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NYSE: XOXO(common stock)

17.25 -0.14 -0.81% Volume: 311,754 Minimum 20 min delay May 24, 2017

Press Release Details

XO Group Reports Third Quarter 2016 Financial Results

11/02/2016

- Total revenue increased 5.8% in the third quarter
- Transactions revenue increased 47.7% in the third quarter
- Third quarter GAAP net income per diluted share was $0.07
- Conference Call Wednesday, November 2, 2016 at 4:30 p.m. ET, Dial-In (866) 393-4306 (ID# 3085819)

NEW YORK, Nov. 2, 2016 /PRNewswire/ -- XO Group Inc. (the "Company") (NYSE: XOXO, xogroupinc.com), today reported financial results for the three months ended September 30, 2016.

Total revenue for the third quarter of 2016 was $36.7 million, up 5.8% compared to the same period in the prior year. Net income for the quarter was $1.9 million or $0.07 per diluted share compared to diluted earnings per share of $0.11 in the same period in the prior year. The Company's balance sheet at September 30, 2016 reflects cash and cash equivalents of $100.1 million compared to $88.5 million at December 31, 2015. The Company repurchased and retired shares of its common stock for an aggregate price of $1.1 million during the quarter as part of the Company's previously announced repurchase program.

"During the quarter, we delivered strong results in our transaction revenue initiative sand launched key enhancements to our leading local marketplace for wedding professionals and couples. We also welcomed Paul Bascobert, as President of Local Marketplace. Paul has a strong track record of serving local businesses and we're excited for him to be part of our next phase of growth," said Mike Steib, Chief Executive Officer.

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
September 30,


 Nine Months Ended
September 30,



2016


2015


2016


2015

Net revenue:









National online advertising


$

8,932



$

8,669



$

27,156



$

25,219


Local online advertising


17,040



16,369



51,871



48,460


        Total online advertising


25,972



25,038



79,027



73,679


Transactions


7,105



4,809



17,740



11,266


Merchandise








878


Publishing and other


3,654



4,859



14,341



17,675


     Total net revenue


36,731



34,706



111,108



103,498


Cost of revenue:









Online advertising


802



683



1,986



1,588


Merchandise








881


Publishing and other


986



1,367



4,168



5,082


     Total cost of revenue


1,788



2,050



6,154



7,551


     Gross profit


34,943



32,656



104,954



95,947


Operating expenses:






















Product and content development


11,729



9,901



33,503



29,300


Sales and marketing


13,098



10,679



36,325



31,683


General and administrative


5,501



5,955



17,531



18,116















Depreciation and amortization


1,580



1,361



4,815



4,027


     Total operating expenses


31,908



27,896



92,174



83,126


     Income from operations


3,035



4,760



12,780



12,821


Loss in equity interests


(29)



(173)



(210)



(209)


Interest and other income/(expense), net


48



(3)



29



(51)















Income before income taxes


3,054



4,584



12,599



12,561


Income tax expense


1,146



1,718



3,901



4,939


Net income


$

1,908



$

2,866



$

8,698



$

7,622











Net income per share:









Basic


$

0.08



$

0.11



$

0.34



$

0.30


Diluted


$

0.07



$

0.11



$

0.34



$

0.30


Weighted average number of shares
used in calculating net earnings per
share:









Basic


25,368



25,136



25,341



25,161


Dilutive effect of:









Restricted stock


331



304



318



360


Options


28



9



16



16


Diluted


25,727



25,449



25,675



25,537


 

 

 

XO GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except for Per Share Data)

(Unaudited)



September 30, 2016


December 31, 2015

ASSETS




Current assets:




Cash and cash equivalents

$

100,070



$

88,509


Accounts receivable, net

18,345



20,475


Prepaid expenses and other current assets

7,643



5,341


Total current assets

126,058



114,325


Long-term restricted cash

1,181



2,598


Property and equipment, net

12,258



13,251


Intangibles assets, net

4,367



4,817


Goodwill

48,678



47,396


Deferred tax assets, net

10,543



11,578


Investments

2,804



2,719


Other assets

242



57


Total assets

$

206,131



$

196,741


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




    Accrued compensation and employee benefits

$

5,749



$

6,036


Accounts payable and accrued expenses

7,462



6,127


Deferred revenue

16,643



18,640


Total current liabilities

29,854



30,803


Deferred rent

3,942



4,486


Other liabilities

1,994



1,985


Total liabilities

35,790



37,274


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value; 5,000,000 shares authorized and 0
shares issued and outstanding as of September 30, 2016 and December
31, 2015, respectively




Common stock, $0.01 par value; 100,000,000 shares authorized and
26,475,720 and 26,235,824 shares issued and outstanding at September
30, 2016 and December 31, 2015, respectively

265



264


Additional paid-in-capital

177,275



173,564


Accumulated deficit

(7,199)



(14,361)


Total stockholders' equity

170,341



159,467


Total liabilities and stockholders' equity

$

206,131



$

196,741


 

 

XO GROUP INC.

