TheStreet.com Q3 Earnings Call Transcript

123jump.com Staff
29 Nov, 2010
New York City

The digital financial media company said quarterly revenue rose 8% to $14.3 million, reflecting a 9% jump in advertising sales and 8% growth in subscription revenue. Net loss widened 39% to $1.93 million in the quarter. The company lost 6 cents a share versus a loss of 5 cents a year-ago quarter.

TheStreet.com, Inc. ((TSCM))
Q3 2010 Earnings Call Transcript
November 4, 2010 4:30 p.m. ET

Executives

Daryl Otte – Chief Executive Officer
Gregory E. Barton – Executive Vice President, Business and Legal Affairs
Thomas J. Etergino – Executive Vice President and Chief Financial Officer

Analysts

Vik Mehta – J. Goldman & Co.
Michael Moskoff – MRM Capital

Presentation

Operator

Good day, ladies and gentlemen and welcome to the Third Quarter 2010 TheStreet.com Earnings Conference Call. My name is Lacy [ph] and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will facilitate a question-and-answer session. If at any time, during the call you require audio assistance, please press star followed by zero and a coordinator will be happy to assist you. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today''s call, Mr. Daryl Otte, CEO. Please proceed, sir.

Daryl Otte

Thanks Lacy. Hi everyone. I like to welcome you to TheStreet.com''s third quarter 2010 and earnings call. I''m Daryl Otte, the company''s Chief Executive Officer. With me today are Tom Etergino, our Executive Vice President and Chief Financial Officer, and Greg Barton, our Executive Vice President of Business and Legal Affairs and General Counsel.

This is Tom''s first earnings call with our company as he started in early September. We''re extremely pleased to have him augment our team with such a strong hire. And I am sure you, the investors, will enjoy interacting with him. Before we start, I''ll hand the call to Greg, who will read our legal statement.

Gregory E. Barton

Thanks Daryl and welcome everyone. All statements made on this call, other than statements of historical facts, are deemed to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, including those described in the company''s filings with the Securities and Exchange Commission, that could cause actual results to differ materially from those reflected in the forward-looking statements.

Although the company believes that the expectations reflected in the forward-looking statements are reasonable, the company cannot guarantee future results or occurrences. The company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise. You may obtain copies of the company''s filings with the SEC at the Commission''s website, www.sec.gov. Additional information related to matters discussed today also will be set forth on the company''s quarterly report on Form 10-Q for the third quarter of 2010, which we expect to file shortly. And now, I''ll have the call back to Daryl.

Daryl Otte

Thanks Greg. I think that it would be useful to begin this call with an overview of market conditions we saw in the quarter that are relevant to our business. The markets were somewhat unkind to our sector this past quarter where the flash crash of May 6 appears to have unfavorably affected the behavior of retail investors and consequently the business of our major advertising and marketing partners.

You all may be familiar with some of the statistics, but as a reminder, many brokerages reported that their retail trading volume declined in the range of 30% year-over-year and the Investment Company Institute reported that equity mutual funds saw net cash outflows of almost $40 billion during the quarter as compared to net cash inflows of $3 billion in the year-ago period.

As you might imagine as well, interest in the financial markets coverage also declined. Two independent measures of this interest, Nielsen and the Google Investing Index, which tracks queries related to investing terms such as stocks, bonds and EPS, each showed a double-digit decline during the quarter as compared to a year ago.

In a word, our business faced some substantial market level headwinds in the quarter. While there are always areas we could do better, I believe we did a good job navigating through this environment and that our results reflect the benefits of equities and undertaking in the last six quarters I''ve been here to refocus the company.

Indeed, by most measures, our results moved contrary to the market trends. But before moving on to the quarter results, I think it would be useful to recap the progress the company has made and to reiterate our strategic vision.

First, one of the most important areas of my focus has been to recruit a new and outstanding management team and I''m very pleased with the exceptional executives who have joined or been promoted from within the company in the past several quarters. This is now a team whose strength extends beyond that which you would expect a company our current size to have.

Next, we needed to put behind us the distractions of the restatement and divestitures. Having done so, I felt we were in a position to move forward -- move to a forward-leaning stance and we commenced our investment program to support our strategic plan to build long-term profitable growth and value.

