- Total revenue increased 6% in the third
quarter
- Local Marketplace and Transactions revenue
increased 18% and 23% in the third quarter, respectively
- Third quarter GAAP net income per diluted
share was $0.17; Non-GAAP net income per diluted share was
$0.19
- Proposed merger with WeddingWire, Inc.
expected to close in the first half of 2019
XO Group Inc. (the “Company”) (NYSE: XOXO, xogroupinc.com),
today reported financial results for the three and nine months
ended September 30, 2018.
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the full release here:
https://www.businesswire.com/news/home/20181101006095/en/
Total revenue for the third quarter of 2018 was $43.1 million,
up 6% from $40.6 million reported during the same period in the
prior year. Net income for the quarter was $4.3 million or $0.17
per diluted share compared to diluted earnings per share of $0.14
in the same period in the prior year. Non-GAAP adjusted EBITDA for
the quarter was $9.8 million or 23% of revenue. Non-GAAP net income
per share for the quarter was $0.19 compared to $0.14 in the same
period in the prior year. The Company’s balance sheet at
September 30, 2018 reflects cash and cash equivalents of
$123.0 million compared to $106.1 million at December 31,
2017.
“I want to thank the team for their good work this quarter,
during which our growth businesses, Local Marketplace and
Transactions, grew 19% year-over-year. We believe our products
continue to delight our users and drive increased engagement: The
Knot Planner app exceeded more than 1 million installs for the
year, already surpassing the total for all of 2017. We are focused
on maintaining this strong momentum across our platforms as we
finish the year and head into 2019," said Mike Steib, Chief
Executive Officer.
Long-Term Financial
Targets
XO Group is not providing long-term financial targets due to its
announced pending merger with WeddingWire, Inc.
Conference Call Details
In light of the pending merger announced on September 25, 2018,
XO Group will not be hosting a conference call to discuss its
results for the third quarter of 2018. More information on the
Company's third quarter results can be found in XO's Form 10-Q for
the three and nine months ended September 30, 2018. More details on
the pending transaction can be found on XO Group's investor
relations site, ir.xogroupinc.com.
XO GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited, in thousands, except for
share and per share data)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Net revenue $ 43,057
$ 40,609 $ 124,516 $ 120,351
Costs and expenses (exclusive of
depreciationand amortization, shown separately below):
Cost of revenue 1,793 2,307 6,050 7,133 Product and content
development 12,620 11,131 35,445 34,137 Sales and marketing 13,187
12,197 38,967 39,761 General and administrative 9,075 7,809 23,307
23,740 Depreciation and amortization 1,350 1,565
4,664 5,234 Total costs and expenses 38,025 35,009
108,433 110,005 Income from operations 5,032 5,600 16,083 10,346
Loss in equity interests (24 ) (33 ) (67 ) (1,204 ) Interest and
other income, net 246 161 657 359
Income before income taxes 5,254 5,728 16,673 9,501 Income tax
expense 960 2,148 3,482 3,225
Net
income $ 4,294 $ 3,580 $ 13,191 $ 6,276
Net income per share: Basic $ 0.17 $
0.14 $ 0.52 $ 0.25 Diluted $ 0.17 $
0.14 $ 0.51 $ 0.25
Weighted average number of shares
usedin calculating net earnings per share:
Basic 25,220 24,858 25,130 25,054 Dilutive effect of: Restricted
stock 339 226 306 262 Options 452 40 278 35 Employee Stock Purchase
Plan — — 3 2 Diluted 26,011
25,124 25,717 25,353
XO GROUP INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited, in thousands, except for
share and per share data)
September 30, 2018 December 31, 2017
ASSETS Current assets: Cash and cash equivalents $ 123,040 $
106,092 Accounts receivable, net 19,427 17,375 Prepaid expenses and
other current assets 4,386 5,327 Total current assets
146,853 128,794 Long-term restricted cash 1,181 1,181 Property and
equipment, net 13,803 11,829 Intangibles assets, net 3,293 4,019
Goodwill 51,438 51,438 Deferred tax assets, net 5,137 6,124
Investments 1,625 1,442 Other assets 907 223 Total
assets $ 224,237 $ 205,050
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accrued compensation
and employee benefits $ 6,912 $ 6,611 Accounts payable and accrued
expenses 8,044 5,273 Deferred revenue 15,087 13,891
Total current liabilities 30,043 25,775 Deferred rent 2,785 3,365
Other liabilities 802 1,776 Total liabilities 33,630
30,916 Commitments and contingencies Stockholders’ equity:
Preferred stock, $0.001 par value;
5,000,000 shares authorized andzero shares issued and outstanding
as of September 30, 2018and December 31, 2017, respectively
— —
Common stock, $0.01 par value; 100,000,000
shares authorizedand 25,936,625 and 25,696,796 shares issued and
outstandingat September 30, 2018 and December 31, 2017,
respectively
260 258 Additional paid-in-capital 185,271 180,695 Retained
earnings/(accumulated deficit) 5,076 (6,819 ) Total
stockholders’ equity 190,607 174,134 Total
liabilities and stockholders’ equity $ 224,237 $ 205,050
XO GROUP INC.
