KNOT up $2.00 in after hours trading yesterday:
The Knot Reports Second Quarter 2007 Financial Results
Wednesday August 8, 4:00 pm ET
Online Advertising and Registry Services Lead Revenue Gains
Conference Call Today at 4:30 p.m. ET Dial-In 800-638-7172 (ID#10416358)
NEW YORK--(BUSINESS WIRE)--The Knot, Inc. (NASDAQ: KNOT - News, www.theknot.com - News), a leading lifestage media company targeting couples planning their weddings and future lives together, today reported financial results for its second quarter and six months ended June 30, 2007.
Second Quarter 2007 Results
For the second quarter ended June 30, 2007, The Knot reported net revenues of $28.5 million, an increase of 61% from net revenues of $17.7 million for the second quarter of 2006.
Revenue from national and local online advertising programs increased 50% over the prior year's second quarter.
Merchandise revenue from the sale of wedding supplies grew 35% while publishing and other revenues recorded a 30% gain.
Registry services revenue, which is derived substantially through the WeddingChannel business that was acquired in September 2006, was $3.4 million in the recent quarter.
Income before income taxes increased to $8.1 million in the second quarter of 2007 compared to $4.1 million a year ago. The provision for income taxes was $3.4 million in the second quarter of 2007 and $173,000 in the corresponding period in 2006. The provision for income taxes for the second quarter 2006 was reduced by the utilization of net operating loss carryforwards. Net income for the second quarter of 2007 was $4.8 million or $0.15 per basic and diluted share as compared to net income of $3.9 million or $0.17 per basic and $0.15 per diluted share in the second quarter of 2006.
"Our second quarter results demonstrate the resilience of our business model; however, 2007 remains a challenging year, and I believe there is still room for significant improvement across all our business units," said David Liu, Chief Executive Officer of The Knot. "Online national advertising grew by 65% for the quarter, powered in part by short term buys. We must continue our efforts to increase our share of marketing budgets for both our online and offline businesses. Our challenge remains to extend our multi-media platform across multiple life stage brands and to educate our advertisers on how to build long term relationships with our valuable consumers. We continue to invest in updating our technology platform so that we may efficiently meet the ever changing needs of our audience and advertisers alike."
Six Month Results
For the six months ended June 30, 2007, The Knot reported net revenues of $49.5 million and net income of $6.4 million or $0.21 per basic and $0.19 per diluted share as compared to net revenues of $32.5 million and net income of $5.6 million or $0.24 per basic and $0.22 per diluted share in 2006. Income before income taxes was $10.9 million for the first six months of 2007 and $5.8 million in the corresponding period in 2006. The number of common shares outstanding were 31,417,909 and 23,448,397 as of June 30, 2007 and 2006, respectively.
Second Quarter 2007 Financial Highlights:
-- National online revenues were $4.9 million and $8.4 million, for the three and six months ended June 30, 2007, respectively, as compared to $3.0 million and $5.7 million for the corresponding periods in 2006.
-- Local online revenues were $7.6 million and $14.9 million for the three and six months ended June 30, 2007, respectively, as compared to $5.4 million and $10.5 million for the corresponding periods in 2006.
-- Gross profit margins for the six months ended June 30, 2007 were 80% as compared to 78% for the corresponding period in 2006.
-- Stock-based compensation expense was $577,000 and $1.0 million for the three and six months ended June 30, 2007, respectively, as compared to $361,000 and $689,000 for the corresponding periods in 2006.
-- Net cash provided by operating activities was $15.2 million for the six months ended June 30, 2007 while capital expenditures amounted to $1.3 million.
Recent Highlights:
-- In April, The Knot Best of Weddings magazine, a by-brides-for-brides guide to the top wedding sites, photographers, florists and more in over 40 key cities across the United States, was launched. The magazine is based on a unique survey of 25,000 recent brides and grooms capturing detailed feedback on every wedding business that couples hire.
-- In June, Denise Favorule joined The Knot from Readers Digest Association as Senior Vice President, Group Publishing Director, a new position at the Company. Ms. Favorule is responsible for leading both national and local advertising sales and marketing as well as spearheading cross-platform sales efforts across all media properties.
-- In June, The Knot announced the launch of TheNestBaby.com in response to the growing audience demand for pregnancy advice and resources. TheNestBaby.com brings modern advice, an active community and detailed local content together in a single website.
