,747 |
3,562,388 |
15,925,143 |
14,831,086 |
||||
Depreciation and amortization |
1,206,568 |
1,161,176 |
4,631,198 |
4,350,714 |
||||
Impairment of goodwill |
21,466,182 |
- |
21,466,182 |
- |
||||
Restructuring and other charges |
- |
239,666 |
- |
438,645 |
||||
Transaction costs |
3,403,527 |
- |
3,403,527 |
- |
||||
Total operating expense |
38,324,673 |
13,969,244 |
82,431,634 |
57,153,783 |
||||
Operating (loss) income |
(24,406,869) |
26,817 |
(29,342,182) |
(2,358,942) |
||||
Net interest income |
100,538 |
20,583 |
181,705 |
46,807 |
||||
Net (loss) income from continuing operations before income taxes |
(24,306,331) |
47,400 |
(29,160,477) |
(2,312,135) |
||||
Benefit for income taxes |
21,283,639 |
3,424,610 |
22,367,402 |
2,622,361 |
||||
Net (loss) income from continuing operations |
(3,022,692) |
3,472,010 |
(6,793,075) |
310,226 |
||||
(Loss) income from discontinued operations |
(285,637) |
673,506 |
1,440,009 |
3,242,463 |
||||
(Loss) gain on sale of business, net of tax |
(3,499,431) |
- |
23,567,640 |
- |
||||
(Loss) gain on discontinued operations |
(3,785,068) |
673,506 |
25,007,649 |
3,242,463 |
||||
Net (loss) income |
(6,807,760) |
4,145,516 |
18,214,574 |
3,552,689 |
||||
Capital contribution attributable to preferred stockholders |
- |
22,367,520 |
- |
22,367,520 |
||||
Net (loss) income attributable to common stockholders |
$ (6,807,760) |
$ 26,513,036 |
$ 18,214,574 |
$ 25,920,209 |
||||
Basic net (loss) income per share: |
||||||||
Continuing operations |
$ (0.06) |
$ 0.60 |
$ (0.14) |
$ 0.60 |
||||
Discontinued operations |
(0.08) |
$ 0.01 |
$ 0.51 |
0.09 |
||||
Basic net (loss) income per share |
$ (0.14) |
$ 0.61 |
$ 0.37 |
$ 0.69 |
||||
Diluted net (loss) income per share: |
||||||||
Continuing operations |
$ (0.06) |
$ 0.59 |
$ (0.13) |
$ 0.60 |
||||
Discontinued operations |
(0.07) |
0.01 |
0.49 |
$ 0.08 |
||||
Diluted net (loss) income per share |
$ (0.13) |
$ 0.60 |
$ 0.36 |
$ 0.68 |
||||
Weighted average basic shares outstanding |
49,613,369 |
43,303,851 |
49,425,372 |
37,624,103 |
||||
Weighted average diluted shares outstanding |
51,602,359 |
43,896,676 |
51,047,059 |
37,842,479 |
||||
Reconciliation of net (loss) income to adjusted EBITDA - see note (1): |
||||||||
Net (loss) income |
$ (6,807,760) |
$ 4,145,516 |
$ 18,214,574 |
$ 3,552,689 |
||||
Benefit for income taxes |
(21,283,639) |
(3,424,610) |
(22,367,402) |
(2,622,361) |
||||
Net interest income |
(100,538) |
(20,583) |
(181,705) |
(46,807) |
||||
Depreciation and amortization |
1,206,568 |
1,161,176 |
4,631,198 |
4,350,714 |
||||
EBITDA |
(26,985,369) |
1,861,499 |
296,665 |
5,234,235 |
||||
Impairment of goodwill |
21,466,182 |
- |
21,466,182 |
- |
||||
Restructuring and other charges |
- |
239,666 |
- |
438,645 |
||||
Loss (income) from discontinued operations |
285,637 |
(673,506) |
(1,440,009) |
(3,242,463) |
||||
Gain on sale of business, net of tax |
3,499,431 |
- |
(23,567,640) |
- |
||||
Transaction costs |
3,403,527 |
- |
3,403,527 |
- |
||||
Severance |
- |
- |
- |
105,531 |
||||
Stock based compensation |
759,485 |
396,624 |
2,455,535 |
