XO Group Reports Fourth Quarter and Full Year 2016 Financial Results
- Revenue increased 8% in the fourth quarter and 7% for the full year, year-over-year
- Fourth quarter GAAP net income per diluted share was $0.13
- Conference Call Thursday February 28, 2017 at 4:30 p.m. ET, Dial-In (877) 201-0168 (ID#57838274)
NEW YORK, Feb. 28, 2017 /PRNewswire/ -- XO Group Inc. (the "Company") (NYSE: XOXO, xogroupinc.com), today reported financial results for the three months and full year ended December 31, 2016.
Total revenue for the fourth quarter of 2016 was $41.0 million, up 8% compared to the same period in the prior year. Net income for the quarter was $3.4 million or $0.13 per diluted share compared to a loss per share of $0.09 in the prior year quarter. The Company's balance sheet at December 31, 2016 reflects cash and cash equivalents of $105.7 million compared to $88.5 million at December 31, 2015.
"During the year, we made significant improvements to our consumer-facing products and our local wedding vendor marketplace that improved engagement and drove more value to our couples and our wedding pros. In 2017, we look forward to continuing to capitalize on our market leading position in weddings by more deeply engaging the couples we serve, intensifying our local sales efforts, and expanding guest and registry services," 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. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except for Per Share Data) (Unaudited)
|
|||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||||
| 2016 |
2015 |
2016 |
2015 |
||||||||||||
| Net revenue: |
|||||||||||||||
| National online advertising |
$ |
11,789 |
$ |
10,545 |
$ |
38,945 |
$ |
35,764 |
|||||||
| Local online advertising |
18,368 |
17,481 |
70,239 |
65,941 |
|||||||||||
| Online advertising |
$ |
30,157 |
$ |
28,026 |
$ |
109,184 |
$ |
101,705 |
|||||||
| Transactions |
5,079 |
3,434 |
22,819 |
14,700 |
|||||||||||
| Merchandise |
— |
— |
— |
878 |
|||||||||||
| Publishing and other |
5,772 |
6,686 |
20,113 |
24,361 |
|||||||||||
| Total net revenue |
41,008 |
38,146 |
152,116 |
141,644 |
|||||||||||
| Cost of revenue: |
|||||||||||||||
| Online advertising |
1,119 |
647 |
3,665 |
2,235 |
|||||||||||
| Merchandise |
— |
— |
— |
881 |
|||||||||||
| Publishing and other |
1,920 |
2,189 |
6,089 |
7,271 |
|||||||||||
| Total cost of revenue |
3,039 |
2,836 |
9,754 |
10,387 |
|||||||||||
| Gross profit |
37,969 |
35,310 |
142,362 |
131,257 |
|||||||||||
| Operating expenses: |
|||||||||||||||
| Product and content development |
11,726 |
11,051 |
44,668 |
40,351 |
|||||||||||
| Sales and marketing |
13,953 |
11,737 |
49,772 |
43,420 |
|||||||||||
| General and administrative |
5,642 |
6,345 |
23,666 |
24,440 |
|||||||||||
| Asset impairment charges |
5 |
245 |
18 |
266 |
|||||||||||
| Depreciation and amortization |
1,557 |
1,517 |
6,372 |
5,544 |
|||||||||||
| Total operating expenses |
32,883 |
30,895 |
124,496 |
114,021 |
|||||||||||
| Income from operations |
5,086 |
4,415 |
17,866 |
17,236 |
|||||||||||
| Gain (loss) in equity interests |
(118) |
729 |
(328) |
520 |
|||||||||||
| Interest and other income (expense), net |
117 |
(3,972) |
146 |
(4,023) |
|||||||||||
| Income before income taxes |
5,085 |
1,172 |
17,684 |
13,733 |
|||||||||||
| Income tax expense |
1,663 |
3,330 |
5,564 |
8,269 |
|||||||||||
| Net income |
$ |
3,422 |
$ |
(2,158) |
$ |
12,120 |
$ |
5,464 |
|||||||
| Net income per share: |
|||||||||||||||
| Basic |
$ |
0.14 |
$ |
(0.09) |
$ |
0.48 |
$ |
0.22 |
|||||||
