XOXO 
By NEW YORK, March 13, 2014 /PRNewswire/ -- XO Group Inc. (NYSE: XOXO, xogroupinc.com), the premier consumer Internet and media company devoted to weddings, pregnancy, and everything in between, today reported financial results for the fourth quarter and year ended December 31, 2013.
XO Group also announced it has named Michael Steib, currently President, as its new Chief Executive Officer and has appointed him to the Board of Directors. Co-Founder David Liu will continue guiding overall Company direction as Chairman of the Board, including intensifying his focus on driving the Company's business in China.
"Over the last 17 years, we have built some of the top brands in the industry," said David Liu, Co-Founder and Chairman of XO Group. "The power of those brands to help people make lifestage decisions remains unchanged. However, our consumers now view mobile as their first choice for both content and engagement. Hiring Mike and empowering him to transform our businesses and build on our brands was a key first step. I am confident he has the skills and passion to guide XO Group and lead the industry into a more connected future."
"Our goal at XO is to build a brand- and mobile-driven marketplace for lifestage decisions," said Michael Steib, President and Chief Executive Officer, XO Group. "As a result, in late 2013 we began making critical investments in technology and talent in order to give our consumers even greater real-time, on-the-go access to trusted brands and vendors - and to build the back-end systems that make that access more valuable to advertisers and business partners."
Added Steib: "It's an honor to lead XO into this next exciting phase of its development."
Overview of Recent Strategic Initiatives
Since joining the Company, Mr. Steib has worked closely with Mr. Liu to sharpen XO Group's focus on building out its network of branded sites, vendors and advertisers so that they can better serve the thousands of individual consumer touchpoints that take place as on-the-go brides, couples and families seek advice and assistance.
On this front, in recent months, the Company hired several new senior-level executives, under the leadership of Mr. Steib, including Gillian Munson as Chief Financial Officer; Jennifer Garrett as EVP, National Enterprise Sales; and Katherine Wu Brady as EVP, E-Commerce and Registry. These appointments stack the leadership team with the skills and expertise necessary to further the Company's technological transformation.
Also under the direction of Mr. Steib, the Company added significant product and engineering expertise during the quarter focused heavily on mobile development. These strategic investments also resulted in higher product and content expenses, and included management transition expenses, all contributing to year-over-year increases in operating expenses.
"Our results highlight a strategic allocation of our capital towards internal investment that we believe will generate long term opportunities and returns for our company and our shareholders," said Gillian Munson, Chief Financial Officer.
Full Year 2013 Highlights:
-- Full year consolidated revenue was $133.8 million, a 3.6% year over year
improvement.
-- Local online revenue increased 9.1%.
-- Registry services revenue increased 27.2% in 2013.
-- Gross profit was $111.4 million a 4.6% improvement from the prior year.
Gross margin was 83.3% compared to 82.5% for 2012.
-- Net income for the full year 2013 was $5.8 million, down 33.0% from the
prior year, reflecting the Company's investment in future growth
initiatives.
-- Full year diluted earnings per share (EPS) were $0.23, down $0.12 from
full year 2012 diluted EPS.
-- Adjusted EBITDA for 2013 was $26.7 million, which compares to $25.5
million for full year 2012.
-- Cash flow from operations for the full year was $22.2 million.
-- Capital expenditures for the full year were $6.0 million.
-- Free cash flow for the full year of 2013 was $16.3 million, driving a
$13.3 million increase in our overall cash balance to $90.7 million.
Fourth Quarter 2013 Operating Results:
Total revenue for the fourth quarter of 2013 totaled $32.6 million, an increase of 1.3%, compared with $32.2 million in the fourth quarter of 2012.
-- Total online advertising revenue was $20.1 million, a 1.2% increase from
the comparable quarter in the prior year. Local online advertising grew
by 7.1%, while national online advertising was down by 9.6%.
-- Registry services revenue increased by 32.1% to $1.6 million for the
fourth quarter of 2013.
-- E-commerce revenue was $3.0 million, down 4.4% compared to the prior
year.
