UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  August 8, 2018 

THESTREET, INC.

 

(Exact name of registrant as specified in its charter)

 

DELAWARE

(State or other jurisdiction of incorporation)

 

0-25779

(Commission File Number)

06-1515824

(IRS Employer Identification No.)

 

14 WALL STREET, 15 TH FLOOR

NEW YORK, NEW YORK 10005

 

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code: (212) 321-5000

 

NA

 

(Former name or former address, if changed since last report)

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c ))

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On August 8, 2018, TheStreet, Inc. (the “Company”) issued a press release announcing financial results for its second quarter ended June 30, 2018. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated herein by reference in this Item 2.02.

 

The information in this Current Report on Form 8-K and the Exhibit attached hereto is furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 7.01 Regulation FD Disclosure.

 

The information set forth under Item 2.02, “Results of Operations and Financial Condition”, is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Shell company transactions: None
(d) Exhibits: Press release, dated August 8, 2018, issued by TheStreet, Inc.

 

Exhibit No. Exhibit Description
   
99.1** Press Release dated August 8, 2018

 

**    Furnished herewith.

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  THESTREET, INC.  
       
Date: August 8, 2018 By: /s/ Eric Lundberg  
    Name: Eric Lundberg  
    Title: Chief Financial Officer  

 

 

 

Exhibit Index

 

Exhibit No. Description
   
99.1 Press Release dated August 8, 2018

 

 

Exhibit 99.1

(TheStreet Logo)

TheStreet Reports Second Quarter 2018 Results
Deferred Revenue Growth Highlight Continued Turnaround

Effective June 20, 2018, The Street, Inc. completed the sale of its RateWatch business. As a result, RateWatch has been reclassified as a discontinued operation in the financial statements. Accordingly, the second quarter results presented in this press release reflect continuing operations unless indicated otherwise.

  RateWatch business sold June 20, 2018 for $33.5 million.
  Cash, cash equivalents, restricted cash and marketable securities totaled $44.9 million, an increase of $31.0 million from December 31, 2017, including a $5.6 million increase in cash from operations.
  Net income for the second quarter 2018 including discontinued operations totaled $27.5 million, or $0.54 per diluted share, compared to $0.3 million, or $0.01 per diluted share for the same quarter last year. The second quarter of 2018 includes the gain on sale of RateWatch of $27.6 million partially offset by eight fewer business days of operating activity in the RateWatch business (Discontinued operations).
  Net loss from continuing operations totaled $0.9 million, or ($0.02) per share, as compared to $0.4 million, or ($0.01) per share in the second quarter of 2017.
  Total Revenue from continuing operations for the second quarter of 2018 totaled $13.6 million, down $0.5 million, or 3%, as compared to the same quarter in the prior year.
  Business-to-Business (B2B) revenue of $6.7 million, up 12% year-over-year.
  Business-to-Consumer (B2C) revenue of $6.9 million, down 15% year-over-year, primarily due to a strategic shift as it relates to advertising.
  Deferred subscription revenue from continuing operations totaled $23.2 million, up $1.8 million, or 8%, year-over-year.
  B2B deferred subscription revenue increased $0.9 million, or 8%, as compared to the second quarter of 2017.
  B2C premium deferred subscription revenue grew $0.9 million, or 9%, as compared to the second quarter 2017.
  Adjusted EBITDA of $0.4 million for the second quarter of 2018 decreased $0.9 million as compared to the same quarter last year.

NEW YORK, August 8, 2018 -- TheStreet, Inc. (Nasdaq: TST) a leading financial news and information company, today reported financial results for the second quarter ended June 30, 2018.

For the second quarter of 2018, the Company reported revenue of $13.6 million, net loss from continuing operations of $0.9 million, or ($0.02) per basic and diluted share, and an Adjusted EBITDA(1) of $0.4 million. The second quarter net loss increased $0.5 million over the same period last year primarily from lower Business-to-Consumer (“B2C”) advertising revenue coupled with higher operating costs, partially offset by a lower tax provision.