NON-GAAP RECONCILIATION TABLE

For the Three Months Ended September 30, 2016 and 2015

(In Thousands, Except for Per Share Data)

(Unaudited)




Three Months Ended September 30,



2016


2015



As Reported

Adjustments


Non GAAP


As Reported

Adjustments


Non GAAP












Net revenue


$

36,731


$



$

36,731



$

34,706


$



$

34,706


Cost of revenue


1,788




1,788



2,050




2,050


Operating expenses











Product and content development


11,729




11,729



9,901




9,901


Sales and marketing


13,098




13,098



10,679




10,679


General and administrative


5,501




5,501



5,955




5,955


Depreciation and amortization


1,580




1,580



1,361




1,361


Total operating expenses


31,908




31,908



27,896




27,896













Income from operations


3,035




3,035



4,760




4,760













Interest and other
income/(expense), net


48




48



(173)




(173)


Loss in equity interest


(29)




(29)



(3)




(3)


Income tax expense


1,146




1,146



1,718




1,718


Net income


$

1,908


$



$

1,908



$

2,866


$



$

2,866


Net income per share - diluted


$

0.07


$



$

0.07



$

0.11


$



$

0.11


Weighted average number of shares
outstanding - diluted


25,727




25,727



25,449




25,449







Three Months Ended September 30,



2016


2015



As Reported

Adjustments


Non GAAP


As Reported

Adjustments


Non GAAP

Income from operations


$

3,035


$



$

3,035



$

4,760


$



$

4,760


Depreciation and amortization (c)


1,580




1,580



1,361




1,361


Stock-based compensation (d)


2,157




2,157



1,135




1,135


Adjusted EBITDA


$

6,772


$



$

6,772



$

7,256


$



$

7,256















Free Cash Flow Reconciliation






Three Months Ended September 30,



2016


2015

Net cash provided by operating
activities





$

7,455






$

4,114


Less: capital expenditures





(1,061)






(741)


Free cash flow





$

6,394






$

3,373


 

 

XO GROUP INC.

NON-GAAP RECONCILIATION TABLE

For the Nine Months Ended September 30, 2016 and 2015

(In Thousands, Except for Per Share Data)

(Unaudited)




Nine Months Ended September 30,



2016


2015



As Reported

Adjustments


Non GAAP


As Reported

Adjustments


Non GAAP












Net revenue


$

111,108


$



$

111,108



$

103,498


$



$

103,498


Cost of revenue


6,154




6,154



7,551




7,551


Operating expenses











Product and content development


33,503




33,503



29,300


(11)


(a)

29,289


Sales and marketing


36,325




36,325



31,683


(265)


(a)

31,418


General and administrative


17,531




17,531



18,116


(158)


(a)

17,958


Depreciation and amortization


4,815




4,815



4,027




4,027


Total operating expenses


92,174




92,174



83,126


(434)



82,692













Income from operations


12,780




12,780



12,821


434



13,255













Interest and other
income/(expense), net


29




29



(209)




(209)


Loss in equity interest


(210)




(210)



(51)




(51)


Income tax expense


3,901


1,128


(b)

5,029



4,939


171


(b)

5,110


Net income


$

8,698


$

(1,128)



$

7,570



$

7,622


$

263



$

7,885


Net income per share - diluted


$

0.34


$

(0.05)



$

0.29



$

0.30


$

0.01



$

0.31


Weighted average number of shares
outstanding - diluted


25,675




25,675



25,161




25,161







Nine Months Ended September 30,



2016


2015



As Reported

Adjustments


Non GAAP


As Reported

Adjustments


Non GAAP

Income from operations


$

12,780


$



$

12,780



$

12,821


$

434



$

13,255


Depreciation and amortization (c)


4,815




4,815



4,027




4,027


Stock-based compensation (d)


5,801




5,801



4,252




4,252


Adjusted EBITDA


$

23,396


$



$

23,396



$

21,100


$

434



$

21,534















Free Cash Flow Reconciliation






Nine Months Ended September 30,



2016


2015

Net cash provided by operating
activities





$

20,088






$

11,559


Less: capital expenditures





(3,047)






(2,777)


Free cash flow





$

17,041






$

8,782


 

 

 

(a)

Costs impacting comparability included in operating expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2015 included costs related to the closure of our merchandise operations in Redding, CA.

