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Edited Transcript of TST earnings conference call or presentation 12-Mar-19 12:00pm GMT

Q4 2018 TheStreet Inc Earnings Call

NEW YORK Mar 18, 2019 (Thomson StreetEvents) -- Edited Transcript of TheStreet Inc earnings conference call or presentation Tuesday, March 12, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Eric F. Lundberg

TheStreet, Inc. - CEO, CFO & Director

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Conference Call Participants

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* Kara Lyn Anderson

B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group

* Mark Nicholas Argento

Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst

* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for holding and welcome to TheStreet.com's Fourth Quarter and Year-end Conference Results Conference. The date of this conference is Tuesday, March 12, 2019, and is being webcast at the Investor Relations section of the TheStreet.com's website, www.t.st. This call is the property of TheStreet.com and any reproduction or rebroadcast without the expressed written permission of TheStreet.com is prohibited. As a reminder, today's call is being recorded and you may listen to a webcast replay of this call by going to the Investor Relations section of TheStreet's website. I would now like to turn the call over to Mr. Eric Lundberg, the company's Chief Executive Officer and Chief Financial Officer. Please go ahead, sir.

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [2]

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Thank you, David. Good morning all and thank you for joining us today to discuss TheStreet's financial and operational results for the fourth quarter and full-year of 2018. Joining me on the call today are, Margaret de Luna, our Chief Operating Officer; Jared Verteramo, our General Counsel; and Robert Kondracki, our Chief Accounting Officer. Before we begin, I'd like to remind you that management will make forward-looking statements during the course of this call and our actual results could differ materially. Some of the risks and uncertainties that could impact our business are included in our 10-K, which will be filed shortly. In addition, our presentation will include non-GAAP financial measures and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website.

To start, I'd like to address some of the recent changes that have taken place at TheStreet as well as update you on where we are, how we got here and what you [should] expect going forward.

As you may recall, in the fall of 2017, we removed the preferred stock overhang that had plagued this company for many years, resulting in an immediate spike in our stock price. This also cleared the way for our Board of Directors to form a strategic committee to explore various alternatives to continue to maximize value for you, our stockholders. To that end, in June of 2018, we sold RateWatch for $33.5 million in gross proceeds to S&P Global.

Following the sale of RateWatch, in December of 2018, we received a compelling offer for our institutional business units, The Deal and BoardEx, and we subsequently sold our B2B business to Euromoney for $87.3 million in gross proceeds. As previously stated, the primary goal of our board and management team has always been to maximize stockholder value, and the sale of our B2B business to Euromoney was a unique opportunity to do just that. The transaction just recently closed on February 14 of this year. The strategic actions we took in 2018 have positioned us to return capital to our stockholders, and as promised, we expect to distribute a substantial portion of the net proceeds for the B2B sale along with a portion of our current cash on hand. While we will not be announcing the details of the distribution on this call, we want to provide a brief update on the board's efforts and timing.

We've been working around the clock with our legal and tax advisers to analyze and agree upon the form, timing and amount of distribution, and we will publicly communicate all of this to you in the coming weeks. We appreciate your patience.

Moving forward, our focus will squarely be on our B2C business. We have been working diligently on our go-forward strategy, including exciting initiatives to grow our revenues as well as analyzing and rationalizing our cost base. At the same time, our board continues to explore strategic opportunities for the business as they arise.

We've been very busy here at TheStreet. Along with year-end selling our RateWatch business followed a few months later by selling our B2B assets; working with Euromoney on transition services; evaluating the most efficient way to distribute cash to you, our stakeholders; and restructuring our business, we've been equally focused on continuing to improve our consumer business and unlocking the value therein. We know there is a lot of work to be done and we look forward to keeping you updated on our progress.

Finally, I'd like to take a moment to thank and recognize several individuals who have moved on from TheStreet leadership team, including Dave Callaway, our former CEO; Heather Mars, our former General Counsel; and Terri Smith, our former Chief Marketing Officer; as well as Steve Zacharias, who served on our board for a number of years. Each of these individuals greatly contributed to our successful turnaround and recent transactions, and we wish them the best of luck in their future endeavors.

A quick note on Q4 and full year 2018 results. It gets a little wordy due to a number of onetime charges, other noncash charges and tax, so please bear with me. That is why you may have noticed a change in the structure of our earnings press release this morning where we tried to make our results easier to digest by adding a summary of financial results. If you haven't seen it already, I encourage you to take a look.