| Diluted |
$ |
0.13 |
$ |
(0.09) |
$ |
0.47 |
$ |
0.21 |
|||||||
| Weighted average number of shares used in calculating net earnings per share: |
|||||||||||||||
| Basic |
25,316 |
25,174 |
25,314 |
25,164 |
|||||||||||
| Diluted |
25,698 |
25,174 |
25,640 |
25,530 |
|||||||||||
|
XO GROUP INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except for Per Share Data) (Unaudited)
|
||||||||
| December 31, |
||||||||
| 2016 |
2015 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
105,703 |
$ |
88,509 |
||||
| Accounts receivable, net of allowance of $1,386 and $2,668 at December 31, 2016 and December 31, 2015, respectively |
20,182 |
20,475 |
||||||
| Prepaid expenses and other current assets |
5,247 |
5,341 |
||||||
| Total current assets |
131,132 |
114,325 |
||||||
| Long-term restricted cash |
1,181 |
2,598 |
||||||
| Property and equipment, net |
12,130 |
13,251 |
||||||
| Intangible assets, net |
4,154 |
4,817 |
||||||
| Goodwill |
48,678 |
47,396 |
||||||
| Deferred tax assets, net |
9,918 |
11,578 |
||||||
| Investments |
2,685 |
2,719 |
||||||
| Other assets |
308 |
57 |
||||||
| Total assets |
$ |
210,186 |
$ |
196,741 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accrued compensation and employee benefits |
$ |
6,164 |
$ |
6,036 |
||||
| Accounts payable and accrued expenses |
7,515 |
6,127 |
||||||
| Deferred revenue |
16,752 |
18,640 |
||||||
| Total current liabilities |
30,431 |
30,803 |
||||||
| Deferred rent |
3,720 |
4,486 |
||||||
| Other liabilities |
1,485 |
1,985 |
||||||
| Total liabilities |
35,636 |
37,274 |
||||||
| Commitments and contingencies |
||||||||
| Stockholders' equity: |
||||||||
| Preferred stock, $0.001 par value; 5,000,000 shares authorized and 0 shares issued and outstanding as of December 31, 2016 and 2015, respectively |
— |
— |
||||||
| Common stock, $0.01 par value; 100,000,000 shares authorized and 26,304,925 and 26,235,824 shares issued and outstanding at December 31, 2016 and 2015, respectively |
264 |
264 |
||||||
| Additional paid-in-capital |
178,959 |
173,564 |
||||||
| Accumulated deficit |
(4,673) |
(14,361) |
||||||
| Total stockholders' equity |
174,550 |
159,467 |
||||||
| Total liabilities and stockholders' equity |
$ |
210,186 |
$ |
196,741 |
||||
|
XO GROUP INC. NON-GAAP TABLE For the Years Ended December 31, 2016 and 2015 (Amounts in Thousands, Except for Per Share Data) (Unaudited) |
||||||||||||||||
| Years Ended December 31, |
||||||||||||||||
| 2016 |
2015 |
|||||||||||||||
| GAAP Actual |
Adjustments |
Non GAAP Results |
GAAP Actual |
Adjustments |
Non GAAP Results |
|||||||||||
| Adjusted Net Income and EPS Reconciliation |
||||||||||||||||
| Revenue |
152,116 |
— |
152,116 |
141,644 |
— |
141,644 |
||||||||||
| Cost of Revenues |
9,754 |
— |
9,754 |
10,387 |
— |
10,387 |
||||||||||
| Operating Expenses |
— |
|||||||||||||||
| Product & Content Development |
44,668 |
— |
44,668 |
40,351 |
(11) |
a |
40,340 |
|||||||||
| Sales & Marketing |
49,772 |
— |
49,772 |
43,420 |
(265) |
a |
43,155 |
|||||||||
| General & Administrative |
23,666 |
— |
23,666 |
24,440 |
(158) |
a |
24,282 |
|||||||||
| Depreciation & Amortization |
6,372 |
— |
6,372 |
5,544 |
— |
5,544 |
||||||||||
| Impairments |
18 |
— |
18 |
266 |
(266) |
b |
— |
|||||||||
| Total Operating Expenses |
124,496 |
— |
124,496 |
114,021 |
(700) |
113,321 |
||||||||||
| Operating Income |
17,866 |
— |
17,866 |
17,236 |
700 |
17,936 |
||||||||||
| Interest & Other Income/(Loss), Net |
146 |
— |
146 |
(4,023) |
4,000 |
c |
(23) |
|||||||||
