XOXO NEW YORK, Feb. 28, 2017 /PRNewswire/ -- XO Group Inc. (the "Company") (NYSE: XOXO, xogroupinc.com), today reported financial results for the three months and full year ended December 31, 2016.
Total revenue for the fourth quarter of 2016 was $41.0 million, up 8% compared to the same period in the prior year. Net income for the quarter was $3.4 million or $0.13 per diluted share compared to a loss per share of $0.09 in the prior year quarter. The Company's balance sheet at December 31, 2016 reflects cash and cash equivalents of $105.7 million compared to $88.5 million at December 31, 2015.
"During the year, we made significant improvements to our consumer-facing products and our local wedding vendor marketplace that improved engagement and drove more value to our couples and our wedding pros. In 2017, we look forward to continuing to capitalize on our market leading position in weddings by more deeply engaging the couples we serve, intensifying our local sales efforts, and expanding guest and registry services," 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Three months ended December 31, Twelve months ended December 31,
------------------------------- --------------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net revenue:
National online advertising $11,789 $10,545 $38,945 $35,764
Local online advertising 18,368 17,481 70,239 65,941
Online advertising $30,157 $28,026 $109,184 $101,705
Transactions 5,079 3,434 22,819 14,700
Merchandise - - - 878
Publishing and other 5,772 6,686 20,113 24,361
----- ----- ------ ------
Total net revenue 41,008 38,146 152,116 141,644
Cost of revenue:
Online advertising 1,119 647 3,665 2,235
Merchandise - - - 881
Publishing and other 1,920 2,189 6,089 7,271
----- ----- ----- -----
Total cost of revenue 3,039 2,836 9,754 10,387
Gross profit 37,969 35,310 142,362 131,257
Operating expenses:
Product and content development 11,726 11,051 44,668 40,351
Sales and marketing 13,953 11,737 49,772 43,420
General and administrative 5,642 6,345 23,666 24,440
Asset impairment charges 5 245 18 266
Depreciation and amortization 1,557 1,517 6,372 5,544
----- ----- ----- -----
Total operating expenses 32,883 30,895 124,496 114,021
Income from operations 5,086 4,415 17,866 17,236
Gain (loss) in equity interests (118) 729 (328) 520
Interest and other income (expense), net 117 (3,972) 146 (4,023)
--- ------ --- ------
Income before income taxes 5,085 1,172 17,684 13,733
Income tax expense 1,663 3,330 5,564 8,269
Net income $3,422 $(2,158) $12,120 $5,464
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Net income per share:
Basic $0.14 $(0.09) $0.48 $0.22
===== ====== ===== =====
Diluted $0.13 $(0.09) $0.47 $0.21
===== ====== ===== =====
Weighted average number of shares used in calculating net earnings per
share:
Basic 25,316 25,174 25,314 25,164
====== ====== ======
Diluted 25,698 25,174 25,640 25,530
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XO GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
December 31,
2016 2015
---- ----
ASSETS
Current assets:
Cash and cash equivalents $105,703 $88,509
Accounts receivable, net of
allowance of $1,386 and $2,668
at December 31, 2016 and
December 31, 2015, respectively 20,182 20,475
Prepaid expenses and other
current assets 5,247 5,341
Total current assets 131,132 114,325
Long-term restricted cash 1,181 2,598
Property and equipment, net 12,130 13,251
Intangible assets, net 4,154 4,817
Goodwill 48,678 47,396
Deferred tax assets, net 9,918 11,578
Investments 2,685 2,719
Other assets 308 57
--- ---
Total assets $210,186 $196,741
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued compensation and employee
benefits $6,164 $6,036
Accounts payable and accrued
expenses 7,515 6,127
Deferred revenue 16,752 18,640
------ ------
Total current liabilities 30,431 30,803
Deferred rent 3,720 4,486
Other liabilities 1,485 1,985
----- -----
Total liabilities 35,636 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 December
31, 2016 and 2015, respectively - -
Common stock, $0.01 par value;
100,000,000 shares authorized
and 26,304,925 and 26,235,824
shares issued and outstanding at
December 31, 2016 and 2015,
respectively 264 264
Additional paid-in-capital 178,959 173,564
Accumulated deficit (4,673) (14,361)
------ -------
Total stockholders' equity 174,550 159,467
Total liabilities and
stockholders' equity $210,186 $196,741
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XO GROUP INC.
NON-GAAP TABLE
For the Years Ended December 31, 2016 and 2015
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Years Ended December 31,
2016 2015
GAAP Actual Adjustments Non GAAP GAAP Actual Adjustments Non GAAP
Results Results
Adjusted Net Income and EPS Reconciliation
Revenue 152,116 - 152,116 141,644 - 141,644
Cost of Revenues 9,754 - 9,754 10,387 - 10,387
Operating Expenses -
Product & Content Development 44,668 - 44,668 40,351 (11) a 40,340
Sales & Marketing 49,772 - 49,772 43,420 (265) a 43,155
General & Administrative 23,666 - 23,666 24,440 (158) a 24,282
Depreciation & Amortization 6,372 - 6,372 5,544 - 5,544
Impairments 18 - 18 266 (266) b -
--- --- --- --- ---
Total Operating Expenses 124,496 - 124,496 114,021 (700) 113,321
Operating Income 17,866 - 17,866 17,236 700 17,936
Interest & Other Income/(Loss), Net 146 - 146 (4,023) 4,000 c (23)
Gain/(Loss) in Equity Interest (328) - (328) 520 (765) d (245)
Provision for Taxes on Income 5,564 1,423 f 6,987 8,269 (1,202) e 7,067
----- ----- --- ----- ----- ------ --- -----
Net Profit/(Loss) 12,120 (1,423) 10,697 5,464 5,137 10,601
Amounts per Share - Diluted 0.47 (0.05) 0.42 0.21 0.21 0.42
Weighted Average Number of Shares Outstanding - Diluted 25,640 25,640 25,530 25,530
Adjusted EBITDA Reconciliation
Operating Income 17,866 - 17,866 17,236 700 17,936
Depreciation & Amortization (g) 6,372 - 6,372 5,544 - 5,544
Stock Based Compensation (h) 8,359 - 8,359 5,992 - 5,992
----- ----- ----- -----
Adjusted EBITDA 32,597 - 32,597 28,772 700 29,472
a. To eliminate costs associated with
the exit of our merchandising
operations, including (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. To eliminate impairment charges
included in Asset Impairment
Charges.