The strategic plan rests solidly on the proven and profitable business model of vertical publishing and we''re working hard to apply this model against our key assets. That is our market position and brands, which we are lucky to have and which are firmly situated around finance and which we believe to be among the highest value verticals in the media landscape.

As a reminder of our strategic plan, we believe in original content, produce to high journalistic standards, with deep domain experience and overlaid with strong Web publishing skills. To that end, we are producing over 3000 original articles per month, 500 videos a month and a growing suite of data tools and utilities.

All of this content is produced by our professional in-house editorial team and through a select group of hand-chosen practicing professionals. That content, because of its quality and relevance, attracts highly engaged users, affluent, involved, educated professionals who come to our content for a purpose. They see the value of our content, even pay for it and engage with advertisers not as a distraction but a source of information.

Our audiences are of the type that many advertisers would like to reach, as our audiences like to make and spend money, attracting then both endemic advertisers in the financial category and non-endemic advertisers who are attracted to the demographic characteristics of our audience.

We seek to facilitate this not just through standard advertising units, but through customized marketing packages which add value and directly speak to our advertisers'' objective. The point of all this is that it leads to good opportunities for monetization, both from premium advertising revenue, measured by share of market relative to our reach and by revenue per page, but also through an overlay of user revenue in the form of premium services, indeed today our largest source of revenue.

I''d like to underscore this point that TheStreet has a 15-year history of offering paid content on the web, something that is in our DNA. Thus, over the long-term, we feel we can be competitive and grow by attracting audiences with strong content and monetizing those audiences through premium advertising sales and premium paid fee for services.

For those that follow the company carefully, you''ll recall we began an investment program last quarter with the objective of strengthening our platform and building our team to support this strategy, but with the commitment to remain operating cash flow positive and adjusted EBITDA positive for the year.

So how are we doing against this backdrop of market conditions and with our strategy in mind, we would argue that there have been signs of good progress. We could of course always accomplish more, more effectively and faster but the signs are there.

With that in mind, we’ll head on over to our overview of financial results. Revenue from ongoing businesses for the quarter was up 8% overall with advertising revenue up 9% and ongoing premium services revenue up 8%.

When I refer to ongoing businesses, I''m excluding the results of our former promotions.com subsidiary, which the company divested in December 2009. The banking and insurance rating business of our Street Ratings division, which we divested in May 2010 and the revenue of our Street Ratings division, which enjoyed from the government -- which enjoyed revenue from the government mandated settlement which expired at the end of last July.

With that overview, here are some details on our premium services business. Premium services revenues were up 8% year-on-year to a nine-quarter high. Our churn rate improved slightly on a sequential basis to 3.8% from 3.9% last quarter. Our subscriptions booking for the third quarter declined 14% on a sequential basis.

As I mentioned on our last call, the slowdown in our rate of subscription bookings commenced in the second quarter with the flash crash of May 6, improved but did not fully recovered in the third quarter, as many retail equity investors stayed on the sidelines. These results were the first decline in a while, which was disappointing.

However, set against the metrics we cited at the top of the call, they show what I feel is a respectable result against some fairly strong headwinds. In the broader context of the overall trend, year-to-date bookings are marginally ahead of last year, taking into account this past summer''s difficulties and against the backdrop of a fairly strong 2009.

As we noted on last quarter''s call, we set about managing the shift in retail investor sentiment in a couple ways. We have been working to broaden our suite of product offering and refine our marketing to be more effective in conditions.

We are seeing some early signs of success. For instance, our options profit product, which was launched in late June, has already become our fourth-largest product in terms of quarterly bookings. Also, we''ve been placing greater focus on selling our equity oriented premium services at lower cost entry points, such as monthly subscriptions.

This is important to note because monthly subscriptions generally help revenue growth in the short-term but, of course, produce much lower bookings during a quarter than with the sale of an annual subscription. These lower initial cost entry points are an easier way for our customers to commit in times of uncertainty.

This strategy had the desired effect as subscription counts grew by 9% as compared to the third quarter of 2009, adding new customers who we will seek to upgrade through our upgrowing telesalesforce overtime. As a side note, I should point out that it''s possible that this shift in our mix to monthly subscription may impact churn in some modest amount in future quarters. Something, should it come to pass, we would not view as alarming.

To the point, we believe our ability to pivot quickly and achieve the revenue and subscription growth count results we did in a challenging environment reflect our new team''s expertise and the early returns on the investments we''re making to expand the quality of our premium content offering and sales and marketing teams.

