XOXO NEW YORK, March 9, 2015 /PRNewswire/ -- 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 and full year ended December 31, 2014.
Total revenue for the fourth quarter of 2014 was $37.1 million, up 13.7% compared to the same period in the prior year. GAAP net loss for the quarter was ($4.0) million or ($0.16) per share. Non-GAAP earnings per share for the quarter was $0.06 compared to $0.02 in the prior year quarter. The Company's balance sheet at December 31, 2014 reflects cash and cash equivalents of $90.0 million compared to $90.7 million at December 31, 2013. Under the previously announced stock buyback authorization, during the quarter, the Company repurchased shares of its common stock for approximately $1.0 million.
"I want to congratulate our team on successfully focusing our efforts, investing in our mobile and marketplace capabilities, and launching exceptional products, while delivering our best revenue growth rates in years and continuing to deliver positive cash flow," said Mike Steib, Chief Executive Officer.
During the quarter, the Company announced two strategic actions to focus on the Company's core business: the shutdown of its wedding supplies fulfillment operations and the disposition of its Ijie operations in China. The shutdown of the wedding supplies fulfillment operations is scheduled to be complete by the end of Q1 2015 and the disposition of its Ijie operations was completed in December 2014.
Long-Term Financial Targets
The Company is reiterating its long-term financial targets as previously provided on November 6, 2014. The Company is targeting 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%.
XO GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Three Months Ended December 31,
-------------------------------
2014 2013
---- ----
Net revenue:
National online advertising $8,679 $6,341
Local online advertising 15,348 13,793
------ ------
Total online advertising 24,027 20,134
Registry services 1,840 1,553
Merchandise 3,064 2,995
Publishing and other 8,125 7,903
----- -----
Total net revenue 37,056 32,585
Cost of revenue:
Online advertising 433 421
Merchandise 2,808 2,107
Publishing and other 2,591 2,911
----- -----
Total cost of revenue 5,832 5,439
Gross profit 31,224 27,146
Operating expenses:
Product and content development 9,546 8,761
Sales and marketing 11,724 10,144
General and administrative 6,839 7,242
Asset impairment charges 836 1,430
Depreciation and amortization 1,576 1,484
----- -----
Total operating expenses 30,521 29,061
Income (loss) from operations 703 (1,915)
Income (loss) in equity interests 11 (1,842)
Interest and other income (expense), net (1,795) 74
------ ---
Loss before income taxes (1,081) (3,683)
Income tax expense (benefit) 2,912 (615)
----- ----
Net loss $(3,993) $(3,068)
======= =======
Net loss per share:
Basic $(0.16) $(0.12)
====== ======
Diluted $(0.16) $(0.12)
====== ======
Weighted average number of shares used
in calculating net loss per share:
Basic 25,363 24,704
====== ======
Diluted 25,363 24,704
====== ======
XO GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Twelve Months Ended December 31,
--------------------------------
2014 2013
---- ----
Net revenue:
National online advertising $30,456 $27,216
Local online advertising 59,093 54,445
------ ------
Total online advertising 89,549 81,661
Registry services 9,794 7,926
Merchandise 16,223 18,406
Publishing and other 28,098 25,821
------ ------
Total net revenue 143,664 133,814
Cost of revenue:
Online advertising 1,770 1,927
Merchandise 10,914 11,296
Publishing and other 8,511 9,178
----- -----
Total cost of revenue 21,195 22,401
Gross profit 122,469 111,413
Operating expenses:
Product and content development 35,820 29,877
Sales and marketing 44,330 39,718
General and administrative 25,617 23,073
Asset impairment charges 836 1,430
Depreciation and amortization 6,969 4,808
----- -----
Total operating expenses 113,572 98,906
Income from operations 8,897 12,507
Loss in equity interests (232) (2,016)
Interest and other income (expense), net (1,740) 144
------ ---
Income before income taxes 6,925 10,635
Income tax expense 6,463 4,841
----- -----
Net income $462 $5,794
==== ======
Net income per share:
Basic $0.02 $0.24
===== =====
Diluted $0.02 $0.23
===== =====
Weighted average number of shares used
in calculating net earnings per share:
Basic 25,210 24,620
====== ======
Diluted 25,589 25,596
====== ======
XO GROUP INC.
