Long or Short Capital Reports Q1’07 Results
by Mr JugglesLong or Short Capital’s fiscal 1st Quarter ended on 10/31/06, and the company reported its results in a press release:
Mister Juggles: “Good morning everyone, let me welcome everyone on the line to hear me talk about our best quarter ever. Last call I introduced you to what I think is a really swell statistic, sequential same store traffic, and I put it forth as the key metric we use internally to gauge our success. Last quarter the figure was a strong 21%; this quarter that metric came in at a Googlesque (google that word with MSN Search or Yahoo if you don’t know what it means) 146%. When you consider that 146% came on top of a 21% comp, you really see the power of our model. We have maintained the highest same store traffic rate of the entire Online Financial Humor/Abstract Investment Recommendation Industry.
We generated earnings per subscriberholder of $0.60 compared to $0.38 in Q4’06 and $0.32 in Q3’06. We generated $350 in revenue for the quarter, a 222% increase YOY, and 178% sequentially. We continue to faces headwinds in our contextual advertising due to low click through rates and our experiment with Adsense has yielded lower than historic ECPM’s, but we leveraged our increased traffic volume to increase segment revenue 185% on a sequential basis.
Our strategic focus has been on growing our static ads, specifically the text link ads. Text link advertising accounted for 40% of our Q1’07 revenue, and on a runrate basis, it should rise to 50%+. This revenue is such a focus to us because of how the associated revenue tends to be recurring and very sticky, while the ads themselves are unobtrusive. Our subscribership increased from 282 to 381.
We continue to work on getting better payment terms from our ad vendors; we have had some challenges in this sector with some of suppliers of static ad inventory but we are optimistic that we can bring working capital down to 10-15% of sales. Historically, it has ranged from 25-35% of sales. In terms of liquidity, we reduced our PIK (“Payment-in-kind”) debt to zero and now have cash on the balance sheet of $114.38, despite working capital being relatively flat.
We had our best quarter ever in terms of revenue, free cash flow and qualifying traffic. We think we have established the platform both operationally and financially to build an online powerhouse, and our goal is to do 5-7% better than your expectations every day, on every post and in every quarter. If not, we will cook the books to make you think we did that.
Note that the financials below are unaudited and may contain non-GAAP measures. All numbers comply with Seldom Accepted Accounting Principles (SAAP).
Unaudited Financial Results for Q1’07
- Income Statement
- Contextual CPC Revenue $109.45
- Static Ad Revenue $214.33
- Other Revenue $27.31
- Total Revenue $351.09
- Cost of Sales $19.55
- Marketing Expense $100.15
- Operating Income $231.39
- Balance Sheet
- Cash $114.38
- Accounts Receivable $140.36
- Inventory $0.00
- Prepaid Marketing/Hosting/Reg $163.05
- Accounts Payable $0
- Cash Flow Statement
- Operating Cash Flow $222.17
- Capex $0.00
- Dividends $X.00
- Performance Metrics
- Visits 16,900
- Pageviews 31,850
- Clicks on ads 100
- Ad impressions served 55,000
- Subscribers by Email 68
- Subscribers by XML 313
- Inbound Links per Technorati 345 from 65 Sites (+65 on Blogger)
- Inbound Links per Google ~214 sites (plus 62 on Blogger)
Past Results (due to our reliance on SAAP, previous unaudited financial results are not reliable)
Long or Short Capital Q1’06 Results
Long or Short Capital Q2’06 Results
Long or Short Capital Q3’06 Results
Long or Short Capital Q4’06 Results
Hi Guys,
Great quarter!
I say that primarily because I hope that my blatent ass kissing will encourage you to throw me a morsel of inside information every once and awhile that I can claim to be a “channel check” and fool everyone else on the street into thinking that I am actually doing real research.
Anyhuu,the whole time I was listening to your fake conference call I was thinking to myself “I hope the fact that I said “great quarter” on the last conference call means that when they go to screen who they want to take questions from they will pick me first” and I am glad to see that you did. This validation of me by you should be worth at least $0.01/share in my Q2 estimates.
I was also thinking to myself, “self, what killer question can I come up with that demonstrates to the all the buyside analysts lurking on this call that I am perhaps the smartest human being they have even been priviledged to hear and so inspire them that they vote for me as the #1 II analyst in perpetuity in every possible category imaginable.”