Now, on to ad revenue, ad revenues registered the fourth consecutive quarter of year-over-year growth. As we noted in our earnings release, this ad growth is notable during a quarter in which many of our brokerage clients recorded that overall trading volume declined substantially.

Our growth in this environment demonstrates that TheStreet''s professionally created and curated content attracts a passionate user base that remains highly engaged with our site through thick and thin and that our premier set of advertisers recognize the value of getting their brand and message out in front of this key audience. Syndicated research released last month underscores the exceptional demographic characteristics of our growing audience.

According to the current Nielsen Netratings @ Plan Release 2 of 2010, TheStreet ranked number one in concentration of users with household income above $150,000 a year, number one in concentration of users with a portfolio of above $250,000, number one in concentration of users who own securities, number one in concentration of users who shopped online for stocks, for mutual funds, or for any investment and number one in concentration of users who are C level executives or over in companies of any size all higher than any member of the online competitive set that includes Bloomberg, CNBC, CNN Money or MSN Money, Reuters, The Wall Street Journal and Yahoo Finance, among others.

In addition, comScore August 2010 data indicates that TheStreet ranks number one in concentration of users who plan to buy a luxury vehicle within the next six months as compared to the same competitive sets. With that in mind, I''d highlight a couple of key progress points in growing our advertising business.

First, we are happy to have had Goldman Sachs as an asset management business make a strong commitment to our sites. The purpose of their buy is customer acquisition at the heart of what we do.

Second, we continued over the third quarter with a very interesting small-business success story webinar series launched at the end of Q2, sponsored by American Express Open and powered with the help of our friend (inaudible).

This program is a great example of how the company is combining our marketing and content creation skills to attract audiences with terrific useful content while serving the needs of our marketing partners. Finally, the non-endemic advertising in our business grew by almost a third year-on-year and it is becoming an important overall contributor to our advertising revenue line.

We are continuing to make progress in Detroit with Chrysler and GM now new to us in Q3 and the automobile category generally and in travel where Continental is part of a great package which included the premier sponsorship of our new mobile web service. The point you should take away is that we -- the point you should take away is we believe we are seeing a growing payoff from our investments and improving the quality of the free sites, mainly that more and better users are coming to us for our high-quality focused content, which value the audience is garnering more advertising dollars from our growing advertising mix.

Our expenses from ongoing businesses largely reflect the full quarter effect of the increased level of investments we initiated in Q2 and discussed on the call then, particularly in editorial sales and marketing resources to support the growth of and add long-term value to our subscription and advertising supported business, the early fruits of which we feel are emerging in the quarter''s results.

We feel our investment program has largely matured and point out that the rate of sequential increase overall declined markedly this quarter. We also feel that we are currently at the right scale to support growth, and we presently don''t anticipate significant increases in fixed infrastructure. We will be rigorous in conducting a hardheaded ROI analysis of our spending as part of our 2011 budget process with (inaudible) systems.

Our adjusted EBITDA from ongoing businesses reflect the seasonal nature of our advertising business as well as the impact of our investment program, recording a loss of $300,000 for the quarter, as compared to a profit of $2 million in the prior year period. Again, we are remaining disciplined on our spending, limiting ourselves by maintaining at least a positive adjusted EBITDA and operating cash flow for the year.

The financial summary (inaudible) hit some operating highlights. First, as we discussed, we made a key addition to our management team in September, where Tom Etergino joined as Chief Financial Officer. Tom brings over a decade of experience in senior financial and operating roles at digital advertising and subscription-based businesses, including DoubleClick and eMusic, including serving as CFO at private and public companies for seven years.

We are already seeing the impact of Tom''s presence and we look forward to expanding our efforts to engage with the investment community under his leadership. In addition to doing everything a CFO does, Tom has already lent an additional perspective to our strategy and is contributing and developing potential new lines of revenue in his short time here. As I noted in last quarter''s call and most importantly, I''m particularly happy that Tom is onboard as I can now pass off all your hard questions to him to answer.

We also announced a number of important initiatives during the quarter which helped position the company growth for the future. First, we announced an agreement with PBS'' Nightly Business Report to produce weekly pieces by TheStreet editorial talent titled Word on the Street and aired every Tuesday by this widely watched and influential television program.

