TheStreet.com Reports Net Income of $1.6 Million; Advertising Revenue up 26% Driven by Surge in Traffic

Business Wire, Oct 27, 2005

NEW YORK -- TheStreet.com, Inc. (NASDAQ: TSCM), a leading provider of financial commentary, analysis and news, announced its financial results for the third quarter 2005, which includes net income of $1.6 million and a year-over-year increase of 26% in advertising revenue.

"The quarter saw growth in both our advertising and subscription revenue streams," said Thomas J. Clarke, Jr., the chairman and chief executive officer of TheStreet.com. "The increased traffic growth we have experienced propelled the performance of our advertising revenue stream. Third-quarter advertising revenue increased sequentially from the second quarter for the first time since 1999. The total number of new advertisers in the third quarter alone surpassed the number of new advertisers in the first two quarters combined. In addition, the increased traffic growth also benefited the Company's subscription business, as evidenced by over 7,500 net new subscribers to our premium services in the quarter. We expect both of these trends to continue in the fourth quarter."

Third-Quarter 2005 Results

--Net revenue was $8.2 million in the third quarter 2005, a $0.5 million or 6% increase, over the $7.7 million in the same period last year and a 6% sequential increase, or $0.4 million, from last quarter.

--Deferred revenue was $9.4 million, a 17% increase over the same period last year and a 3% increase from last quarter. This is the highest deferred revenue balance in the Company's history. This represents subscription bookings that will be recognized as revenue in future quarters.

--Net income from continuing operations was $1.4 million, or $0.05 per share, a 216% improvement over the $0.4 million, or $0.02 per share, in the same period last year and a 17% reduction from last quarter's net income of $1.7 million, or $0.07 per share.

--Total cash flow was $1.4 million, a $1.3 million increase over the same period last year and a $0.4 million increase from last quarter.

--Cash and restricted cash stood at $31.0 million at the end of the third quarter, essentially flat from the same period last year and a 5% sequential increase.

"In addition to our advertising business performing solidly, we are extremely pleased with our record third-quarter subscription business," said Lisa A. Mogensen, chief financial officer of TheStreet.com. "At $9.4 million, the Company's deferred revenue is the highest in its history. The Company also reported its highest quarterly subscription revenue of $5.8 million in this quarter and our fourth highest bookings of $6.1 million. As you can see from these results, we remain committed to positioning the company for continued growth and continued profitability this year and beyond."

Revenue Streams

--Advertising revenue for the quarter totaled $2.1 million, a 26% increase over the same period a year ago and a 1% increase from last quarter. Year-to-date advertising revenue is $6.3 million, an improvement of $1.3 million, or 26%, over the same period last year. The number of page views and the number of average monthly unique vistors to TheStreet.com network has increased 13% and 32%, respectively, in the first three quarters of 2005 compared to the same period a year ago. Page views for the quarter totaled 130 million, while monthly unique visitors averaged 3.1 million during the quarter.

--Subscription revenue for the quarter totaled $5.8 million, essentially flat with the same period last year and an increase of 9%, or $0.5 million, from last quarter's $5.3 million.

--Subscription bookings for the quarter totaled $6.1 million, an increase of 19% over the $5.2 million in same period last year and a decrease of 7% from last quarter's $6.6 million. The number of subscribers to the Company's premium services increased by approximately 7,500, or 11%, during the quarter.

Operating Expenses

--Our third-quarter operating expenses were $7.0 million, a 4% improvement over the $7.4 million in the same period last year and a 12% increase from last quarter's $6.3 million. Year-to-date operating expenses are $20.3 million, a $1.3 million, or 6%, improvement over the same period last year.

Recent Company Highlights

--Third-quarter advertising revenue increased sequentially from the second quarter for the first time since 1999. The total number of new advertisers in the third quarter alone surpassed the number of new advertisers in the first two quarters combined.

--The distribution of our free and premium content continues to grow as evidenced by recent deals with Investors.com and Investopedia.com. In addition, we have signed and implemented a deal with Yahoo! Inc. to have our premium content appear within their natural search.

--The Company also expanded its offerings of free newsletters. One of the Company's most popular daily stories on its free, flagship site -TheStreet.com Top 10 Stories - was expanded into a weekly newsletter that contains the site's most popular stories, as selected by our readers, from that particular week. The free newsletter is published every Monday and has become one of the company's most popular offerings.