U.S. Markets open in 3 hrs 40 mins

Edited Transcript of TST earnings conference call or presentation 10-Mar-17 4:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 TheStreet Inc Earnings Call

NEW YORK Mar 10, 2017 (Thomson StreetEvents) -- Edited Transcript of TheStreet Inc earnings conference call or presentation Friday, March 10, 2017 at 4:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Eric Lundberg

TheStreet Inc. - CFO

* David Callaway

TheStreet Inc. - President & CEO

* Larry Kramer

TheStreet Inc. - Chairman of the Board

================================================================================

Conference Call Participants

================================================================================

* Kara Anderson

B. Riley & Company - Analyst

* Mark Argento

Lake Street Capital Markets - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Welcome to TheStreet's fourth-quarter and year-end financial results conference call. The date of this call is March 10, 2017. This call is being webcast live on the investor relations section of TheStreet's website at www.T.ST. This call is the property of TheStreet, and any recording, reproduction or transmission of this call without the expressed written consent of TheStreet is strictly prohibited.

As a reminder, today's call is being recorded. You may listen to the 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. Please go ahead, sir.

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [2]

--------------------------------------------------------------------------------

Thank you, Denise. Good morning, everyone, and thank you for joining us to discuss TheStreet's financial and operating results for the fourth quarter and full year of 2016. Joining me on the call today is David Callaway, TheStreet's President and Chief Executive Officer. I want to let you know that Dave is in California and I'm in New York. I will be joining him on the West Coast shortly for the start of the Roth conference, which we are excited to participate in next week.

Before I begin, I would like to remind you that management will be making 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 businesses are included in our 10-K. In addition, our presentation will include non-GAAP financial measures. And we provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website.

I would like to begin today with some additional color on the special one-time charges that we took in the fourth quarter of our FY16. As you know, during 2016, we introduced segment reporting as a way to provide management, our Board, and you, our investors, greater transparency into our business. We now identify our business in B2B and B2C, and provide much greater insight into our multiple revenue streams.

This increased reporting required an analysis into the goodwill recorded for each of our three segments, which are RateWatch, Institutional -- which is BoardEx and The Deal -- and the B2C, which is premium subs (technical difficulty). In previous years, this was done together as one segment. As such, the majority of the charge which took in Q4 is a non-cash impairment of goodwill totaling $11.6 million, related to our Deal and BoardEx acquisitions. The Company had to take these charges to write down the goodwill from these acquisitions that have produced results that were less than what was hoped for at the time of acquisition.

In addition, as relates to BoardEx, we reversed a $1.8 million non-cash contingent deferred purchase price consideration from the original purchase entry. We also took, in Q4, an additional non-cash depreciation charge of $1.5 million, which was to record depreciation expense on assets placed into service in prior years, not yet expensed. As stated above in our press release earlier this morning, the two non-cash special items related to goodwill and depreciation totalled $13.1 million. They do not affect our liquidity or our cash flows from operating activities, and will not have any impact on our future operations.

We also recorded an additional severance expense in Q4 of $1.4 million, as we continue to rationalize and streamline our expenses. Lastly, we reversed approximately $700,000 from the sales tax reserve we established earlier this year, as we finalized our voluntary disclosures with the various states regarding sales tax.

Now let's take a look at our operating performance for Q4 and full-year 2016, where I will break down the results to provide a clearer picture of our business units' true performance and the trends we see. Please note that due to exchange rates declines related to the depreciation of the pound, our revenues were reduced $400,000 in the fourth quarter of this year, and $1 million for the full year of 2016.

In the fourth quarter of 2016, our total revenues were $15.9 million, a decrease of $1 million or 6% compared to Q4 2015. As I just mentioned, $400,000 of that $1 million drop in revenue was due to currency revaluation of our BoardEx revenues. Adjusting for the change in exchange rate, total Companywide revenues were only down $600,000 for the Company in the quarter.