Second, we announced a content sharing agreement with Newsweek to feature TheStreet editorial content in both a print and online edition of this iconic news property. Third, we announced content and audience sharing agreements with GigaOM, a leading voice and technology media, as well as with Bundle, a new socially informed money-management website back by Citigroup, Microsoft and MorningStar.

Our ability to partner with such highly respected partners speaks to the quality of our content and our ability to help such partners deliver to their audience the deep expertise we bring to covering financial media topics. Lastly, we launched a mobile web version of our flagship website TheStreet optimized to deliver increased speed and ease of navigation to our investment oriented users wishing to access our content through their mobile devices. The new mobile website is accessible at www.thestreet.mobi.

While not wanting to tip our hands too much, you should expect to see from us this quarter a new and I think impressive iPad application launching and a new premium service also launching on the heels of the options profit service, this time centered on the quickly growing ETF market, another market like options which has defied market trend and is indeed now leading and trading volumes.

With that, I''ll hand the call to Tom, who can provide some additional financial details.

Thomas J. Etergino

Thanks Daryl. Welcome everyone. I''m very excited to join TheStreet at this exciting time in the company''s evolution. What I personally found compelling about the opportunity to join the company is that I feel the company has tremendous brand assets, a smart, energetic and motivated management team with digital media experience who are laser focused on creating stockholder value and a strong balance sheet that will enable the company to take advantage of strategic growth opportunities.

This management team clearly has made large steps in turning around the company''s operations during the past year. I am still somewhat drinking from a firehose coming in a couple weeks before quarter end and at the beginning of next year''s budgeting cycle, but I couldn''t be happier to be where I am and looking forward to helping the company expand its efforts to engage with the investment community going forward. So enough about my personal views.

Now, on to some financial data points for the quarter. As Daryl noted earlier, we will assume everyone has read the earnings release, so I won''t repeat every data point in the earnings release, but I will note certain key results.

The company''s ongoing businesses recorded revenue of $14.3 million in the third quarter of 2010, an increase of 8% as compared to the prior year period, with $9.6 million of revenue from ongoing premium services businesses and $4.7 million from advertising. The increase in the company''s premium services revenue for ongoing businesses is primarily a result of a 9% increase in the number of subscribers during the quarter, offset in part by a 3% decline in the average revenue per subscriber during the quarter, as compared to the prior year period.

This is in line with our strategy of bringing in subscribers at lower price points and using our newly expanded telesales force to upsell them to higher-priced premium products. The advertising increase was driven by new advertisers who are interested in reaching our very attractive demographic while our historic advertisers continue to advertise at similar levels to the past.

Operating expenses for the company''s ongoing businesses were $16.4 million in the quarter of 2010, an increase of 12% as compared to prior year period. The increase of operating expenses for the company''s ongoing businesses is largely a result of a $1.4 million increase in sales and marketing expense and a $700,000 increase in cost of services -- the other third -- in the third quarter of 2010 as compared to 2009.

General and administrative expenses related to the company''s ongoing businesses were flat year-over-year as a decrease in costs related to a review of certain accounting matters in the company''s former promotions.com subsidiary were offset by increased compensation, professional and recruiting fees, and certain other costs.

The increase in cost of services is primarily related to increased headcount and increased payments to non-employee content providers which, as Daryl noted, we believe has helped to drive the topline growth. The increase in sales and marketing was driven primarily from our investment in the sales and marketing of our premium subscription-based products, including an increase in headcount primarily resulting from our December 2009 acquisition of Kikucall, an increase in our commission telesales marketing personnel who are instrumental to the upsell process described earlier, as well as higher advertising and promotion costs as we are testing new distribution channels.

The company had a net loss of $1.8 million in the quarter -- in the third quarter of 2010, from its ongoing businesses, as compared to a net loss of $1.1 million from such ongoing businesses in the prior year period. As Daryl noted, adjusted EBITDA for the Company''s ongoing businesses was a loss of $300,000 in the third quarter of 2010, as compared to $2 million in the prior year period.

The company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $79.7 million, a decrease of $2.9 million as compared to June 30, 2010. The decrease is primarily due to capital expenditures of $2.9 million and payments of $900,000 of dividends, offset in part by receipt of $900,000 related to the sale of promotions.com.