(b)

Adjusted income tax expense was calculated using an effective tax rate of  37.5% and 39.9%, respectively, for the three and nine months ended September 30, 2016 and  37.5% and 39.3%, respectively, for the three and nine months ended September 30, 2015.  The effective tax rate for the nine months ended September 30, 2016 and September 30, 2015 excludes discrete items, including a one-time benefit associated with the resolution of an uncertain tax position for a former subsidiary in the 2016 period, as well as a one-time benefit associated with a foreign tax incentive deduction in the 2016 period.

(c)

To eliminate depreciation and amortization expense.

(d)

To eliminate stock-based compensation expense.

 

 

XO GROUP INC.

SUPPLEMENTAL DATA TABLES (UNAUDITED)

(Unaudited)


TheKnot.com Local Online
Advertising Metrics

Q3 2016

Q3 2015

Vendor Count(a)

23,959

24,118

Retention Rate(a);(b)

68.6%

74.7%

Avg. Revenue/Vendor(a)

$2,738

$2,582


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

     (b)     Previously disclosed as churn rate. Retention rate calculated as one less churn rate.

 

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 nine months ended September 30, 2016 and 2015, as follows:



Three Months Ended
September 30,


   Nine Months Ended
September 30,



2016


2015


2016


2015



(Amounts in Thousands)

Product and content development


708



174



1,669



1,271


Sales and marketing


339



289



1,227



1,012


General and administrative


1,110



672



2,905



1,969


Total stock-based compensation


2,157



1,135



5,801



4,252


 

Conference Call and Replay Information

XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Wednesday November 2, 2016, to discuss its third quarter 2016 financial results. Participants should dial (866) 393-4306 and use Conference ID# 3085819 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 to moving in together and having a baby. Our brands include The Knot, the number one wedding planning resource and marketplace, The Bump, the definitive voice for millennial parents and parents-to-be, and The Nest, the go-to guide for all things home for new couples. 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 transactions business is dependent on third party participants, whose lack of performance could adversely affect our results of operations, (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) we may be unable to develop solutions that generate revenue from advertising and other services delivered to mobile phones and wireless devices, (v) our businesses could be negatively affected by changes in Internet search engine algorithms, (vi) intense competition in our markets may adversely affect revenue and results of operations, (vii) we may be subject to legal liability associated with providing online services or content, (viii) fraudulent or unlawful activities on our marketplace could harm our business and consumer confidence in our marketplace, (ix) we are subject to payments-related risks, (x) we cannot assure you that our publications will be profitable, 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.

XO Group Inc.

Logo - http://photos.prnewswire.com/prnh/20140805/133477

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/xo-group-reports-third-quarter-2016-financial-results-300356156.html

SOURCE XO Group Inc.

Ivan Marmolejos, Director, Investor Relations, (212) 219-8555 x1004, IR@xogrp.com

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If you have any investor relations questions you can contact us at:

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If in any jurisdiction, any part of this disclaimer is determined to be unenforceable by a court of competent jurisdiction, such part of this disclaimer shall be restricted or eliminated to the minimum extent necessary to comply with such determination and the remaining disclaimer shall otherwise remain in full force and effect.

Please note the information presented is given as at the date and the time of its original release. Changes in such historical information may occur due to adjustments in accounting and reporting standards & procedures.

Non-GAAP Information

XO Group Inc also uses certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States ("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 U.S. GAAP net income (loss) adjusted to exclude, if applicable: (1) provision (benefit) for income taxes, (2) depreciation and amortization, (3) stock-based compensation expense, (4) impairment charges and asset write-offs, (5) loss in equity interests, (6) interest and other income, net (7) net loss attributable to non-controlling interest and (8) other items impacting comparability in the period.
  • Adjusted net income represents U.S. GAAP net income (loss), adjusted for incremental or unusual costs incurred in the current period, which may include: (1) impairment charges and asset write-offs, (2) executive severance and other restructuring charges and (3) the impact of certain foreign taxes, interest and penalties.
  • 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 U.S. 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 (loss) and 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 the periodic reports and other documents filed from time-to-time by XO Group with the Securities and Exchange Commission.

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