EX-99.1 2 v445609_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

Conference Call Monday, August 1, 2016 at 4:30 p.m. ET, Dial-In (877) 201-0168 (ID# 49063237)

  

XO Group Reports Second Quarter 2016 Financial Results;

 

- Total revenue increased 7.0% in the second quarter

 

- Second quarter GAAP net income per diluted share was $0.15

 

- Second quarter non-GAAP net income per diluted share was $0.14

 

 

NEW YORK, August 1, 2016 - XO Group Inc. (the “Company”) (NYSE: XOXO, xogroupinc.com), today reported financial results for the three months ended June 30, 2016.

  

Total revenue for the second quarter of 2016 was $38.7 million, up 7.0% compared to the same period in the prior year. Net income for the quarter was $3.8 million or $0.15 per diluted share compared to diluted earnings per share of $0.13 in the same period in the prior year. Non-GAAP net income per diluted share for the quarter was $0.14 compared $0.13 to in the prior year quarter. The Company’s balance sheet at June 30, 2016 reflects cash and cash equivalents of $96.7 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 $1.4 million during the quarter as part of the Companys authorized repurchase program.

  

I’m really proud of the team’s work during the quarter. Our national online advertising business delivered solid results, our guest products are continuing to drive value for our users and partners, and our recent marketplace product launches are starting to gain traction, 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 and gross margins of approximately 90-95%, yielding adjusted EBITDA margins of at least 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, 
   2016   2015   2016   2015 
Net revenue:                    
Online advertising  $26,218   $24,725   $53,055   $48,641 
Transactions   6,431    4,163    10,635    6,457 
Merchandise               878 
Publishing and other   6,059    7,302    10,687    12,816 
Total net revenue   38,708    36,190    74,377    68,792 
Cost of revenue:                    
Online advertising   684    551    1,184    905 
Merchandise               881 
Publishing and other   2,072    2,295    3,182    3,715 
Total cost of revenue   2,756    2,846    4,366    5,501 
Gross profit   35,952    33,344    70,011    63,291 
Operating expenses:                    
Product and content development   10,814    9,845    21,774    19,399 
Sales and marketing   11,513    10,382    23,227    21,004 
General and administrative   5,833    6,071    12,030    12,161 
Depreciation and amortization   1,641    1,421    3,235    2,666 
Total operating expenses   29,801    27,719    60,266    55,230 
Income from operations   6,151    5,625    9,745    8,061 
Loss in equity interests   (37)   (30)   (181)   (36)
Interest and other expense, net   (18)   (25)   (19)   (48)
Income before income taxes   6,096    5,570    9,545    7,977 
Income tax expense   2,331    2,259    2,755    3,221 
Net income  $3,765   $3,311   $6,790   $4,756 
                     
Net income per share:                    
Basic  $0.15   $0.13   $0.27   $0.19 
Diluted  $0.15   $0.13   $0.26   $0.19 
Weighted average number of shares used in calculating net earnings per share:                    
Basic   25,393    25,174    25,328    25,174 
Dilutive effect of:                    
Restricted stock   260    352    291    389 
Employee Stock Purchase Plan   3        1     
Options   21    14    17    19 
Diluted   25,677    25,540    25,637    25,582 

 

 

 

 

XO GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except for Per Share Data)

(Unaudited)

 

 

   June 30, 2016   December 31, 2015 
ASSETS        
Current assets:        
Cash and cash equivalents  $96,661   $88,509 
Accounts receivable, net   18,011    20,475 
Prepaid expenses and other current assets   5,353    5,341 
Total current assets   120,025    114,325 
Long-term restricted cash   2,598    2,598 
Property and equipment, net   12,514    13,251 
Intangibles assets, net   4,387    4,817 
Goodwill   47,396    47,396 
Deferred tax assets, net   10,888    11,578 
Investments   2,538    2,719 
Other assets   44    57 
Total assets  $200,390   $196,741 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accrued compensation and employee benefits  $4,413   $5,826 
Accounts payable and accrued expenses   6,751    6,337 
Deferred revenue   15,681    18,640 
Total current liabilities   26,845    30,803 
Deferred rent   4,148    4,486 
Other liabilities   1,990    1,985 
Total liabilities   32,983    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 June 30, 2016 and December 31, 2015, respectively
        
Common stock, $0.01 par value; 100,000,000 shares authorized and 26,476,396 and 26,235,824 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
   265    264 
Additional paid-in-capital   175,573    173,564 
Accumulated deficit   (8,431)   (14,361)
Total stockholders’ equity   167,407    159,467 
Total liabilities and stockholders’ equity  $200,390   $196,741 

 

 

 

 

 

 

XO GROUP INC.