Business-to-business revenue, which includes subscriptions, information services and events revenue for our B2B products -- which are The Deal, BoardEx and RateWatch -- totaled $7.4 million in Q4, essentially flat when compared to the fourth quarter of last year. As I just mentioned, the year-over-year change in exchange rate negatively impacted BoardEx revenues by approximately $400,000. Adjusting for the exchange rate losses, total B2B revenue increased 6%.

BoardEx subscription revenue is essentially flat. Adjusting for the exchange rate losses, BoardEx revenue was up 16% versus Q4 of last year. RateWatch revenues were flat, as information services revenues increased, offset by lower subscription revenues.

Business-to-consumer revenues totaled $8.5 million in Q4, a decrease of $1.1 million or 11% when compared to Q4 2015. B2C subscription revenue for the fourth quarter of this year was $5.3 million, a decrease of $1.1 million or 16% from $6.4 million in the fourth quarter of last year. This decrease was primarily attributable to a 17% decline in the weighted average number of subscriptions, offset by a 1% increase in the average revenue per subscription.

Even though revenues declined, the churn on our B2C subscriptions improved by 10% in the fourth quarter of this year versus the fourth quarter of last year, as we worked hard on improving customer service, telesales and marketing. Advertising revenue in B2C in the fourth quarter was $2.9 million, an increase of $100,000 or 3% compared to Q4 last year. Operating expenses -- which include cost of services, sales and marketing, general and administrative, depreciation and amortization, as well as restructuring and other charges -- for the fourth quarter were $28.2 million, $11.5 million higher than fourth quarter last year.

As stated earlier, we recorded a non-cash goodwill impairment charge of $11.6 million in the fourth quarter, as well as additional non-cash depreciation and amortization of $1.5 million. We also recorded severance of $1.4 million related to a risk that was part of our year-long restructuring effort to bring our costs into line as we continue to rationalize our operating expenses. Offsetting these one-time charges was a non-cash reversal of $1.8 million of deferred purchase price related to our BoardEx acquisition, as well as a reversal of previously accrued sales tax reserves of $700,000.

Net of all these one-time items, total expenses decreased $300,000 in the quarter. As such, the Company reported a net loss attributable to common shareholders of $11.6 million in Q4, compared to a net loss of $300,000 in the prior period. Adjusted EBITDA was $1.2 million in the fourth quarter, down from $2 million compared to the same period last year, primarily driven by reduced revenues of $1 million, offset by expense reductions.

Turning now to full-year results. For the full-year 2016, revenues were $63.5 million, a decrease of $4.2 million, or 6% less than the same period in 2015. $1 million of the $4.2 million decline was due to currency revaluation in our BoardEx revenues. Business-to-business revenues of $29.3 million increased $300,000 or 1% from the same period last year. The year-over-year change in exchange rate negatively impacted BoardEx revenues by approximately $1 million. Adjusting for exchange rate losses, B2B revenues are up 5% for the year.

Looking at the individual B2B products, The Deal total revenue grew $380,000 or 3%, primarily due to the two new US and UK corporate governance events we launched last year. Total BoardEx subscription revenue had modest growth on paper. But BoardEx revenue year-to-date would have been up 11% excluding the impact of foreign exchange.

We recently completed an internal restructuring of the relationship between our BoardEx UK and US entities, which will alleviate much of the negative impact of the exchange rate in 2017. And consequently, in 2017 we will be able to realize the impressive gains made by our BoardEx business. Total RateWatch revenue decreased $83,000. The decline was in subscription revenue, which was partially offset by a 30% increase in one-time special reports for clients.

For the full-year 2016, business-to-consumer revenue was $34.2 million, a decrease of $4.5 million or 12% from $38.7 million. This decrease was primarily related to a 14% decline in the weighted average number of subscriptions, combined with a 2% decrease in the average revenue per subscription. B2C advertising revenue was $10.1 million, flat compared to the prior year.

