Last week The Street (NASDAQ: TST) reported its fourth quarter and full year 2016 financials, including a 16 percent decrease in subscription revenue in the fourth quarter. This was offset by a 1 percent increase in the average revenue per subscription. Also, average monthly churn during the fourth quarter improved 10 percent year-over-year. For the full year, premium newsletter revenue decreased $4.2 million, a 14 percent decrease year-over-year with a 2 percent decline in average rate per subscriber.
In addition, The Street reported a net loss for the fourth quarter of $11.6 million, or ($0.33) per basic and diluted share, and a full year loss of $17.5 million, or ($0.50) per basic and diluted share. Revenue for the quarter was $15.9 million, representing a decrease of 6 percent year-over-year. Revenue for the full year was $63.5 million, also representing a 6 percent loss year-over-year.
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Other fourth quarter 2016 highlights include:
- Revenue was $15.9 million, a 6 percent decrease year-over-year.
- Business-to-business revenue including The Deal, BoardEx and RateWatch was $7.4 million, an increase of $27,000 over the same period last year.
- Business-to-consumer revenue was $8.5 million, an 11 percent decrease year-over-year.
- B2C subscription revenue was $5.3 million, a decrease of 16 percent year-over-year, offset slightly by a 1 percent increase in the average revenue per subscription.
- Average monthly churn improved 10 percent year-over-year.
- B2C media revenue of $3.1 million was flat compared to the same period last year.
- Operating expenses for Q4 were $28.2 million, including $1.4 million in severance.
- Net loss was $11.6 million, or ($0.33) per basic and diluted share, compared to a net loss of $0.3 million, or ($0.01) per basic and diluted share, for the fourth quarter of 2015.
- Adjusted EBITDA was $1.2 million, compared to $2.0 million for the same period last year.
Other full year 2016 highlights include:
- Total revenue was $63.5 million, a 6 percent decrease year-over-year.
- B2B revenue including The Deal, BoardEx and RateWatch totaled $29.3 million, a 1 percent increase year-over-year.
- B2C revenue was $34.2 million, a 12 percent decrease year-over-year.
- The revenue decline occurred in premium newsletters which declined $4.2 million over the prior year, primarily due to a 14 percent decline in subscriptions and a 2 percent decline in average rate per subscriber.
- B2C advertising revenue of $10.1 million was flat year-over-year.
- Operating expenses were $80.7 million, an increase of 19 percent year-over-year. Expenses included severance of $1.6 million and restructuring charges of $1.0 million.
- Net loss (GAAP) was $17.5 million, or ($0.50) per basic and diluted share.
- Adjusted EBITDA was $2.8 million, compared to $5.0 million year-over-year.
“This was an investment year and the seeds of our turnaround efforts began to take hold in the fourth quarter on both our institutional side and our consumer businesses,” said president and CEO David Callaway in a statement.
“The rally in financial markets since November helped us begin to put Brexit and the declines in our premium subscription business behind us. We still maintain a strong cash position, have aggressively been cutting costs, and have started offering new products and revenue strategies to our B2B clients and B2C readers and customers alike.” Callaway added. “As mentioned earlier in the year, our goal is to allow greater transparency and insight to our investors with the breakout of the business-to-business and business-to-consumer products we offer.”
Investors did not react favorably to the news, though they didn’t panic either. On March 10, the day the financials were released, stock closed at $0.75 per share. As of 4 PM EST, March 15, stock price was $0.69 per share. The big difference is between yesterday’s price and where the stock was a year ago. On March 16, 2016, The Street’s price per share was $1.18, so it has dropped $0.49 per share.
As The Street’s president and CEO points out, the company is going through a period of transition. It is cutting costs by reorganizing and reducing staff, and it is focusing on new B2B and B2C products and services to attract and retain customers. It is a positive sign that the company was able to reduce churn by 10 percent in the fourth quarter, but it will need to continue that trend to reverse last year’s double-digit decreases in subscribers.