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): November 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 November 8, 2012, XO Group Inc. (“XO Group”) issued a press release announcing its financial results as of and for the quarter ended September 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 November 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: November 8, 2012 | By: | /s/ JOHN P. MUELLER | |
John P. Mueller | |||
Chief Financial Officer |
EXHIBIT INDEX
99.1 | Press Release dated November 8, 2012. |
XO Group Inc. Reports Third Quarter 2012 Financial Results
Conference Call Today at 4:30 p.m. ET, Dial-In (866) 430-3457 (ID# 58988149)
- Third Quarter Revenue Up 2% Driven by Publishing and Online Advertising -
NEW YORK, Nov. 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 September 30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120618/NY26546LOGO )
Third Quarter Summary Results
Total revenue for the third quarter was $31.7 million, up 2.2% compared to the prior year. The results were led by publishing and other, local online and national online which grew 18.2%, 12.5%, and 9.8% respectively, year over year. The e-commerce and registry businesses were down, 25.4% and 5.2% year over year, respectively.
For the quarter ended September 30, 2012, gross margin improved by 370 basis points over the prior year. The Company's operating profit was $3.3 million compared to an operating profit of $1.9 million in the prior year quarter. The $1.4 million increase in operating profit was due to revenue growth and improved gross margins, which were partly offset by an increase in compensation expenses. Net income for the quarter was $2.1 million or $0.08 per diluted share, compared to net income of $1.3 million or $0.04 per diluted share in the prior year quarter.
The Company's balance sheet at September 30, 2012 reflects cash and cash equivalents of $72.7 million, down $4.7 million from $77.4 million at December 31, 2011. Cash declined during the first nine months of the year, primarily due to the repurchase of 2.1 million shares of common stock for $18.9 million which was completed on June 12, 2012 and capital expenditures of $2.0 million, offset in part by positive cash flow from operations of $18.4 million.
"We are pleased by the continued growth of our local and publishing businesses, although we acknowledge the challenges in our merchandising businesses. Heading into the final quarter of the year we are optimistic our innovative products, high quality content and services will continue to deliver value to our audience and advertisers," said Chief Executive Officer David Liu.
Recent Developments
Third Quarter and Year-to-Date 2012 Financial Highlights
"Nine months into the year we continue to show impressive growth in our local and publishing businesses as well as continued cost control. We are optimistic that our strong brands, community, and advertiser relationships put us in a position to grow profitably over the long term," said Chief Financial Officer John Mueller.
Supplemental Data Tables
Local Online Advertising Metrics
3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | |
Profile Count | 26,900 | 28,400 | 29,300 | 29,700 | 29,700 |
Vendor Count | 20,500 | 20,900 | 21,500 | 21,800 | 22,100 |
Churn Rate | 29.2% | 29.1% | 29.3% | 29.7% | 29.8% |
Avg. Revenue/Vendor | $2,200 | $2,300 | $2,300 | $2,300 | $2,300 |
Gross Profit/Margin by Business
Three months ended September 30, | 2012 | 2012 | 2011 | 2011 |
($000s) | Gross Profit | Gross Margin | Gross Profit | Gross Margin |
Online sponsorship & advertising | $18,533 | 97.7% | $16,477 | 96.9% |
Registry services | 2,054 | 100.0% | 2,166 | 100.0% |
Merchandise | 2,418 | 42.4% | 3,100 | 40.5% |
Publishing & other | 3,412 | 68.2% | 2,935 | 69.3% |
Total gross profit | $26,417 | 83.2% | $24,678 | 79.5% |
Stock Based Compensation
Three Months Ended September 30, | Nine Months Ended
September 30, | |||
($000s) | 2012 | 2011 | 2012 | 2011 |
Product & content development | $658 | $477 | $2,134 | $1,423 |
Sales & marketing | 574 | 375 | 1,987 | 1,368 |
General & administrative | 732 | 423 | 2,313 | 1,284 |
Total stock-based compensation | $1,964 | $1,275 | $6,434 | $4,075 |
Stock Repurchase Summary Since Inception, Through Third 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 November 8, 2012, to discuss its third quarter 2012 financial results. Participants should dial (866) 430-3457 and use Conference ID# 58988149 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 # 58988149.
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.
