EX-99.1 2 v471893_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

 

XO Group Reports Second Quarter 2017 Financial Results;

 

- Total revenue grew 9.1% in the second quarter

 

- Transactions revenue increased 27% and local online advertising revenue increased 14% in the second quarter

 

- GAAP EPS were $0.06, non-GAAP EPS were $0.11 in the second quarter

 

- Company to host Analyst Meeting on September 27, 2017

 

Conference Call Monday, July 31, 2017 at 8:00 a.m. ET, Dial-In (877) 201-0168 (ID# 51080589)

 

 

NEW YORK, July 31, 2017 - XO Group Inc. (the “Company”) (NYSE: XOXO, xogroupinc.com), today reported financial results for the three and six months ended June 30, 2017.

 

Total revenue for the second quarter of 2017 was $42.2 million, up 9% as compared to the same period in the prior year and the Adjusted EBITDA margin was 19%. GAAP net income for the quarter was $1.4 million or $0.06 per diluted share compared to diluted earnings per share of $0.15 in the same period in the prior year. Non-GAAP net income was $2.7 million or $0.11 per diluted share. The Company’s balance sheet at June 30, 2017 reflected cash and cash equivalents of $98.4 million compared to $105.7 million at December 31, 2016. The Company repurchased and retired shares of its common stock for an aggregate price of $8.2 million during the quarter as part of the Companys previously announced repurchase program.

 

"We continue to develop great products that our couples love while delivering distinct value to our business partners.  I am pleased to report another quarter of robust growth in our transactions business and our highest year-over-year quarterly growth rate in local online since the first quarter of 2016," said Mike Steib, Chief Executive Officer.

 

XO's Management Team will welcome Analysts and Investors at an Analyst Breakfast and Meeting on September 27th.  More details to come.

 

Long-Term Financial Targets

 

The Company's long-term financial targets are double digit revenue growth rates and gross margins of approximately 90-95%, yielding adjusted EBITDA margins of 20%.

 

 

 

 

XO GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Thousands, Except for Per Share Data)

(Unaudited)

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2017   2016   2017   2016 
Net revenue:                    
National online advertising  $9,746   $9,566   $18,674   $18,224 
Local online advertising   18,991    16,652    37,426    34,831 
Total online advertising   28,737    26,218    56,099    53,055 
Transactions   8,190    6,431    13,152    10,635 
Publishing and other   5,299    6,059    8,735    10,687 
Total net revenue   42,226    38,708    77,986    74,377 
Cost of revenue:                    
Online advertising   919    684    1,850    1,299 
Publishing and other   1,867    2,072    2,845    3,182 
Total cost of revenue   2,786    2,756    4,695    4,481 
Gross profit   39,440    35,952    73,291    69,896 
Operating expenses:                    
Product and content development   11,914    10,814    23,655    21,659 
Sales and marketing   14,030    11,513    27,531    23,074 
General and administrative   7,961    5,833    15,262    12,183 
Depreciation and amortization   2,011    1,641    3,669    3,235 
Total operating expenses   35,917    29,801    70,117    60,151 
Income from operations   3,524    6,151    3,174    9,745 
Loss in equity interests   (1,054)   (37)   (1,171)   (181)
Interest and other income / (expense), net   105    (18)   198    (19)
Income before income taxes   2,575    6,096    2,201    9,545 
Income tax expense   1,134    2,331    448    2,755 
Net income  $1,441   $3,765   $1,753   $6,790 
                     
Net income per share:                    
Basic  $0.06   $0.15   $0.07   $0.27 
Diluted  $0.06   $0.15   $0.07   $0.26 
Weighted average number of shares used in calculating net earnings per share:                    
Basic   24,958    25,393    25,154    25,328 
Dilutive effect of:                    
Restricted stock   191    260    280    291 
Employee Stock Purchase Plan   2    3    2    1 
Options   31    21    33    17 
Diluted   25,182    25,677    25,469    25,637 

 

 

 

 

XO GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except for Per Share Data)

(Unaudited)

 

   June 30, 2017   December 31, 2016 
ASSETS          
Current assets:          
Cash and cash equivalents  $98,391   $105,703 
Accounts receivable, net   18,548    20,182 
Prepaid expenses and other current assets   8,018    5,247 
Total current assets   124,957    131,132 
Long-term restricted cash   1,181    1,181 
Property and equipment, net   10,912    12,130 
Intangibles assets, net   3,738    4,154 
Goodwill   48,678    48,678 
Deferred tax assets, net   9,757    9,918 
Investments   1,514    2,685 
Other assets   187    308 
Total assets  $200,924   $210,186 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accrued compensation and employee benefits  $4,670   $6,164 
Accounts payable and accrued expenses   7,479    7,515 
Deferred revenue   18,381    16,752 
Total current liabilities   30,530    30,431 
Deferred rent   3,423    3,720 
Other liabilities   1,192    1,485 
Total liabilities   35,145    35,636 
Commitments and contingencies          
Stockholders’ equity:          
Preferred stock, $0.001 par value; 5,000,000 shares authorized and zero shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively        
Common stock, $0.01 par value; 100,000,000 shares authorized and 25,697,045 and 26,304,925 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively  258    264 
Additional paid-in-capital   177,256    178,959 
Accumulated deficit   (11,735)   (4,673)
Total stockholders’ equity   165,779    174,550 
Total liabilities and stockholders’ equity  $200,924   $210,186 

 

 

 

 

XO GROUP INC.