With that, I will first discuss our operating performance for Q4 and full year 2018, which includes a final full year contribution of the B2B businesses that are no longer owned by TheStreet as of February 14, 2019.

The 2018 fourth quarter net loss from continuing operations increased $6.5 million compared to the same period last year, primarily as a result of a number of nonrecurring items. First, we fully impaired the goodwill of the B2C business, which resulted in a noncash charge of $21.5 million.

Second, we incurred $3.4 million in transaction costs related to the asset sales. Third, noncash comp expense. Fourth, we also had income from discontinued operations of $285,000 this year versus a loss of $1.1 million last year. Fifth, we also recognized a gain on the sale of RateWatch of $3.5 million this year. And finally, our benefit for income taxes is $17.9 million higher this year than 2017, due primarily to the release of the valuation allowance for the B2B sale. Excluding these nonrecurring onetime charges I just mentioned, fourth quarter 2018 net income is $1 million, as compared to $1.4 million in Q4 of 2017.

Turning to operating expenses. Operating expenses for the fourth quarter were $38.3 million as compared to $14 million for the fourth quarter of 2017. Included in Q4 2018 were the nonrecurring items I just mentioned, including the $3.4 million of transaction costs, the $21.5 million noncash goodwill impairment and noncash comp expense of $800,000. This compares to Q4 2017 restructuring charges of $200,000 and noncash comp expense of $400,000. Excluding these costs in both periods, total normalized operating expenses for Q4 2018 were favorable by $637,000 or 5% compared to last year.

Cost of services expense decreased $243,000 or 4%. This decrease was primarily related to reduced employee compensation and related expenses.

Sales and marketing expense increased by $247,000 or 8%. This increase primarily related to higher consulting fees of $80,000, employee compensation-related expenses of $82,000 and advertising and promotions of $64,000. General and administrative costs decreased by $321,000 or 9%. The decrease primarily related to lower professional fees of $570,000 as some year-to-date costs were reclassified to transaction cost category, partially offset by increased employee compensation and related expenses. Finally, depreciation and amortization expense increased by $45,000 or 4%.

Now let's take a look at the fourth quarter financials of our B2C business and for the last time our B2B business. B2C revenue totaled $7.2 million for the fourth quarter of 2018, down $432,000 or 6% compared to the fourth quarter of 2017, a decline of $532,000 was in advertising or 23% from the primary period. This was the primary reason for our decline in B2C. The premium business continues to improve as subscription newsletter revenue increased by $167,000 or 3% from Q4 last year. This growth was driven by a 3% increase in the average number of subscriptions, while the average revenue per subscription remained steady. Average quarterly churn improved significantly to 2.88% for the fourth quarter of this year, down from over 4% in the fourth quarter of 2017. These trends bode well for us as paid account is growing, renewal rates are soaring, churn is down and deferred revenue is up substantially.

In the fourth quarter of 2018, our B2B revenue, which includes subscriptions, information services and events revenue from The Deal and BoardEx totaled $6.7 million, up $354,000 or 6% as compared to the fourth quarter of 2017. This growth was driven primarily by increased subscription revenue in both The Deal and BoardEx, along with higher revenue earned from The Deal's event business. Both The Deal and BoardEx had increased revenue per subscriber, while BoardEx also recorded higher revenue from a 4% increase in the actual number of subscribers.

The revenue growth in subscriptions and events was partially offset by a slightly lower revenue of almost $100,000 in the combined advertising, licensing and information services revenue categories.

Before I get into the full year results, I'd like to point out that given that we sold RateWatch in June of 2018, all of their revenues, expenses, et cetera, are recorded in discontinued operations, and the net gain is reflected as gain on sale in our P&L.

For the full year of 2018, we reported revenue of $53.1 million, a decrease of $1.7 million or 3.1% from $54.8 million in 2017. Net loss from continuing operations for the year was $6.8 million as compared to net income from continuing operations of $300,000 for the full year 2017. Adjusted EBITDA for the full year 2018 was $2.6 million as compared to $4.1 million for the full year of 2017, almost entirely due to lower advertising revenue of $3 million.

