UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2012
XO Group Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 001-35217 | 13-3895178 | ||
(State or other Jurisdiction of Incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
195 Broadway, 25th Floor, New York, New York | 10007 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 219-8555
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On August 8, 2012, XO Group Inc. (“XO Group”) issued a press release announcing its financial results as of and for the quarter ended June 30, 2012. A copy of XO Group’s press release announcing these financial results is attached as Exhibit 99.1 hereto, and is incorporated by reference into this report. The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a) (2) of the Securities Act of 1933, as amended. The information contained in this Item and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any filing of XO Group, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following documents are included as exhibits to this report:
99.1 | Press Release dated August 8, 2012. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
XO GROUP INC. | ||
(Registrant) | ||
Date: August 8, 2012 | By: | /s/ JOHN P. MUELLER |
John P. Mueller
Chief Financial Officer |
EXHIBIT INDEX
99.1 | Press Release dated August 8, 2012. |
XO Group Inc. Reports Second Quarter 2012 Financial Results
—Second Quarter Revenue Up 2%, Gross Margin Up 330 basis points, EPS up 30%—
Conference Call Today at 4:30 p.m. ET, Dial-In (866) 430-3457 (ID# 16528009)
NEW YORK, Aug. 8, 2012 /PRNewswire/ -- XO Group Inc. (NYSE: XOXO, www.xogroupinc.com), the premier media and technology company devoted to weddings, pregnancy, and everything in between, today reported financial results for the three months ended June 30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120618/NY26546LOGO )
Second Quarter Summary Results
Total revenue for the second quarter was $35.4 million, up 2.1% compared to the prior year. The results were again led by local online advertising, and publishing and other, which grew 16.5% and 9.5%, respectively, year over year. National online advertising declined 5.4%. The e-commerce and registry businesses were down, 14.6% and 5.3% year over year, respectively.
For the quarter ended June 30, 2012, gross margin improved by 330 basis points over the prior year with gross margin improvements across each business line. The Company's operating profit was $5.2 million compared to an operating profit of $5.0 million in the prior year quarter. The $0.2 million increase in operating profit was due to revenue growth and improved gross margins which were partly offset by an increase in expenses including compensation, investment in Ijie.com in China, and rent compared to June 2011 quarter results. Net income for the quarter was $3.1 million or $0.13 per diluted share, compared to net income of $2.9 million or $0.10 per diluted share in the prior year quarter.
The Company's balance sheet at June 30, 2012 reflects cash and cash equivalents of $69.5 million, down $7.9 million from $77.4 million at December 31, 2011. Cash declined during the first half of the year, primarily due to the repurchase of 2.1 million shares of common stock for $18.9 million and capital expenditures of $1.2 million, offset in part by positive cash flow from operations of $14.3 million.
"We continue to be encouraged by the sustained growth in our local business even as we are cautious on the national online advertising market. Over the last several months, our product development team has been very busy as we constantly strive towards enhancing the user experience of our sites, imagining new and useful sponsorship opportunities for our advertisers, and ultimately driving growth for XO Group across business lines. As we enter the second half of 2012, we remain cautious on the macroeconomic environment but very positive regarding XO Group's opportunities and positioning for long term growth," said Chief Executive Officer David Liu.
Recent Developments
Second Quarter and Year-to-Date 2012 Financial Highlights
"The first half of the year was mixed, with strong local advertising and publishing offset by challenges in national advertising and e-commerce. Improvements in gross margins drove better profitability compared to the first half last year. We are entering the second half of the year hopeful that economic conditions improve but with a continued focus on controlling costs even as we invest in providing our audience and clients with the best products and experiences possible," said Chief Financial Officer John Mueller.