“With the successful RateWatch divestiture behind us, we are now focused squarely on continuing our growth momentum in our paid subscription products,” said David Callaway, President and CEO. “Our strategic shift from advertising, while resulting in a short-term decline in results, has begun to pay off in almost all the underlying metrics of our subscription businesses, especially deferred revenue, which will benefit us in quarters to come.”

Second Quarter Results

Business-to-business (“B2B”) revenue, which includes BoardEx and The Deal, totaled $6.7 million for the second quarter, up $0.7 million or 12% as compared to the second quarter of 2017. B2C revenue was $6.9 million for the second quarter 2018, down $1.2 million, or 15%, compared to the second quarter of 2017, primarily the result of a strategic decision to cut programmatic advertising and instead refocus on building its subscription business. Total deferred subscription revenue was $23.2 million for the second quarter ended June 30, 2018, up $1.8 million, or 8% compared to the second quarter ended in 2017, and up $3.6 million, or 18% from year-end 2017. The continued increase in deferred subscription revenue reflects four consecutive quarters with year-over-year growth. B2B deferred subscription revenue at June 30, 2018 increased $0.9 million, or 8% from the second quarter ended 2017. B2C premium deferred revenue at June 30, 2018 improved $0.9 million, or 9% from the second quarter ended 2017.

Operating expenses for the second quarter of 2018 were $14.9 million as compared to $14.2 million for the second quarter of 2017, an increase of $0.7 million between periods. Higher operating expense for the quarter was primarily the result of staffing and compensation expense mostly in non-cash compensation with the issuance of RSUs related to retention efforts for key employees, increase in bonus and commissions from stronger performance over the prior year, and increased compensation and recruiting costs. In addition, higher marketing spends, and event costs were recorded during the period related to the launch of the new premium product “Retirement Daily” and increased efforts in search engine marketing, and costs related to the additional event revenue generated during the period. The Company also incurred higher year-over-year data platform and technology and consulting costs as we invest in our premium business. Higher professional fees were also recorded during the current year quarter. These increased costs were partially offset by planned reduction in traffic acquisition costs, lower freelance costs and benefits realized in FX exchange rates.

Net loss from continuing operations of $0.9 million for the second quarter of 2018 increased from a net loss of $0.4 million from the prior year period. Adjusted EBITDA for the second quarter of 2018 was $0.4 million compared to $1.3 million from the prior year period. The year-over-year decline in Adjusted EBITDA was primarily the result of declines in B2C advertising and subscription revenue, higher staffing and compensation costs, professional fees and marketing costs, partially offset by strong B2B revenue growth and higher second quarter year over year B2C event revenue.

Business-to-Business Revenue

B2B revenue for the second quarter of 2018 was $6.7 million, an increase of $0.7 million, or 12%, compared to the second quarter of 2017. Year over year revenue growth resulted primarily from increased subscription revenue in BoardEx coupled with higher event revenue in The Deal. Increased BoardEx subscription revenue resulted from both a strong increase in the subscriber base of 13% coupled with an increase of 5% in the average revenue per subscription. Event revenue grew $0.3 million, or 57% to $0.7 million during the second quarter over the same quarter last year due primarily from stronger year-over year performance in our TD Corporate Governance event and the success of a new event, The Dealmaker Awards.

Business-to-Consumer Revenue

B2C revenue for the second quarter of 2018 was $6.9 million, a decrease of $1.2 million, or 15%, from $8.1 million in the second quarter of 2017. Lower year-over-year B2C advertising revenue of $1.1 million resulted from our decision to reduce marginally profitable programmatic advertising earlier in the year. B2C subscription revenue for the second quarter of 2018 was $4.8 million, a decrease of $0.2 million, or 3%, from $5.0 million in the second quarter of 2017. This decrease primarily related to a 6% decline in the weighted-average number of subscriptions partially offset by a 3% increase in the average revenue recognized per subscription. Average monthly churn(2) improved to 3.90% for the second quarter of 2018 from 4.67% for the second quarter of 2017. Subscription sales bookings increased $0.3 million, or 6% for the second quarter of 2018 over the same quarter in 2017. B2C event revenue of $0.2 million for the second quarter of 2018 increased $0.1 million as compared to the second quarter 2017.