Operating expenses for the full year 2018 were $82.4 million, an increase of $25.3 million or 44% from $57.2 million in the prior year. As I've mentioned earlier, operating expense for the full year of 2018 includes $21.5 million of noncash goodwill impairment charges. It also includes transaction-related costs of $3.4 million and $2.5 million attributable in part to noncash compensation. Back in 2017, we also recorded restructuring charges and noncash compensation of $400,000 and $1.6 million, respectively. If you exclude all these charges from both of the years, operating expenses for full year 2018 increased by less than $100,000 compared to full year 2017.

So as I just mentioned, adjusted EBITDA is down $1.5 million due almost exclusively to declines in advertising revenues of $3 million.

Our B2C revenue for the full year was $27.5 million, down $3.5 million or 11% compared to the prior year. The full year revenue decline resulted primarily from advertising revenue, which declined 32% or $3 million from declines in repeat and nonrepeat advertisers as well as from lower page views, resulting from lower articles published year-over-year. In addition, although B2C had year-over-year subscription growth during the last 2 quarters of 2018, full year subscription still declined $0.5 million or 2% compared to full year 2017.

B2B revenue for the full year 2018 totaled $25.6 million, up $1.8 million or 8% from the prior year. Exchange rate changes related to the pound sterling positively impacted BoardEx revenue by $200,000 for the full year 2018. Adjusted for the impact of exchange rate, total B2B revenue increased 7%. Full year revenue growth in The Deal of $100,000 resulted from higher events revenue, while BoardEx full year revenue growth of $1.7 million resulted from higher subscription growth. The company recorded a tax benefit of $21.3 million, primarily from the reversal of its U.S. tax valuation in the fourth quarter of 2018, in anticipation of the gain from the sale of the B2B business, which just completed in February of this year. Also, the company reversed its U.K. operations tax valuation allowance resulting in a tax benefit of $3.4 million for the fourth quarter of 2017 due to the positive earnings there as well as the favorable profit outlook of its U.K. business and recorded a tax credit related to recently enacted federal tax reform. The company recorded a total tax benefit in 2018 of $22.4 million as compared to a total tax benefit in 2017 of $2.6 million.

Turning to the balance sheet. We ended 2018 with cash and cash equivalents, restricted cash and marketable securities of $39.4 million, up $25.5 million as compared to $13.9 million at December 2017. Change between periods primarily resulted from the net proceeds from the sale of RateWatch of $28.2 million and cash generated from operating activities of $2.3 million. This was partially offset by capital expenditures incurred during the period of $3.9 million and a deferred payment for our prior acquisition of our BoardEx business.

Before we wrap up and open up the call for Q&A, I'd like to spend a couple of minutes on our go-forward strategy and outlook for the remaining B2C business.

Those of you that follow our company closely, already know that premium subscription revenue is approximately 70% of our total consumer revenue and that bookings, conversion rates, renewal rates, subscriber count and deferred revenue are all very important metrics of our business. We are extremely encouraged by the positive trends we've seen in our bookings from both quarterly and full year perspectives. We've seen year-over-year growth each quarter in bookings as well as full year growth for the year. Bookings were up almost 7% for the year. Our conversion rates have grown from 48% in 2017 to 62% in December of '18. Our renewal rates have also grown to 72% in December of '18 compared to 67% in 2017. We will continue to build on the momentum in 2019.

We're also seeing some great trends in subscriber count. Total premium subscriber count has grown each of the last 7 months of the year on a sequential basis, and our average paid count grew year-over-year for each quarter in 2018.

For the full year, our paid count grew by 3,702 subscriptions or almost 7%.

From a deferred revenue perspective, bookings and paid count drove premium deferred revenues up $1.1 million or 12% at year-end. Deferred revenue is, obviously, a very helpful leading indicator of expected revenues in the future. So we'll be doing all we can to keep that trend moving in the right direction.

As a brief reminder, deferred revenue December '17 versus December '16 was down $300,000 or 3%. That negative 3% is now compared to a positive 12%, one year later. That change is fantastic.

Following the completion of the sale of our institutional businesses, as I mentioned earlier in the call, our board and management team have been working tirelessly to determine the best path forward for our remaining B2C business. And we've identified areas of opportunity that we can begin to focus to drive profitability in the business and achieve value and enhance the value on behalf of our stockholders.

