Long or Short Capital Reports Q1’07 Results

by Mr Juggles

Long 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

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