NON-GAAP TABLE

For the Three Months Ended June 30, 2016 and 2015

(Amounts in Thousands, Except for Per Share Data)

(Unaudited)

 

   Three Months Ended June 30, 
   2016   2015 
   GAAP
Actual
   Adjustments   Non GAAP   GAAP
Actual
   Adjustments   Non GAAP 
                         
Net revenue  $38,708   $   $38,708   $36,190   $   $36,190 
Cost of revenue   2,756        2,756    2,846        2,846 
Operating expenses                              
Product and content development   10,814        10,814    9,845        9,845 
Sales and marketing   11,513        11,513    10,382        10,382 
General and administrative   5,833        5,833    6,071        6,071 
Depreciation and amortization   1,641        1,641    1,421        1,421 
Total operating expenses   29,801        29,801    27,719        27,719 
                               
Income from operations   6,151        6,151    5,625        5,625 
                               
Interest and other expense, net   (18)       (18)   (25)       (25)
Loss in equity interest   (37)       (37)   (30)       (30)
Income tax expense   2,331    171(b)   2,502    2,259        2,259 
Net income  $3,765   $(171)  $3,594   $3,311   $   $3,311 
Net income per share - diluted  $0.15   $(0.01)  $0.14   $0.13   $   $0.13 
Weighted average number of shares outstanding - diluted   25,677         25,677    25,540         25,540 

 

 

   Three Months Ended June 30, 
   2016   2015 
    GAAP
Actual
    Adjustments    Non GAAP    GAAP
Actual
    Adjustments    Non GAAP 
Income from operations  $6,151   $   $6,151   $5,625   $   $5,625 
Depreciation and amortization (c)   1,641        1,641    1,421        1,421 
Stock-based compensation (d)   1,988        1,988    1,637        1,637 
Adjusted EBITDA  $9,780   $   $9,780   $8,683   $   $8,683 
                               

 

   Free Cash Flow Reconciliation 
   Three Months Ended June 30, 
   2016   2015 
Net cash provided by operating activities          $7,090           $6,561 
Less: capital expenditures             (1,264)             (801)
Free cash flow            $5,826             $5,760 
                               

 

 

 

 

 

 

XO GROUP INC.

NON-GAAP TABLE

For the Six Months Ended June 30, 2016 and 2015

(Amounts in Thousands, Except for Per Share Data)

(Unaudited)

 

 

   Six Months Ended June 30, 
   2016   2015 
   GAAP
Actual
   Adjustments   Non GAAP   GAAP
Actual
   Adjustments     Non GAAP 
                           
Net revenue  $74,377   $   $74,377   $68,792   $     $68,792 
Cost of revenue   4,366        4,366    5,501          5,501 
Operating expenses                                
Product and content development   21,774        21,774    19,399    (11) (a)   19,388 
Sales and marketing   23,227        23,227    21,004    (265) (a)   20,739 
General and administrative   12,030        12,030    12,161    (158) (a)   12,003 
Depreciation and amortization   3,235        3,235    2,666          2,666 
Total operating expenses   60,266        60,266    55,230    (434)     54,796 
                                 
Income from operations   9,745        9,745    8,061    434      8,495 
                                 
Interest and other expense, net   (19)       (19)   (48)         (48)
Loss in equity interest   (181)       (181)   (36)         (36)
Income tax expense   2,755    1,128(b)   3,883    3,221    177  (b)   3,398 
Net income  $6,790   $(1,128)  $5,662   $4,756   $257     $5,013 
Net income per share - diluted  $0.26   $(0.04)  $0.22   $0.19   $0.01     $0.20 
Weighted average number of shares outstanding - diluted   25,637         25,637    25,582           25,582 
     
   Six Months Ended June 30, 
   2016   2015 
    GAAP Actual    Adjustments    Non GAAP    GAAP Actual    Adjustments      Non GAAP 
Income from operations  $9,745   $   $9,745   $8,061   $434     $8,495 
Depreciation and amortization (c)   3,235        3,235    2,666          2,666 
Stock-based compensation (d)   3,644        3,644    3,117          3,117 
Adjusted EBITDA  $16,624   $   $16,624   $13,844   $434     $14,278 
                                 
    Free Cash Flow Reconciliation 
    Six Months Ended June 30, 
    2016    2015 
Net cash provided by operating activities          $12,633             $7,445 
Less: capital expenditures             (1,986)               (2,036)
Free cash flow            $10,647               $5,409 
                                 

 

 

 

 

 

(a)Costs impacting comparability included in operating expenses in the condensed consolidated statements of operations for the six months ended June 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 41.0% and 40.7%, respectively, for the three and six months ended June 30, 2016 and 40.6% and 40.4%, respectively, for the three and six months ended June 30, 2015. The effective tax rate for the three months ended June 30, 2016 excludes a one-time benefit associated with a foreign tax incentive deduction. The effective tax rate for the six months ended June 30, 2016 excludes a one-time tax 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.
(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 Q2 2016 Q2 2015
Vendor Count(a) 24,241 23,789
Retention Rate(a);(b) 69.7% 76.4%
Avg. Revenue/Vendor(a) $2,667 $2,547

 

(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 six months ended June 30, 2016 and 2015, as follows:

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2016   2015   2016   2015 
   (Amounts in Thousands) 
Product and content development   556    513    961    1,097 
Sales and marketing   438    353    848    723 
General and administrative   994    771    1,835    1,297 
Total stock-based compensation   1,988    1,637    3,644    3,117 

 

 

 

 

 

 

 

Conference Call and Replay Information

 

XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Monday August 1, 2016, to discuss its second quarter 2016 financial results. Participants should dial (877) 201-0168 and use Conference ID# 49063237 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.

 

Contact:

Ivan Marmolejos

Director, Investor Relations

(212) 219-8555 x1004

IR@xogrp.com