Exhibit 99.1
Conference Call Thursday, May 7th, at 4:30 p.m. ET, Dial-In (877) 201-0168 (ID# 32332065)
XO Group Reports First Quarter 2015 Financial Results;
-First Quarter GAAP income per share was $0.06
-First Quarter NON-GAAP earnings per share was $0.07
NEW YORK, May 7, 2015 – XO Group Inc. (the “Company”) (NYSE: XOXO, xogroupinc.com), the premier consumer internet and media company dedicated to guiding people through transformative life stages - from getting married, moving in together and having a baby - today reported financial results for the three months March 31, 2015.
Total revenue for the first quarter of 2015 was $32.6 million, up 0.6% compared to the same period in the prior year. Excluding revenue from the Merchandise operations, a business that was exited during the first quarter of 2015, first quarter revenue increased 10.3% compared to the prior year. Net income for the quarter was $1.4 million or $0.06 per share compared to a loss of ($0.03) a share in the prior year quarter. Non-GAAP earnings per share for the quarter were $0.07 compared to $0.01 in the prior year quarter. The Company’s balance sheet at March 31, 2015 reflects cash and cash equivalents of $82.7 million compared to $90.0 million at December 31, 2014. Under the previously announced stock buyback authorization, during the quarter, the Company repurchased shares of its common stock for approximately $6.0 million.
“While delivering solid financial results this quarter, our team also successfully launched completely rearchitected, mobile-first websites for TheKnot.com and TheBump.com. These sites enable us to deliver beautiful, personalized content to our users, connect them more successfully with local wedding professionals and advertising partners, and drive future growth for our business,” said Mike Steib, Chief Executive Officer.
During the quarter, the Company completed the exit of its merchandise operations in Redding, California. The closure of the warehouse was previously disclosed on a Form 8-K filed on October 24, 2014 and updated on the Form 8-K/A filed on March 9, 2015.
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 operating expense growth below revenue growth rates, yielding adjusted EBITDA margins of at least 20%. The Company is also reiterating that is does not expect to meet these targets in 2015.
XO GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net revenue: | ||||||||
| National online advertising | $ | 7,999 | $ | 6,910 | ||||
| Local online advertising | 15,917 | 14,439 | ||||||
| Total online advertising | 23,916 | 21,349 | ||||||
| Registry and commerce | 2,294 | 1,886 | ||||||
| Merchandise | 878 | 3,653 | ||||||
| Publishing and other | 5,514 | 5,532 | ||||||
| Total net revenue | 32,602 | 32,420 | ||||||
| Cost of revenue: | ||||||||
| Online advertising | 354 | 463 | ||||||
| Merchandise | 881 | 2,366 | ||||||
| Publishing and other | 1,420 | 1,631 | ||||||
| Total cost of revenue | 2,655 | 4,460 | ||||||
| Gross profit | 29,947 | 27,960 | ||||||
| Operating expenses: | ||||||||
| Product and content development | 9,554 | 8,873 | ||||||
| Sales and marketing | 10,622 | 11,113 | ||||||
| General and administrative | 6,090 | 7,065 | ||||||
| Depreciation and amortization | 1,245 | 1,677 | ||||||
| Total operating expenses | 27,511 | 28,728 | ||||||
| Income (loss) from operations | 2,436 | (768 | ) | |||||
| Loss in equity interests | (6 | ) | (60 | ) | ||||
| Interest and other income (expense), net | (23 | ) | (25 | ) | ||||
| Income (loss) before income taxes | 2,407 | (853 | ) | |||||
| Income tax expense (benefit) | 962 | (177 | ) | |||||
| Net income (loss) | $ | 1,445 | $ | (676 | ) | |||
| Net income (loss) per share: | ||||||||
| Basic | $ | 0.06 | $ | (0.03 | ) | |||
| Diluted | $ | 0.06 | $ | (0.03 | ) | |||
| Weighted average number of shares used in calculating net earnings (loss) per share: | ||||||||
| Basic | 25,174 | 24,908 | ||||||
| Diluted | 25,624 | 24,908 | ||||||
XO GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
| March 31, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 82,672 | $ | 89,955 | ||||
| Accounts receivable, net | 16,182 | 15,785 | ||||||
| Deferred tax assets, net | 3,052 | 3,052 | ||||||
| Prepaid expenses and other current assets | 4,604 | 4,696 | ||||||
| Total current assets | 106,510 | 113,488 | ||||||
| Long-term restricted cash | 2,600 | 2,600 | ||||||
| Property and equipment, net | 14,985 | 15,125 | ||||||
| Goodwill and intangibles | 43,532 | 43,558 | ||||||
| Deferred tax assets, net | 12,781 | 13,110 | ||||||
| Investments | 5,495 | 5,501 | ||||||
| Other assets | 152 | 200 | ||||||
| Total assets | $ | 186,055 | $ | 193,582 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 8,617 | $ | 12,463 | ||||
| Deferred revenue | 16,947 | 16,236 | ||||||
| Total current liabilities | 25,564 | 28,699 | ||||||
| Deferred rent | 4,996 | 5,167 | ||||||
| Other liabilities | 1,229 | 1,790 | ||||||
| Total liabilities | 31,789 | 35,656 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 266 | 267 | ||||||
| Additional paid-in-capital | 170,672 | 171,951 | ||||||
| Accumulated other comprehensive income | — | 35 | ||||||
| Accumulated deficit | (16,672 | ) | (14,327 | ) | ||||
| Total stockholders’ equity | 154,266 | 157,926 | ||||||
| Total liabilities and stockholders’ equity | $ | 186,055 | $ | 193,582 | ||||