Turning to operating expenses for the full year of 2016. Excluding the one-time non-cash charges -- such as goodwill impairment of $11.6 million and the catch-up depreciation and amortization of $1.5 million, as well as severance and the reversal of deferred purchase price of BoardEx of $1.8 million -- operating expenses decreased $2.2 million or 3%. It is also important to note that many of our restructuring efforts were in the second half of the year, so the full effect of these efforts will be evident in 2017 full-year expenses.

Turning to the balance sheet, the Company ended the year with cash, cash equivalents and marketable securities of $23.4 million, down $7.3 million from $30.7 million at December 31 last year. And down $2.5 million from $25.9 million at the end of the third quarter of this past year. Of the $2.5 million decline we experienced in Q4 of this year, most was due to severance pay to terminated employees, as we continue to focus on rationalizing our expense base. Of the $7.3 million decline, for the full year, $2.8 million was severance and $3.6 million was CapEx.

I'll remind you, for 2016, no cash dividend payments were recorded. Dave will address the good news with respect to our outlook on the business, as well as our cash position for next year. So with that, I'd like to turn the call over to our CEO, David Callaway.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [3]

--------------------------------------------------------------------------------

Thank you, Eric, and I hope everyone can hear me okay. Folks, when I joined as CEO this past July, we were in the middle of a major restructuring year, begun under our now Chairman, Larry Kramer. We needed every last bit of 2016, and then some. And we thank many of you for your patience, as you have seen other managements come and go over the years.

With a new management team now and a new Board of Directors, and these one-time extraordinary charges Eric has just outlined now behind us, we believe we have finally worked through the vast bulk of expense [holds] and data management practices. To enable us to return to profitability of creating a diverse business and organizational structure built to last. We've taken millions in costs out, and set a realistic 2017 budget, which calls for organic revenue growth for the first time in six years.

With 2016 now behind us, I'm happy to report that we are already moving closer to our goals for 2017. This year it is on us. Across our business, personal costs and other expenses are down over 6%. We've adopted mobile, social and video strategies that are already yielding considerable gains. And importantly, are increasing advertising, in part, because of the return of several major clients who have been [dark] for us over the years, as our own news and analysis has improved.

We've begun to leverage new revenue streams and events, and now, importantly, in data services, where our fastest-growing and most exciting opportunities exist. And we believe we've arrested the decline we witnessed over the last two years in our premium subscription business, with an entirely new team of very smart people, new strategies and a significant investment in tools tied to acquisition and retention marketing. I want to underscore what I just said there. Because as you heard from Eric, a lot of our declines last year were tied into that business. We believe we've arrested that decline, and we are looking forward to showing improvement in 2017 for you.

Our B2B business, despite the headwinds of Brexit, finished the year strong, and is now off to a good start in renewals and new business sales. We've revamped our institutional news product, The Deal, finally moving away from its print legacy to a mobile-based delivery system. We've invested in Deal content. And this old editor is quite proud of our many scoops and wins recently, especially as the Trump era shines new light on Wall Street -- dare I say, from the market and today's employment numbers, a positive one.

Importantly, we began a project last year to integrate 20 years of Deal-archived mergers and acquisition data into our BoardEx product, making it even more valuable for the growing list of high-end banking, legal and academic clients who pay five- and six-figure licensing fees. These are the types of projects that will finally help us realize the value of acquiring The Deal and BoardEx over the last several years, leveraging the two of them, and particularly, their data, together, to make both better.

In our RateWatch business, a rising rate environment for the first time in more than a decade has created new opportunities for sponsored and sold special reports, in addition to subscription services. We are the big fish in the rates research industry, and the market share opportunities as rates finally increase, are huge.

On the media side, we've taken some painful cuts to staff as we've moved to a more nimble, mobile, social and video model. We have a new app coming which you are going to love, and which will provide a new outlet for our subscription products via the Apple Store. And we've recently signed on famous media and talent [exciters] like Michael Wolff and Ken Doctor, as contributing columnists and editors and talent for upcoming events help lead our coverage in what has been a massive infusion of Wall Street talent into the White House.