NON-GAAP RECONCILIATION TABLE
For the Three and Nine Months Ended
September 30, 2018 and 2017
(unaudited, in thousands, except for
share and per share data)
Reconciliation of GAAP net income to EBITDA, adjusted
EBITDA, and adjusted EBITDA margin:
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018
2017 GAAP net income $ 4,294 $ 3,580 $ 13,191 $ 6,276
Income tax expense 960 2,148 3,482 3,225 Interest and other income,
net (246 ) (161 ) (657 ) (359 ) Depreciation and amortization 1,350
1,565 4,664 5,234 EBITDA 6,358
7,132 20,680 14,376 Loss in equity interest(a)
24 33 67 1,204 Stock-based compensation 2,103 2,021 5,995 6,037 Bad
debt expense(b) — — — 200 Deal-related expenses(c) 1,330 —
1,330 — Adjusted EBITDA $ 9,815 $ 9,186
28,072 $ 21,817 GAAP net revenue 43,057 40,609
124,516 120,351 Adjusted EBITDA margin 22.8 % 22.6 % 22.5 % 18.1 %
(a) Loss in equity interest includes an other-than-temporary
impairment that reduced the carrying value of an equity investment
to zero during the nine months ended September 30, 2017. (b)
Included in general and administrative expenses, related to a loan
previously made to an equity investee in the nine months ended
September 30, 2017. (c) During Q3 2018, costs associated with the
pending merger with WeddingWire, Inc. are included in general and
administrative expenses.
Reconciliation of GAAP net
income to adjusted net income:
Three Months Ended September
30,
Nine Months Ended September 30,
2018 2017 2018
2017 GAAP net income $ 4,294 $ 3,580 $ 13,191 $ 6,276
Other-than-temporary impairment(a) — — — 1,032 Bad debt expense(b)
$ — — — 200 Deal-related expenses(c) $ 1,330 — 1,330 — Income tax
expense $ 960 2,148 3,482 3,225
Adjusted income before income taxes 6,584 5,728 18,003 10,733
Adjusted effective income tax expense rate 26 % 40 % 26 % 40
% Adjusted provision for income tax
expense (1,712 ) (2,291 ) (4,681 ) (4,293 ) Adjusted net income $
4,872 $ 3,437 $ 13,322 $ 6,440
Adjusted net income per diluted share $ 0.19 $ 0.14 $ 0.52 $ 0.25
Weighted average number of shares outstanding - diluted 26,011
25,124 25,717 25,353 (a) Loss in equity interest includes an
other-than-temporary impairment that reduced the carrying value of
an equity investment to zero during the nine months ended September
30, 2017. (b) Included in general and administrative expenses,
related to a loan previously made to an equity investee in the nine
months ended September 30, 2017. (c) During Q3 2018, costs
associated with the pending merger with WeddingWire, Inc. are
included in general and administrative expenses.
Free
cash flow reconciliation:
Three Months Ended
September 30, Nine Months Ended September 30,
2018 2017 2018
2017 Net cash provided by operating activities $ 8,457 $
7,409 $ 24,674 $ 17,241 Less: capital expenditures (1,567 ) (1,440
) (6,251 ) (3,563 ) Free cash flow $ 6,890 $ 5,969 $ 18,423 $
13,678
XO GROUP INC.
SUPPLEMENTAL DATA TABLES
(unaudited, in thousands, except for
metrics)
Revenue by Category
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Local marketplace $ 23,383
$ 19,851 $ 67,576 $ 57,408 Transactions 9,733 7,891 25,050 21,181
National online advertising 6,794 9,054 20,666 29,035 Publishing
and other 3,147 3,813 11,224 12,727 Total net
revenue $ 43,057 $ 40,609 $ 124,516 $ 120,351
TheKnot.com Local Marketplace
Metrics
Q3 2018 Q3 2017 Vendor Count at Quarter end
29,953 25,646 TTM Vendor Count (a) 28,361 23,504 Retention Rate (b)
77.0 % 78.6 % Avg. Revenue/Vendor (a) $ 2,958 $ 3,045 (a)
Calculated on a trailing twelve-month basis. (b) Number of canceled
vendors on a trailing twelve-month basis divided by the sum of the
beginning vendors plus trailing twelve-months of additions (churn).