Another area we are excited about is education. Our goal is to provide everyone both novice and experienced investors, with the tools and knowledge to feel confident about their financial future. We'll be providing you with more details about some of the exciting initiatives we are working on shortly. Additionally, going forward, we are keenly focused on editorial quality, targeted editorial content, focus and production. We've implemented a new editorial leadership and organizational structure as well as new job descriptions and monthly production goals for each person in the newsroom. As a result of our efforts so far, in January of 2019, our production rose to over 1,000 stories for the month and we beat our traffic and advertising goals for the month. You will remember that advertising declined $3 million last year. Additionally, tracking the impact of lead generation and orders on the incremental production and increased traffic is critical to us to ensure that we're increasing the sub count and focusing on the correct themes and topics. More quality traffic on our free site is our best source of leads for our paid products.

With the 2 asset sales completed and a cash distribution to stockholders on the way, our full attention is now turned to our consumer business. We believe there is a lot of value to be recognized within our business, and we will be focusing our efforts on supporting and growing the consumer business to that end. It's actually funny to think that 20 years later, we are back to being what first made us a success. Once again, we are a consumer-facing, financial news, information and education company that delivers exceptional coverage and analysis of the financial markets along with best-in-class subscription products and events.

In summary, we've been extremely busy, and as I mentioned earlier, we will be communicating with you in the coming weeks regarding the form, timing and amount of our distribution. Now with that, I'd like to open up the discussion for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question will come from Mark Argento with Lake Street Capital Markets.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [2]

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Thing that really stuck out to me was in Q4, it looks like actually, subscribers grew on the B2C business. Is that the first time you saw year-over-year subscriber growth in -- revenue growth, actually, in aggregate, in the quarter?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [3]

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No, we saw earned revenue growth in Q3 and Q4 year-over-year. Total paid count was up 9 -- 10 months in a row? 10 months in a row last year on the subscription business. We finished the year over 3,700 subscriptions up year-over-year. As I mentioned to you, bookings are up, conversion rates are up, renewals are up, average price is up barely by 1% and results in paid count and deferred revenue is up. Deferred revenue is up 12% at December of this year versus December of '17 when it was down 3%. That's a 15% swing in deferred revenue.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [4]

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That's pretty impressive. The other number that stuck out to me was the -- it looks like the churn is down -- dramatically down from 4% to less than 3%. What are you guys doing to achieve that?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [5]

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We've done quite a few things. It's not just one thing. But first and foremost, I would say, it's validation of the editorial quality that our products produce number one. Number two is, I believe that we have appended a credit card processor with our new billing system, which allows for us to get [again a] credit card as opposed to calling a customer again. Anytime we can do auto renew as opposed to calling a customer, that's a good thing for any business. That's 2 things.

We have built a remarkable customer service and telesales team. We've now redirected certain calls that come in from our customers directly to our sales team instead of our customer service team. We're able to save customers. Obviously, one of the reasons why sales and marketing costs were up is because of the deferred revenue and the prolific growth that we've seen. So it's quite a few things. It's not just one thing. I'd say it's 5 or 6 things that we have done collectively that have really helped us turn the tide. I mean this is, I think, a very sizable seismic change in our business.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [6]

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And then in terms of the advertising, I know you guys kind of pivoted on that a few quarters back. Do you look at that -- does that kind of start to stabilize here at some point? What's your thoughts on the advertising piece of the B2C business?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [7]

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Margaret de Luna who is here with me is the Chief Operating Officer and she oversees editorial. I think that under her leadership we have now implemented production goals for our editorial teams. I'm not sure that many other media companies didn't have already production goals that they had set aside for their editorial team. We now finally have goals by person and by focus area that we are monitoring to make sure that we understand how many stories each journalist is writing. We are monitoring the traffic and page views associated with each type of story because as we can drive up our production, our advertising will grow. 30% of our advertising is programmatic and as a result of page views, certainly quality page views, I should mention, we believe we are producing quality. That will help us drive up our advertising revenues.