c. To eliminate Touch Media impairment
expense, included in Interest and
other income (expense), net.
d. To eliminate a gain on our existing
equity method investment in
GigMasters, included in Gain
(Loss) in Equity Interests.
e. To adjust income tax expense to our
effective tax rate, excluding
discrete items, of 40.0% for the
year ended December 31, 2015,
f. To eliminate discrete items,
including 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 in the
2016 period.
g. To eliminate depreciation and
amortization expense.
h. To eliminate stock-based
compensation expense.
XO GROUP INC.
NON-GAAP TABLE
For the Quarters Ended December 31, 2016 and 2015
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Quarters Ended December 31,
2016 2015
GAAP Actual Adjustments Non GAAP GAAP Actual Adjustments Non GAAP
Results Results
Adjusted Net Income and EPS Reconciliation
Revenue 41,008 - 41,008 38,146 38,146
Cost of Revenues 3,039 - 3,039 2,836 2,836
Operating Expenses -
Product & Content Development 11,726 - 11,726 11,051 11,051
Sales & Marketing 13,953 - 13,953 11,737 11,737
General & Administrative 5,642 - 5,642 6,345 6,345
Depreciation & Amortization 1,557 - 1,557 1,517 1,517
Impairments 5 - 5 245 (245) a -
--- --- --- --- ---
Total Operating Expenses 32,883 - 32,883 30,895 (245) 30,650
Operating Income 5,086 - 5,086 4,415 245 4,660
Interest & Other Income/(Loss), Net 117 - 117 (3,972) 4,000 b 28
Gain/(Loss) in Equity Interest (118) - (118) 729 (765) c (36)
Provision for Taxes on Income 1,663 295 e 1,958 3,330 (1,469) d 1,861
----- --- --- ----- ----- ------ --- -----
Net Profit/(Loss) 3,422 (295) 3,127 (2,158) 4,949 2,791
Amounts per Share - Diluted 0.13 (0.01) 0.12 (0.09) 0.20 0.11
Weighted Average Number of Shares Outstanding - Diluted 25,698 25,698 25,174 25,174
Adjusted EBITDA Reconciliation
Operating Income 5,086 - 5,086 4,415 245 4,660
Depreciation & Amortization (f) 1,557 - 1,557 1,517 - 1,517
Stock Based Compensation (g) 2,558 - 2,558 1,740 - 1,740
----- ----- ----- --- -----
Adjusted EBITDA 9,201 - 9,201 7,672 245 7,917
a) To eliminate impairment charges included in Asset Impairment Charges.
b) To eliminate Touch Media impairment expense, included in Interest and other income (expense), net.
c) To eliminate a gain on a pre-existing equity method investment in GigMasters, included in Gain(Loss) in Equity Interests.
d) To adjust income tax expense to our 2015 effective tax rate, excluding discrete items, of 40.0%
e) To eliminate a one time benefit associated with the resolution of an uncertain tax position.
f) To eliminate depreciation and amortization expense.
g) To eliminate stock-based compensation expense.
XO GROUP INC.
SUPPLEMENTAL DATA TABLES (UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
Three months ended December 31, Twelve months ended December 31,
------------------------------- --------------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net cash provided by operating activities $7,302 $8,989 $27,390 $20,548
Less: capital expenditures (1,250) (772) (4,297) (3,549)
Free cash flow $6,052 $8,217 $23,093 $16,999
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TheKnot.com Local Online Advertising Metrics Q4 2016 Q4 2015
-------------------------------------------- ------- -------
Vendor Count(a) 23,662 24,340
-------------- ------ ------
Retention Rate(a);(b) 68.0% 73.8%
-------------------- ---- ----
Avg. Revenue/Vendor(a) $2,804 $2,628
---------------------- ------ ------
(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 twelve months ended December 31, 2016 and 2015, as follows:
Three months ended December 31, Twelve months ended December 31,
------------------------------- --------------------------------
2016 2015 2016 2015
---- ---- ---- ----
(In Thousands)
-------------
Product and content development $654 $546 $2,324 $1,817
Sales and marketing 831 372 2,057 1,384
General and administrative 1,073 822 3,978 2,791
Total stock-based compensation $2,558 $1,740 $8,359 $5,992
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Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Tuesday, February 28, 2017, to discuss its fourth quarter and full year 2016 financial results. Participants should dial (877) 201-0168 and use Conference ID# 57838274 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 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) 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 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, (4) costs related
to exit activities and (5) discrete tax items.
-- 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 (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) 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.
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SOURCE XO Group Inc.