| Gain/(Loss) in Equity Interest |
(328) |
— |
(328) |
520 |
(765) |
d |
(245) |
|||||||||
| Provision for Taxes on Income |
5,564 |
1,423 |
f |
6,987 |
8,269 |
(1,202) |
e |
7,067 |
||||||||
| Net Profit/(Loss) |
12,120 |
(1,423) |
10,697 |
5,464 |
5,137 |
10,601 |
||||||||||
| Amounts per Share - Diluted |
0.47 |
(0.05) |
0.42 |
0.21 |
0.21 |
0.42 |
||||||||||
| Weighted Average Number of Shares Outstanding - Diluted |
25,640 |
25,640 |
25,530 |
25,530 |
||||||||||||
| Adjusted EBITDA Reconciliation |
||||||||||||||||
| Operating Income |
17,866 |
— |
17,866 |
17,236 |
700 |
17,936 |
||||||||||
| Depreciation & Amortization (g) |
6,372 |
— |
6,372 |
5,544 |
— |
5,544 |
||||||||||
| Stock Based Compensation (h) |
8,359 |
— |
8,359 |
5,992 |
— |
5,992 |
||||||||||
| Adjusted EBITDA |
32,597 |
— |
32,597 |
28,772 |
700 |
29,472 |
||||||||||
| a. |
To eliminate costs associated with the exit of our merchandising operations, including (i) severance of approximately $0.2 million recorded in general and administrative and (ii) rent acceleration and other closure costs of $0.2 million recorded in sales and marketing. |
| b. |
To eliminate impairment charges included in Asset Impairment Charges. |
| c. |
To eliminate Touch Media impairment expense, included in Interest and other income (expense), net. |
| d. |
To eliminate a gain on our existing equity method investment in GigMasters, included in Gain (Loss) in Equity Interests. |
| e. |
To adjust income tax expense to our effective tax rate, excluding discrete items, of 40.0% for the year ended December 31, 2015, |
| f. |
To eliminate discrete items, including a one-time tax benefit associated with the resolution of an uncertain tax position for a former subsidiary in the 2016 period, as well as a one-time benefit associated with a foreign tax incentive deduction in the 2016 period. |
| g. |
To eliminate depreciation and amortization expense. |
| h. |
To eliminate stock-based compensation expense. |
|
XO GROUP INC. NON-GAAP TABLE For the Quarters Ended December 31, 2016 and 2015 (Amounts in Thousands, Except for Per Share Data) (Unaudited) |
|||||||||||||||
| Quarters Ended December 31, |
|||||||||||||||
| 2016 |
2015 |
||||||||||||||
| GAAP Actual |
Adjustments |
Non GAAP Results |
GAAP Actual |
Adjustments |
Non GAAP Results |
||||||||||
| Adjusted Net Income and EPS Reconciliation |
|||||||||||||||
| Revenue |
41,008 |
— |
41,008 |
38,146 |
38,146 |
||||||||||
| Cost of Revenues |
3,039 |
— |
3,039 |
2,836 |
2,836 |
||||||||||
| Operating Expenses |
— |
||||||||||||||
| Product & Content Development |
11,726 |
— |
11,726 |
11,051 |
11,051 |
||||||||||
| Sales & Marketing |
13,953 |
— |
13,953 |
11,737 |
11,737 |
||||||||||
| General & Administrative |
5,642 |
— |
5,642 |
6,345 |
6,345 |
||||||||||
| Depreciation & Amortization |
1,557 |
— |
1,557 |
1,517 |
1,517 |
||||||||||
| Impairments |
5 |
— |
5 |
245 |
(245) |
a |
— |
||||||||
| Total Operating Expenses |
32,883 |
— |
32,883 |
30,895 |
(245) |
30,650 |
|||||||||
| Operating Income |
5,086 |
— |
5,086 |
4,415 |
245 |
4,660 |
|||||||||
| Interest & Other Income/(Loss), Net |
117 |
— |
117 |
(3,972) |
4,000 |
b |
28 |
||||||||
| Gain/(Loss) in Equity Interest |
(118) |
— |
(118) |
729 |
(765) |
c |
(36) |
||||||||
| Provision for Taxes on Income |
1,663 |
295 |
e |
1,958 |
3,330 |
(1,469) |
d |
1,861 |
|||||||
| Net Profit/(Loss) |
3,422 |
(295) |
3,127 |
(2,158) |
4,949 |
2,791 |
|||||||||
| Amounts per Share - Diluted |
0.13 |
(0.01) |
0.12 |
(0.09) |
0.20 |
0.11 |
|||||||||
