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XO Group Reports Third Quarter 2017 Financial Results;
NEW YORK, Oct. 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%.
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XO GROUP INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Amounts in Thousands, Except for Per Share Data)
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(Unaudited)
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|
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2017
|
|
2016
|
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2017
|
|
2016
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
National online advertising
|
|
$
|
8,842
|
|
$
|
8,932
|
|
$
|
27,516
|
|
$
|
27,156
|
|
Local online advertising
|
|
20,130
|
|
17,040
|
|
57,555
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|
51,871
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|
Total online advertising
|
|
28,972
|
|
25,972
|
|
85,071
|
|
79,027
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|
Transactions
|
|
7,950
|
|
7,105
|
|
21,102
|
|
17,740
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Publishing and other
|
|
3,315
|
|
3,654
|
|
12,050
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|
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
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|
986
|
|
3,952
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|
4,168
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Total cost of revenue
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2,314
|
|
1,788
|
|
7,009
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|
6,270
|
|
Gross profit
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37,923
|
|
34,943
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|
111,214
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|
104,838
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Operating expenses:
|
|
|
|
|
|
|
|
|
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Product and content development
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|
11,462
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|
11,729
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|
35,117
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|
33,388
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|
Sales and marketing
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12,230
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13,098
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39,761
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36,172
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General and administrative
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7,469
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5,501
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22,731
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|
17,683
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Depreciation and amortization
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1,565
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1,580
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5,234
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4,815
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Total operating expenses
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32,726
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31,908
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102,843
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92,058
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Income from operations
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5,197
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|
3,035
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8,371
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12,780
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Loss in equity interests
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(33)
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(29)
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(1,204)
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(210)
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Interest and other income / (expense), net
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161
|
|
48
|
|
359
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|
29
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Income before income taxes
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5,325
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3,054
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7,526
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12,599
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Income tax expense
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1,984
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|
1,146
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2,432
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|
3,901
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Net income
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|
$
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3,341
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|
$
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1,908
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$
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5,094
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$
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8,698
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|
|
|
|
|
|
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Net income per share:
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|
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Basic
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$
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0.13
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$
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0.08
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|
$
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0.20
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|
$
|
0.34
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Diluted
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$
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0.13
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$
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0.07
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$
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0.20
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$
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0.34
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Weighted average number of shares
used in calculating net earnings per
share:
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|
|
|
|
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Basic
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24,858
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25,368
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25,054
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25,341
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Dilutive effect of:
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Restricted stock
|
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226
|
|
331
|
|
262
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|
318
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|
Employee Stock Purchase Plan
|
|
—
|
|
—
|
|
2
|
|
—
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Options
|
|
40
|
|
28
|
|
35
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|
16
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Diluted
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25,124
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25,727
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25,353
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25,675
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XO GROUP INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(Amounts in Thousands, Except for Per Share Data)
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(Unaudited)
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September 30, 2017
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December 31, 2016
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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100,796
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$
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105,703
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Accounts receivable, net
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15,912
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20,182
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Prepaid expenses and other current assets
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6,312
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5,247
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Total current assets
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123,020
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131,132
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Long-term restricted cash
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1,181
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1,181
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Property and equipment, net
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11,041
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12,130
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Intangibles assets, net
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4,608
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4,154
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Goodwill
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51,088
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48,678
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Deferred tax assets, net
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9,429
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9,918
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Investments
|
1,481
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2,685
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Other assets
|
122
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|
308
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Total assets
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$
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201,970
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$
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210,186
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accrued compensation and employee benefits
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$
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4,487
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$
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6,164
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Accounts payable and accrued expenses
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7,175
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7,515
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Deferred revenue
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15,021
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16,752
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Total current liabilities
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26,683
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30,431
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Deferred rent
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3,246
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3,720
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Other liabilities
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1,200
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|
1,485
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Total liabilities
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31,129
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35,636
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Commitments and contingencies
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Stockholders' equity:
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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
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—
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|
—
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Common stock, $0.01 par value; 100,000,000 shares authorized and
25,706,079 and 26,304,925 shares issued and outstanding at September
30, 2017 and December 31, 2016, respectively
|
258
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|
264
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Additional paid-in-capital
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178,977
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178,959
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Accumulated deficit
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(8,394)
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(4,673)
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Total stockholders' equity
|
170,841
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|
174,550
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Total liabilities and stockholders' equity
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$
|
201,970
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|
$
|
210,186
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XO GROUP INC.
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NON-GAAP RECONCILIATION TABLE
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For the Three Months Ended September 30, 2017 and 2016
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(In Thousands, Except for Per Share Data)
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|
(Unaudited)
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|
|
|
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Adjusted EBITDA Reconciliation
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|
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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)
|
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|
$
|
—
|
|
|
|
—
|
|
|
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Adjusted EBITDA
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|
$
|
8,783
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|
|
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$
|
6,772
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|
|
|
|
|
|
|
|
|
|
|
|
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Free Cash Flow Reconciliation
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|
|
Three Months Ended September 30,
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|
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2017
|
|
|
2016
|
|
|
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Net cash provided by operating activities
|
|
|
$
|
7,409
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|
|
|
$
|
7,455
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|
|
Less: capital expenditures
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|
(1,440)
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|
|
|
(1,061)
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|
|
|
Free cash flow
|
|
|
$
|
5,969
|
|
|
|
$
|
6,394
|
|
|
|
|
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(a)
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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.
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XO GROUP INC.
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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.
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|
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:
|
|
Three Months Ended September
30,
|
|
Nine Months Ended September
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.
View original content:http://www.prnewswire.com/news-releases/xo-group-reports-third-quarter-2017-financial-results-300546039.html
SOURCE XO Group Inc.
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