XO Group Reports Second Quarter 2017 Financial Results;
NEW YORK, July 31, 2017 /PRNewswire/ -- XO Group Inc. (the "Company") (NYSE: XOXO, xogroupinc.com), today reported financial results for the three and six months ended June 30, 2017.
Total revenue for the second quarter of 2017 was $42.2 million, up 9% as compared to the same period in the prior year and the Adjusted EBITDA margin was 19%. GAAP net income for the quarter was $1.4 million or $0.06 per diluted share compared to diluted earnings per share of $0.15 in the same period in the prior year. Non-GAAP net income was $2.7 million or $0.11 per diluted share. The Company's balance sheet at June 30, 2017 reflected cash and cash equivalents of $98.4 million compared to $105.7 million at December 31, 2016. The Company repurchased and retired shares of its common stock for an aggregate price of $8.2 million during the quarter as part of the Company's previously announced repurchase program.
"We continue to develop great products that our couples love while delivering distinct value to our business partners. I am pleased to report another quarter of robust growth in our transactions business and our highest year-over-year quarterly growth rate in local online since the first quarter of 2016," said Mike Steib, Chief Executive Officer.
XO's Management Team will welcome Analysts and Investors at an Analyst Breakfast and Meeting on September 27th. More details to come.
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 June 30, Six Months Ended June 30, 2017 2016 2017 2016 ---- ---- ---- ---- Net revenue: National online advertising $9,746 $9,566 $18,674 $18,224 Local online advertising 18,991 16,652 37,425 34,831 ------ ------ ------ Total online advertising 28,737 26,218 56,099 53,055 Transactions 8,190 6,431 13,152 10,635 Publishing and other 5,299 6,059 8,735 10,687 ----- ----- ----- ------ Total net revenue 42,226 38,708 77,986 74,377 Cost of revenue: Online advertising 919 684 1,850 1,299 Publishing and other 1,867 2,072 2,845 3,182 ----- ----- ----- ----- Total cost of revenue 2,786 2,756 4,695 4,481 Gross profit 39,440 35,952 73,291 69,896 Operating expenses: Product and content development 11,914 10,814 23,655 21,659 Sales and marketing 14,030 11,513 27,531 23,074 General and administrative 7,961 5,833 15,262 12,183 Depreciation and amortization 2,011 1,641 3,669 3,235 ----- ----- ----- ----- Total operating expenses 35,917 29,801 70,117 60,151 Income from operations 3,524 6,151 3,174 9,745 Loss in equity interests (1,054) (37) (1,171) (181) Interest and other income / (expense), net 105 (18) 198 (19) --- --- --- --- Income before income taxes 2,575 6,096 2,201 9,545 Income tax expense 1,134 2,331 448 2,755 ----- ----- --- ----- Net income $1,441 $3,765 $1,753 $6,790 ====== ====== ====== ====== Net income per share: Basic $0.06 $0.15 $0.07 $0.27 ===== ===== ===== ===== Diluted $0.06 $0.15 $0.07 $0.26 ===== ===== ===== ===== Weighted average number of shares used in calculating net earnings per share: Basic 24,958 25,393 25,154 25,328 Dilutive effect of: Restricted stock 191 260 280 291 Employee Stock Purchase Plan 2 3 2 1 Options 31 21 33 17 === === === === Diluted 25,182 25,677 25,469 25,637 ====== ====== ====== ======
XO GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except for Per Share Data) (Unaudited) June 30, 2017 December 31, 2016 ------------- ----------------- ASSETS Current assets: Cash and cash equivalents $98,391 $105,703 Accounts receivable, net 18,548 20,182 Prepaid expenses and other current assets 8,018 5,247 ----- ----- Total current assets 124,957 131,132 Long-term restricted cash 1,181 1,181 Property and equipment, net 10,912 12,130 Intangibles assets, net 3,738 4,154 Goodwill 48,678 48,678 Deferred tax assets, net 9,757 9,918 Investments 1,514 2,685 Other assets 187 308 --- --- Total assets $200,924 $210,186 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accrued compensation and employee benefits $4,670 $6,164 Accounts payable and accrued expenses 7,479 7,515 Deferred revenue 18,381 16,752 ------ ------ Total current liabilities 30,530 30,431 Deferred rent 3,423 3,720 Other liabilities 1,192 1,485 ----- ----- Total liabilities 35,145 35,636 Commitments and contingencies Stockholders' equity: Preferred stock, $0.001 par value; 5,000,000 shares authorized and zero - - shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively Common stock, $0.01 par value; 100,000,000 shares authorized and 258 264 25,697,045 and 26,304,925 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively Additional paid-in-capital 177,256 178,959 Accumulated deficit (11,735) (4,673) ------- ------ Total stockholders' equity 165,779 174,550 ------- ------- Total liabilities and stockholders' equity $200,924 $210,186 ======== ========