Cash on hand

The Company ended the second quarter 2018 with cash and cash equivalents, restricted cash and marketable securities of $44.9 million, up $31.0 million as compared to $13.9 million at December 31, 2017. The change between the periods primarily resulted from proceeds from the sale of RateWatch of $28.2 million and cash generated from operating activities of $5.6 million. This was partially offset by capital expenditures incurred during the period of $1.7 million and the deferred payment for a prior acquisition (BoardEx).

Conference Call Information

TheStreet will discuss its financial results for the second quarter 2018 on August 8, 2018 at 8:00 a.m. EDT.

To participate in the call, please dial 877-260-1479 (domestic) or 334-323-0522 (international). The conference code is 6703776. 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 TheStreet

TheStreet, Inc. (NASDAQ: TST, www.t.st) is a leading financial news and information provider to investors and institutions worldwide. The Company’s flagship brand, TheStreet (www.thestreet.com), has produced unbiased business news and market analysis for individual investors for more than 20 years. The Company’s portfolio of institutional brands includes The Deal (www.thedeal.com), which provides actionable, intraday coverage of mergers, acquisitions and all other changes in corporate control; and BoardEx (www.boardex.com), a relationship mapping service of corporate directors and officers.

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, 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 monthly 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 Securities and Exchange Commission (“SEC”) that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might contribute to such differences include, among others, economic downturns and the general state of the economy, including the financial markets and mergers and acquisitions environment; our ability to drive revenue, and increase or retain current subscription revenue, particularly in light of the investments in our expanded news operations; our ability to develop new products; competition and other factors set forth in our filings with the SEC, which are available on the SEC’s website at www.sec.gov. All forward-looking statements contained herein are made as of the date of this press release. 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.

Contacts:

Eric Lundberg
Chief Financial Officer
TheStreet, Inc.
ir@thestreet.com

John Evans
Investor Relations
PIR Communications
415-309-0230
ir@thestreet.com

THESTREET, INC.
CONSOLIDATED BALANCE SHEETS

   

June 30, 2018

   

December 31, 2017

 
   

(unaudited)

       

ASSETS

               

Current Assets:

               

Cash and cash equivalents

 

$

42,661,074

   

$

11,684,817

 

Accounts receivable, net of allowance for doubtful accounts of $293,083 at June 30, 2018 and $278,997 at December 31, 2017

   

4,631,413

     

4,546,308

 

Other receivables

   

227,306

     

389,353

 

Prepaid expenses and other current assets

   

2,351,558

     

1,615,720

 

Current assets of discontinued operations

   

     

230,116

 

Total current assets

   

49,871,351

     

18,466,314

 

Noncurrent Assets:

               

Property and equipment, net of accumulated depreciation and amortization of $5,862,499 at June 30, 2018 and $5,475,077 at December 31, 2017

   

1,734,326

     

2,092,669

 

Marketable securities

   

1,750,026

     

1,680,000

 

Other assets

   

4,479,795

     

306,465

 

Goodwill

   

23,535,799

     

23,568,472

 

Other intangibles, net of accumulated amortization of $17,450,650 at June 30, 2018 and $15,702,665 at December 31, 2017

   

12,579,416

     

12,966,569

 

Deferred tax asset

   

1,547,420

     

1,865,453

 

Restricted cash

   

500,000

     

500,000

 

Noncurrent assets of discontinued operations

   

     

7,564,606

 

Total assets

 

$

95,998,133

   

$

69,010,548

 
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current Liabilities:

               

Accounts payable

 

$

2,447,393

   

$

1,999,772

 

Accrued expenses

   

3,724,123

     

3,690,337

 

Deferred revenue

   

22,369,916

     

19,201,693

 

Other current liabilities

   

936,785

     

1,835,679

 

Current liabilities of discontinued operations

   

     

4,246,891

 

Total current liabilities

   

29,478,217

     

30,974,372

 

Noncurrent Liabilities:

               

Deferred tax liability

   

1,376,897

     

803,917

 

Other liabilities

   

1,938,717

     