Capital expenditures in the third quarter were larger than is typical for the company as they related primarily to renovation of the company''s headquarters in accordance with terms of the company''s lease agreement. This lease provides for substantial rent abatements through the third quarter of next year that will allow us to recoup much of the renovation cash currently being spent.

The renovation of the company''s headquarters should be concluded in the fourth quarter of 2010. Additionally, capital expenditures included spend related to the development and implementation of an upgrade to the company''s technical infrastructure and its content management systems.

With that, I''ll hand the call back to Daryl.

Daryl Otte

Thanks Tom. Prior to turning the call over to Q&A, I want to again extend thanks to our shareholders who have shown us support in this quarter, to our employees who in my view manage the market turbulence (inaudible), and of course to our subscribers, advertisers and distribution and content partners, the ranks of all of which are growing daily.

With that, we will open the call to questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, if you wish to pose a question, please press star one on your touchtone phone. If your question is answered and you wish to withdraw, you may press star two. Please press star one to begin and please stand by for your question. Simply stand by as we structure our list.

Once again, ladies and gentlemen, that’s star one if you have any question.

Daryl Otte

Everybody, any question.

Operator

And our first question will come from the line of Vik Mehta with J. Goldman. Please proceed.

Vik Mehta – J. Goldman & Co.

Hi. Thanks. It’s Vik Mehta from J. Goldman. Can you comment about your sales force, how the headcount there is being enhanced and what your key initiatives are over there this year, next year?

Daryl Otte

Hi, Vik. How are you doing? I think, as I mentioned or alluded to in the call and I hope it wasn''t the lines that I flubbed, we''re really building the telemarketing sales force. That''s based here in New York but also in our great facility out in Fort Atkinson, Wisconsin. And the idea, as I think we''ve alluded to in the past, is that we are bringing folks in at a certain kind of entry level to our premium services and developing account relationships with them, with these folks on the phone and then selling them increasingly higher-priced packages of services. And so that''s really the larger part of where our spending has gone.

Vik Mehta – J. Goldman & Co.

Then as we look towards the bottom line, how should we think about what it takes as far as revenue scale or other key operating metrics that might be a driver to actually start to show profitability?

Thomas J. Etergino

I think, as we alluded to again in my script, that we feel like we have kind of reached the point where we are at scale in terms of spending and that we are now solely on increment revenue growth and converting that at a very high rate to profit. So incremental advertising sales and incremental subscriptions sales, net of distribution costs or whatever for -- you know, we use partners to sell the services -- should drop to the bottom line very effectively and then that''s really what we''re focused on.

Vik Mehta – J. Goldman & Co.

I guess last question I have is, of the key relationships announced during the quarter, I''m not sure if those -- the content relationship deals that were announced have been made active already. But of the ones that are, how are they tracking versus your expectations with regards to providing you incremental traffic?

Thomas J. Etergino

They are all up and running and they are all providing us some incremental traffic. I think, in addition to that, they are providing us brand awareness and positioning our editorial talent as thought leaders in the space. And so it''s both a direct traffic and a brand halo that we are really seeing. If you look at the direct load and the partner traffic, direct load onto our sites is increasing and also you look at obviously the partner traffic when you look at the partner level and seeing that increasing so the strategy is working.

Vik Mehta – J. Goldman & Co.

Should we look upon these relationships so far as kind of a handful of many more that will come -- or because these are pretty big brands you''ve already partnered with. I''m just wondering if there''s any nature of exclusivity or could TheStreet.com partner with hundreds of entities globally in distributing content like this?

Daryl Otte

Yeah, I think hundreds is a lot. We are being very judicious in picking brands and partners that work for both sides of the equation and which bring an incremental audience to us and which we can contribute our content and add a lot of value for them. And so I would expect to see a drumbeat of these rolling out over time but again, we''re going to be -- we are not -- this is not a numbers game, it''s a quality game. So we are handpicking them.

Vik Mehta – J. Goldman & Co.

I guess based on how you described it then, each of these relationships should result in incremental traffic over time?

Daryl Otte

Yeah and yes.

Vik Mehta – J. Goldman & Co.

Terrific. Thank you.

Daryl Otte

Welcome

Operator

And our next question will come from the line of Michael Moskoff with MRM Capital. Please proceed.

Michael Moskoff – MRM Capital

Tom, welcome aboard, Tom.