| Weighted Average Number of Shares Outstanding - Diluted |
25,698 |
25,698 |
25,174 |
25,174 |
|||||||||||
| Adjusted EBITDA Reconciliation |
|||||||||||||||
| Operating Income |
5,086 |
— |
5,086 |
4,415 |
245 |
4,660 |
|||||||||
| Depreciation & Amortization (f) |
1,557 |
— |
1,557 |
1,517 |
— |
1,517 |
|||||||||
| Stock Based Compensation (g) |
2,558 |
— |
2,558 |
1,740 |
— |
1,740 |
|||||||||
| Adjusted EBITDA |
9,201 |
— |
9,201 |
7,672 |
245 |
7,917 |
|||||||||
| a) |
To eliminate impairment charges included in Asset Impairment Charges. |
| b) |
To eliminate Touch Media impairment expense, included in Interest and other income (expense), net. |
| c) |
To eliminate a gain on a pre-existing equity method investment in GigMasters, included in Gain(Loss) in Equity Interests. |
| d) |
To adjust income tax expense to our 2015 effective tax rate, excluding discrete items, of 40.0% |
| e) |
To eliminate a one time benefit associated with the resolution of an uncertain tax position. |
| f) |
To eliminate depreciation and amortization expense. |
| g) |
To eliminate stock-based compensation expense. |
|
XO GROUP INC. SUPPLEMENTAL DATA TABLES (UNAUDITED) (Amounts in Thousands, Except for Per Share Data) (Unaudited) |
|||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||||
| 2016 |
2015 |
2016 |
2015 |
||||||||||||
| Net cash provided by operating activities |
$ |
7,302 |
$ |
8,989 |
$ |
27,390 |
$ |
20,548 |
|||||||
| Less: capital expenditures |
(1,250) |
(772) |
(4,297) |
(3,549) |
|||||||||||
| Free cash flow |
$ |
6,052 |
$ |
8,217 |
$ |
23,093 |
$ |
16,999 |
|||||||
| TheKnot.com Local Online Advertising Metrics |
Q4 2016 |
Q4 2015 |
| Vendor Count(a) |
23,662 |
24,340 |
| Retention Rate(a);(b) |
68.0% |
73.8% |
| Avg. Revenue/Vendor(a) |
$2,804 |
$2,628 |
| (a) |
Calculated on a trailing twelve-month basis. |
| (b) |
Previously disclosed as churn rate. Retention rate calculated as one less churn 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 twelve months ended December 31, 2016 and 2015, as follows:
| Three months ended December 31, |
Twelve months ended December 31, |
||||||
| 2016 |
2015 |
2016 |
2015 |
||||
| (In Thousands) |
|||||||
| Product and content development |
$654 |
$546 |
$2,324 |
$1,817 |
|||
| Sales and marketing |
831 |
372 |
2,057 |
1,384 |
|||
| General and administrative |
1,073 |
822 |
3,978 |
2,791 |
|||
| Total stock-based compensation |
$2,558 |
$1,740 |
$8,359 |
$5,992 |
|||
Conference Call and Replay Information
XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Tuesday, February 28, 2017, to discuss its fourth quarter and full year 2016 financial results. Participants should dial (877) 201-0168 and use Conference ID# 57838274 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 net income (loss) adjusted to exclude, if applicable: (1) income tax expense (benefit), (2) depreciation and amortization, (3) stock-based compensation expense, (4) asset impairment charges, (5) loss in equity interests, (6) interest and other income (expense), net and (7) other items affecting comparability during the period.
- Adjusted net income represents GAAP net income (loss), 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, (4) costs related to exit activities and (5) discrete tax items.
- 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 (loss), adjusted net income (loss) 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) and 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.
SOURCE XO Group Inc.
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