NON-GAAP RECONCILIATION TABLE

For the Three Months Ended June 30, 2017 and 2016

(In Thousands, Except for Per Share Data)

(Unaudited)

 

   Adjusted Net Income Reconciliation
Three Months Ended June 30,
 
   2017   2016 
   As Reported   Adjustments   Non GAAP   As Reported   Adjustments   Non GAAP 
                         
Net revenue  $42,226   $   $42,226   $38,708   $   $38,708 
Cost of revenue   2,786        2,786    2,756        2,756 
Operating expenses                              
Product and content development   11,914        11,914    10,814        10,814 
Sales and marketing   14,030        14,030    11,513        11,513 
General and administrative   7,961    200(a)   7,761    5,833        5,833 
Depreciation and amortization   2,011        2,011    1,641        1,641 
Total operating expenses   35,916    200    35,716    29,801        29,801 
                               
Income from operations   3,524    200    3,724    6,151        6,151 
                               
Interest and other income/(expense), net   105        105    (18)       (18)
Loss in equity interests   (1,054)   1,032(a)   (22)   (37)       (37)
Income tax expense   1,134        1,134    2,331        2,331 
Net income  $1,441   $1,232   $2,673   $3,765   $   $3,765 
Net income per share - diluted  $0.06   $0.05   $0.11   $0.15   $   $0.15 
Weighted average number of shares outstanding - diluted   25,182         25,182    25,677         25,677 

 

   Adjusted EBITDA Reconciliation 
   Three Months Ended June 30, 
   2017   2016 
Income from operations  $3,524   $6,151 
Depreciation and amortization   2,011    1,641 
Stock-based compensation   2,142    1,988 
Bad debt expense (a)  $200     
Adjusted EBITDA  $7,877   $9,780
     
   Free Cash Flow Reconciliation 
   Three Months Ended June 30, 
   2017   2016 
Net cash provided by operating activities  $3,625   $7,090 
Less: capital expenditures   (911)   (1,264)
Free cash flow  $2,714   $5,826 

 

(a)Adjusted loss in equity interests excludes the other-than-temporary impairment that reduced the carrying value of our equity investment in Jetaport, Inc. to zero. In addition, adjusted general and administrative operating expenses exclude bad debt expense associated with a loan previously made to Jetaport, Inc.

 

 

 

 

XO GROUP INC.

NON-GAAP RECONCILIATION TABLE

For the Six Months Ended June 30, 2017 and 2016

(In Thousands, Except for Per Share Data)

(Unaudited)

 

   Adjusted Net Income Reconciliation 
   Six Months Ended June 30, 
   2017   2016 
   As Reported   Adjustments   Non GAAP   As Reported   Adjustments   Non GAAP 
                         
Net revenue  $77,986   $   $77,986   $74,377   $   $74,377 
Cost of revenue   4,695        4,695    4,481        4,481 
Operating expenses                              
Product and content development   23,655        23,655    21,659        21,659 
Sales and marketing   27,531        27,531    23,074        23,074 
General and administrative   15,262    200(a)   15,062    12,183        12,183 
Depreciation and amortization   3,669        3,669    3,235        3,235 
Total operating expenses   70,117    200    69,917    60,151        60,151 
Income from operations   3,174    200    3,374    9,745        9,745 
Interest and other income / (expense), net   198        198    (19)       (19)
Loss in equity interests   (1,171)   1,032(a)   (139)   (181)       (181)
Income tax expense   448        448    2,755        2,755 
Net income  $1,753   $1,232   $2,985   $6,790   $   $6,790 
Net income per share - diluted  $0.07   $0.05   $0.12   $0.26   $   $0.26 
Weighted average number of shares outstanding - diluted   25,469         25,469    25,637         25,637 

 

   Adjusted EBITDA Reconciliation 
   Six Months Ended June 30, 
   2017   2016 
Income from operations  $3,174   $9,745 
Depreciation and amortization   3,669    3,235 
Stock-based compensation   4,017    3,644 
Bad debt expense (a)   200     
Adjusted EBITDA  $11,060   $16,624 
         
   Free Cash Flow Reconciliation 
   Six Months Ended June 30, 
   2017   2016 
Net cash provided by operating activities  $9,832   $12,633 
Less: capital expenditures   (2,123)   (1,986)
Free cash flow  $7,709   $10,647 

 

(a)Adjusted loss in equity interests excludes the other-than-temporary impairment that reduced the carrying value of our equity investment in Jetaport, Inc. to zero. In addition, general and administrative operating expenses excludes bad debt expense associated with a loan previously made to Jetaport, Inc.