In a few weeks, we will be holding a major new event in London tied to Brexit and the European economy. It is the first of four major events for The Deal this year in the UK and the US, and a continuation and expansion of the events we are looking forward to.

At our premium subscription business, Jim Cramer, who's going to be leading a corporate activist event in June, a very important event for us this summer and our Editor-in-Chief Tara Murphy, have been revamping our famous Action Alerts PLUS business. And planning several new subscription products to help active investors in the new era. We are particularly proud of a significant increase in the use of video and direct interaction between our subscribers and our experts, that has greatly increased the value of memberships in these products.

Again, premium, as you can tell from the numbers Eric laid out and from our press release, was one of our more troubled businesses last year. We believe we've arrested that decline, and we have several new products coming, which are going to be quite exciting.

I want to take a moment to address our stock price, which we are all painfully aware, is at a new low. It has been difficult for us to watch the impact of a large hedge fund [sell], which has kept our stock price down, as it has absorbed significant buying interest over the months. But we have also been very happy to see that most of our long-term shareholders have stuck with us through the year-long rebuilding process we outlined just over a year ago.

We are almost there. We've always communicated to you and operated under the expectation that once the heavy lifting was done and [shump] starting its turnaround, the Company would begin on the path toward profitability, which would then naturally have a positive effect on the stock price. Of course, we will continue to improve the business, as well as address the current capital structures that our shareholders, new and old, will be able to see a return on their commitments and investment in us.

We feel good about our prospects this year. In fact, based on our strategy and early results in 2017, we believe we will be able to grow revenue, reduce expenses in excess of 5%, and generate positive cash flow for the year.

We are now in our 21st year of providing investors and Wall Street with trusted, unique and financial news and information. We are not the same Company we were back then, and we face an uphill battle showing you and the investment community what we have become and where we are going. We are ready.

There has never been a more important time for trusted news and information, and we are now positioned not only to deliver it to our millions of readers and our clients, we are positioned to make money from it. I'm even more excited now as I was the day when I started. Thank you again for your patience. And now I'd like to open the call to analysts' questions. Denise, since I'm out in California today, I asked our Chairman, Larry Kramer, to join Eric in New York, in case there are any questions about the Board of Directors.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions)

Kara Anderson, B. Riley & Company.

--------------------------------------------------------------------------------

Kara Anderson, B. Riley & Company - Analyst [2]

--------------------------------------------------------------------------------

Hi, good morning.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [3]

--------------------------------------------------------------------------------

Hi, Kara.

--------------------------------------------------------------------------------

Kara Anderson, B. Riley & Company - Analyst [4]

--------------------------------------------------------------------------------

Just wondering if you can expand on your cost cutting, what business line that is particularly coming from?

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [5]

--------------------------------------------------------------------------------

Kara, I will let Eric follow me. But basically, it is cutting across all lines. We did some serious attrition at the end of the fourth quarter, and has continued into the first. And as you know from the severance costs Eric has mentioned, we have had some layoffs as well. Some of it has come from our media group.

Like I said in my comments, we've adjusted to become more nimble, we've shifted some more assets to things like video and social, and away from other things. But that has allowed us to find savings in the newsroom. And we've also found savings in some of our other -- well, in most of our other products as well.

--------------------------------------------------------------------------------

Kara Anderson, B. Riley & Company - Analyst [6]

--------------------------------------------------------------------------------

Great. And then acknowledging that the comps get easier for the B2C business in 2017, and I think I heard you say that you expect that piece to grow, how many more quarters before we see that happen?

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [7]

--------------------------------------------------------------------------------

Well, I think, Kara, what I said is, we believe we've arrested the decline. So we certainly think, from these levels, it is going to grow. How fast we can bounce back will depend on not only the market conditions, but on the new products we can launch. But in terms of some of the factors that were contributing to the decline -- which were outdated marketing and retention practices, and what we believe were fairly poor, essentially, practices in monitoring subscribers and renewals -- we believe we've fixed those.

