EXHIBIT 99.1
The Knot Reports Second Quarter and Six Month Results;
Company's Online Advertising Revenue up 43%
NEW YORK--(BUSINESS WIRE)--Aug. 12, 2004--
Conference Call Today at 4:30 Interactive Dial in
800-638-7172, 10 Minutes in Advance
The Knot, Inc. (OTCBB: KNOT.OB, www.theknot.com), one of the
world's leading wedding media and services companies, providing
today's to-be-weds with comprehensive wedding planning information,
interactive tools and other resources including extensive online
wedding-related shopping, today reported financial results for its
second quarter and six months ended June 30, 2004.
Second Quarter 2004 Results
For the second quarter ended June 30, 2004, The Knot reported net
revenues of $10.9 million up from net revenues of $10.1 million for
the second quarter of 2003. The major contributors to the higher
revenues were increased advertising revenue from national and local
online programs, which were up 43% and publishing revenues that rose
22% over the prior year due, in part, to the timing of publications in
certain local markets.
"Our active membership, representing a significant percentage of
all couples having a wedding in the next 12 to 18 months, is a very
compelling target for advertisers," explained David Liu, CEO of The
Knot. "On average, our members visit our site seven times a month and
stay for over 16 minutes during each visit, which provides our
advertisers with frequent opportunities to capture the attention of a
prime audience that has a finite time to spend a significant wedding
budget."
The Knot reported net income for the second quarter of 2004 of
$182,000, or $0.01 per basic and diluted share as compared to net
income of $772,000 or $0.04 per basic and diluted share in the second
quarter of 2003. Total operating expenses for the second quarter
increased to $7.6 million from $6.1 million in the prior year as The
Knot continued to invest in additional personnel and other resources
to support its growth strategy. In addition, operating expenses for
the recent quarter included approximately $625,000 in professional
fees related to The Knot's current litigation with WeddingChannel.com,
Inc.
"We were disappointed with e-commerce revenues which were down 20%
during the quarter compared to the prior year." Mr. Liu said. "While
site performance during the month of May was a factor in this decline,
we are also seeing further competition developing online with respect
to the sale of wedding supplies. These results reinforce the
importance of implementing our new technology platform for e-commerce,
which we currently expect to test launch by the end of the year. This
platform will significantly improve the efficiency of the shopping
process on our site and enhance our competitive position with respect
to online merchandising."
As of June 30, 2004, The Knot's cumulative membership reached over
5.1 million compared to the approximately 4.1 million in 2003. "Our
focus is maximizing the lifetime value of our membership database,"
Mr. Liu said. "We have a loyal audience, and increasingly, they are
staying with us through their first years of marriage. Average monthly
page views for the second quarter of 2004, were 91 million,
approximately 20% greater than the 76 million average monthly page
views recorded for the comparable 2003 period. Of the total,
approximately 70% of traffic to TheKnot is non-referred direct to its
URL, www.theknot.com.
Results for the Six Months Ended June 30, 2004
For the six months ended June 30, 2004, The Knot reported net
revenues of $20.7 million, and net income of $85,000 or $0.00 per
basic and diluted share compared to net revenues of $18.8 million and
net income of $576,000, or $0.03 per basic and diluted share in 2003.
THE KNOT'S RECENT HIGHLIGHTS
Consistent with the Company's strategy to tap into the potential
of the local advertising markets, beginning in May 2004, The Knot
launched the all-new THE KNOT Weddings(R) regional magazines. The
sixteen new publications feature an updated design, the signature
fresh voice of The Knot and best-of-class regional expertise. A new
local resource directory at the back of each guide profiles hundreds
of vendors, while the magazines work exclusively in tandem with
TheKnot.com, allowing couples to tour reception venues, view
portfolios of photographers portfolios and find essential wedding
professionals.
During the second quarter, The Knot's recognized wedding expert,
Editor in Chief Carley Roney, was in the national broadcast spotlight
with several high profile appearances including guiding engaged Star
Jones, host of ABC's The View, through her myriad of wedding planning
options, revealing fantasy looks for her wedding gown, bridesmaid
dresses, photography and wedding websites. Carley also hosted a
25-city broadcast media tour profiling key trends covered in the new
THE KNOT Weddings regional magazines. Connected via satellite to
morning shows across the country, Carley revealed ways couples may
incorporate color into their weddings from the gown, to the
invitations, to the cake. The media tour generated over 1.7 million
viewers.