 

 

 

 

XO GROUP INC.

SUPPLEMENTAL DATA TABLES (UNAUDITED)

(Unaudited)

 

TheKnot.com Local Online Advertising Metrics Q2 2017 Q2 2016
Vendor Count(a) 23,961 24,241
Retention Rate(a) 75.1% 69.7%
Avg. Revenue/Vendor(a) $2,865 $2,667
Vendor Count at Quarter End 26,124 22,909

 

(a)Calculated on a trailing twelve-month basis.

 

Stock Based Compensation

 

The Company included total stock-based compensation expense related to all its stock awards in various operating expense categories for the three and six months ended June 30, 2017 and 2016, as follows:

 

  Three Months Ended June 30,    Six Months Ended June 30, 
  2017   2016   2017   2016 
  (Amounts in Thousands)
Product and content development  $657   $556   $1,154   $961 
Sales and marketing   431    438    865    848 
General and administrative   1,054    994    1,998    1,835 
Total stock-based compensation  $2,142   $1,988   $4,017   $3,644 

 

 

 

 

Conference Call and Replay Information

 

XO Group Inc. will host a conference call with investors at 8:00 a.m. ET on Monday, July 31, 2017, to discuss its second quarter 2017 financial results. Participants should dial (877) 201-0168 and use Conference ID# 51080589 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.

 

About XO Group Inc.

 

XO Group Inc.’s (NYSE: XOXO; xogroupinc.com) mission is to help people navigate and truly enjoy life’s biggest moments together. Our multi-platform brands guide couples through transformative life stages - from getting married with The Knot, to moving in together with The Nest, to having a baby with The Bump, and helping bring important celebrations to life with entertainment vendors from GigMasters. The Company is publicly listed on the New York Stock Exchange (NYSE: XOXO) and is headquartered in New York City.

 

Forward Looking Statements

 

This release may contain projections or other forward-looking statements regarding future events or our future financial performance or estimates regarding third parties. These statements are only estimates or predictions and reflect our current beliefs and expectations. Actual events or results may differ materially from those contained in the estimates, 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 operating results may fluctuate, are difficult to predict and could fall below expectations, (ii) our business depends on strong brands, and failing to maintain and enhance our brands would hurt our business, (iii) our ongoing investment in new businesses and new products, services, and technologies is inherently risky, and could disrupt our ongoing business and/or fail to generate the results we are expecting, (iv) if we are unable to continue to develop solutions that generate revenue from advertising and other services delivered to mobile devices, our business could be harmed, (v) we face intense competition in our markets. If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenue and results of operations could be adversely affected, (vi) our businesses could be negatively affected by changes in Internet search engine algorithms and email marketing policies, (vii) our transactions business is dependent on third-party participants, whose lack of performance could adversely affect our results of operations, (viii) fraudulent or unlawful activities on our marketplace could harm our business and consumer confidence in our marketplace, (ix) we may be subject to legal liability associated with providing online services or content, (x) we may be unable to continue to use the domain names that we use in our business, or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks, and (xi) 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.

 

 

 

 

Non-GAAP Financial Measures

 

This press release includes information about certain financial measures that are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “U.S. GAAP”), including adjusted EBITDA, adjusted net income, adjusted net income per diluted share and free cash flow. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

 

Management defines its non-GAAP financial measures as follows:

 

Adjusted EBITDA represents GAAP income from operations adjusted to exclude, if applicable: (1) depreciation and amortization, (2) stock-based compensation expense, (3) asset impairment charges, and (4) other items affecting comparability during the period.

 

Adjusted net income represents GAAP net income, adjusted for items that impact comparability for incremental or unusual costs incurred in the current period, which may include: (1) asset impairment charges, (2) executive separation and other severance charges, (3) non-recurring foreign taxes, interest and penalties and (4) costs related to exit activities.

 

Adjusted net income per diluted share represents adjusted net income (as defined above), divided by the diluted weighted-average number of shares outstanding for the period.

 

Free cash flow represents GAAP net cash provided by operations, less capital expenditures.

 

Management believes that these non-GAAP financial measures, when viewed with our results under U.S. GAAP and the accompanying reconciliations, provide useful information about our period-over-period growth and provide additional information that is useful for evaluating our operating performance. However, adjusted EBITDA, adjusted net income, adjusted net income per diluted share and free cash flow are not measures of financial performance under U.S. GAAP and, accordingly, should not be considered substitutes for or superior to net income and net income per diluted share and net cash provided by operating activities as indicators of operating performance.

 

A reconciliation of GAAP to Non-GAAP financial measures is included in this press release.

 

Contact:

Ivan Marmolejos

Director, Investor Relations

(212) 219-8555 x1004

IR@xogrp.com