NEW YORK, Aug. 6, 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 ended June 30, 2015.

Total revenue for the second quarter of 2015 was $36.2 million, down 5.6% 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, second quarter revenue increased 7.9% compared to the prior year. Net income for the quarter was $3.3 million or $0.13 per diluted share compared to $0.12 in the prior year quarter. The Company's balance sheet at June 30, 2015 reflects cash and cash equivalents of $85.6 million compared to $90.0 million at December 31, 2014. Under the previously announced stock buyback authorization, the Company repurchased shares of its common stock for approximately $2.8 million during the quarter. For the six months ended June 30, 2015, the Company has repurchased $8.8 million of its common stock.

"Through product innovation and focused business execution, we continued the steady growth of our core online advertising businesses while unlocking new transactional revenue streams. I want to thank the team for continuing to deliver for our users, customers, and shareholders," 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, 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 June 30,                                           Six Months Ended June 30,
                                             ---------------------------                                       -------------------------

                                                 2015                            2014                                    2015                     2014
                                                 ----                            ----                                    ----                     ----

      Net revenue:

        National online advertising                        $8,505                                                                $7,541                       16,504    14,451

                                                                                                                                                         $            $

        Local online advertising                           16,220                                                                14,510                       32,137    28,949
                                                           ------                                                                ------                       ------    ------

    Online advertising                                     24,725                                                                22,051                       48,641    43,400

    Registry and commerce                       4,163                                              3,072                                        6,457           4,957

    Merchandise                                     -                                             4,775                                          878           8,429

    Publishing and other                        7,302                                              8,432                                       12,816          13,964
                                                -----                                              -----                                       ------          ------

    Total net revenue                          36,190                                             38,330                                       68,792          70,750

    Cost of revenue:

    Online advertising                            551                                                509                                          905             972

    Merchandise                                     -                                             2,907                                          881           5,273

    Publishing and other                        2,295                                              2,626                                        3,715           4,257
                                                -----                                              -----                                        -----           -----

    Total cost of revenue                       2,846                                              6,042                                        5,501          10,502

    Gross profit                               33,344                                             32,288                                       63,291          60,248

    Operating expenses:

    Product and content development             9,845                                              8,832                                       19,399          17,705

    Sales and marketing                        10,382                                             10,651                                       21,004          21,764

    General and administrative                  6,071                                              6,324                                       12,161          13,389

    Depreciation and amortization               1,421                                              1,848                                        2,666           3,525
                                                -----                                              -----                                        -----           -----

    Total operating expenses                   27,719                                             27,655                                       55,230          56,383

    Income from operations                      5,625                                              4,633                                        8,061           3,865

    Loss in equity interests                    (30))                                             (115))                                         (36)         (175))

    Interest and other (expense) income, net    (25))                                                 23                                         (48)            (2)
                                                 ----                                                ---                                          ---             ---

    Income before income taxes                  5,570                                              4,541                                        7,977           3,688

    Income tax expense                          2,259                                              1,494                                        3,221           1,317
                                                -----                                              -----                                        -----           -----

    Net income                                             $3,311                                                                $3,047                       $4,756    $2,371
                                                           ------                                                                ------                       ------    ------


    Net income per share:

    Basic                                                   $0.13                                                                 $0.12                        $0.19     $0.09
                                                            -----                                                                 -----                        -----     -----

    Diluted                                                 $0.13                                                                 $0.12                        $0.19     $0.09
                                                            -----                                                                 -----                        -----     -----

    Weighted average number of
    shares used in calculating net
    earnings per share:

    Basic                                      25,174                                             25,220                                       25,174  25,065

    Diluted                                    25,540                                             25,498                                       25,582          25,534
                                               ------                                             ------                                       ------          ------




                                                      XO GROUP INC.

                                          CONDENSED CONSOLIDATED BALANCE SHEETS

                                                 (Amounts in Thousands)

                                                       (Unaudited)


                                                                                June 30, 2015          December 31, 2014
                                                                                -------------          -----------------

    ASSETS

    Current assets:

    Cash and cash equivalents                                                                  $85,598                              $89,955

    Accounts receivable, net                                                           19,375                               15,785

    Deferred tax assets, net                                                            3,052                                3,052

    Prepaid expenses and other current
     assets                                                                             3,452                                4,696
                                                                                        -----                                -----

    Total current assets                                                              111,477                              113,488
                                                                                      -------                              -------

    Long-term restricted cash                                                           2,595                                2,600

    Property and equipment, net                                                        14,354                               15,125

    Goodwill and intangibles, net                                                      43,489                               43,558

    Deferred tax assets, net                                                           12,452                               13,110

    Investments                                                                         5,465                                5,501

    Other assets                                                                           96                                  200
                                                                                          ---                                  ---

    Total assets                                                                              $189,928                             $193,582

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable and accrued expenses                                                      $11,786                              $12,463

    Deferred revenue                                                                   15,810                               16,236
                                                                                       ------                               ------

    Total current liabilities                                                          27,596                               28,699

    Deferred rent                                                                       4,927                                5,167

    Other liabilities                                                                   1,132                                1,790
                                                                                        -----                                -----

    Total liabilities                                                                  33,655                               35,656
                                                                                       ------                               ------