Supplemental Data Tables
Local Online Advertising Metrics
2Q2012 | 1Q2012 | 4Q2011 | 3Q2011 | 2Q2011 | |
Profile Count | 29,700 | 29,300 | 28,400 | 26,900 | 26,200 |
Vendor Count | 21,800 | 21,500 | 20,900 | 20,500 | 20,000 |
Churn Rate | 29.7% | 29.3% | 29.1% | 29.2% | 29.8% |
Avg. Revenue/Vendor | $2,300 | $2,300 | $2,300 | $2,200 | $2,200 |
Gross Profit/Margin by Business
Three months ended June 30, | 2012 | 2012 | 2011 | 2011 |
($000s) | Gross Profit | Gross Margin | Gross Profit | Gross Margin |
Online sponsorship & advertising | $18,534 | 97.5% | $17,093 | 96.8% |
Registry services | 1,988 | 100.0% | 2,100 | 100.0% |
Merchandise | 3,004 | 43.4% | 3,196 | 39.5% |
Publishing & other | 5,146 | 68.4% | 4,566 | 66.5% |
Total gross profit | $28,672 | 80.9% | $26,955 | 77.6% |
Stock Based Compensation
Three Months Ended June 30, | Six Months Ended June 30, | |||
($000s) | 2012 | 2011 | 2012 | 2011 |
Product & content development | $651 | $473 | $1,485 | $946 |
Sales & marketing | 531 | 390 | 1,411 | 992 |
General & administrative | 713 | 421 | 1,573 | 861 |
Total stock-based compensation | $1,895 | $1,284 | $4,469 | $2,799 |
Stock Repurchase Summary Since Inception, Through Second Quarter 2012
($000s) Three Months Ended |
Total Cost |
Common Stock Repurchased (000s shares) | Percentage of
Common Stock At 12/31/2010 |
March 31, 2011 | $37,670 | 3,672 | 10.7% |
June 30, 2011 | 8,744 | 886 | 2.7% |
September 30, 2011 | 13,796 | 1,558 | 4.5% |
December 31, 2011 | 10,895 | 1,344 | 3.9% |
March 31, 2012 | 12,699 | 1,434 | 4.2% |
June 30, 2012 | 6,196 | 675 | 1.9% |
Total, Since Inception | $90,000 | 9,569 | 27.9% |
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on August 8, 2012, to discuss its second quarter 2012 financial results. Participants should dial (866) 430-3457 and use Conference ID# 16528009 at least 10 minutes before the call is scheduled to begin. Participants can also access the live broadcast over the Internet on the Investor Relations section of the Company's website, accessible at http://ir.xogroupinc.com. To access the webcast, participants should visit XO Group's website at least 15 minutes prior to the conference call in order to download or install any necessary audio software.
A replay of the webcast will also be archived on the Company's website approximately two hours after the conference call ends. A replay of the call will be available at (855) 859-2056 or (404) 537-3406, conference ID # 16528009.
About XO Group Inc.
XO Group Inc. (NYSE: XOXO; http://www.xogroupinc.com) is the premier media and technology company devoted to weddings, pregnancy and everything in between, providing young women with the trusted information, products and advice they need to guide them through the most transformative events of their lives. Our family of premium brands began with the #1 wedding brand, The Knot, and has grown to include WeddingChannel.com, The Nest, The Bump, The Blush and Ijie.com. XO Group is recognized by the industry for being innovative in all media - from the web to social media and mobile, magazines and books, and video - and our groundbreaking social platforms have ignited passionate communities across the world. XO Group has leveraged its customer loyalty into successful businesses in online sponsorship and advertising, registry services, ecommerce and publishing. The company is publicly listed on the New York Stock Exchange (XOXO) and is headquartered in New York City.
This release may contain projections or other forward-looking statements regarding future events or our future financial performance. These statements are only predictions and reflect our current beliefs and expectations. Actual events or results may differ materially from those contained in the projections or forward-looking statements. It is routine for internal projections and expectations to change as the quarter progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of the quarter. Although these expectations may change, we will not necessarily inform you if they do. Our policy is to provide expectations not more than once per quarter, and not to update that information until the next quarter. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation, (i) our online wedding-related and other websites may fail to generate sufficient revenue to survive over the long term, (ii) our history of losses, (iii) inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our advertisers and sponsors, (v) the significant fluctuation to which our quarterly revenue and operating results are subject, (vi) the seasonality of the wedding industry, (vii) the dependence of our e-commerce sites on search engine rankings and the limits of our search engine optimization efforts to influence those rankings, (viii) the dependence of the WeddingChannel.com registry services business on third parties, and (ix) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
XO GROUP INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(in thousands, except for per share amounts) | |||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||
2012
| 2011
| ||||||||||||||||
Net revenue: | |||||||||||||||||
Online sponsorship and advertising | $ 19,012 | $ 17,653 | |||||||||||||||
