News
The Knot Reports Fourth Quarter and 2007 Year End Financial Results
NEW YORK-(Business Wire)-February 13, 2008 - The Knot, Inc. (NASDAQ: KNOT, www.theknot.com), a leading lifestage media company targeting couples planning their weddings and future lives together, today reported financial results for its fourth quarter and twelve months ended December 31, 2007.
2007 Financial Performance
For the year ended December 31, 2007, The Knot's net revenue rose to $98.7 million, an increase of 36% from $72.7 million in 2006. Revenue from national and local online advertising programs increased 34% over the prior year. Merchandise revenue from the sale of wedding supplies grew 29% while publishing and other revenue increased 8%. Registry services revenue, which is derived substantially through the WeddingChannel business that was acquired in September 2006, was $10.9 million in 2007.
Income before income taxes increased to $20.7 million for 2007 compared to $14.1 million in 2006. Net income for 2007 was $11.9 million, or $0.38 per basic and $0.36 per diluted share, as compared to $23.4 million, or $0.90 per basic and $0.82 per diluted share in 2006. The results for 2006 included a non-cash income tax benefit of approximately $9.4 million related to the recognition of a deferred tax asset with respect to certain of The Knot's net operating loss carry-forwards as well as other income of $1.2 million resulting from the settlement of a legal action. 2007 results reflect a provision for income taxes of $8.8 million.
"Our multi platform media model, combined with our strong member base, continued to produce healthy revenue gains in 2007," said David Liu, CEO of the Knot. "Our progress in non-wedding related advertising categories demonstrates the growing recognition of the buying power of our audience during key lifestages from engagement through first pregnancy."
Fourth Quarter 2007 Results
For the fourth quarter of 2007, The Knot reported net revenue of $24.2 million and net income of $2.6 million, or $0.08 per basic and diluted shares compared to net revenue of $21.7 million and net income of $14.6 million, or $0.48 per basic and $0.45 per diluted share in the corresponding period in 2006. The results for the fourth quarter of 2006 include the non-cash income tax benefit and the gain from the settlement of a legal action noted previously.
"In 2008 we will continue to invest in our product and infrastructure to support our commitment to maintaining a leadership position in a rapidly changing media environment," Mr. Liu said. "During this phase we expect that revenue growth will be in the mid teens. We believe that the management and technology infrastructure we are investing in today will provide important growth potential for many years to come."
Fourth Quarter and Full Year 2007 Financial Highlights:
— National online revenues were $5.5 million and $18.4 million for the three and 12 months ended December 31, 2007, respectively, as compared to $4.3 million and $13.6 million for the corresponding periods in 2006.
— Local online revenues were $7.9 million and $30.6 million for the three and 12 months ended December 31, 2007, respectively, as compared to $6.7 million and $23.0 million for the corresponding periods in 2006.
— Gross profit margins for the 12 months ended December 31, 2007 were 82% as compared to 79% in 2006.
— Stock-based compensation expense was $707,000 and $2.4 million for the three and twelve months ended December 31, 2007, respectively, as compared to $467,000 and $1.5 million for the corresponding periods in 2006.
— Net cash provided by operating activities was $27.4 million for the 12 months ended December 31, 2007, while capital expenditures amounted to $3.9 million for the same period.
Recent Highlights:
The second branded segment of our strategic partnership with Style Network entitled, "My Destination Wedding with The Knot," aired in December of 2007. This new spin-off showcased a multi-cultural destination wedding, planned by The Knot's editor in chief, Carley Roney.
Conference Call and Replay Information
The Knot will host a conference call with investors at 4:30 p.m. ET on Wednesday, February 13, 2008 to discuss its fourth quarter and full year 2007 financial results. Participants should dial in 800-638-7172 Reference # 30519381 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 #30519381.
About The Knot, Inc.
The Knot (NASDAQ: KNOT; www.theknot.com) is a leading lifestage media company. The Company's flagship brand, The Knot, is the nation's leading wedding resource, reaching well over a million engaged couples each year through the #1 wedding website TheKnot.com. Other Knot brand products include The Knot national and local magazines, The Knot books (published by Random House and Chronicle) and television programming bearing The Knot name (aired on Style Network and Comcast). The Company also owns WeddingChannel.com, the most visited wedding gift registry website. The Company's Nest brand focuses on the newlywed-to-pregnancy lifestage, with the popular lifestyle website TheNest.com, a home decor book series with Clarkson Potter, The Nest magazine and baby offshoot TheNestBaby.com. Also under The Knot, Inc. umbrella are WeddingTracker.com; GiftRegistryLocator.com; party planning site PartySpot.com; teen-oriented PromSpot.com; and local baby services and community site Lilaguide.com. The Knot, Inc. is based in New York and has several other offices across the country.