Unfortunately, I was so caught in this vision and thinking about all the banking business it would generate and then all the bonus dollars I would “indirectly” receive because of my “great research” that I forgot most of what was said.
That said, just to demonstrate what a tremendously insightful analyst I am, I am going to ask a very high value question that cuts to the heart of the strategic and financial uncertainties facing your business and indicates to all those listening just how much more astute and perceptive I am than they are without being so astute that it obviously stumps you guys and I return to be the last guy in the cue you consider taking a question from.
And so therefore my question is this: “I noticed that your tax rate in Q1 was 0.0%, how should we thinking about Q2’s tax rate and to follow up on that, in my model should I be thinking about adjusting deferred taxes assets on the balance sheet in order to account for any possible fx losses associated with moving some of your cash equivalents into candy corns?”
Thanks and I just want to mention again, great quarter.
That’s a great question Bill and we probably should have gone through this before so thanks for bringing it up, I’ll make one quick comment from a high level and then let Juggles fill in any detail. Our tax situation is somewhat unique in that we don’t pay them. Some people think it’s a little risky but we really view it as a long term startegic advantage. Not paying taxes obviously improves our tax expense line compared to a case where we did pay taxes, but most people forget it also improves our labor cost: we’re not paying anyone for help with our taxes, instead Juggles just writes “0” in every box and sends it in. This allows us to maximize our dividends to you.
Nothing better than slogging in on a Monday morning and laughing out loud at this post…loved it.
As a shareholder, I hope you are effectively managing your cash position by using repos or some other sort of easy overnight investment.
Is there a dividend reinvestment plan?
Good morning and thanks for your questions RC and good to hear from you Bill. How is your wife/child/pet/parent? I hope they are hot/smart/obedient/in good health.
Just to clear the 27A nonsense out of the way…forward looking statements…blah blah blah….limitations, liability, lawyer crap…blah blah blah…we can only predict the future most of the time so don’t sue us…blah loblaw blah…no assurances….blah blah blah
On taxes, and Kaiser, jump in on any point, but we are not…well, we are not what you would call a “tax paying entity.” I know if you have been listening to the calls of our non-existent public competitors, the tenor you would be non-existently getting would be that there is a fear… a concern that not paying taxes could be construed as illegal under certain interpretations of the tax code and the extant body of related legislation.
Let me assure our subscriberholders that we have vetted the issue with both our internal legal team as well as an external group, and once we paid them enough, both agreed that this entire “not paying any taxes” thing was entirely ok.
Not being a tax paying entity allows us to receive higher after-tax cash inflows and hence, more capital available for growth projects such as “lighting twenties on fire”, “lighting fifties on fire” and “lighting hundreds on fire.”
As to your model, I don’t have the numbers in front of me, but we are at this present time, your model should look like this (and with no deferred tax assets). Revenue will grow 7.5% YOY every Q forever. Operating income will crome 9% YOY every quarter forever. We will make it so (literally, I have the spreadsheet right in front of my assistant at all times, and I can tell her to make the numbers anything, a quick pat on her ass and the job is done).
Now on the second question, we have discussed and developed some exciting new dividend alternatives which we expect to roll out sometime soon. Dividend reinvestment may be incorporated in an appropriately convoluted way. Whatever we decide to do, you can fully expect that it will maximize our returns. And by “our” I mean “management’s.”
Great quarter guys. Sorry, I was a little late getting on the call, so you might have covered these questions already.
1)First, did the weather impact those comps at all?
2)On forward guidance: can you provide a little more granularity on the breakout of that revenue guidance? I like to make models that have line-items per revenue source (it’s my competitive advantage) yet I am unable to discern if I should just plug in 7.5% on each line, or mix it up a bit?
Once again, great quarter. You’re in my magic quadrant for sure.
Hi there Cheddah. On your first question, we did see some weather related uplift, but we don’t like to quantify in a public forum like this for competitive reasons.
On two, I don’t know what kind of granularity we can give you, typically it’s not something we give out. The guidance we can provide is for you to develop your model based on the consensus industry estimates. Then add 5-7% to everything that is good. Those are the results we plan to release, and we have full discretionary control over the numbers.
Thanks for your questions.