TheStreet Reports Q1 Financials: Subscription Revenue Down 14 Percent

Total revenue is down 5% and Subscriptions are down 14%

TheStreet Reports Q1 Financials: Subscription Revenue Down 14 Percent

Source: TheStreet

Yesterday TheStreet (NASDAQ: TST) reported its first quarter 2016 financials and it isn’t pretty. In addition to total revenue being down 5 percent year-over-year, the company’s consumer subscription revenue was $6.3 million, a decrease of 14 percent year-over-year.

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Other highlights include:

  • Total revenue was $16.1 million, a 5 percent decrease year-over-year.
  • Business-to-business revenue remained level at $7.2 million year-over-year.
  • Media revenue was $2.6 million, an increase of 11 percent year-over-year.
  • Net loss was $3.4 million, compared to $1.1 million last year.
  • Adjusted EBITDA was $0.7 million, a 25 percent increase year-over-year.
  • Operating expenses grew 9 percent to $19.2 million, which included a $1.4 million payout to former CEO and president Elisabeth DeMarse.

TheStreet Reports Q1 Financials: Subscription Revenue Down 14 Percent

“This is the beginning of our transition year,” said Larry Kramer, Chairman and Interim CEO for TheStreet, in a press release. “We have launched product improvement projects in all of our businesses, and begun to add resources in technology, sales and content that will give us the products we need to grow.  New technology investment and significant improvement in content, including this month’s launch of our European news operations, will provide new opportunities for growth by the end of this year.”

Kramer also noted that, in pursuit of the company’s strategic goals, it would incur restructuring costs, invest in operational improvements, and identify and hire a candidate for the permanent CEO role. DeMarse left TheStreet in February of this year. To help clarify the company’s lines of business, TheStreet has started reporting each line of business separately.

The company’s business-to-consumer revenue side sustained the largest loss year-over-year, reporting subscription revenue of $6.3 million, a 14 percent decrease year-over-year. TheStreet attributes this to the 11 percent decline in the weighted-average number of subscriptions combined with a 3 percent in average revenue recognized per subscription.

TheStreet reported these business-to-consumer subscription highlights:

  • Paid subscriptions as of March 31, 2016 was 71,900, a decrease of 11,700 subscriptions, or 14 percent year-over-year. It is a difference of 4,900 subscriptions from December 31, 2015, or 6 percent.
  • Average revenue per subscription decreased 3 percent year-over-year, but is level with year-end totals.
  • Average monthly churn was 5.6 percent for the period, compared to 4.7 percent year-over-year and 4.7 percent for the fourth quarter of 2015. The average monthly churn rate does not include free-trial subscribers.
  • First quarter 2016 page views increased 43 percent year-over-year, compared to a 14 percent increase for the fourth quarter of 2015.
  • First quarter 2016 organic page views increased 116 percent year-over-year, compared to a 23 percent increase for the fourth quarter of 2015.

Insider Take:

The numbers indicate TheStreet is on a downward slide so far this year, but that appears to be due to a multitude of factors, including the exit of their previous CEO. The company said this is a transition year, and the numbers support that.

From a subscription perspective, it doesn’t look like TheStreet’s metered paywall strategy is yet working for them. The company implemented that strategy in May 2015 to expose more readers to TheStreet’s content before committing to a subscription. After the change, readers could access eight free articles per month. For additional content, they have to subscribe to one of several subscription packages.

However, since replacing their hard paywall with a metered paywall, subscriptions are down about 14 percent. Is that because more casual users can get what they need for free now, or is there some other reason TheStreet’s subscriptions and subscription revenue are down while the average monthly churn rate is up?

Ideally, TheStreet will adjust its strategy quickly to avoid any more sizable subscription losses by adjusting its revenue strategy or increasing the value for existing subscribers. TheStreet needs to get a new CEO on board soon to help guide the company through this rocky transition.