This release may contain projections or other forward-looking statements regarding future events or the future financial performance of The Knot. These statements are only predictions and reflect the current beliefs and expectations of The Knot. Actual events or results may differ materially from those contained in the 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 The Knot bases its expectations may change prior to the end of the quarter. Although these expectations may change, The Knot will not necessarily inform you if they do. The Knot's policy is to provide its 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) The Knot's unproven business model and limited operating history, (ii) The Knot's history of losses, (iii) risks related to The Knot's recent acquisition of WeddingChannel, (iv) the significant fluctuation to which The Knot's quarterly revenues and operating results are subject, (v) the seasonality of the wedding industry and (vi) other factors detailed in documents The Knot files 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. -0- *T The Knot, Inc. Consolidated Balance Sheets (in thousands) December 31st, December 31st, 2007 2006 (Unaudited) (Audited) ——————— ——————— Current assets: Cash and cash equivalents $33,127 $73,633 Short-term investments 72,649 7,000 Accounts receivable, net 16,254 9,743 Inventories 1,879 1,345 Deferred production and marketing costs 483 584 Deferred tax assets, current portion 3,388 8,369 Other current assets 1,622 1,500 ——————— ——————— Total current assets 129,402 102,174 Property and equipment, net 8,497 9,376 Intangible assets, net 30,953 34,015 Goodwill 32,105 33,854 Deferred tax assets 22,018 24,490 Other assets 278 342 ——————— ——————— Total assets $223,253 $204,251 ============== ============== Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $7,616 $7,661 Deferred revenue 14,665 10,498 Current portion of long-term debt 55 51 ——————— ——————— Total current liabilities 22,336 18,210 Deferred tax liabilities 14,178 15,014 Long term debt - 55 Other liabilities 456 548 ——————— ——————— Total liabilities 36,970 33,827 Stockholders' equity: Common stock 316 311 Additional paid-in-capital 192,894 188,909 Accumulated deficit (6,927) (18,796) ——————— ——————— Total stockholders' equity 186,283 170,424 ——————— ——————— Total liabilities and stockholders' equity $223,253 $204,251 ============== ============== *T -0- *T The Knot, Inc. Consolidated Statements of Operations (in thousands, except per share amounts) Three months ended Twelve months ended December 31st, December 31st, ———————————————————————- 2007 2006 2007 2006 ———————————————————————- (Unaudited) (Unaudited) (Unaudited) (Audited) Net revenues: Online sponsorship and advertising $13,342 $11,044 $49,034 $36,577 Registry Services 2,079 1,940 10,861 3,038 Merchandise 2,866 2,838 19,313 15,004 Publishing and other 5,877 5,870 19,480 18,060 ———————————————————————- Total net revenues 24,164 21,692 98,688 72,679 Cost of revenues 3,991 4,129 18,052 15,517 ———————————————————————- Gross profit 20,173 17,563 80,636 57,162 Operating expenses: Product and content development 3,890 3,229 13,827 9,013 Sales and marketing 6,730 5,141 25,297 18,881 General and administrative 4,235 4,354 16,706 15,174 Goodwill impairment - - 496 - Depreciation and amortization 2,055 2,049 8,439 3,849 ———————————————————————- Total operating expenses 16,910 14,773 64,765 46,917 Income from operations 3,263 2,790 15,871 10,245 Interest and other income, net 1,324 2,115 4,820 3,860 ———————————————————————- Income before income taxes $4,587 $4,905 $20,691 $14,105 Provision for income taxes 2,010 (9,688) 8,822 (9,321) Net income $2,577 $14,593 $11,869 $23,426 =============================================== Basic earnings per share $0.08 $0.48 $0.38 $0.90 =============================================== Diluted earnings per share $0.08 $0.45 $0.36 $0.82 =============================================== Weighted average number of common shares outstanding Basic 31,153,139 30,671,906 30,975,457 26,125,038 =============================================== Diluted 32,705,892 32,758,619 32,766,879 28,496,405 =============================================== *T
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