-- Publishing and Other revenues were down 0.9% from the prior year due to
a decrease in tradeshow revenue, partially offset by increased
advertising revenue.
Consolidated gross profit improved 2.3% year over year to $27.1 million for the fourth quarter primarily due to a mix shift to advertising and registry services revenue.
Operating expenses for the fourth quarter of 2013 were $29.1 million, an increase of 36.1% from the fourth quarter of 2012, driven by increases of $2.8 million in product and content development, $2.8 million in general and administrative expenses and $1.4 million related to impairment of tradenames. The increase in product and content was driven by increased personnel expenses, related to our product and mobile investments. The increase in general and administrative expense was primarily due to executive transition charges and foreign value added tax, interest and penalties.
Ijie.com incurred operating losses of $2.0 million and $5.0 million, respectively, for the three months and twelve months ended December 31, 2013.
Net loss and net loss per share on a GAAP basis for the fourth quarter of 2013 were $3.1 million and ($0.12) respectively, compared to net income of $3.1 million and net income per diluted share of $0.13 for the fourth quarter of 2012. Excluding severance charges related to executive management changes, impairment charges and incremental foreign tax expenses, adjusted net income per diluted share for the fourth quarter of 2013 was $0.02 compared to $0.13 for the fourth quarter of 2012.
Cash and cash equivalents were $90.7 million at the end of 2013, a 17.2% increase compared to 2012.
Capital expenditures for the fourth quarter of 2013 were $1.3 million.
XO GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except for Per Share Data)
(unaudited)
Three Months
Ended
December 31,
2013 2012
---- ----
Net revenue:
National online sponsorship
and advertising $6,341 $7,017
Local online sponsorship
and advertising 13,793 12,884
------ ------
Total online sponsorship
and advertising 20,134 19,901
Registry services 1,553 1,175
Merchandise 2,995 3,131
Publishing and other 7,903 7,974
----- -----
Total net revenue 32,585 32,181
Cost of revenue:
Online sponsorship and
advertising 421 398
Merchandise 2,107 2,211
Publishing and other 2,911 3,047
----- -----
Total cost of revenue 5,439 5,656
Gross profit 27,146 26,525
Operating expenses:
Product and content
development 8,761 5,996
Sales and marketing 10,144 9,732
General and administrative 7,242 4,482
Long-lived asset
impairment charge 1,430 __
Depreciation and
amortization 1,484 1,134
----- -----
Total operating expenses 29,061 21,344
(Loss) Income from
operations (1,915) 5,181
Loss in equity interests (1,842) (26)
Interest and other income,
net 74 41
--- ---
(Loss) Income before income
taxes (3,683) 5,196
(Benefit) Provision for
income taxes (615) 2,074
---- -----
Net (loss) income $(3,068) $3,122
====== ======
Net (loss) income per
share:
Basic $(0.12) $0.13
====== =====
Diluted $(0.12) $0.13
====== =====
Weighted average number of
shares used in calculating
net (loss) income per
share:
Basic 24,704 24,311
====== ======
Diluted 24,704 24,892
====== ======
XO GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except for Per Share Data)
(unaudited)
Twelve Months
Ended December
31,
2013 2012
---- ----
Net revenue:
National online sponsorship and
advertising $27,216 $26,561
Local online sponsorship and
advertising 54,445 49,914
------ ------
Total online sponsorship and
advertising 81,661 76,475
Registry services 7,926 6,231
Merchandise 18,406 21,359
Publishing and other 25,821 25,066
------ ------
Total net revenue 133,814 129,131
Cost of revenue:
Online sponsorship and
advertising 1,927 1,741
Merchandise 11,296 12,454
Publishing and other 9,178 8,407
----- -----
Total cost of revenue 22,401 22,602
Gross profit 111,413 106,529
Operating expenses:
Product and content development 29,877 26,229
Sales and marketing 39,718 40,239
General and administrative 23,073 20,980
Long-lived asset impairment
charge 1,430 958
Depreciation and amortization 4,808 3,874
----- -----
Total operating expenses 98,906 92,280
Income from operations 12,507 14,249
Loss in equity interests (2,016) (55)
Interest and other income, net 144 113
--- ---
Income before income taxes 10,635 14,307
Provision for income taxes 4,841 5,658
----- -----
Net income 5,794 8,649
Plus: net loss attributable to
noncontrolling interest - 65
--- ---
Net income attributable to XO
Group Inc. $5,794 $8,714
====== ======
Net income per share
attributable to XO Group Inc.