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [8]

--------------------------------------------------------------------------------

Kara, let me just add on. Obviously the subscription revenue, no matter what happens this year, down 17%, 18%, is going to be a very challenge to get it back to even breakeven. Dave is right. We have seen the churn get significantly better. We have seen conversion rates go up, we have seen orders go up. And we think we are making great strides there to turn that business around.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [9]

--------------------------------------------------------------------------------

I wanted to highlight one of the numbers, Kara. I think Eric said we lost about 16,000 subscribers in 2016. In the fourth quarter, that number was 900. So it is clearly making the turn, and we've seen the continued evidence of that in the first two months of this year.

--------------------------------------------------------------------------------

Kara Anderson, B. Riley & Company - Analyst [10]

--------------------------------------------------------------------------------

Great, thank you. That's it for me.

--------------------------------------------------------------------------------

Operator [11]

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [12]

--------------------------------------------------------------------------------

Good morning, everybody.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [13]

--------------------------------------------------------------------------------

Hey, Mark.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [14]

--------------------------------------------------------------------------------

Just wanted to drill down on a couple things in particular. Can you quantify for us the cost that you've taken out of the business in 2016, or help reframe that a little bit for me?

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [15]

--------------------------------------------------------------------------------

I think that Dave said it best when he said that our expectation is that, all said and done, our expenses will be down at least 5% in 2017. There's expense reductions throughout the entire organization, but the biggest ones are in personnel-related costs.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [16]

--------------------------------------------------------------------------------

Also Mark, note, I said we've taken millions in costs out, and that includes some stuff we've done this year.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [17]

--------------------------------------------------------------------------------

Okay. And then total headcount reduction has been -- as a percentage, is that 10%-plus?

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [18]

--------------------------------------------------------------------------------

Our headcount right now is down about 7% or 8% from year-end.

--------------------------------------------------------------------------------

Larry Kramer, TheStreet Inc. - Chairman of the Board [19]

--------------------------------------------------------------------------------

This is Larry. There's also -- our headcount comes, really, in two categories. There's full-time equivalents, and then we had a significant headcount number -- well, personnel number, that in --

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [20]

--------------------------------------------------------------------------------

Chennai.

--------------------------------------------------------------------------------

Larry Kramer, TheStreet Inc. - Chairman of the Board [21]

--------------------------------------------------------------------------------

Well, no, there's actually three. Chennai is one. But the third one is in contributors, where we spent a lot of money for outside contributors to all of our publications. And we revised that too, and took significant costs out of that, as we targeted the most effective contributors, re-invested in them and cut back a number who had not been really driving traffic or product improvements for years. So it is not just what shows up on the personnel lines in our reports, it is additional expenditures of a freelance nature and an outside contributor nature.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [22]

--------------------------------------------------------------------------------

Yes, Mark, that's an important point. A lot of media sites over the years -- our competitors, like Seeking Alpha, even MarketWatch, adapted strategies where they would just have people who wanted to write for some level of compensation. And as we looked at that, we saw a lot of people writing who really were not hitting the numbers we needed. And so we were able to take a lot of costs out by culling that list. And we culled it dramatically, by several dozen.

In terms of headcount, while total is down, I think what Eric said, 6% or 7% or 8% since the end of the year. And we are down about 10% in Chennai, almost 10%. And I think if you looked at US headcount, you would be closer to that 10% number.

--------------------------------------------------------------------------------

Larry Kramer, TheStreet Inc. - Chairman of the Board [23]

--------------------------------------------------------------------------------

And remember, this was the end of the year, where we finally integrated everybody into one newsroom. So it takes time once you get that together, to know where you get your efficiencies and synergies. But instead of using, for instance, outside contacts, or two or three people on the same beats, we have some people who now cover areas of coverage for two or three of our products.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [24]

--------------------------------------------------------------------------------

Okay, that's a good point as well. Talking about integration, like you did the newsrooms, on the business services or data side, it sounds like you guys are doing some integration work, populating the BoardEx data base with probably some Deal content.