Thomas J. Etergino

Thank you.

Michael Moskoff – MRM Capital

A bunch of questions. Daryl or Tom, either or.

Daryl Otte

Tom gets these.

Michael Moskoff – MRM Capital

As far as clarification on the PP&E where you spent in excess of $2.1 million and you talk about how you''re going to get rebated, so can I assume that you''re going to get rebated when -- and is it going to be in the amount of that $2.1 million or can you give me an amount?

Thomas J. Etergino

So it will actually be -- there''s some additional capital expenditures I think I mentioned. There''s a buildout that will be done in fourth quarter. The amount of the rebate would actually exceed the $2.1 million that you''re quoting. We''ll have rent abatements through third quarter of next year.

Michael Moskoff – MRM Capital

Normally is that the way it works? Why wouldn''t they -- why do you guys have to lay it out upfront and they give you back rent?

Thomas J. Etergino

We actually had a choice to make. We actually could have taken it upfront, but we decided to take it over time this way because it actually allows us to save uncertain taxes as well. So the actual math would work that we actually save more money by doing it that way than the opportunity costs that we''re giving up on the interest.

Michael Moskoff – MRM Capital

Okay. So the abatements are going to be in excess of $2.1 million is what you''re saying?

Thomas J. Etergino

That''s correct.

Michael Moskoff – MRM Capital

Okay. That''s great.

Daryl Otte

Yeah, Mike, I think the plan is to have the renovation, which it was part of the contract which we inherited when took over the company, the idea that the renovation is going to cost basically the same, roughly the same amount, as the abatement. So it will be cost-neutral.

Michael Moskoff – MRM Capital

Okay. Now, exclusive of that, the operating expenditures which you are now saying in your press releases is going to be dropping markedly. Can you give me a run rate approximately of what that would be?

Daryl Otte

I don''t think we -- the way that reads, I don''t think it''s going to drop. We don''t expect it to drop markedly. I think what we''re saying is it''s plateauing. So I don''t expect large increases from where we are.

Michael Moskoff – MRM Capital

Is it going to be like last quarter of about $15.2 million or this quarter like $16.4 million or somewhere in between kind of thing?

Daryl Otte

Yeah. We don''t really give guidance on that but I think, if you look at the kind of sequential expense growth, you see it diminished dramatically and we would expect that to happen. Some of what we''re spending on to kind of get the strategy implemented is structural, as that will continue ongoing. But there is a strong element too of one-off or multi-period expenses which will diminish over time. I think we''ve spoken about these on the calls in the past. So for example getting our IT teams trained on the new system that we are implementing. Obviously, it takes a couple of quarters to get that done but that will diminish over time.

We''ve also recruited two strong C level candidates, which involve recruiting costs. That''s a one on cost. And there are some structural costs as well, like building our sales force, which are ongoing.

Michael Moskoff – MRM Capital

Okay. When you talk about going to the -- trying to drum up new subscribers as a result of what''s transpired since the flash crash, so hence the revenue number may be a little lighter as far as the average but then you''re going to try to upgrade them. As far as if you had to segment all your subscribers and you had professionals, let''s say like me in the business, to just Joe Q. Public out there, that may be high net worth or are relevant just that he''s been a subscriber, or she has been a subscriber for a long time. As far as the pro side, did you see a lot of degradation in losing subs as well…?

Daryl Otte

This is a great point which our script maybe could have done a better job of highlighting, which thank you very much for setting this up. But you know churn rate actually went down, so we are not losing people. It''s really just finding new people was a little bit more challenging to get into our system that it had been in the past. And so when people come into our system, we are very comfortable that they love the content quality and they get value for what they are -- value for services and really, it''s just about new account acquisition slowed because it''s tougher to find -- or tougher to convince people to commit money to pay up for premium services at a time when the stock markets were doing what they were doing.

And so that''s when our clever subscription marketing team pivoted to lower-cost entry points. Let''s keep the subscribers rolls growing and we have the confidence now with our strong telemarketing team and other things that we''re doing that we will be able to convert them to annual subscribers and convert them to higher ARPU over time. They are laser focused on that now.

Michael Moskoff – MRM Capital

When did that plan actually start, would you stay?

Daryl Otte

It was being implemented kind of at the time of our last call. I think I might have alluded to it to a certain extent.