common stockholders:
Basic $0.24 $0.35
===== =====
Diluted $0.23 $0.35
===== =====
Weighted average number of
shares used in calculating net
income per share:
Basic 24,620
24,649
======
Diluted 25,596
25,218
======
XO GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(unaudited)
December 31,
2013 2012
---- ----
ASSETS
Current assets:
Cash and cash equivalents $90,697 $77,407
Accounts receivable, net 11,838 14,960
Inventories 2,374 2,222
Deferred production and
marketing costs 475 557
Deferred tax assets, current
portion 2,782 2,857
Prepaid expenses and other
current assets 5,993 2,452
----- -----
Total current assets 114,159 100,455
Long-term restricted cash 2,599 2,599
Property and equipment, net 15,490 13,093
Intangible assets, net 3,357 5,660
Goodwill 38,500 37,750
Deferred tax assets 21,469 21,334
Investment in equity interests 1,680 2,396
Other assets 495 67
--- ---
Total assets $197,749 $183,354
====== ======
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
expenses $12,420 $11,448
Deferred revenue 14,864 14,710
------ ------
Total current liabilities 27,284 26,158
Deferred tax liabilities 4,507 2,791
Deferred rent 5,914 6,628
Other liabilities 4,154 3,270
----- -----
Total liabilities 41,859 38,847
Stockholders' equity:
Preferred stock - -
Common stock 270 259
Additional paid-in-capital 169,756 164,071
Accumulated other
comprehensive loss (204) (97)
Accumulated deficit (13,932) (19,726)
------- -------
Total stockholders' equity 155,890 144,507
Total liabilities and equity $197,749 $183,354
====== ======
XO GROUP INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in Thousands, Except for Per Share Data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
---- ---- ---- ----
Net (loss) income attributable to XO Group Inc. ($3,068) $3,122 $5,794 $8,714
(Benefit) Provision for income taxes (615) 2,074 4,841 5,658
Depreciation and amortization 1,484 1,134 4,808 3,874
Stock-based compensation expense 2,145 (46) 6,697 6,388
Long-lived asset impairment charges 1,430 - 1,430 958
Loss in equity interests 1,842 26 2,016 55
Interest and other income, net (74) (41) (144) (113)
Net loss attributable to noncontrolling interest - - - (65)
Executive severance charges (a) 350 - 350 -
Foreign VAT, interest and penalties (b) 930 - 930 -
--- --- --- ---
Adjusted EBITDA $4,424 $6,269 $26,722 $25,469
Depreciation and amortization (1,484) (1,134) (4,808) (3,874)
Stock-based compensation expense (2,145) 46 (6,697) (6,388)
Loss in equity interests (1,842) (26) (2,016) (55)
Interest and other income, net 74 41 144 113
Impairment of equity interest (c) 1,773 - 1,773 -
----- --- ----- ---
Adjusted income before income taxes 800 5,196 15,118 15,265
Adjusted provision for income taxes (d) 328 2,052 6,198 6,030
--- ----- ----- -----
Adjusted net income $472 $3,144 $8,920 $9,235
==== ====== ====== ======
Adjusted net income per diluted share $0.02 $0.13 $0.35 $0.37
===== ===== ===== =====
Diluted weighted average number of shares outstanding 25,647 24,892 25,596 25,218
Net cash provided by operating activities $6,889 $6,956 $22,243 $25,373
Less: Capital expenditures (1,307) (822) (5,968) (2,831)
------ ---- ------ ------
Free cash flow $5,582 $6,134 $16,275 $22,542
====== ====== ======= =======
(a) Incremental costs included
in "General and
administrative" expenses on
the Condensed Consolidated
Statements of Operations for
the three and twelve months
ended December 31, 2013
include severance of $0.35
million, representing the
severance for a former
executive of the Company.
