NEW YORKOct. 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)

3 mo. Ended 9/30

9 mo. Ended 9/30

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)

9/30/17

12/31/16

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
25,706,079 and 26,304,925 shares issued and outstanding at September
30, 2017 and December 31, 2016, respectively

258

264

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

(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 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 /
(expense), net

359

359

29

29

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
outstanding – diluted

25,353

25,353

25,675

25,675

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
activities

$

17,241

$

20,088

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
Local Online
Advertising
Metrics

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Vendor
Count(a)

23,504

22,498

22,024

22,447

23,136

23,888

24,377

Retention
Rate(a)

78.6%

77.0%

69.7%

63.4%

62.6%

62.6%

67.8%

Avg.
Revenue/Ven
dor(a)

$3,053

$3,052

$3,018

$2,955

$2,835

$2,747

$2,694

Vendor
Count at
Quarter End

25,646

24,681

23,108

22,058

21,326

21,404

23,910

(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:

3 mo Ended 9/30

9 mo Ended 9/30

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.

 

SOURCE XO Group Inc.

Related Links

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