Contact:
Ivan Marmolejos
Investor Relations Associate
(212) 219-8555 x1004
IR@xogrp.com
XO GROUP INC. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
(in thousands, except for per share amounts) | |||||
Three Months Ended September 30, | |||||
2012
| 2011
| ||||
Net revenue: | |||||
Online sponsorship and advertising | $ 18,973 | $ 17,003 | |||
Registry services | 2,054 | 2,166 | |||
Merchandise | 5,703 | 7,647 | |||
Publishing and other | 5,004 | 4,233 | |||
Total net revenue | 31,734 | 31,049 | |||
Cost of revenue: | |||||
Online sponsorship and advertising | 440 | 526 | |||
Merchandise | 3,285 | 4,547 | |||
Publishing and other | 1,592 | 1,298 | |||
Total cost of revenue | 5,317 | 6,371 | |||
Gross profit | 26,417 | 24,678 | |||
Operating expenses: | |||||
Product and content development | 6,768 | 5,827 | |||
Sales and marketing | 9,096 | 9,468 | |||
General and administrative | 5,461 | 5,898 | |||
Long-lived asset impairment charges | 958 | 716 | |||
Depreciation and amortization | 867 | 892 | |||
Total operating expenses | 23,150 | 22,801 | |||
Income from operations | 3,267 | 1,877 | |||
Loss in equity interest | (19) | (29) | |||
Interest and other income, net | 82 | 423 | |||
Income before income taxes | 3,330 | 2,271 | |||
Provision for income taxes | 1,271 | 1,010 | |||
Net income | 2,059 | 1,261 | |||
Plus: net loss attributable to non-controlling interest | - | 22 | |||
Net income attributable to the controlling interest | $ 2,059 | $ 1,283 | |||
Net income per share attributable to XO Group common shareholders: | |||||
Basic | $ 0.08 | $ 0.05 | |||
Diluted | $ 0.08 | $ 0.04 | |||
Weighted average number of shares used in calculating net income per share | |||||
Basic | 24,285 | 28,259 | |||
Diluted | 24,818 | 28,822 |
XO GROUP INC. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
(in thousands, except for per share amounts) | |||||
Nine Months Ended September 30, | |||||
2012
| 2011
| ||||
Net revenue: | |||||
Online sponsorship and advertising | $ 56,574 | $ 51,425 | |||
Registry services | 5,056 | 5,395 | |||
Merchandise | 18,228 | 21,450 | |||
Publishing and other | 17,092 | 15,042 | |||
Total net revenue | 96,950 | 93,312 | |||
Cost of revenue: | |||||
Online sponsorship and advertising | 1,332 | 1,651 | |||
Merchandise | 10,255 | 12,817 | |||
Publishing and other | 5,359 | 4,923 | |||
Total cost of revenue | 16,946 | 19,391 | |||
Gross profit | 80,004 | 73,921 | |||
Operating expenses: | |||||
Product and content development | 20,234 | 18,662 | |||
Sales and marketing | 30,507 | 29,631 | |||
General and administrative | 16,497 | 15,713 | |||
Long-lived asset impairment charges | 958 | 716 | |||
Depreciation and amortization | 2,740 | 3,417 | |||
Total operating expenses | 70,936 | 68,139 | |||
Income from operations | 9,068 | 5,782 | |||
Loss in equity interest | (29) | (269) | |||
Interest and other income , net | 73 | 516 | |||
Income before income taxes | 9,112 | 6,029 | |||
Provision for income taxes | 3,584 | 2,557 | |||
Net income | 5,528 | 3,472 | |||
Plus: net loss attributable to non-controlling interest | 65 | 22 | |||
Net income attributable to the controlling interest | $ 5,593 | $ 3,494 | |||
Net income per share attributable to XO Group common shareholders: | |||||
Basic | $ 0.23 | $ 0.12 | |||
Diluted | $ 0.22 | $ 0.11 | |||
Weighted average number of shares used in calculating net income per share | |||||
Basic | 24,762 | 29,856 | |||
Diluted | 25,328 | 30,522 |
XO GROUP INC. | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(amounts in thousands) | ||||
September 30, | December 31, | |||
2012 | 2011 | |||
(unaudited) | ||||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 72,707 | $ 77,376 | ||
Accounts receivable, net | 13,704 | 16,723 | ||
Inventories | 2,416 | 3,591 | ||
Deferred production and marketing costs | 830 | 1,050 | ||
Deferred tax assets, current portion | 3,015 | 3,015 | ||
Assets held for sale | 1,290 | - | ||
Other current assets | 5,418 | 4,860 | ||
Total current assets | 99,380 | 106,615 | ||
Long-term restricted cash | 2,598 | 2,599 | ||
Property and equipment, net | 12,929 | 13,535 | ||
Intangible assets, net | 5,931 | 6,938 | ||
Goodwill | 37,750 | 39,089 | ||
Deferred tax assets | 15,607 | 15,605 | ||
Other assets | 523 | 58 | ||
Total assets | $ 174,718 | $ 184,439 | ||
LIABILITIES AND EQUITY | ||||
Current liabilities: | ||||
Accounts payable and accrued expenses | $ 7,951 | $ 11,054 | ||
Deferred revenue | 14,919 | 13,745 | ||
Total current liabilities | 22,870 | 24,799 | ||
Deferred tax liabilities | 2,668 | 2,665 | ||
Other liabilities | 6,980 | 6,096 | ||
Total liabilities | 32,518 | 33,560 | ||
Common stock | 259 | 276 | ||
Additional paid-in-capital | 165,041 | 172,935 | ||
Accumulated other comprehensive loss | (91) | - | ||
Accumulated deficit | (23,009) | (22,868) | ||
Total stockholders' equity | 142,200 | 150,343 | ||
Non-controlling interest in subsidiary | - | 536 | ||
Total equity | 142,200 | 150,879 | ||
Total liabilities and stockholders' equity | $ 174,718 | $ 184,439 |