The inverse of churn is retention 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 nine months ended September 30,
2018 and 2017, as follows:
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Product and content
development 661 666 1,902 1,819 Sales and marketing 463 423 1,297
1,288 General and administrative 979 932 2,796
2,930 Total stock-based compensation 2,103 2,021 5,995 6,037
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 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 ability to accurately measure and
monetize the level of offline store level traffic attributable to
an online digital campaign conducted on our sites, (iii) our
business depends on strong brands, and failing to maintain and
enhance our brands would hurt our business, (iv) 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, (v)
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, (vi) our businesses could be
negatively affected by changes in Internet search engine and app
store search algorithms and email marketing policies, (vii) 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, (viii) our transactions
business is dependent on third-party participants, whose lack of
performance could adversely affect our results of operations, (ix)
fraudulent or unlawful activities on our marketplace could harm our
business and consumer confidence in our marketplace, (x) we may be
subject to legal liability associated with providing online
services or content, (xi) 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, (xii) risks related to the occurrence of any
event, change or other circumstance that could give rise to the
termination of the Agreement and Plan of Merger, (xiii) the failure
to obtain Company stockholder approval of the proposed transaction
or required regulatory approvals or the failure to satisfy any of
the other conditions to the completion of the proposed transaction,
(xiv) the effect of the announcement of the proposed transaction on
the ability of the Company to retain and hire key personnel and
maintain relationships with its customers, suppliers, vendors,
advertisers, distributors, partners and others with whom it does
business, or on its operating results and businesses generally,
(xv) risks associated with the disruption of management's attention
from ongoing business operations due to the proposed transaction,
(xvi) the ability to meet expectations regarding the timing and
completion of the proposed transaction, (xvii) the potential impact
of the consummation of the proposed transaction on the Company's
relationships, including with employees, customers, suppliers,
vendors, advertisers, distributors, partners and competitors, and
(xvii) 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
EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net
income, adjusted provision for income taxes, adjusted effective
income tax rate, 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. The Company's use of these terms may vary from the use of
similarly-titled measures by others in its 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:
- EBITDA represents GAAP net income
adjusted to exclude: (1) interest, (2) tax, and (3) depreciation
and amortization.
- Adjusted EBITDA represents GAAP net
income adjusted to exclude, if applicable: (1) interest, (2) tax,
(3) depreciation and amortization, (4) gains or losses from equity
method investments, (5) stock-based compensation expense, (6) asset
impairment charges, and (7) other items affecting comparability
during the period.
- Adjusted EBITDA margin represents
adjusted EBITDA (as defined above), divided by total GAAP
revenue.
- Adjusted provision for income taxes is
calculated by applying an adjusted effective income tax rate to
adjusted income before income taxes. Adjusted effective income tax
rate is based on the statutory income tax rates in the
jurisdictions in which we operate. The adjusted effective income
tax rate also excludes discrete items that we view as unrelated to
our operations during the period, such as the impact of tax
windfalls and shortfalls associated with stock based compensation,
changes in our reserves for uncertain tax positions, and
non-deductible deal costs related to the Merger, as these items can
materially distort our effective income tax rate. We monitor the
adjusted effective income tax rate based on events or trends that
could materially impact the rate, including tax legislation changes
and changes in the geographic mix of revenue and expenses. For the
three months ended September 30, 2018, the adjusted effective
income tax rate of 26% excludes the impact of approximately $0.7
million of tax benefits associated with the release of previously
reserved uncertain tax positions, offset by an approximately $0.3
million tax effect of non-deductible deal costs, as these items are
considered to be discrete items. For the nine months ended
September 30, 2018, the adjusted effective income tax rate of 26%
excludes the impact of approximately $0.7 million of tax benefits
associated with the release of previously reserved uncertain tax
positions as well as approximately $0.6 million in tax windfalls,
offset by an approximately $0.3 million tax effect of
non-deductible deal costs, as these items are considered to be
discrete items. For the three months ended September 30, 2017, the
adjusted effective income tax rate of 40% excludes the impact of
approximately $0.3 million of tax benefits associated with the
release of a previously reserved uncertain tax position, these
benefits are considered to be discrete items. For the nine months
ended September 30, 2017, the adjusted effective income tax rate of
40% excludes the impact of approximately $0.6 million of tax
benefits associated with the release of previously reserved
uncertain tax positions as well as approximately $0.4 million in
tax windfalls, as each are considered to be discrete items.
- 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) use of an adjusted effective income
tax rate (as defined above), (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.
- 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,
EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted provision
for income taxes, adjusted effective income tax rate, 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, 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 source
version on businesswire.com: https://www.businesswire.com/news/home/20181101006095/en/
XO Group Inc.Ivan Marmolejos, 718-560-2217Director, Investor
RelationsIR@xogrp.com
XO Grp., Inc. (NYSE:XOXO)
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