So yes, Mark, it's a long way of saying that we feel very confident that our advertising has not only bottomed out, we should actually start to see some growth. In Q4 of last year, our average story count had dropped to 700 stories per month. In January and February, we are over 1,000 stories each month. February would have been higher, but we have 3 less days in the month of February. So we're certainly driving that goal higher than 1,000. But we went from 700 in December to 1,000 January, we will be going up. The other thing that's driving it up is SEO. The company didn't have a focus on SEO until about a year ago. And we've hired a fantastic person, Binti Pawa, to oversee our SEO efforts. And she is doing all sorts of unbelievable efforts with us in terms of taxonomy as well as evergreen content that's allowing us to gain page views, for example, over the weekend.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [8]

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That's helpful. And then just a housekeeping question. As of today, March 12, how much cash do you guys have that would be available? Not that you would distribute all of it, obviously, but how much liquid capital cash do you guys have on the balance sheet today?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [9]

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It's an interesting question, Mark. And I'm not trying to be evasive, right? So I could tell you the exact amount of cash we have, but we still have quite a few open bills. And we have open severance charges that we still need to fulfill. We -- so we still have quite a few bills. I still feel comfortable, I think, that we said it earlier $110 million to $120 million of cap cash we'd have to distribute. I still feel that that's somewhere in the range of what we would say. I'd say $110 million to $115 million. But obviously, March, that would be -- Mark, that would -- we would still need to -- some of that would be capitalized on the new -- when the company is [renaming] and some of it will be distributed.

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Operator [10]

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On next question comes from Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [11]

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Just a couple of B2C questions. Specifically, what was the ad revenue in the December quarter and the actual number in the year-ago quarter?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [12]

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We'll get that for you in a second. What's your next question?

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [13]

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Just curious if there -- if B2C had any event revenue in 4Q?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [14]

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Minimal.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [15]

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Got it, got it. And sort of what's the outlook for event revenue on the B2C side?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [16]

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So -- great question. So in 2016, we had 0 event revenue. In 2017, we -- and I'm rounding -- $300,000. 2018, we had $600,000. And 2019, we're budgeting ad up substantially. So we -- last year, we did 2, what we call teach-ins with Jim Cramer. Those are kind of the flagship events that we do in our consumer business. We have historically done them on a Saturday in a large venue in New York City, and we achieved most of our revenue through sponsorship and a smaller percentage of our revenue through delegate sales. Those have been somewhere in the neighborhood of $200,000 give or take, in top line revenue and quite profitable. In 2019, we expect to increase the number of teach-ins that we do. And we are also targeting 10 webinars. Webinars for us are also very profitable. That's when we get a single sponsor to do a webinar on a specific topic. So, Michael, to your question about the advertising. So this year, advertising for the quarter was $1.7 million. Last year, it was almost $2.2 million. The drop was $500,000.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [17]

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Got it, got it. And I'm sorry I kind of missed it. I think you were asked earlier, but when do you see that leveling out a little bit? Are we close at $1.5 million or how do you think about that over the course of '19?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [18]

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The advertising?

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [19]

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Yes, stabilizing?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [20]

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Okay. So advertising has seasonality to it. In -- Q4 is our largest quarter followed by Q2. The lowest quarters are Q1 and Q3. Any media -- most media businesses have some seasonality to them predicated off of the holidays and summertime when people are on vacation and advertisers tend to pull back. That said, so I don't expect it to be flatlined, Mike. I mean, that's not how we've built our budget. We do expect our advertising -- we don't expect our advertising to decline any more. Let me state that. We feel like we now have a very good handle on advertising. As I said earlier, 30% of our advertising dollars are programmatic ads. And a lot of that, obviously, is driven by our production, not just the sheer volume of our production, but the quality and the targeting of our production to ensure that we're driving quality eyeballs, page views and traffic that we can monetize. So it's a long way of saying, we feel confident that our advertising dollars have certainly bottomed out.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [21]

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Good, good. And then as you step back from the B2C business, are you thinking of '19 as, sort of, flat to mid-single digits? Or where should the bar be for your B2C staff and kind of the business as a whole?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [22]

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Top line, bottom line, what's your...