-- In June, The Knot TV launched a new series that adds 360 minutes of this season's exciting new wedding fashions to its already extensive lineup of original wedding programming. Summer 2007 marks the second year that The Knot TV has been live as the world's only 24/7 wedding TV channel. The channel, streamed to a bride-to-be audience, features wedding-themed programming that includes fashion shows, bridal makeovers, honeymoon specials, real-wedding videos and style inspiration from celebrity wedding planners and The Knot's TV personality Carley Roney.
Conference Call and Replay Information
The Knot will host a conference call with investors at 4:30 p.m. ET on Wednesday, August 8, 2007 to discuss its second quarter 2007 financial results. Participants should dial in 800-638-7172 Reference # 10416358 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 Knot Web site, accessible at www.theknot.com/investor-relations. To access the webcast, participants should visit The Knot 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 Knot website approximately two hours after the conference call ends for a period of two weeks and will also be available at 800-642-1687 Reference # 10416358.
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The Knot, Inc.
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2007 2006
(Unaudited) (Audited)
----------- ------------
Current assets:
Cash and cash equivalents $44,737 $73,633
Short-term investments 50,857 7,000
Accounts receivable, net 11,663 9,743
Inventories 2,099 1,345
Deferred production and marketing
costs 394 584
Deferred tax assets, current portion 5,966 8,369
Other current assets 1,141 1,500
----------- ------------
Total current assets 116,857 102,174
Property and equipment, net 8,079 9,376
Intangible assets, net 32,832 34,015
Goodwill 33,280 33,854
Deferred tax assets 22,010 24,490
Other assets 290 342
----------- ------------
Total assets $213,348 $204,251
=========== ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $7,710 $7,661
Deferred revenue 11,821 10,497
Current portion of long-term debt 51 51
----------- ------------
Total current liabilities 19,582 18,209
Deferred tax liabilities 14,534 15,014
Long term debt 55 55
Other liabilities 500 548
----------- ------------
Total liabilities 34,671 33,826
Stockholders' equity:
Common stock 314 311
Additional paid-in-capital 190,764 188,909
Accumulated deficit (12,401) (18,795)
----------- ------------
Total stockholders' equity 178,677 170,425
----------- ------------
Total liabilities and stockholders' equity $213,348 $204,251
=========== ============
The Knot, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues:
Online sponsorship and
advertising $12,521 $8,354 $23,298 $16,153
Registry Services 3,356 84 5,117 143
Merchandise 6,500 4,813 11,130 7,892
Publishing and other 6,109 4,478 9,970 8,292
----------- ----------- ----------- -----------
Total net revenues 28,486 17,729 49,515 32,480
Cost of revenues 5,651 4,058 9,667 7,187
----------- ----------- ----------- -----------
Gross profit 22,835 13,671 39,848 25,293
Operating expenses:
Product and content
development 3,306 1,828 6,450 3,613
Sales and marketing 6,447 4,368 12,337 9,083
General and
administrative 3,987 3,326 8,072 6,588
Depreciation and
amortization 2,198 453 4,306 825
----------- ----------- ----------- -----------
Total operating
expenses 15,938 9,975 31,165 20,109
Income from operations 6,897 3,696 8,683 5,184
Interest and other
income, net 1,236 363 2,223 663
----------- ----------- ----------- -----------
Income before income
taxes $8,133 $4,059 $10,906 $5,847
Provision for income
taxes 3,373 173 4,512 276
Net income $4,760 $3,886 $6,394 $5,571
=========== =========== =========== ===========
Basic earnings per
share $0.15 $0.17 $0.21 $0.24
=========== =========== =========== ===========
Diluted earnings per
share $0.15 $0.15 $0.19 $0.22
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding
Basic 30,898,378 23,173,216 30,855,336 23,129,238
=========== =========== =========== ===========
Diluted 32,759,935 25,783,965 32,795,590 25,681,506
=========== =========== =========== ===========
Note: Certain prior year amounts have been reclassified to conform to the current year's presentation.
Contact:
VMW Corporate & Investor Relations
Vicki Weiner/Sylvia Dresner
212-616-6161
info@vmwcom.com
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Source: The Knot, Inc.
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