(b) Incremental costs included
in "General and
administrative" expenses on
the Condensed Consolidated
Statements of Operations for
the three and twelve months
ended December 31, 2013
include foreign VAT, interest
and penalties of $0.9
million.
(c) Impairment of an equity
interest of $1.8 million is
included in "Loss in equity
interests" on the Condensed
Consolidated Statements of
Operations for the three and
twelve months ended December
31, 2013.
(d) Adjusted provision for
income taxes was calculated
using the effective tax rate
for each respective year,
excluding discrete items.
XO GROUP INC.
SUPPLEMENTAL DATA TABLES
(unaudited)
Local Online Advertising Metrics
4Q 2013 4Q 2012
------- -------
Profile Count 30,562 29,161
------------- ------ ------
Vendor Count 22,755 22,122
------------ ------ ------
Churn Rate 27.9% 30.2%
---------- ---- ----
Avg. Revenue/Vendor $2,474 $2,351
------------------- ------ ------
Stock Based Compensation
Three Months Twelve Months
Ended Ended
December December 31,
31,
($000s) 2013 2012 2013 2012
------ ---- ---- ---- ----
Product & content development $680 $(50) $2,391 $2,084
----------------------------- ---- ---- ------ ------
Sales & marketing 412 49 1,591 2,036
----------------- --- --- ----- -----
General & administrative 1,053 (45) 2,715 2,268
------------------------ ----- --- ----- -----
Total stock-based compensation $2,145 $(46) $6,697 $6,388
------------------------------ ------ ---- ------ ------
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Thursday, March 13, 2014, to discuss its fourth quarter 2013 financial results. Participants should dial (866) 430-3457 and use Conference ID# 2198783 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 athttp://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. A replay of the call will be available at (855) 859-2056 or (404) 537-3406, conference ID #2198783.
About XO Group Inc.
XO Group Inc. (NYSE: XOXO; http://www.xogroupinc.com) is the premier consumer Internet and media company devoted to weddings, pregnancy and everything in between, providing young women with the trusted information, products and advice they need to guide them through the most transformative events of their lives. Our family of premium brands began with the #1 wedding brand, The Knot, and has grown to include The Nest, The Bump and Ijie.com. XO Group is recognized by the industry for being innovative in all media - from the web to social media and mobile, magazines and books, and video - and our groundbreaking social platforms have ignited passionate communities across the world. XO Group has leveraged its customer loyalty into successful businesses in online sponsorship and advertising, registry services, ecommerce and publishing. The company is publicly listed on the New York Stock Exchange (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. These statements are only predictions and reflect our current beliefs and expectations. Actual events or results may differ materially from those contained in the 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 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) sales to sponsors or advertisers may be delayed or cancelled, (v) efforts to launch new technology and features may not generate significant new revenue or may reduce revenue from existing services, (vi) we may be unable to develop solutions that generate revenue from advertising delivered to mobile phones and wireless devices, (vii) the significant fluctuation to which our quarterly revenue and operating results are subject, (viii) the seasonality of the wedding industry, (ix) our e-commerce operations are dependent on Internet search engine rankings, and our ability to influence those rankings is limited, (x) the dependence of our registry services business on third parties, 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) provision (benefit) for income taxes, (2)
depreciation and amortization, (3) stock-based compensation expense, (4)
impairment charges and asset write-offs, (5) loss in equity interests,
(6) interest and other income, net (7) net loss attributable to
non-controlling interest and (8) other incremental charges incurred in
the period.
-- Adjusted net income represents GAAP net income (loss), adjusted for
incremental costs incurred in the current period, which may include: (1)
impairment charges and asset write-offs, (2) executive severance and (3)
non-recurring foreign taxes, interest and penalties.
-- 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. In addition, Free cash flow provides management with useful information for managing the cash needs of our business. 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), 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
Investor Relations
(212) 219-8555 x1004
IR@xogrp.com
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SOURCE XO Group Inc.
