TheStreet.com Reports Second-Quarter 2005 Financial Results; Net Income from Continuing Operations Reaches $1.7 Million

Business Wire, July 28, 2005

NEW YORK -- TheStreet.com, Inc. (NASDAQ: TSCM), a leading provider of financial commentary, analysis and news, announced its financial results for the second quarter 2005, which included profitability in the Company's electronic publishing business and the highest deferred revenue balance in the Company's history.

"Our Electronic Publishing business continues to deliver strong, consistent growth," said Thomas J. Clarke, Jr., the chairman and chief executive officer of TheStreet.com. "During the quarter, this business had $1.7 million in net income from continuing operations, the 5th consecutive quarter it has achieved profitability. With the closing of Independent Research Group LLC (IRG Research) on June 28th, we are better positioned to drive shareholder value."

Second Quarter 2005 Results

--Net income from continuing operations, which excludes results from the Company's wholly owned subsidiary IRG Research, was $1.7 million, or $0.07 per share, a 30% improvement over the $1.3 million, or $0.05 per share, in the same period last year and a 68% improvement from last quarter's net income of $1.0 million, or $0.04 per share.

--Net revenue was $7.8 million, a $0.2 million, or 2%, decrease over the $7.9 million of net revenue during the same period last year and a $54,000, or 1%, decrease from last quarter's $7.8 million. Year-to-date net revenue is $15.6 million, a $0.5 million, or 3%, increase over the same period last year.

--Deferred revenue was $9.1 million, a 6% increase over the same period last year and a 16% increase from last quarter's $7.9 million. This is the highest deferred revenue balance in the history of the company.

--Net loss for the quarter was ($2.3) million, or ($0.09) per share, $2.1 million greater than the ($0.1) million loss in the same period last year and $1.4 million greater than last quarter's net loss of ($0.9) million. During the quarter, the Company announced the closing of business operations of IRG Research, which operated the Company's securities research and brokerage segment. This resulted in a one-time charge of $2.4 million (see "Discontinued Operations").

--Total cash flow for the quarter was $1.1 million, a $0.1 million increase over last year's second quarter cash flow of $0.9 million, and a $4.6 million increase from last quarter's cash burn of ($3.6) million. Cash flow for the electronic publishing business was $2.7 million, an increase of $0.5 million from last year's second quarter cash flow of $2.2 million.

--Cash, restricted cash and investments stood at $29.6 million at the end of the second quarter. This represents a 4% decrease over the same period last year and a 4% sequential increase.

Revenue Streams

--Advertising revenue for the quarter totaled $2.1 million, a 10% increase over the same period a year ago and essentially flat with last quarter. Year-to-date advertising revenue is $4.2 million, an improvement of $0.9 million, or 26%, over the same period last year. The Company is benefiting from an increase in traffic to its network of Web sites and newsletter services, and an industry-wide revival in online advertising spend. The number of unique visitors to TheStreet.com network has increased 27% in the first half of 2005 compared to the same period a year ago.

--Subscription revenue for the quarter totaled $5.3 million, a decrease of $0.3 million, or 6%, over the same period last year and a decrease of $0.1 million, or 2%, from last quarter's $5.4 million.

--Subscription bookings for the quarter totaled $6.6 million, an increase of 7% over the $6.2 million in same period last year and an increase of 10% from last quarter's $6.0 million. The number of subscribers to the Company's premium services increased by 2,971, or 4.3%, during the quarter.

Operating Expenses

--Our second-quarter operating expenses were $6.3 million, a 7% decrease over the $6.7 million in same period last year and a 10% decrease from last quarter's $7.0 million. Year-to-date operating expenses are $13.3 million, a 7% improvement over the same period last year.

Discontinued Operations

--On June 28, 2005, the Company announced plans to exit its IRG Research business. The Company's consolidated results of operations in the second quarter include charges totaling approximately ($3.9) million related to the losses from IRG Research and the plan to discontinue its operations. This charge is reported in two line items, the loss from discontinued operations which was ($1.5) million, and the loss on disposal of discontinued operations, which the company estimates to be ($2.4) million. Approximately 25%-30% of the estimated disposal charge consists of write-downs of assets, and are not cash related. The majority of the remaining cash portion of the charge is related to severance and the exit of the lease obligation at IRG Research's former headquarters. All liabilities on IRG Research's balance sheet at the time of closing are direct obligations of IRG Research. TheStreet.com is not a guarantor of any of these obligations. The final amounts realized from the disposal, as well as IRG Research's actual losses in fiscal year 2005, will have no effect on the Company's income from continuing operations in the remainder of fiscal year 2005.