XOXO NEW YORK, Oct. 31, 2017 /PRNewswire/ -- XO Group Inc. (the "Company") (NYSE: XOXO), (xogroupinc.com), today reported financial results for the three months ended September 30, 2017.
Total revenue for the third quarter of 2017 was $40.2 million, up from $36.7 million during the same period in the prior year. Net income for the quarter was $3.3 million or $0.13 per diluted share compared to diluted earnings per share of $0.07 in the same period in the prior year. The Company's balance sheet at September 30, 2017 reflects cash and cash equivalents of $100.8 million compared to $105.7 million at December 31, 2016.
"Our products are performing. Our local sales are accelerating. And we are about to launch some of our most exciting marketplace features yet. I appreciate the team's good work in Q3," 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 September 30, Nine Months Ended September 30,
-------------------------------
2017 2016 2017 2016
---- ---- ---- ----
Net revenue:
National online advertising $8,842 $8,932 $27,516 $27,156
Local online advertising 20,130 17,040 57,555 51,871
------ ------ ------
Total online advertising 28,972 25,972 85,071 79,027
Transactions 7,950 7,105 21,102 17,740
Publishing and other 3,315 3,654 12,050 14,341
----- ----- ------ ------
Total net revenue 40,237 36,731 118,223 111,108
Cost of revenue:
Online advertising 1,207 802 3,057 2,102
Publishing and other 1,107 986 3,952 4,168
----- --- ----- -----
Total cost of revenue 2,314 1,788 7,009 6,270
Gross profit 37,923 34,943 111,214 104,838
Operating expenses:
Product and content development 11,462 11,729 35,117 33,388
Sales and marketing 12,230 13,098 39,761 36,172
General and administrative 7,469 5,501 22,731 17,683
Depreciation and amortization 1,565 1,580 5,234 4,815
----- ----- ----- -----
Total operating expenses 32,726 31,908 102,843 92,058
Income from operations 5,197 3,035 8,371 12,780
Loss in equity interests (33) (29) (1,204) (210)
Interest and other income / (expense), net 161 48 359 29
--- --- --- ---
Income before income taxes 5,325 3,054 7,526 12,599
Income tax expense 1,984 1,146 2,432 3,901
----- ----- ----- -----
Net income $3,341 $1,908 $5,094 $8,698
====== ====== ====== ======
Net income per share:
Basic $0.13 $0.08 $0.20 $0.34
===== ===== ===== =====
Diluted $0.13 $0.07 $0.20 $0.34
===== ===== ===== =====
Weighted average number of shares
used in calculating net earnings per
share:
Basic 24,858 25,368 25,054 25,341
Dilutive effect of:
Restricted stock 226 331 262 318
Employee Stock Purchase Plan - - 2 -
Options 40 28 35 16
=== === === ===
Diluted 25,124 25,727 25,353 25,675
====== ====== ====== ======
XO GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)
September 30, 2017 December 31, 2016
------------------ -----------------
ASSETS
Current assets:
Cash and cash equivalents $100,796 $105,703
Accounts receivable, net 15,912 20,182
Prepaid expenses and other current assets 6,312 5,247
----- -----
Total current assets 123,020 131,132
Long-term restricted cash 1,181 1,181
Property and equipment, net 11,041 12,130
Intangibles assets, net 4,608 4,154
Goodwill 51,088 48,678
Deferred tax assets, net 9,429 9,918
Investments 1,481 2,685
Other assets 122 308
--- ---
Total assets $201,970 $210,186
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued compensation and employee benefits $4,487 $6,164
Accounts payable and accrued expenses 7,175 7,515
Deferred revenue 15,021 16,752
------ ------
Total current liabilities 26,683 30,431
Deferred rent 3,246 3,720
Other liabilities 1,200 1,485
----- -----
Total liabilities 31,129 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 September 30, 2017 and December
31, 2016, respectively
Common stock, $0.01 par value; 100,000,000 shares authorized and 258 264
25,706,079 and 26,304,925 shares issued and outstanding at September
30, 2017 and December 31, 2016, respectively
Additional paid-in-capital 178,977 178,959
Accumulated deficit (8,394) (4,673)
------ ------
Total stockholders' equity 170,841 174,550
------- -------
Total liabilities and stockholders' equity $201,970 $210,186
======== ========
XO GROUP INC.
NON-GAAP RECONCILIATION TABLE
For the Three Months Ended September 30, 2017 and 2016
(In Thousands, Except for Per Share Data)
(Unaudited)
Adjusted EBITDA Reconciliation
Three Months Ended September 30,
2017 2016
Income from operations $5,197 $3,035
Depreciation and amortization 1,565 1,580
Stock-based compensation 2,021 2,157
Bad debt expense (a) $ - -
--- --- ---
Adjusted EBITDA $8,783 $6,772
Free Cash Flow Reconciliation
Three Months Ended September 30,
2017 2016
Net cash provided by operating activities $7,409 $7,455
Less: capital expenditures (1,440) (1,061)
------
Free cash flow $5,969 $6,394
Adjusted loss in equity interests
excludes the other-than-
temporary impairment that reduced
the carrying value of our equity
investment in Jetaport, Inc. to
zero. In addition, adjusted
general and administrative
operating expenses exclude bad
debt expense associated with a
loan previously made to Jetaport,
(a) Inc.
