Long or Short Capital Reports Q3’07 Results

by Mr Juggles

Long or Short Capital’s fiscal 3rd Quarter ended on 4/30/07, and the company reported its results in a press release:

Mr Juggles: “Morning all. The third quarter was a transitional one for Long or Short. We took part in initiatives which had a negative short term impact on our financials, but which will position us for a higher level of long term sustainable earnings. Additionally, we put less focus on unadulterated traffic growth and more focus on user interaction. Lastly, we worked with our customers to squeeze working capital down to more efficient levels to drive cash flow. Any quarter would have been disappointment following the milestones we were able to blow out of the water in Q2’07, but I am proud to say that I think management proved in Q3 that we will not pander to short term financial metrics, unless it will increase value to subscriberholders, in which case we will pander to short term financial metrics.

Sequential same store traffic, our measure of organic traffic, showed a 5% positive trend against Q2. Considering that last quarter was our historical peak, it means this quarter is now our historical peak, and this is, clearly, historical. Our proprietary “Eyeball Monetization Conversion” ratio, a non-pageview measure of revenue generated per customer, decreased from $18.43 to $14.49, expected due to a scale-back in static advertising and other strategic initiatives which I will address later. Our EMCr still improved 67% on a year over year basis.

We generated earnings per subscriberholder of $0.91 compared to $2.12 in the second quarter and $0.60 in Q1. We generated $947 in revenue for the quarter, a 685% increase year over year, and slightly down sequentially. Our dosey-doe with Google Adsense and Yahoo Publisher resulted in yet another switch, this time from Yahoo to Adsense at the beginning of April. We made the switch due to our dissatisfaction with the relevance of Yahoo’s ads, as well as cost-per-click levels which were sub-twenty cents. We will continue to dynamically adjust to changes in the contextual ad market.

Text link advertising remains the stalwart of our topline, but it experienced a diminution. We sold a full load of Text Link Ads inventory in the second quarter. Subsequently, management determined that a substantial portion of that ad inventory was being delivered at sub-market rates with unreasonable contractual terms. We elected to reduce the ad inventory sold through that channel from 10 links to 1 link. This had a negative $350 impact on our topline. Management believes it is in Long or Short’s long term best interest to hold back supply while pushing for Google Page Rank 6, and then seek out premium pricing selectively. If you have the ability to link to us or coerce high page rank friends to link to us, this will help greatly in our efforts to achieve Page Rank 6, and only further the growth the amount of money we dividend to our readers and get us a step closer to feeling ok buying iPhones for our children’s stuffed animals.

We had one successful CPA campaign which we launched late in Q2 with Everybody’s Gonna Get Laid Except You and followed with “Buy Your GF Flowers Now. Get It Done“.

Our subscribership increased from 508 to 1012. Approximately half that is organic growth and half that resulted from a change in the way Google Reader shows up in susbscriber stats, namely that it does show up now.

Our free cash flow is something I am really proud of and thanks to the good work our finance department did in reaching out and shaking changes out of our customers (laughs), those slow paying mother (expletive), (laughs) (inaudible), we generated free cash flow of $1,417, an increase of 200% sequentially, and higher than our cumulative free cash flow up until the beginning of this quarter. We set a target on last quarter’s call for working capital to run in the 30-35% range and we like the progress we were able to achieve in just one quarter. We are exploring uses for our cash which include but are not limited to investments in regional financial humor producers, acquisition of competitors, complicated structures involving SPEs that would allow us to mislead potential investors, or one really nice corporate pen.

Transition doesn’t sound sexy, but let me tell you, it will be. By way of example, we are like that 7 coming out of college, you know the one, brunette with an ok body ok face and has never really put it altogether. Two years out of college, she is exercising twice a day, not-eating three healthy meals a day, she blondes her hair and learns how to get it done with makeup, and now she is a 9 plus and everyone is bidding up her assets. And how does she get that done? She transitions. And that is what Long or Short is doing, transitioning. Thanks for your time, and have a great night.”

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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 Q3’07
Income Statement

Contextual CPC Revenue $229
CPA Revenue $109
Static Ad Revenue $594
Other Revenue $15

Total Revenue $947

Cost of Sales $19.55
SAAP Income $926.9

Balance Sheet

Cash $1962
Accounts Receivable $302
Inventory $0.00
Prepaid Marketing/Hosting/Reg $146
Accounts Payable $0

Cash Flow Statement

Operating Cash Flow $1417
Capex $0.00
Dividends $X.00

Performance Metrics

Visits 65,290
Pageviews 133,960
Clicks on ads 282
Subscribers by Email 159
Subscribers by XML 853
Inbound Links per Technorati 394 from 148 Sites
Technorati Rank 27,274
Inbound Links per Google ~399 sites
Google PageRank 5

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
Long or Short Capital Q1’07 Results
Long or Short Capital Q2’07 Results

Also here is a look at our Google Spreadsheet Financials spread out quarterly. As you can see, we strictly adhere to SAAP.

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