XO GROUP INC. NON-GAAP RECONCILIATION TABLE For the Three Months Ended June 30, 2017 and 2016 (In Thousands, Except for Per Share Data) (Unaudited) Adjusted Net Income Reconciliation Three Months Ended June 30, 2017 2016 As Reported Adjustments Non GAAP As Reported Adjustments Non GAAP Net revenue $42,226 $ - $42,226 $38,708 $ - $38,708 Cost of revenue 2,786 - 2,786 2,756 - 2,756 Operating expenses Product and content development 11,914 - 11,914 10,814 - 10,814 Sales and marketing 14,030 - 14,030 11,513 - 11,513 General and administrative 7,961 200 (a) 7,761 5,833 - 5,833 Depreciation and amortization 2,011 - 2,011 1,641 - 1,641 ----- --- ----- ----- --- ----- Total operating expenses 35,916 200 35,716 29,801 - 29,801 Income from operations 3,524 200 3,724 6,151 - 6,151 Interest and other income/(expense), net 105 - 105 (18) - (18) Loss in equity interests (1,054) 1,032 (a) (22) (37) - (37) Income tax expense 1,134 - 1,134 2,331 - 2,331 ----- --- ----- ----- --- ----- Net income $1,441 $1,232 $2,673 $3,765 $ - $3,765 Net income per share - diluted $0.06 $0.05 $0.11 $0.15 $ - $0.15 Weighted average number of shares 25,182 25,182 25,677 25,677 outstanding - diluted Adjusted EBITDA Reconciliation Three Months Ended June 30, 2017 2016 Income from operations $3,524 $6,151 Depreciation and amortization 2,011 1,641 Stock-based compensation 2,142 1,988 Bad debt expense (a) $200 - ---- --- Adjusted EBITDA $7,877 $9,780 Free Cash Flow Reconciliation Three Months Ended June 30, 2017 2016 Net cash provided by operating activities $3,625 $7,090 Less: capital expenditures (911) (1,264) ---- ------ Free cash flow $2,714 $5,826
(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, adjusted general and administrative operating expenses exclude bad debt expense associated with a loan previously made to Jetaport, Inc.
XO GROUP INC. NON-GAAP RECONCILIATION TABLE For the Six Months Ended June 30, 2017 and 2016 (In Thousands, Except for Per Share Data) (Unaudited) Adjusted Net Income Reconciliation Six Months Ended June 30, 2017 2016 As Reported Adjustments Non GAAP As Reported Adjustments Non GAAP Net revenue $77,986 $ - $77,986 $74,377 $ - $74,377 Cost of revenue 4,695 - 4,695 4,481 - 4,481 Operating expenses Product and content development 23,655 - 23,655 21,659 - 21,659 Sales and marketing 27,531 - 27,531 23,074 - 23,074 General and administrative 15,262 200 (a) 15,062 12,183 - 12,183 Depreciation and amortization 3,669 - 3,669 3,235 - 3,235 ----- --- ----- ----- --- ----- Total operating expenses 70,117 200 69,917 60,151 - 60,151 Income from operations 3,174 200 3,374 9,745 - 9,745 Interest and other income / 198 - 198 (19) - (19) (expense), net Loss in equity interests (1,171) 1,032 (a) (139) (181) - (181) Income tax expense 448 - 448 2,755 - 2,755 --- --- --- ----- --- ----- Net income $1,753 $1,232 $2,985 $6,790 $ - $6,790 Net income per share - diluted $0.07 $0.05 $0.12 $0.26 $ - $0.26 Weighted average number of shares 25,469 25,469 25,637 25,637 outstanding - diluted Adjusted EBITDA Reconciliation Six Months Ended June 30, 2017 2016 Income from operations $3,174 $9,745 Depreciation and amortization 3,669 3,235 Stock-based compensation 4,017 3,644 Bad debt expense (a) 200 - --- --- Adjusted EBITDA $11,060 $16,624 Free Cash Flow Reconciliation Six Months Ended June 30, 2017 2016 Net cash provided by operating activities $9,832 $12,633 Less: capital expenditures (2,123) (1,986) ------ Free cash flow $7,709 $10,647
(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 Local Online Advertising Metrics Q2 2017 Q2 2016 Vendor Count(a) 23,961 24,241 Retention Rate(a) 75.1% 69.7% ---- ---- Avg. Revenue/Vendor(a) $2,865 $2,667 ---------------------- ------ ------ Vendor Count at Quarter End 26,124 22,909 ----------------------- ------ ------
(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, 2017 and 2016, as follows:
Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 ---- ---- ---- ---- (Amounts in Thousands) Product and content development $657 $556 $1,154 $961 Sales and marketing 431 438 865 848 General and administrative 1,054 994 1,998 1,835 ----- --- ----- ----- Total stock-based compensation $2,142 $1,988 $4,017 $3,644
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 8:00 a.m. ET on Monday, July 31, 2017, to discuss its second quarter 2017 financial results. Participants should dial (877) 201-0168 and use Conference ID# 51080589 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 business depends on strong brands, and failing to maintain and enhance our brands would hurt our business, (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) if we are unable to continue to develop solutions that generate revenue from advertising and other services delivered to mobile devices, our business could be harmed, (v) we face intense competition in our markets.If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenue and results of operations could be adversely affected, (vi) our businesses could be negatively affected by changes in Internet search engine algorithms and email marketing policies, (vii) our transactions business is dependent on third-party participants, whose lack of performance could adversely affect our results of operations, (viii) fraudulent or unlawful activities on our marketplace could harm our business and consumer confidence in our marketplace, (ix) we may be subject to legal liability associated with providing online services or content, (x) we may be unable to continue to use the domain names that we use in our business, or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks, 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.
View original content:http://www.prnewswire.com/news-releases/xo-group-reports-second-quarter-2017-financial-results-300496447.html
SOURCE XO Group Inc.