XO GROUP INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net income (loss) | $ | 1,445 | $ | (676 | ) | |||
| Income tax expense (benefit) | 962 | (177 | ) | |||||
| Depreciation and amortization | 1,245 | 1,677 | ||||||
| Stock-based compensation expense | 1,480 | 1,188 | ||||||
| Exit of merchandise operations(a) | 434 | - | ||||||
| Interest and other income, net | 23 | 25 | ||||||
| Loss in equity interests | 6 | 60 | ||||||
| Executive separation and severance charges(b) | - | 1,354 | ||||||
| Adjusted EBITDA | $ | 5,595 | $ | 3,451 | ||||
| Depreciation and amortization | (1,245 | ) | (1,677 | ) | ||||
| Stock-based compensation expense | (1,480 | ) | (1,188 | ) | ||||
| Loss in equity interests | (6 | ) | (60 | ) | ||||
| Interest and other income, net | (23 | ) | (25 | ) | ||||
| Adjusted income before income taxes | 2,841 | 501 | ||||||
| Adjusted income tax expense(c) | 1,135 | 150 | ||||||
| Adjusted net income | $ | 1,706 | $ | 351 | ||||
| Adjusted net income per diluted share | $ | 0.07 | $ | 0.01 | ||||
| Diluted weighted average number of shares outstanding | 25,624 | 25,623 | ||||||
| Net cash provided by (used in) operating activities | $ | 884 | $ | (957 | ) | |||
| Less: Capital expenditures | (1,235 | ) | (1,006 | ) | ||||
| Free cash flow | $ | (351 | ) | $ | (1,963 | ) | ||
| (a) | Costs impacting comparability included in operating expenses in the condensed consolidated statements of operations for the quarter ended March 31, 2015 included costs related to the closure of our merchandise operations in Redding, CA of (i) severance of approximately $0.2 million recorded in general and administrative and (ii) rent acceleration and other closure costs of $0.2 million recorded in sales and marketing. |
| (b) | Costs impacting comparability included in operating expenses in the condensed consolidated statements of operations for the quarter ended March 31, 2014 include severance of approximately $1.4 million, representing (i) severance charges for certain executive officers and (ii) severance charges for the employees in our Los Angeles office ($70,000 in product and content development, $0.5 million in sales and marketing and $0.8 million in general and administrative). |
| (c) | Adjusted income tax expense was calculated using the annual effective tax rate of 40.0% and 29.9% for the three months ended March 31, 2015 and 2014, respectively, excluding discrete items. |
Supplemental data tables (unaudited)
Local Advertising Metrics (excluding Two Bright Lights)
| Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 | |
| Profile Count | 33,308 | 33,414 | 32,602 | 31,774 | 30,857 |
| Vendor Count | 25,182 | 24,764 | 24,304 | 23,682 | 23,064 |
| Churn Rate(a) | 21.1% | 21.7% | 22.8% | 25.2% | 27.0% |
| Avg. Revenue/Vendor(a) | $2,519 | $2,527 | $2,517 | $2,516 | $2,497 |
| (a) | calculated on a trailing twelve month basis |
Stock Based Compensation
|
($000s) |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2014 |
| Product and Content | $584 | $443 |
| Sales and Marketing | 370 | 239 |
| General and Administrative | 526 | 506 |
| Total stock-based compensation | $1,480 | $1,188 |
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Thursday, May 7, 2015, to discuss its first quarter 2015 financial results. Participants should dial (877) 201-0168 and use Conference ID# 32332065 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, The Bump, a leading pregnancy and parenting brand, and The Nest, the hip guide to 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 online wedding-related and other websites, mobile and other digital properties may fail to generate sufficient revenue to survive over the long term, (ii) we incurred losses for many years following our inception and may incur losses in the future, (iii) we may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) efforts to launch new or upgrading existing technology and features may not generate significant new revenue or may reduce revenue from existing services, (v) we may be unable to develop solutions that generate revenue from advertising and other services delivered to mobile phones and wireless devices, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject, (vii) the seasonality of the wedding industry, (viii) our operations are dependent on Internet search engine rankings, and our ability to influence those rankings is limited, (ix) the dependence of our registry and commerce services business on third parties, (x) increased competition in our markets could reduce our market share, and (x) 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 generally accepted accounting principles in the United States (“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 net income (loss) adjusted to exclude, if applicable: (1) income tax expense (benefit), (2) depreciation and amortization, (3) stock-based compensation expense, (4) asset impairment charges, (5) (gain) loss in equity interests, (6) interest and other income (expense), net and (7) other items affecting comparability during the period. |
| · | Adjusted net income represents GAAP net income (loss), adjusted 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 (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 this press release.
Contact:
Ivan Marmolejos
Director of Investor Relations
(212) 219-8555 x1004
IR@xogrp.com