CONFERENCE CALL AND WEBCAST
The Knot will host a conference call with investors at 4:30 p.m.,
ET on Thursday, August 12, 2004, to discuss its second quarter 2004
financial results. Participants should dial in 800-638-7172 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
http://www.theknot.com/au_corpoverview.shtml. To access the Web cast,
participants should visit The Knot Web site at least 15 minutes prior
to the conference call in order to download or install any necessary
audio software.
A replay of the Web cast will also be archived on The Knot Web
site approximately 2 hours after the conference call ends for a period
of two weeks and will also be available at 800-642-1687.
ABOUT THE KNOT, INC.
The Knot, Inc. (OTCBB: KNOT.OB; www.theknot.com) is one of the
world's leading wedding media and services companies, providing
today's to-be-weds with comprehensive wedding planning information,
interactive tools and other resources including extensive online
wedding-related shopping. Its award-winning website, TheKnot.com, is
the leading online wedding destination and wedding content provider to
America Online and MSN.
The Knot also offers a diverse collection of wedding-planning
print publications. The Knot produces a national publication, The Knot
Weddings Magazine, and publishes The Knot Weddings, regional wedding
magazines in sixteen U.S. markets and The Knot Real Weddings in two
additional markets. The Company also publishes a wedding-planning book
trilogy with Random House's Broadway Books and a gift book series with
Chronicle Books. The Knot 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) the
significant fluctuation to which The Knot's quarterly revenues and
operating results are subject, (iv) the seasonality of the wedding
industry and (v) other factors detailed in documents The Knot files
from time to time with the Securities and Exchange Commission,
including its recent filings on Forms 10-K and 10-Q. Forward-looking
statements in this release are made pursuant to the safe harbor
provisions contained in the Private Securities Litigation Reform Act
of 1995.
The Knot Inc.
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2004 2003
-------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $22,467 $22,511
Accounts receivable, net 2,602 2,883
Inventories 2,250 1,195
Deferred production and marketing costs 352 318
Other current assets 685 747
-------------------------
Total current assets 28,356 27,654
Property and equipment, net 2,030 2,006
Intangible assets, net 8,684 8,734
Other assets 302 313
-------------------------
Total assets $39,372 $38,707
=========================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $6,003 $5,790
Deferred revenue 4,831 4,891
Current portion of long-term debt 40 40
-------------------------
Total current liabilities 10,874 10,721
Long term debt 196 196
Other liabilities 502 490
-------------------------
Total liabilities 11,572 11,407
Stockholders' equity:
Common stock 221 217
Additional paid-in-capital 74,944 74,533
Accumulated deficit (47,365) (47,450)
-------------------------
Total stockholders' equity 27,800 27,300
-------------------------
Total liabilities and stockholders' equity $39,372 $38,707
=========================
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
--------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues:
Sponsorship and
advertising $4,174 $2,912 $8,135 $5,771
Merchandise 4,013 5,022 7,233 8,799
Publishing and
other 2,696 2,209 5,293 4,239
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Total net revenues 10,883 10,143 20,661 18,809
Cost of revenues 3,119 3,303 5,928 6,234
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Gross profit 7,764 6,840 14,733 12,575
Operating expenses:
Product and content
development 1,264 1,032 2,460 2,104
Sales and marketing 3,603 2,757 7,051 5,619
General and
administrative 2,526 2,026 4,793 3,765
Non-cash
compensation - 12 - 32
Depreciation and
amortization 201 238 398 491
--------------------------------------------------
Total operating
expenses 7,594 6,065 14,702 12,011
Income from
operations 170 775 31 564
Interest and other
income, net 57 27 111 42
--------------------------------------------------
Income before
income taxes 227 802 142 606
==================================================
Provision for
income taxes 45 30 57 30
Net income $182 $772 $85 $576
==================================================
Basic earnings per
share $0.01 $0.04 $0.00 $0.03
==================================================
Diluted earnings
per share $0.01 $0.04 $0.00 $0.03
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Weighted average
number of common
shares outstanding
Basic 22,020,775 18,409,892 21,924,910 18,402,106
==================================================
Diluted 23,547,450 19,783,362 23,655,992 19,354,868
==================================================
CONTACT: Investor Relations:
VMW Corporate & Investor Relations
Vicki Weiner or Sylvia Dresner, 212-616-6161
info@vmwcom.com
or
Media Contact:
The Knot Inc.
Amy Shey Jacobs, 212-219-8555 Ext. 1246
ashey@theknot.com