1,590,380 |
||||
Adjusted EBITDA |
$ 2,428,893 |
$ 1,824,283 |
$ 2,614,260 |
$ 4,126,328 |
THESTREET, INC. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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For the Year Ended December 31, |
||||
2018 |
2017 |
|||
Cash Flows from Operating Activities: |
||||
Net income |
$ 18,214,574 |
$ 3,552,689 |
||
Adjustments to reconcile net income from continuing |
||||
operations to net cash provided by operating activities: |
||||
Gain on sale of business, net of tax |
(23,567,640) |
- |
||
Impairment of goodwill |
21,466,182 |
- |
||
Stock-based compensation expense |
2,475,214 |
1,606,680 |
||
Provision for doubtful accounts |
42,043 |
21,154 |
||
Depreciation and amortization |
4,780,768 |
5,132,259 |
||
Deferred taxes |
(22,184,543) |
(3,005,213) |
||
Deferred rent |
(324,969) |
(526,579) |
||
Changes in operating assets and liabilities: |
||||
Accounts receivable |
(509,509) |
485,592 |
||
Other receivables |
(62,200) |
(30,101) |
||
Prepaid expenses and other current assets |
(954,800) |
(166,578) |
||
Other assets |
(395,414) |
(2,693) |
||
Accounts payable |
791,821 |
(518,834) |
||
Accrued expenses |
(78,137) |
(1,383,875) |
||
Deferred revenue |
2,679,874 |
728,118 |
||
Other current liabilities |
(175,824) |
(3,511) |
||
Other liabilities |
87,952 |
- |
||
Net cash provided by continuing operations |
2,285,392 |
5,889,108 |
||
Cash Flows from Investing Activities: |
||||
Proceeds from the sale of business, net |
28,232,100 |
- |
||
Capital expenditures |
(3,922,509) |
(2,505,816) |
||
Net cash provided by (used in) investing activities |
24,309,591 |
(2,505,816) |
||
Cash Flows from Financing Activities: |
||||
Earnout payment for prior acquisition |
(951,867) |
- |
||
Cash dividends paid on common stock |
(68,162) |
(68,245) |
||
Net proceeds from the sale of common stock |
- |
7,849,999 |
||
Cash paid to extinguish preferred stock |
- |
(20,891,480) |
||
Share repurchase |
(1,415) |
- |
||
Shares withheld on RSU vesting to pay for withholding taxes |
(268,220) |
(273,783) |
||
Net cash used in financing activities |
(1,289,664) |
(13,383,509) |
||
Effect of foreign exchange rate changes on cash, cash equivalents |
||||
and restricted cash |
39,126 |
313,912 |
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
25,344,445 |
(9,686,305) |
||
Cash, cash equivalents and restricted cash, beginning of period |
12,184,817 |
21,871,122 |
||
Cash, cash equivalents and restricted cash, end of period |
$ 37,529,262 |
$ 12,184,817 |
||
Reconciliation of net loss to free cash flow - see note (1): |
||||
Net loss |
$ (5,353,066) |
$ 3,552,689 |
||
Noncash expenditures |
6,254,695 |
3,228,301 |
||
Changes in operating assets and liabilities |
1,383,763 |
(891,882) |
||
Capital expenditures |
(3,922,509) |
(2,505,816) |
||
Free cash flow |
$ (1,637,117) |
$ 3,383,292 |
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SOURCE
Eric Lundberg, CEO and CFO, TheStreet, Inc., Eric.lundberg@thestreet.com; Jared Verteramo, General Counsel and Corporate Secretary, TheStreet, Inc., Jared.verteramo@thestreet.com