1,543,602

 

Noncurrent liabilities of discontinued operations

   

     

741,856

 

Total liabilities

   

32,793,831

     

34,063,747

 
                 

Stockholders’ Equity:

               

Common stock; $0.01 par value; 100,000,000 shares authorized; 57,307,672 shares issued and 49,590,988 shares outstanding at June 30, 2018, and 56,891,551 shares issued and 49,181,462 shares outstanding at December 31, 2017

   

573,077

     

568,916

 

Additional paid-in capital

   

260,483,998

     

259,569,737

 

Accumulated other comprehensive loss

   

(5,104,828

)

   

(4,845,650

)

Treasury stock at cost; 7,716,684 shares at June 30, 2018 and 7,710,089 shares at December 31, 2017

   

(13,494,805

)

   

(13,484,924

)

Accumulated deficit

   

(179,253,140

)

   

(206,861,278

)

Total stockholders’ equity

   

63,204,302

     

34,946,801

 
                 

Total liabilities and stockholders’ equity

 

$

95,998,133

   

$

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
 June 30,

   

For the Six Months Ended
 June 30,

 
   

2018

   

2017

   

2018

   

2017

 
   

unaudited

   

unaudited

 

Revenue:

                               

Business to business

 

$

6,687,633

   

$

5,953,014

   

$

12,591,573

   

$

11,466,671

 

Business to consumer

   

6,901,644

     

8,104,658

     

13,572,847

     

15,997,856

 

Total revenue

   

13,589,277

     

14,057,672

     

26,164,420

     

27,464,527

 
                                 

Operating expense:

                               

Cost of services

   

5,745,659

     

6,244,445

     

11,206,732

     

13,076,044

 

Sales and marketing

   

3,897,220

     

3,257,498

     

7,378,077

     

6,482,951

 

General and administrative

   

4,150,957

     

3,681,419

     

8,319,248

     

7,550,602

 

Depreciation and amortization

   

1,150,307

     

1,058,603

     

2,257,913

     

2,074,503

 

Restructuring and other charges

   

     

     

     

198,979

 

Total operating expense

   

14,944,143

     

14,241,965

     

29,161,970

     

29,383,079

 

Operating loss

   

(1,354,866

)

   

(184,293

)

   

(2,997,550

)

   

(1,918,552

)

Net interest income

   

30,031

     

10,285

     

48,808

     

18,056

 

Net loss before income taxes

   

(1,324,835

)

   

(174,008

)

   

(2,948,742

)

   

(1,900,496

)

Income from discontinued operations

   

758,122

     

706,510

     

1,855,455

     

1,726,368

 

Gain on sale of business, net of tax

   

27,618,823

     

     

27,618,823

     

 

Income (loss) before income taxes

   

27,052,110

     

532,502

     

26,525,536

     

(174,128

)

Benefit (provision) for income taxes

   

463,885

     

(187,758

)

   

308,749

     

(608,568

)

Net income (loss) attributable to common stockholders

 

$

27,515,995

   

$

344,744

   

$

26,834,285

   

$

(782,696

)

                                 

Basic net loss (income) per share:

                               

Continuing operations

 

$

(0.02

)

 

$

(0.01

)

 

$

(0.05

)

 

$

(0.07

)

Discontinued operations

   

0.58

     

0.02

     

0.60

     

0.05

 

Basic net (loss) income attributable to common stockholders

 

$

0.56

   

$

0.01

   

$

0.55

   

$

(0.02

)

                                 

Diluted net (loss) income per share

                               

Continuing operations

 

$

(0.02

)

 

$

(0.01

)

 

$

(0.05

)

 

$

(0.07

)

Discontinued operations

   

0.56

     

0.02

     

0.59

     

0.05

 

Diluted net (loss) income attributable to common stockholders

 

$

0.54

   

$

0.01

   

$

0.54

   

$

(0.02

)

                                 

Weighted average basic shares outstanding

   

49,296,061

     

35,698,603

     

49,240,684

     

35,628,874

 

Weighted average diluted shares outstanding

   

50,551,236

     

35,803,117

     

