XOXO NEW YORK, May 9, 2017 /PRNewswire/ --
- Total revenue remained flat in the first quarter
- Transactions revenue increased 18.0% in the first quarter
- First quarter GAAP net income per diluted share was $0.01
- Conference Call Tuesday, May 9, 2017 at 4:30 p.m. ET, Dial-In (877) 201-0168 (ID# 6892945)
XO Group Inc. (the "Company") (NYSE: XOXO), (xogroupinc.com), today reported financial results for the three months ended March 31, 2017.
Total revenue for the first quarter of 2017 was $35.8 million, flat as compared to the same period in the prior year. Net income for the quarter was $0.3 million or $0.01 per diluted share compared to diluted earnings per share of $0.12 in the same period in the prior year. The Company's balance sheet at March 31, 2017 reflects cash and cash equivalents of $103.0 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 $5.1 million during the quarter as part of the Company's previously announced repurchase program.
"This quarter, we further improved the performance of our products, grew our transaction business, and began to strengthen our local sales and service operation to capitalize on the increased usage of our local vendor marketplace. We are excited for the significant opportunity ahead," said Mike Steib, Chief Executive Officer.
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 March 31,
2017 2016
---- ----
Net revenue:
National online advertising $8,928 $8,658
Local online advertising 18,435 18,179
------ ------
Total online advertising 27,363 26,837
Transactions 4,962 4,204
Publishing and other 3,435 4,628
----- -----
Total net revenue 35,760 35,669
Cost of revenue:
Online advertising 931 616
Publishing and other 978 1,110
--- -----
Total cost of revenue 1,909 1,726
Gross profit 33,851 33,943
Operating expenses:
Product and content development 11,741 10,845
Sales and marketing 13,501 11,561
General and administrative 7,301 6,349
Depreciation and amortization 1,658 1,594
----- -----
Total operating expenses 34,201 30,349
(Loss) / Income from operations (350) 3,594
Loss in equity interests (117) (144)
Interest and other income / (expense), net 93 (1)
--- ---
(Loss) / Income before income taxes (374) 3,449
Income tax (benefit) / expense (686) 424
---- ---
Net income $312 $3,025
==== ======
Net income per share:
Basic and Diluted $0.01 $0.12
===== =====
Weighted average number of shares
used in calculating net earnings per
share:
Basic 25,352 25,263
Dilutive effect of:
Restricted stock 370 322
Options 35 14
=== ===
Diluted 25,757 25,599
====== ======
XO GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
March 31, 2017 December 31, 2016
-------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $103,012 $105,703
Accounts receivable, net 18,284 20,182
Prepaid expenses and other current assets 6,609 5,247
----- -----
Total current assets 127,905 131,132
Long-term restricted cash 1,181 1,181
Property and equipment, net 11,828 12,130
Intangibles assets, net 3,946 4,154
Goodwill 48,678 48,678
Deferred tax assets, net 10,086 9,918
Investments 2,568 2,685
Other assets 415 308
--- ---
Total assets $206,607 $210,186
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued compensation and employee benefits $3,944 $6,164
Accounts payable and accrued expenses 7,763 7,515
Deferred revenue 19,091 16,752
------ ------
Total current liabilities 30,798 30,431
Deferred rent 3,603 3,720
Other liabilities 1,488 1,485
----- -----
Total liabilities 35,889 35,636
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized and 0 - -
shares issued and outstanding as of March 31, 2017 and December 31,
2016, respectively
Common stock, $0.01 par value; 100,000,000 shares authorized and 262 264
26,153,288 and 26,304,925 shares issued and outstanding at March 31,
2017 and December 31, 2016, respectively
Additional paid-in-capital 178,659 178,959
Accumulated deficit (8,203) (4,673)
------ ------
Total stockholders' equity 170,718 174,550
------- -------
Total liabilities and stockholders' equity $206,607 $210,186
======== ========
XO GROUP INC.
NON-GAAP RECONCILIATION TABLE
For the Three Months Ended March 31, 2017 and 2016
(In Thousands, Except for Per Share Data)
(Unaudited)
Three Months Ended March 31,
2017 2016
As Reported Adjustments Non GAAP As Reported Adjustments Non GAAP
Net revenue $35,760 $ - $35,760 $35,669 $ - $35,669
Cost of revenue 1,909 - 1,909 1,726 - 1,726
Operating expenses
Product and content development 11,741 - 11,741 10,845 - 10,845
Sales and marketing 13,501 - 13,501 11,561 - 11,561
General and administrative 7,301 - 7,301 6,349 - 6,349
Depreciation and amortization 1,658 - 1,658 1,594 - 1,594
----- --- ----- ----- --- -----
Total operating expenses 34,201 - 34,201 30,349 - 30,349
(Loss) / Income from operations (350) - (350) 3,594 - 3,594
Interest and other income / 93 - 93 (1) - (1)
(expense), net
Loss in equity interests (117) - (117) (144) - (144)
Income tax (benefit) / expense (686) - (686) 424 956 (a) 1,380
---- --- ---- --- --- --- -----
Net income $312 $ - $312 $3,025 $(956) $2,069
Net income per share - diluted $0.01 $ - $0.01 $0.12 $(0.04) $0.08
Weighted average number of shares 25,757 25,757 25,599 25,599
outstanding - diluted
Three Months Ended March 31,
2017 2016
As Reported Adjustments Non GAAP As Reported Adjustments Non GAAP
(Loss) / Income from operations $(350) $ - $(350) $3,594 $ - $3,594
Depreciation and amortization 1,658 - 1,658 1,594 - 1,594
Stock-based compensation 1,874 - 1,874 1,656 - 1,656
----- --- ----- ----- --- -----
Adjusted EBITDA $3,182 $ - $3,182 $6,844 $ - $6,844
Free Cash Flow Reconciliation
Three Months Ended March 31,
2017 2016
Net cash provided by operating $5,036 $5,543
activities
Less: capital expenditures (1,212) (722)
------ ----
Free cash flow $3,824 $4,821
(a) Adjusted income tax expense
was calculated using an
effective tax rate of 40%
for the three months ended
March 31, 2016. The
effective tax rate excludes
discrete items, including a
one-time benefit
associated with the
resolution of an uncertain
tax position for a former
subsidiary.
XO GROUP INC.
SUPPLEMENTAL DATA TABLES (UNAUDITED)
(Unaudited)
TheKnot.com Local Online Q1 2017 Q1 2016
Advertising Metrics
------------------- ---
Vendor Count(a) 23,458 24,356
Retention Rate(a) 72.0% 71.0%
---- ----
Avg. Revenue/Vendor(a) $2,832 $2,696
---------------------- ------ ------
Vendor Count at Quarter End 24,168 24,326
--------------------------- ------ ------
(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 months ended March 31, 2017 and 2016, as follows:
Three Months Ended March 31,
2017 2016
---- ----
(Amounts in Thousands)
Product and content development $497 $405
Sales and marketing 433 411
General and administrative 944 840
--- ---
Total stock-based compensation $1,874 $1,656
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Tuesday, May 9, 2017, to discuss its first quarter 2017 financial results. Participants should dial (877) 201-0168 and use Conference ID# 6892945 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 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.
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SOURCE XO Group Inc.