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [23]

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Top line, yes, revenue?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [24]

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Okay. So let's do line by line, okay? So -- without giving you too much guidance, obviously, you heard that our deferred revenue went from a negative 3% in December '17 versus December '16 to a positive 12% December '18 versus December '17. That's a 15% swing in our deferred revenue. As I said earlier, bookings are up, conversion rates are up, renewals are up. There is no reason for us to believe that we're not going to sustain and hopefully grow those positive trends. So we feel very confident that our subscription revenue will grow year-over-year. In fact, subscription revenue grew in Q3 and then grew a lot more in Q4 year-over-year. So that's for sure. The only thing that could potentially change that is if we had a catastrophic economic event that would affect the economy, you might see something different. But short of that, we expect nice, healthy growth in subscription revenue line. Advertising, we just said, is -- it certainly flatlined based off our ability to work with our editorial team. Margaret meets with our editorial team virtually every day. Today she's not, but the meeting is right now at 8:30. Margaret is sitting here with me. But every day, she sits in on the editorial meeting, which is fantastic. And we're getting more and more collaboration, I'd say, between our various people. So our day starts with a gentleman in our U.K. base. He shuffles -- transfers that over to a gentleman that comes into our New York office at like 4:30 in the morning, who then turns it over to somebody else in our New York office, who then turns it over to somebody in our San Francisco-based office. So we feel really good about our editorial team. As to licensing, we just signed a deal with a third party that we think will help us grow our education business, as I said earlier, more to come on that later. And our events have been growing every year. So it went from 0 to 300 to 600, and we certainly expect growth in 2019. And on the expense side, will -- we will be ever vigilant on the expense side. But bear in mind that what used to be a corporate overhead as a public company for 5 assets is now on top of just the consumer business, even though we're doing our best to rationalize our cost base.

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Operator [25]

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Our next question comes from Kara Anderson with B. Riley FBR.

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [26]

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I just wanted to drill down, hopefully, a little bit on the last comment. Kind of going forward, at what point in the year do you think you can achieve a more rationalized cost structure? Is it this year or is it next year? In other words, how quickly do you get to sort of a normalized expense structure for the B2C business as a stand-alone entity?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [27]

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Well, we've already taken significant steps and we're continuing to take significant steps all the time. So we recently said goodbye to quite a few of our leadership team. We will be rationalizing the size of our board. We're looking at every line item. We've looked at every vendor. Every vendor in our company, we have analyzed and we're looking at ways to restructure. I'll give you other examples. So we recently put in a new phone system in our New York office. Doesn't sound like a lot, but it's going to save us $50k per year. I mean we are -- so we're looking at everything from salary, which is about 60% of our cost base, to professional fees, to board costs, to even $50,000 vendor relationships.

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [28]

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Okay, and then just wondering if you can provide some helpful color as to expectations for fully diluted shares outstanding with the vesting of all the ROCs and options now that the transaction has closed?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [29]

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I'm sorry, I didn't quite understand the question. Say that again?

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [30]

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I'm just looking for some color on your expectations for the fully diluted shares outstanding now that all of the vesting of the ROCs and options have occurred and now that we stand at March 12, just trying to get an idea?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [31]

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Cool. So not all of the options have been exercised. All the options have accelerated, but they've not all been exercised. All of the RSUs accelerated and have been exercised. Most of those were done via a cashless exercise -- not all. So if you were to look at -- our total outstanding shares are roughly 50 million. If you were to assume that all of our shares were exercised via a cashless mechanism, we would have, roughly speaking, 52.5 million to 53 million shares out. Does that answer your question?

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [32]

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Okay. Great. That's helpful. And then just wanting to know how -- yes, that's helpful. And then one question on the G&A. It stood out to me in the fourth quarter versus kind of the prior 3 quarters. Any reason for, I guess, the sequential decline pretty materially from the first 3 quarters of the year?

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [33]

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In G&A?

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [34]

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G&A. Yes.

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [35]

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So, I mean, I think we're just continuing do a good job in G&A in driving cost down. That was your question?

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [36]

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Yes, I mean, it was about $1 million less than the third quarter and the first and the second quarter. So I was just curious if there was anything that caused...

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [37]

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Well, 2 things. One is, we moved some of our transaction costs. So we had some professional fees in our P&L and some of those got reclassed to transaction expense to properly record them as a onetime item. That's part of it. And the second part is that we trued up our bonus accrual. So as many companies go, we did not pay out our full bonus this year or come anywhere close to it. So as a result, we started to reverse our bonus accrual as we got to more certainty on our numbers.

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Operator [38]

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At this time we have no further questioners in the queue.

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Eric F. Lundberg, TheStreet, Inc. - CEO, CFO & Director [39]

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Thank you very much. I really appreciate it. Wishing you all the best day. Thank you.

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Operator [40]

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Ladies and gentlemen, that concludes this morning's presentation. You may disconnect your phone lines, and thank you for joining us this morning.