You talked longer-term the game plan in terms of the data business. Do you acquire more businesses there, organic growth. It seems like you guys are having some success. That business is growing. How should we see that playing out over the next couple of years?

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [25]

--------------------------------------------------------------------------------

This is Dave. I think, Mark, you've hit it on the head. The data business, in the journalism world, in the media world, is one of the hottest businesses right now. And a lot of our competitors are building back data teams, but they don't have the data. And we've got a unique point of leverage there, in that we actually have the data. On BoardEx, more than a million names, public companies, top-300 private equity companies. And on The Deal, like I said, 20 years of archived M&A stuff.

So as data becomes more important, we have begun -- we are seeing great organic growth. We are happy. We want to see more obviously. We've got some overlap between our Deal and BoardEx clients, and leveraging the data of the two together, we believe, will help increase that and provide new revenue streams in that business. When we get to the point where we can show you results in terms of performance and profitability, and we start to look out beyond our businesses to what opportunities there are, I would think that a data business would be a logical connection to where we are already going.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [26]

--------------------------------------------------------------------------------

All right. Shifting back over to the consumer side of the house, it looks like sub losses, at least in Q4 -- like you said, 900 versus 16,000 on the year, which is great. Looks like you said 10% reduction in churn -- again, we are in the right direction. But I'm guessing that you are offsetting -- the fact that you only lost 900 tells me, and the 10% reduction in churn, tells me, though, that gross adds must have been pretty strong. Am I thinking about that right? Is that math [right]?

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [27]

--------------------------------------------------------------------------------

What was pretty --?

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [28]

--------------------------------------------------------------------------------

Adds. In other words, the increases were going -- both things happened, I think. We had a drop in -- our conversion rate has gotten better. So the number of people cancelling is down. And the number -- and we are on the smaller base here too though. But new orders is up considerably over last year.

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [29]

--------------------------------------------------------------------------------

But both are happening, Mark.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [30]

--------------------------------------------------------------------------------

Okay. And then if new adds, we will call them -- is that being driven by -- have you changed your marketing tactics, or is that being driven by a little bit of resurgence in retail here over the last three or four months?

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [31]

--------------------------------------------------------------------------------

You know, Mark --

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [32]

--------------------------------------------------------------------------------

It is a combination of both, Mark. I mentioned it before -- we did change our marketing tactics. We didn't have the right visibility into our pricing practices and what was working with our subscribers, and we paid for that. So we fixed it. So we got a new marketing team completely in, in the second half of last year, and they are doing great things. We are really proud of them.

But I think also the effect of the market rally in the last couple of months, whatever the reason, has many people starting to look at these types of products again. We have seen that on the advertising side as well. Some of our big advertisers, and even the ones that have been away for a few years, are suddenly back, hoping to capitalize on what we are seeing in the market. At the same time, there's a price war going on in the discount brokerage industry, which is also helping us.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [33]

--------------------------------------------------------------------------------

Right.

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [34]

--------------------------------------------------------------------------------

Mark, let me add onto that. The marketing approach that the Company had was completely inadequate. We brought in a whole new management team, and people below the management on the premium side. We put new tools in place. We built a fairly sophisticated model that allows us to look at -- and a modeled-out, conversion, renewal, pricing, et cetera, byproduct. They didn't have that.

We put tools in place that allow us to monitor subscriber behavior, as well as the channel they came in via, to better predict what renewal price we should be offering them. The previous regime, one the day you bought a subscription, put in your renewal price regardless of what you did with the product. We've just gotten much more sophisticated.

We also moved our telesales team to New York from Wisconsin. So we basically got rid of the entire team in Wisconsin that was managed from afar, and now they are managed closely. There is a Board that I walk by on a daily -- probably 10 times a day, I stop and look at the board. We measuring them on a daily basis -- the number of subs they sell, the average price they are getting, the total subs. So any day and time I can look at, or Dave can look at, or Larry can look at, where we are, vis-a-vis our budget, for the day, the month, the quarter, et cetera. There's just a lot more visibility there.

