EX-99.1 2 tv487116_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

Conference Call Thursday March 1, 2018, at 8:00 a.m. ET, Dial-In (833) 236-5763 (ID# 6377287)

 

XO Group Reports Fourth Quarter and Full Year 2017 Financial Results

 

- Revenue increased 3% in the fourth quarter and 6% for the full year, year-over-year

 

- Fourth quarter GAAP net income per diluted share was $0.02

 

- Fourth quarter non-GAAP net income per share was $0.14

 

NEW YORK, 3/1/2018- XO Group Inc. (the “Company”) (NYSE: XOXO, xogroupinc.com), today reported financial results for the three months and full year ended December 31, 2017.

 

Total revenue for the fourth quarter of 2017 was $42.3 million, up 3% compared to the same period in the prior year. GAAP net income for the quarter was $0.4 million or $0.02 per diluted share compared to $0.13 in the prior year quarter. The Company’s Q4 2017 earnings include tax expense of approximately $3.0 million, related to the impact of the U.S. Tax Cuts and Jobs Act of 2017. Excluding this expense, non-GAAP net income for the quarter was $3.5 million or $0.14 per diluted share compared to $0.13 in the prior year quarter. The Company's balance sheet at December 31, 2017 reflects cash and cash equivalents of $106.1 million compared to $105.7 million at December 31, 2016.

 

"We continue to develop innovative products that help our couples navigate and enjoy life’s biggest moments while delivering distinct value to our business partners. In 2017, we delivered strong revenue growth in our transactions and local online businesses alongside record vendor count and retention rates for our local marketplace," said Mike Steib, Chief Executive Officer.

 

Long-Term Financial Targets

 

The Company is reiterating its long-term financial targets of double digit revenue growth rates, gross margins of approximately 90-95%, and adjusted EBITDA margins of 20%.

 

 

 

 

XO GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except for per share data)

(unaudited)

 

   Three months ended
December 31,		   Twelve months ended
December 31,		 
   2017   2016   2017   2016 
Net revenue:                    
Local online advertising  $20,802   $18,368   $78,358   $70,239 
National online advertising   9,913    11,789    37,429    38,945 
Total online advertising   30,715    30,157    115,787    109,184 
Transactions   6,004    5,079    27,106    22,819 
Publishing and other   5,614    5,772    17,663    20,113 
Total net revenue   42,333    41,008    160,556    152,116 
Cost of revenue:                    
Online advertising   1,507    1,563    4,564    3,665 
Publishing and other   2,008    1,921    5,960    6,089 
Total cost of revenue   3,515    3,484    10,524    9,754 
Gross profit   38,818    37,524    150,032    142,362 
Operating expenses:                    
Product and content development   11,044    11,094    45,180    43,874 
Sales and marketing   13,361    13,945    53,093    49,738 
General and administrative   7,056    5,836    30,797    24,494 
Depreciation and amortization   1,538    1,563    6,772    6,390 
Total operating expenses   32,999    32,438    135,842    124,496 
Income from operations   5,819    5,086    14,190    17,866 
Loss in equity interests   (39)   (118)   (1,243)   (328)
Interest and other income, net   253    117    612    146 
Income before income taxes   6,033    5,085    13,559    17,684 
Income tax expense   5,593    1,663    8,025    5,564 
Net income  $ 440   $ 3,422   $ 5,534   $ 12,120 
Net income per share:                    
Basic  $ 0.02   $ 0.14   $ 0.22   $ 0.48 
Diluted  $0.02   $ 0.13    $0.22   $ 0.47 
Weighted average number of shares used in calculating net earnings per share:                    
Basic   24,986    25,316    25,018    25,314 
Diluted   25,306    25,698    25,322    25,640 

  

 

 

 

XO GROUP INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except for per share data)

(unaudited)

 

