XOXO NEW YORK, Aug. 1, 2016 /PRNewswire/ -- 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 Company's 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 Six Months Ended June
30, 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.
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SOURCE XO Group Inc.