We brought in a head of customer service and telesales, to oversee both those, to help them with scripts they did not have. We have just gotten -- we did a lot of basic blocking and tackling, but now we are getting sophisticated as well.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [35]

--------------------------------------------------------------------------------

All right, that's helpful. And then, Eric, just one more for you, quick. So the burn -- it looks like you've mitigated the burn. Most all the burn, if any, was really one-time severance stuff for the year. But on an operating basis going forward, you guys anticipate operating the business on a cash-flow positive, is that what I'm hearing?

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [36]

--------------------------------------------------------------------------------

Correct. For the year.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [37]

--------------------------------------------------------------------------------

Yes, for the year. And last one, for Larry, more of a high-level strategic question. So obviously, Jim Cramer's contract is up this year. He seems like he's pretty engaged in building some new products and kind of revamping. Looks like you've got the subs going back the other way. How do we think about that process of trying to get some type of a new deal put in place with Cramer? Is that something you want to deal with sooner rather than later, or are we are going to 11th-hour it?

--------------------------------------------------------------------------------

Larry Kramer, TheStreet Inc. - Chairman of the Board [38]

--------------------------------------------------------------------------------

(Laughter) Well, we are not planning on 11th-houring it, I will tell you that. No, we are talking to Jim about it. And it is a little tricky obviously. He has to back off, really, from doing a lot of that himself, because he's on our Board too. So we will engage with his representatives earlier than last time to try and get something done sooner.

He is heavily involved in all the things that are going on now. So we don't have to worry about engaging him in terms of what's going on in the product -- he's as involved as everyone. So I think we will be okay there. We are two-thirds of the way through his contract, so you've got to expect that, soon, we will start talking to them. But we obviously don't do those things in public. We will have that negotiation with him as soon as we think it is prudent.

But I think he is watching, like everybody else, how well the Company is putting itself back together again and moving forward. And we believe that's a big part of our negotiation with him, is to show him how well the Company is doing. So we certainly want to get through this next quarter we are in today.

As we start reporting the next few quarters, we think they will show everything we've been talking about, and we will be in a good position to negotiate with him. But we are not going to wait until the end. We hope to have something done soon as soon as we can.

--------------------------------------------------------------------------------

Eric Lundberg, TheStreet Inc. - CFO [39]

--------------------------------------------------------------------------------

Mark, you hit it on the head. He is really involved. He just did his monthly call this week with his AAP subscribers. We had the most subscribers we've ever had on the call. There was 2,700 subscribers on the call, it was on Tuesday, I believe -- Wednesday.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [40]

--------------------------------------------------------------------------------

Yes, Mark, this is Dave. As I've been saying, this is the year that everyone has been waiting for. And we have been working all through last year to prepare for this year, to get us back to a positive cash flow, on our way to profitability. To get Jim excited again, to get our shareholders excited again, to address our shareholder structural issues -- this is the year we hope to make that happen. And by that, I don't mean December.

--------------------------------------------------------------------------------

Mark Argento, Lake Street Capital Markets - Analyst [41]

--------------------------------------------------------------------------------

You lost him? All right. I'm good, I appreciate the perspective. Congrats on a solid second-half turnaround here. Got things pointing in the right direction. Good luck this year.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [42]

--------------------------------------------------------------------------------

Thanks, Mark.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

(Operator Instructions)

There are no further questions at this time. I turn the conference back over to the CEO, Mr. David Callaway.

--------------------------------------------------------------------------------

David Callaway, TheStreet Inc. - President & CEO [44]

--------------------------------------------------------------------------------

Okay, thank you, Denise. I appreciate everybody being on. As Eric said, we are going to be at the Roth conference in Laguna next week, and see many of you. And look forward to talking with you, those of you who we are not going to see in the coming weeks, about our story. Thank you very much for attending.

--------------------------------------------------------------------------------

Operator [45]

--------------------------------------------------------------------------------

That does conclude today's presentation. Thank you for your participation. You may now disconnect.