   December 31, 
   2017   2016 
ASSETS          
Current assets:          
Cash and cash equivalents  $106,092   $105,703 
Accounts receivable, net of allowance of $2,354 and $1,386 at December 31, 2017 and December 31, 2016, respectively   16,399    20,182 
Prepaid expenses and other current assets   5,102    5,247 
Total current assets   127,593    131,132 
Long-term restricted cash   1,181    1,181 
Property and equipment, net   11,829    12,130 
Intangible assets, net   4,019    4,154 
Goodwill   51,438    48,678 
Deferred tax assets, net   6,500    9,918 
Investments   1,442    2,685 
Other assets   118    308 
Total assets  $204,120   $210,186 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accrued compensation and employee benefits  $6,100   $6,164 
Accounts payable and accrued expenses   5,661    7,515 
Deferred revenue   14,113    16,752 
Total current liabilities   25,874    30,431 
Deferred rent   3,365    3,720 
Other liabilities   1,792    1,485 
Total liabilities   31,031    35,636 
Commitments and contingencies (Note 11)          
Stockholders’ equity:          
Preferred stock, $0.001 par value; 5,000,000 shares authorized and 0 shares issued and outstanding as of December 31, 2017 and 2016, respectively   —    — 
Common stock, $0.01 par value; 100,000,000 shares authorized and 25,696,796 and 26,304,925 shares issued and outstanding at December 31, 2017 and 2016, respectively   258    264 
Additional paid-in-capital   180,695    178,959 
Accumulated deficit   (7,864)   (4,673)
Total stockholders’ equity   173,089    174,550 
Total liabilities and stockholders’ equity  $204,120   $210,186 

 

 

 

 

XO GROUP INC.

NON-GAAP TABLE

For the Years Ended December 31, 2017 and 2016

(amounts in thousands, except for per share data)

(unaudited)

 

   Years Ended December 31, 
   2017   2016 
   GAAP Actual   Adjustments     Non GAAP Results   GAAP Actual   Adjustments   Non GAAP Results 
Adjusted Net Income and EPS Reconciliation                                
Revenue  $160,556   $—     $160,556   $152,116    —   $152,116 
Cost of revenues   10,524    —      10,524    9,754    —    9,754 
Operating expenses                                
Product and content development   45,180    —      45,180    43,874    —    43,874 
Sales and marketing   53,093    —      53,093    49,738    —    49,738 
General and administrative   30,797    (200) a   30,597    24,494    —    24,494 
Depreciation and amortization   6,772    —      6,772    6,390    —    6,390 
Total operating expenses   135,842    (200)     135,642    124,496    —    124,496 
                                 
Income from operations   14,190    200      14,390    17,866    —    17,866 
                                 
Interest and other income, net   612    —      612    146    —    146 
(Loss)/gain in equity interest   (1,243)   1,032  a   (211)   (328)   —    (328)
Income tax expense/(benefit)   8,025    (3,030) b   4,995    5,564    5,564      
Net income  $5,534   $4,262     $9,796   $12,120   $—   $12,120 
Amounts per share - diluted   0.22    0.17      0.39    0.47    —    0.47 
Weighted average number of shares outstanding - diluted   25,322           25,322    25,640         25,640 
                                 
Adjusted EBITDA Reconciliation                                
                                 
Operating income  $14,190   $200     $14,390   $17,866   $—   $17,866 
Depreciation and amortization   6,772    —      6,772    6,390    —    6,390 
Stock-based compensation expense   7,843    —      7,843    8,359    —    8,359 
Adjusted EBITDA  $28,805   $200     $29,005   $32,615   $—   $32,615 

  

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.

b.In 2017, income tax expense includes approximately $3.0 million related primarily to the revaluation of certain deferred tax assets in conjunction with the U.S. Tax Cuts and Jobs act of 2017.

  

 

 

 

XO GROUP INC.

NON-GAAP TABLE

For the Quarters Ended December 31, 2017 and 2016

(amounts in thousands, except for per share data)

(unaudited)

 

   Quarters Ended December 31, 
   2017     2016 
   GAAP Actual   Adjustments     Non GAAP Results   GAAP Actual   Adjustments   Non GAAP Results 
Adjusted Net Income and EPS Reconciliation                                
Revenue  $42,333   $—     $42,333   $41,008    —   $41,008 
Cost of revenues   3,515    —      3,515    3,484    —    3,484 
Operating expenses                             
Product and content development   11,044    —      11,044    11,094    —    11,094 
Sales and marketing   13,361    —      13,361    13,945    —    13,945 
General and administrative   7,056    —      7,056    5,836    —    5,836 
Depreciation and amortization   1,538    —      1,538    1,563    —    1,563 
Total operating expenses   32,999    —      32,999    32,438    —    32,438 
                               
