NEW YORK, Aug. 5, 2014 /PRNewswire/ -- XO Group Inc. (NYSE: XOXO, xogroupinc.com), the premier consumer internet and media company devoted to weddings, pregnancy, and everything in between, today reported financial results for the three months ended June 30, 2014.

Total revenue for the second quarter of 2014 was $38.3 million, up 3.6% compared to the same period in the prior year. Net income for the quarter was $3.0 million or $0.12 per share. The Company ended the quarter with $79.4 million in cash, up from $75.5 million at March 31, 2014.

Total operating expenses were $27.7 million and $56.4 million for the three and six months ended June 30, 2014, respectively, compared to $23.6 million and $46.4 million during the corresponding periods in 2013. These increases in operating expenses were driven by new spend attributable to the transformation underway at XO.

"During the second quarter, we delivered solid earnings results on stable revenue growth, driven by our core local and national advertising offerings and a strong quarter for our registry business," said Mike Steib, Chief Executive Officer. "We continue to make significant progress on XO's strategic transformation to accelerate growth and position our Company for the future.  As we work to evolve The Knot into a digital marketplace, we are refocusing on execution, re-investing in our products and our talent pool, and taking a hard look at our asset base.  We believe that with the successful execution of our strategy, we can drive toward our target long-term business model and enhance shareholder value."

"Our Q2 '14 results reflect the strategy we laid out in the beginning of the year, maintaining steady revenue growth while balancing targeted investments in the business to drive innovation that we believe will provide compelling returns over the next several years," said Gillian Munson, Chief Financial Officer.  

Business Outlook

For the full year 2014, the Company continues to expect to deliver single digit total revenue growth and increased year-over-year growth rates of operating expense above its historical run rates.  The additional operating expense related to the strategic initiatives underway at XO is expected to be approximately $15.0 million in 2014.  

Long-Term Financial Targets

Over the long-term, the Company is targeting double digit revenue growth, gross margins of 83-85%, with operating expense growth below revenue growth rates and adjusted EBITDA margins of at least 15-20%. 

Supplemental data tables (unaudited)

Local Advertising Metrics  (excluding Two Bright Lights)

Stock Based Compensation

Conference Call and Replay Information

XO Group Inc. will host a conference call with investors at 4:30 p.m. ET on Tuesday, August 5, 2014, to discuss its second quarter 2014 financial results. Participants should dial (844) 824-7422 and use Conference ID# 74637798 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. A replay of the call will be available at (855) 859-2056 or (404) 537-3406, conference ID #74637798.

About XO Group Inc.

XO Group Inc. (NYSE: XOXO; http://www.xogroupinc.com) is the premier consumer internet and media company devoted to weddings, pregnancy and everything in between, providing young couples with the trusted information, products and advice they need to guide them through the most transformative events of their lives. Our family of premium brands began with the #1 wedding brand, The Knot, and has grown to include The Nest, The Bump and Ijie.com. XO Group is recognized by the industry for being innovative in media - from the web to mobile, magazines, books and video. XO Group has leveraged its customer loyalty into successful businesses in online sponsorship and advertising, registry services, ecommerce and publishing. The Company is publicly listed on the New York Stock Exchange (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. These statements are only predictions and reflect our current beliefs and expectations. 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 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 online wedding-related and other websites may fail to generate sufficient revenue to survive over the long term, (ii) we incurred losses for many years following our inception and may incur losses in the future, (iii) we may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) sales to sponsors or advertisers may be delayed or cancelled, (v) efforts to launch new technology and features may not generate significant new revenue or may reduce revenue from existing services, (vi) we may be unable to develop solutions that generate revenue from advertising delivered to mobile phones and wireless devices, (vii) the significant fluctuation to which our quarterly revenue and operating results are subject, (viii) the seasonality of the wedding industry, (ix) our e-commerce operations are dependent on Internet search engine rankings, and our ability to influence those rankings is limited, (x) the dependence of our registry services business on third parties, 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 generally accepted accounting principles in the United States ("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 U.S. GAAP net income (loss) adjusted to exclude, if applicable: (1) provision (benefit) for income taxes, (2) depreciation and amortization, (3) stock-based compensation expense, (4) impairment charges and asset write-offs, (5) loss in equity interests, (6) interest and other income, net (7) net loss attributable to non-controlling interest and (8) other incremental charges incurred in the period.
• Adjusted net income represents U.S. GAAP net income (loss), adjusted for incremental costs incurred in the current period, which may include: (1) impairment charges and asset write-offs, (2) executive severance and (3) non-recurring foreign taxes, interest and penalties.
• 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 U.S. 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. In addition, free cash flow provides management with useful information for managing the cash needs of our business. 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 (loss),Net income (loss) per diluted share and Net cash provided by operating activities as indicators of operating performance.

A reconciliation of U.S. GAAP to Non-GAAP financial measures is included in this press release.

Contact:
Ivan Marmolejos
Investor Relations
(212) 219-8555 x1004
IR@xogrp.com

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SOURCE XO Group Inc.