Registry services | 1,988 | 2,100 | |||||||||||||||
Merchandise | 6,916 | 8,097 | |||||||||||||||
Publishing and other | 7,520 | 6,869 | |||||||||||||||
Total net revenue | 35,436 | 34,719 | |||||||||||||||
Cost of revenue: | |||||||||||||||||
Online sponsorship and advertising | 478 | 560 | |||||||||||||||
Merchandise | 3,912 | 4,901 | |||||||||||||||
Publishing and other | 2,374 | 2,303 | |||||||||||||||
Total cost of revenue | 6,764 | 7,764 | |||||||||||||||
Gross profit | 28,672 | 26,955 | |||||||||||||||
Operating expenses: | |||||||||||||||||
Product and content development | 6,874 | 6,304 | |||||||||||||||
Sales and marketing | 10,258 | 9,659 | |||||||||||||||
General and administrative | 5,401 | 4,712 | |||||||||||||||
Depreciation and amortization | 927 | 1,243 | |||||||||||||||
Total operating expenses | 23,460 | 21,918 | |||||||||||||||
Income from operations | 5,212 | 5,037 | |||||||||||||||
Loss in equity interest | (10) | (136) | |||||||||||||||
Interest and other (loss) income, net | (5) | 94 | |||||||||||||||
Income before income taxes | 5,197 | 4,995 | |||||||||||||||
Provision for income taxes | 2,079 | 2,079 | |||||||||||||||
Net income | 3,118 | 2,916 | |||||||||||||||
Plus: net loss attributable to non-controlling interest | 20 | - | |||||||||||||||
Net income attributable to the controlling interest | $ 3,138 | $ 2,916 | |||||||||||||||
Net income per share attributable to XO Group
| |||||||||||||||||
Basic | $ 0.13 | $ 0.10 | |||||||||||||||
Diluted | $ 0.13 | $ 0.10 | |||||||||||||||
Weighted average number of shares used in
| |||||||||||||||||
Basic | 24,488 | 29,495 | |||||||||||||||
Diluted | 25,078 | 30,161 |
XO GROUP INC. | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
(in thousands, except for per share amounts) | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
2012
| 2011
| |||||||||||||
Net revenue: | ||||||||||||||
Online sponsorship and advertising | $ 37,601 | $ 34,422 | ||||||||||||
Registry services | 3,002 | 3,229 | ||||||||||||
Merchandise | 12,525 | 13,803 | ||||||||||||
Publishing and other | 12,087 | 10,809 | ||||||||||||
Total net revenue | 65,215 | 62,263 | ||||||||||||
Cost of revenue: | ||||||||||||||
Online sponsorship and advertising | 892 | 1,125 | ||||||||||||
Merchandise | 6,970 | 8,270 | ||||||||||||
Publishing and other | 3,766 | 3,625 | ||||||||||||
Total cost of revenue | 11,628 | 13,020 | ||||||||||||
Gross profit | 53,587 | 49,243 | ||||||||||||
Operating expenses: | ||||||||||||||
Product and content development | 13,466 | 12,835 | ||||||||||||
Sales and marketing | 21,411 | 20,163 | ||||||||||||
General and administrative | 11,035 | 9,815 | ||||||||||||
Depreciation and amortization | 1,873 | 2,525 | ||||||||||||
Total operating expenses | 47,785 | 45,338 | ||||||||||||
Income from operations | 5,802 | 3,905 | ||||||||||||
Loss in equity interest | (10) | (240) | ||||||||||||
Interest and other (loss) income, net | (9) | 93 | ||||||||||||
Income before income taxes | 5,783 | 3,758 | ||||||||||||
Provision for income taxes | 2,313 | 1,547 | ||||||||||||
Net income | 3,470 | 2,211 | ||||||||||||
Plus: net loss attributable to non-controlling interest | 65 | - | ||||||||||||
Net income attributable to the controlling interest | $ 3,535 | $ 2,211 | ||||||||||||
Net income per share attributable to XO Group
| ||||||||||||||
Basic | $ 0.14 | $ 0.07 | ||||||||||||
Diluted | $ 0.14 | $ 0.07 | ||||||||||||
Weighted average number of shares used in
| ||||||||||||||
Basic | 25,004 | 30,667 | ||||||||||||
Diluted | 25,585 | 31,385 |
XO GROUP INC. | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(amounts in thousands) | ||||||||||
June 30, | December 31, | |||||||||
2012 | 2011 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ 69,510 | $ 77,376 | ||||||||
Accounts receivable, net | 13,661 | 16,723 | ||||||||
Inventories | 2,935 | 3,591 | ||||||||
Deferred production and marketing costs | 767 | 1,050 | ||||||||
Deferred tax assets, current portion | 3,015 | 3,015 | ||||||||
Other current assets | 4,239 | 4,860 | ||||||||
Total current assets | 94,127 | 106,615 | ||||||||
Long-term restricted cash | 2,597 | 2,599 | ||||||||
Property and equipment, net | 12,949 | 13,535 | ||||||||
Intangible assets, net | 7,086 | 6,938 | ||||||||
Goodwill | 38,879 | 39,089 | ||||||||
Deferred tax assets | 15,604 | 15,605 | ||||||||
Other assets | 542 | 58 | ||||||||
Total assets | $ 171,784 | $ 184,439 | ||||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued expenses | $ 9,669 | $ 11,054 | ||||||||
Deferred revenue | 14,099 | 13,745 | ||||||||
Total current liabilities | 23,768 | 24,799 | ||||||||
Deferred tax liabilities | 2,665 | 2,665 | ||||||||
Other liabilities | 6,965 | 6,096 | ||||||||
Total liabilities | 33,398 | 33,560 | ||||||||
Common stock | 259 | 276 | ||||||||
Additional paid-in-capital | 163,194 | 172,935 | ||||||||
Accumulated deficit | (25,067) | (22,868) | ||||||||
Total stockholders' equity | 138,386 | 150,343 | ||||||||
Non-controlling interest in subsidiary | - | 536 | ||||||||
Total equity | 138,386 | 150,879 | ||||||||
Total liabilities and equity | $ 171,784 | $ 184,439 | ||||||||
CONTACT: Malindi Davies, Investor Relations Manager, +1-212-219-8555 x1078, IR@xogrp.com