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NYSE: XOXO(common stock)

34.98 +0.00 +0% Volume: 309,512 Minimum 20 min delay December 14, 2018

Press Release Details

XO Group Reports Fourth Quarter and Full Year 2017 Financial Results

03/01/2018

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

NEW YORK, March 1, 2018 /PRNewswire/ -- 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.

Cision View original content:http://www.prnewswire.com/news-releases/xo-group-reports-fourth-quarter-and-full-year-2017-financial-results-300606264.html

SOURCE XO Group Inc.

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

Questions?

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

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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