Income from operations   5,819    —      5,819    5,086    —    5,086 
                              
Interest and other income, net   253    —      253    117    —    117 
Loss in equity interest   (39)   —      (39)   (118)   —    (118)
Income tax expense/(benefit)   5,593    (3,030) a   2,563    1,663    —    1,663 
Net income  $440   $3,030     $3,470   $3,422    —   $3,422 
Amounts per share - diluted   0.02    0.12      0.14    0.13     —    0.13 
Weighted average number of shares outstanding - diluted   25,306           25,306    25,698         25,698 
                                 
Adjusted EBITDA Reconciliation                                
                                 
Operating income  $5,819   $—     $5,819   $5,086   $—   $5,086 
Depreciation and amortization   1,538    —      1,538    1,563    —    1,563 
Stock-based compensation expense   1,806    —      1,806    2,558    —    2,558 
Adjusted EBITDA  $9,163   $—     $9,163   $9,207   $—   $9,207 

 

a.In 2017, income tax expense includes approximately $3.0 million related primarily to the revaluation of certain deferred tax assets in conjunction with the U.S. Tax Cuts and Jobs act of 2017.

 

 

 

 

XO GROUP INC.

SUPPLEMENTAL DATA TABLES (UNAUDITED)

(amounts in thousands, except for metrics)

(unaudited)

 

   Three months ended December 31,   Twelve months ended December 31, 
   2017   2016   2017   2016 
Net cash provided by operating activities  $7,242   $7,302   $24,483   $27,390 
Less: capital expenditures   (2,006)   (1,250)   (5,569)   (4,297)
Free cash flow  $5,236   $6,052   $18,914   $23,093 

 

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 twelve months ended December 31, 2017 and 2016, as follows:

 

   Three months ended December 31,   Twelve months ended December 31, 
   2017   2016   2017   2016 
Product and content development  $689   $654   $2,509   $2,324 
Sales and marketing   241    831    1,528    2,057 
General and administrative   876    1,073    3,806    3,978 
Total stock-based compensation  $1,806   $2,558   $7,843   $8,359 

 

TheKnot.com Local Online Advertising Metrics
   Q4 2017   Q4 2016 
Vendor Count at quarter end   27,252    22,058 
TTM Vendor Count(a)   24,748    22,447 
Retention Rate(a)   80.2%   63.4%
Avg. Revenue/Vendor(a)  $2,995   $2,955 

 

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

 

 

 

 

Conference Call and Replay Information

 

XO Group Inc. will host a conference call with investors at 8:00 a.m. ET on Thursday, March 1, 2018, to discuss its fourth quarter and full year 2017 financial results. Participants should dial (833) 236-5763 and use Conference ID# 6377287 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 enjoy life's biggest moments together. Our family of multi-platform brands guide people through transformative lifestages, from getting married with The Knot, 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 ability to accurately measure and monetize the level of offline store level traffic attributable to an online digital campaign conducted on our sites, (iii) our business depends on strong brands, and failing to maintain and enhance our brands would hurt our business, (iv) 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, (v) 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, (vi) our businesses could be negatively affected by changes in Internet search engine and app store search algorithms and email marketing policies, (vii) 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, (viii) our transactions business is dependent on third-party participants, whose lack of performance could adversely affect our results of operations, (ix) fraudulent or unlawful activities on our marketplace could harm our business and consumer confidence in our marketplace, (x) we may be subject to legal liability associated with providing online services or content, (xi) 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 (xii) 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 for items that impact comparability, which may include: (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, which may include: (1) asset impairment charges, (2) executive separation and other severance charges, (3) impact of U.S. tax reform and non-recurring foreign taxes, interest and penalties, (4) costs related to exit activities, and (5) other items affecting comparability during the period.

 

•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.

 

•Adjusted EBITDA margin represents adjusted EBITDA (as defined above), divided by total GAAP revenue.

 

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

 

•National online advertising programs include display advertisements. Revenue from display advertisements is largely generated by sold impressions (the number of views or displays of a customer’s advertisement, banner, link or other form of content on our online properties for which we earn revenue). Display advertising revenue per one thousand sold impressions derives our effective CPM (“eCPM”).

 

•Through our transactions business, we earn fixed fees, a percentage of sales, per-unit activity fees, or some combination thereof with respect to these transactions, which we refer to collectively as our “take rate.”

 

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 EBITDA margin, Adjusted net income (loss), Adjusted net income (loss) 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 (loss), net income (loss) 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