XO GROUP INC.
NON-GAAP RECONCILIATION TABLE
For the Nine Months Ended September 30, 2017 and 2016
(In Thousands, Except for Per Share Data)
(Unaudited)
There were no non-GAAP adjustments to Net Income for the three months ended September 30, 2017 or 2016.
Adjusted Net Income Reconciliation
Nine Months Ended September 30,
2017 2016
As Reported Adjustments Non GAAP As Reported Adjustments Non GAAP
Net revenue $118,223 $ - $118,223 $111,108 $ - $111,108
Cost of revenue 7,009 - 7,009 6,270 - 6,270
Operating expenses
Product and content development 35,117 - 35,117 33,388 - 33,388
Sales and marketing 39,761 - 39,761 36,172 - 36,172
General and administrative 22,731 200 (a) 22,531 17,683 - 17,683
Depreciation and amortization 5,234 - 5,234 4,815 - 4,815
----- --- ----- ----- --- -----
Total operating expenses 102,843 200 102,643 92,058 - 92,058
Income from operations 8,371 200 8,571 12,780 - 12,780
Interest and other income / 359 - 359 29 - 29
(expense), net
Loss in equity interests (1,204) 1,032 (a) (172) (210) - (210)
Income tax expense 2,432 - 2,432 3,901 - 3,901
----- --- ----- ----- --- -----
Net income $5,094 $1,232 $6,326 $8,698 $ - $8,698
Net income per share - diluted $0.20 $0.05 $0.25 $0.34 $ - $0.34
Weighted average number of shares 25,353 25,353 25,675 25,675
outstanding - diluted
Adjusted EBITDA Reconciliation
Nine Months Ended September 30,
2017 2016
Income from operations $8,371 $12,780
Depreciation and amortization 5,234 4,815
Stock-based compensation 6,037 5,801
Bad debt expense (a) 200 -
--- ---
Adjusted EBITDA $19,842 $23,396
Free Cash Flow Reconciliation
Nine Months Ended September 30,
2017 2016
Net cash provided by operating $17,241 $20,088
activities
Less: capital expenditures (3,563) (3,047)
------ ------
Free cash flow $13,678 $17,041
(a) Adjusted loss in equity interests excludes the other-than-temporary impairment that reduced the carrying value of our equity investment in Jetaport,
Inc. to zero. In addition, general and administrative operating expenses excludes bad debt expense associated with a loan previously made to
Jetaport, Inc.
XO GROUP INC.
SUPPLEMENTAL DATA TABLES (UNAUDITED)
(Unaudited)
TheKnot.com Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016
Local Online
Advertising
Metrics
Vendor 23,504 22,498 22,024 22,447 23,136 23,888 24,377
Count(a)
Retention 78.6% 77.0% 69.7% 63.4% 62.6% 62.6% 67.8%
Rate(a)
Avg. $3,053 $3,052 $3,018 $2,955 $2,835 $2,747 $2,694
Revenue/Ven
dor(a)
-----
Vendor 25,646 24,681 23,108 22,058 21,326 21,404 23,910
Count at
Quarter End
-----------
(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 nine months ended September 30, 2017 and 2016, as follows:
Three Months Ended September Nine Months Ended September
30, 30,
2017 2016 2017 2016
---- ---- ---- ----
(Amounts in Thousands)
Product and content development $666 $708 $1,819 $1,669
Sales and marketing 423 339 1,288 1,227
General and administrative 932 1,110 2,930 2,905
--- ----- ----- -----
Total stock-based compensation $2,021 $2,157 $6,037 $5,801
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 8:00 a.m. ET on Tuesday, October 31, 2017, to discuss its third quarter 2017 financial results. Participants should dial (833) 236-5763 and use Conference ID# 99985038 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, 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) other items affecting comparability during the
period.
-- 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.
-- Adjusted EBITDA margin represents adjusted EBITDA (as defined above),
divided by total GAAP revenue.
-- Free cash flow represents GAAP net cash provided by operations, less
capital expenditures.
National online advertising programs include display advertisements. Revenue from display advertisements is largely generated by sold impressions (the number of views or displays of a customer's advertisement, banner, link or other form of content on our online properties for which we earn revenue). Display advertising revenue per one thousand sold impressions derives our effective CPM ("eCPM").
Through our transactions business, we earn fixed fees, a percentage of sales, per-unit activity fees, or some combination thereof with respect to these transactions, which we refer to collectively as our "take rate."
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.
