- Strong Q3 but Q4 guidance trimmed, in part because of concerns about impact of housing market
- Revenue up 13% to $69 million, driven by ads, a book deal, and a one-time gain, in middle of guidance range.
- Operating loss narrowed to ($4.9 million) from ($10.4 million), versus (-$8.0 million) guidance.
- Ad revenue up 40%, driven by Martha Stewart Living magazine
- Publishing division revenue up 27% to $46 million. Operating income up to $6 million from $2 million.
- Broadcasting revenue down from $10.1 million to $8.8 million.
- Online revenue minor and tepid: $3.3 million vs. $2.8 million. Operating loss also increasing: ($2.1 million) vs. ($0.8 million).
Cuts Outlook: Despite outperforming in Q3, company cut revenue guidance from $330-$340 million to $330 million and operating profit and adjusted EBITDA (the latter from $34-$37 million to $33 – $35 million.
Logic: increased salesforce hiring for our media businesses and Marthapedia, “an Internet project under development, as well as our more conservative posture on the housing market.“
IMPORTANT: This is the first media company we are aware of that has cut guidance specifically as a result of weakness in the housing market. We continue to fear this could be the start of a trend.
*UPDATE: On the conference call later on Friday, the company attributed the guidance cut directly to the KB Homes deal (MSO gets a royalty payment when houses are sold above a certain price threshold). The company also said that advertising in October and the first two days of November was strong. So it appears our initial concern about the guidance cut–that housing weakness was beginning to affect advertising spending–was unfounded.
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