SELECTED BALANCE SHEET DATA
(Amounts in Thousands)
(Unaudited)
December 31, December 31,
2014 2013
------------- -------------
Cash and cash equivalents $89,955 $90,697
Accounts receivable, net 15,785 11,838
Total assets 195,699 197,749
Total liabilities 37,772 41,859
Total stockholders' equity 157,927 155,890
XO GROUP INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Net income (loss) $(3,993) $(3,068) $462 $5,794
Income tax expense
(benefit) 2,912 (615) 6,463 4,841
Depreciation and
amortization 1,576 1,484 6,969 4,808
Stock-based
compensation
expense 1,692 2,145 6,139 6,697
Asset impairment
charges 530 1,430 530 1,430
(Income) loss in
equity interests (11) 1,842 232 2,016
Interest and other
income, net (33) (74) (88) (144)
Executive
separation and
severance
charges(a) 733 350 2,087 350
Foreign VAT,
interest and
penalties(b) - 930 (592) 930
Exit of Ijie
operations(c) 1,828 - 1,828 -
Exit of warehouse
operations(d) 572 - 572 -
--- --- --- ---
Adjusted EBITDA $5,806 $4,424 $24,602 $26,722
Depreciation and
amortization (1,576) (1,484) (6,969) (4,808)
Stock-based
compensation
expense (1,692) (2,145) (6,139) (6,697)
Income (loss) in
equity interests 11 (1,842) (232) (2,016)
Interest and other
income, net 33 74 88 144
Impairment of
equity
interests(e) - 1,773 - 1,773
Adjusted income
before income
taxes 2,582 800 11,350 15,118
Adjusted provision
for income
taxes(f) 1,097 328 4,824 6,198
Adjusted net income $1,485 $472 $6,526 $8,920
====== ==== ====== ======
Adjusted net income
per diluted share $0.06 $0.02 $0.26 $0.35
===== ===== ===== =====
Diluted weighted
average number of
shares outstanding 25,821 25,647 25,589 25,596
Net cash provided
by operating
activities $8,462 $6,889 $20,015 $22,243
Less: Capital
expenditures (1,095) (1,307) (5,068) (5,968)
Free cash flow $7,367 $5,582 $14,947 $16,275
====== ====== ======= =======
(a) Costs impacting comparability
included in operating expenses on
the consolidated statements of
operations for the year ended
December 31, 2014 include
executive separation and other
severance charges of approximately
$2.1 million, representing (i)
separation payments for certain
executive officers and (ii)
severance charges for the
employees in our Los Angeles
office. Of the total executive
separation and severance charges,
$0.4 million was recorded in
Product and content development,
$0.5 million in Sales and
marketing and $1.2 million in
General and administrative. Costs
impacting comparability for the
year ended December 31, 2013
include severance of $0.4 million
recorded in General and
administrative for a former
executive of the Company.
(b) Included in "General and
administrative" expenses on the
consolidated statements of
operations for the year ended
December 31, 2014 are favorable
adjustments for foreign value-
added tax ("VAT"), interest and
penalties of $0.6 million and for
the year ended December 31, 2013
an unfavorable adjustment for VAT,
interest and penalties of $0.9
million.
(c) Included in Interest and other
income (expense) on the
consolidated statements of
operations for the three months
and year ended December 31, 2014
is a $1.8 million loss on the
disposition of the Company's China
wedding content and publishing
operations.
(d) Costs impacting comparability
included in operating expenses on
the consolidated statements of
operations for the three months
and year ended December 31, 2014
included (i) severance of
approximately $0.3 million related
to the closure of the Company's
merchandising warehouse in
Redding, CA and (ii) asset
impairment charges of
approximately $0.3 million. Of the
total severance charges, $26,000
was recorded in Product and
content development, $179,000 in
Sales and marketing and $60,000 in
General and administrative.
(e) Impairment of equity interest of
$1.8 million is included in "Loss
in equity interests" on the
consolidated statements of
operations for the twelve months
ended December 31, 2013.
(f) Adjusted provision for income taxes
was calculated using an effective
tax rate of 42.5% for 2014 periods
and 41.0% for 2013 periods both of
which excludes discrete items.
Supplemental data tables (unaudited)
Local Advertising Metrics (excluding Two Bright Lights)
Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013
------- ------- ------- ------- -------
Profile
Count 33,414 32,602 31,774 30,857 30,562
------- ------ ------ ------ ------ ------
Vendor
Count 24,764 24,304 23,682 23,064 22,755
------ ------ ------ ------ ------ ------
Churn
Rate(a) 21.7% 22.8% 25.2% 27.0% 27.9%
-------- ---- ---- ---- ---- ----
Avg.
Revenue/
Vendor(a) $2,527 $2,517 $2,516 $2,497 $2,474
---------- ------ ------ ------ ------ ------
(a) calculated on a trailing
twelve month basis
Stock Based Compensation
Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
($000s)
------
Product and Content $569 $680
------------------- ---- ----
Sales and Marketing 468 412
------------------- --- ---
General and Administrative 655 1,053
-------------------------- --- -----
Total stock-based
compensation $1,692 $2,145
----------------- ------ ------
Twelve Months Ended Twelve Months Ended
December 31, 2014 December 31, 2013
($000s)
------
Product and Content $2,020 $2,391
------------------- ------ ------
Sales and Marketing 1,533 1,591
------------------- ----- -----
General and
Administrative 2,586 2,715
--------------- ----- -----
Total stock-based
compensation $6,139 $6,697
----------------- ------ ------
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Monday, March 9, 2015, to discuss its fourth quarter and full year 2014 financial results. Participants should dial (877) 201-0168 and use Conference ID# 71880269 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, to moving in together and having a baby - and include The Knot (#1 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 (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. These statements are only predictions and reflect our current beliefs and expectations. Actual events or results may differ materially from those contained in the 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 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) sales to sponsors or advertisers may be delayed or cancelled, (v) efforts to launch new technology and features may not generate significant new revenue or may reduce revenue from existing services, (vi) we may be unable to develop solutions that generate revenue from advertising delivered to mobile phones and wireless devices, (vii) the significant fluctuation to which our quarterly revenue and operating results are subject, (viii) the seasonality of the wedding industry, (ix) our e-commerce operations are dependent on Internet search engine rankings, and our ability to influence those rankings is limited, (x) the dependence of our registry services business on third parties, 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 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 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) (income) loss in equity interests, (6) interest and other
income, 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 and (3) non-recurring
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 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
Investor Relations
(212) 219-8555 x1004
IR@xogrp.com
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SOURCE XO Group Inc.
