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NYSE: XOXO(common stock)

19.89 +0.00 +0% Volume: 49,200 Minimum 20 min delay October 18, 2017

Press Release Details

XO Group Reports Second Quarter 2017 Financial Results;

07/31/2017

- 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 /PRNewswire/ -- 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 Company's 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



37,425



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.

 

View original content:http://www.prnewswire.com/news-releases/xo-group-reports-second-quarter-2017-financial-results-300496447.html

SOURCE XO Group Inc.

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

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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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