Michael Moskoff – MRM Capital

So have you seen some reasonable results in the last month or so or especially with the fact that the market now doing what it''s done in the last 2.5 months or nine weeks or what have you. Have you seen -- and I''ll just follow up with another question -- how are your bookings in the fourth quarter based on the advent of the market now?

Daryl Otte

Yeah. Nice try. I don''t think we''re going to tell you that until the next call but again, we did -- our subscriber accounts are going up by 9%. And so you can see that we are definitely getting folks into the system.

Michael Moskoff – MRM Capital

Okay. But you have talked in the past about how businesses -- in the current quarter, you''ve talked about how things are looking. Last quarter, you talked about how things were looking…

Daryl Otte

Fair enough, fair enough. Yes. And I think we are very -- I think some of the brokerages have announced that kind of they''re seeing much more robust trading volume in October than they did earlier in the year. And we notice that capital is now starting to inflow versus outflow for the market, and so I think they kind of -- we''re heartened by that. I hate to call like a turn and then be called on it next quarter. But I think we feel that people are returning back to the markets and they see opportunity much more this year. We''re working to make the most of that.

Michael Moskoff – MRM Capital

Okay. And then last but not least, two other things -- Tom, when you talk about taking advantage of growth opportunities, since you being the new guy on the block, can you expand on that a little bit?

Thomas J. Etergino

Sure. I think there is actually a lot of places I think we can grow. I think, on the subscription side, there is a lot of new channels that we can go into to grow and I think that is one of the things Daryl mentioned that I have been focused on a little bit since I started. I think that could -- that''s a real growth opportunity for us. I think, on the advertising side, on the non-endemic advertisers, we have seen some traction there. I think there''s a lot of growth potential there as well.

Daryl Otte

Okay. Mike, I would just add -- I''ll jump on top of that to say Tom came to us from eMusic, which is a large-scale consumer online subscription business. They have been doing this a long time and have a different perspective on how -- or additional perspective on how to acquire new subscription. We are now kind of systematically sifting through some of their best practices and overlaying that against our business to see if there are opportunities for us.

Michael Moskoff – MRM Capital

Okay. One observation -- I was at -- my mother-in-law passed away about four months ago unexpectedly and so I am at the funeral. I''m talking to -- or half a funeral. I''m talking to about three older gentlemen, and they say, hey, do you ever watch that show with Kramer, that crazy guy and so anyway I said, yeah, I know all about it. So I started talking to them. I said, did you know that this show, that he founded TheStreet.com? They said, what is TheStreet.com? And then I basically kind of ended the conversation with them. I was talking to them a little while.

My thing to you guys is I don''t know if, out of all the viewers that watch this show, I don''t know if they use the connotation of Kramer and your site. Even though he talks about it a tiny bit, I just don''t think they put two and two together, which I kind of find mind-boggling in a way and also, you''re missing out on something possibly. Somehow, if there could be some synergies that you can have them put two and two together -- because you could see, just when he talks a lot of times, he can move a stock or this and that. Obviously, he can''t tell your company, but somehow, someway, people that watch that show should know that the two and two go together.

Daryl Otte

Yeah. I would just say that the show is not a part of our operation. Jim has a lot of operating interests and he has the relationship with CNBC in producing that show. He has to live within certain restrictions as do we with respect to that. Jim is a huge supporter of our organization, as he is at CNBC and his show in particular. And within those restrictions, we look to make the most of the relationship. I think also I have alluded to this in the last couple of calls, there are others who would argue or have expressed concern that this company was too much about Jim.

We''re working very hard to find the right balance where we have enough room for lots of different voices but also of course staying with the spirit of how Jim founded the company. He is certainly still a part of our operations and publishes actively for us and is here almost every day. So he''s a big supporter of us and we are of him.

Michael Moskoff – MRM Capital

Okay. Great. Thanks guys.

Operator

As a reminder, ladies and gentlemen, that’s star one if you have a question. Please stand by for your next question. And at this time, I show we have no further questions in queue. I would like to turn the call back over to Mr. Daryl Otte for any closing remarks.

Daryl Otte

Not much more to say. Thanks everyone for participating on the call, we look forward to our fourth-quarter results early next year. Thanks Lacy and thanks everyone, for participating.

Operator

Thank you for your participation in today''s conference. This concludes your presentation. You may now disconnect. Have a wonderful day everyone.