50,210,935

     

35,628,874

 
                                 

Reconciliation of net income (loss) to adjusted EBITDA - see note (1):

                         

Net income (loss) attributable to common stockholders

 

$

27,515,995

   

$

344,744

   

$

26,834,285

   

$

(782,696

)

Provision for income taxes

   

(463,885

)

   

187,758

     

(308,749

)

   

608,568

 

Net interest income

   

(30,031

)

   

(10,285

)

   

(48,808

)

   

(18,056

)

Depreciation and amortization

   

1,150,307

     

1,058,603

     

2,257,913

     

2,074,503

 

EBITDA

   

28,172,386

     

1,580,820

     

28,734,641

     

1,882,319

 

Restructuring and other charges

   

     

     

     

198,979

 

Income from discontinued operations

   

(758,122

)

   

(706,510

)

   

(1,855,455

)

   

(1,726,368

)

Gain on Sale of RateWatch

   

(27,618,823

)

   

     

(27,618,823

)

   

 

Stock based compensation

   

578,146

     

408,788

     

918,512

     

805,030

 

Adjusted EBITDA

 

$

373,587

   

$

1,283,098

   

$

178,875

   

$

1,159,960

 

THESTREET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

   

For the Six Months Ended June 30,

 
   

2018

   

2017

 

Cash Flows from Operating Activities:

               

Net income (loss)

 

$

26,834,285

   

$

(782,696

)

Gain on sale of business, net of tax

   

(27,618,823

)

   

 

Adjustments to reconcile net loss to net cash provided by operating activities:

               

Stock-based compensation expense

   

918,512

     

805,030

 

Provision for doubtful accounts

   

50,122

     

37,923

 

Depreciation and amortization

   

2,418,206

     

2,482,025

 

Deferred taxes

   

(311,438

)

   

296,544

 

Deferred rent

   

(114,324

)

   

(263,067

)

Changes in operating assets and liabilities:

               

Accounts receivable

   

(214,813

)

   

690,768

 

Other receivables

   

163,357

     

(29,548

)

Prepaid expenses and other current assets

   

(376,137

)

   

(669,144

)

Other assets

   

(345,528

)

   

(3,433

)

Accounts payable

   

436,897

     

(512,932

)

Accrued expenses

   

(335,273

)

   

(1,553,138

)

Deferred revenue

   

3,919,340

     

2,602,825

 

Other current liabilities

   

70,006

     

(3,912

)

Other liabilities

   

108,196

     

22,105

 

Net cash provided by operating activities

   

5,602,585

     

3,119,350

 
                 

Cash Flows from Investing Activities:

               

Capital expenditures

   

(1,698,277

)

   

(1,293,417

)

Proceeds from the sale of business, net

   

28,232,100

     

 

Net cash used in investing activities

   

26,533,823

     

(1,293,417

)

                 

Cash Flows from Financing Activities:

               

Cash dividends paid on common stock

   

(68,162

)

   

(68,245

)

Earnout payment for prior acquisition

   

(951,867

)

   

 

Share repurchase

   

(1,415

)

   

 

Shares withheld on RSU vesting to pay for withholding taxes

   

(8,466

)

   

(10,251

)

Net cash used in financing activities

   

(1,029,910

)

   

(78,496

)

                 

Effect of exchange rate changes on cash and cash equivalents

   

(130,241

)

   

265,701

 
                 

Net increase in cash, cash equivalents and restricted cash

   

30,976,257

     

2,013,138

 

Cash, cash equivalents and restricted cash, beginning of period

   

12,184,817

     

21,871,122

 

Cash, cash equivalents and restricted cash, end of period

 

$

43,161,074

   

$

23,884,260

 
                 

Reconciliation of net loss to free cash flow - see note (1):

               

Net loss

 

$

(784,538

)

 

$

(782,696

)

Noncash expenditures

   

2,961,078

     

3,358,455

 

Changes in operating assets and liabilities

   

3,426,045

     

543,591

 

Capital expenditures

   

(1,698,277

)

   

(1,293,417

)

Free cash flow

 

$

3,904,308

   

$

1,825,933