    Stockholders' equity:

    Preferred stock                                                                         -                                   -

    Common stock                                                                          264                                  267

    Additional paid-in-capital                                                        171,077                              171,951

    Accumulated other comprehensive
     income                                                                                 -                                  35

    Accumulated deficit                                                              (15,068)                            (14,327)
                                                                                      -------                              -------

    Total stockholders' equity                                                        156,273                              157,926
                                                                                      -------                              -------

    Total liabilities and stockholders'
     equity                                                                                   $189,928                             $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 June 30,                          Six Months Ended June 30,
                                                                                                  ---------------------------                       -------------------------

                                                                                                        2015                   2014                      2015                   2014
                                                                                                        ----                   ----                      ----                   ----

                                                                                                                     (In Thousands, Except for Per Share Data)

    Net income                                                                                                   $3,311                                          $3,047                                           $4,756                                           $2,371

    Income tax expense                                                                                 2,259                              1,494                               3,221                                 1,317

    Depreciation and amortization                                                                      1,421                              1,848                               2,666                                 3,525

    Stock-based compensation expense                                                                   1,637                              1,810                               3,117                                 2,998

    Exit of merchandise operations(a)                                                                      -                                 -                                434                                     -

    Interest and other expense (income), net                                                              25                               (23)                                 48                                     2

    Loss in equity interests                                                                              30                                115                                  36                                   175

    Severance charges(b)                                                                                   -                                 -                                  -                                1,354
                                                                                                         ---                               ---                                ---                                -----

    Adjusted EBITDA                                                                                              $8,683                                          $8,291                                          $14,278                                          $11,742

    Depreciation and amortization                                                                    (1,421)                           (1,848)                            (2,666)                              (3,525)

    Stock-based compensation expense                                                                 (1,637)                           (1,810)                            (3,117)                              (2,998)

    Loss in equity interests                                                                            (30)                             (115)                               (36)                                (175)

    Interest and other (expense) income, net                                                            (25)                                23                                (48)                                  (2)

    Adjusted income before income taxes                                                                5,570                              4,541                               8,411                                 5,042

    Adjusted income tax expense(c)                                                                     2,259                              1,494                               3,398                                 1,798

    Adjusted net income                                                                                          $3,311                                          $3,047                                           $5,013                                           $3,244
                                                                                                                 ------                                          ------                                           ------                                           ------


    Adjusted net income per diluted                                                                               $0.13                                           $0.12                                            $0.20                                            $0.13
    share



    Diluted weighted average                                                                          25,540                             25,498                              25,582                                25,534
    number of shares outstanding

    Net cash provided by operating activities                                                                    $6,561                                          $4,835                                           $7,445                                           $3,878

    Less: Capital expenditures                                                                         (801)                           (1,638)                            (2,036)                  (2,644)
                                                                                                        ----                             ------                              ------                    ------

    Free cash flow                                                                                               $5,760                                          $3,197                                           $5,409                                           $1,234
                                                                                                                 ------                                          ------                                           ------                                           ------


    (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 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 six months ended June 30, 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 an effective tax rate of 40.6% and 32.9% for three months ended June 30, 2015 and 2014, respectively, and 40.4% and 35.7% for the six months ended June 30, 2015 and 2014, respectively, excluding discrete items.


                                                                       Supplemental data tables (unaudited)
                                                                        -----------------------------------


                                                    Local Advertising Metrics (excluding Two Bright Lights)


                                                                                                            Q2 2015        Q2 2014
                                                                                                            -------        -------

    Profile Count                                                                                                   32,812         31,774
    -------------                                                                                                   ------         ------

    Vendor Count                                                                                                    24,619         23,682
    ------------                                                                                                    ------         ------

    Churn Rate(a)                                                                                                    23.6%         25.2%
    ------------                                                                                                      ----           ----

    Avg. Revenue/Vendor(a)                                                                                          $2,547         $2,516
    ----------------------                                                                                          ------         ------


    (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 and six months ended June 30, 2015 and 2014, as follows:


                                                                                     Three Months Ended June 30,              Six Months Ended June 30,
                                                                                     ---------------------------              -------------------------

                                                                                         2015                 2014                2015                 2014
                                                                                         ----                 ----                ----                 ----

                                                                                                               (In Thousands)

    Product and content development                                                                $513                                    $626             $1,097  $1,069

    Sales and marketing                                                                   353                            488                           723      727

    General and administrative                                                            771                            696                         1,297    1,202
                                                                                          ---                            ---                         -----    -----

    Total stock-based compensation                                                               $1,637                                  $1,810             $3,117  $2,998
                                                                                                 ------                                  ------             ------  ------

Conference Call and Replay Information

XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Thursday, August 6, 2015, to discuss its second quarter 2015 financial results. Participants should dial (877) 201-0168 and use Conference ID# 77028633 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 (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 ("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 for
        items that impact comparability, which may include: (1) asset impairment
        charges, (2) executive separation and other severance charges, (3)
        non-recurring 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

http://photos.prnewswire.com/prnvar/20140805/133477

Logo - http://photos.prnewswire.com/prnh/20140805/133477

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/xo-group-reports-second-quarter-2015-financial-results-300125092.html

SOURCE XO Group Inc.