Exhibit 99.1
The Knot Reports Third Quarter Results;
Online Advertising Revenue Rose 44%;
Company Leverages Brand with Newlywed Site 'The Nest'
NEW YORK--(BUSINESS WIRE)--Nov. 11, 2004--
Reminder: Conference Call Today at 2:30 dial-in
800-638-7172, ID# 1694519
The Knot, Inc. (OTCBB: KNOT.OB, www.theknot.com), one of the
world's leading wedding media and services companies, today reported
financial results for its third quarter and nine months ended
September 30, 2004.
For the third quarter, The Knot reported net revenues rose to
$10.7 million from net revenues of $9.7 million in the same period of
2003. The revenue gain reflects a 44% increase in online advertising
in both local and national markets. Publishing and other revenues for
the period were up 18% primarily reflecting growth in national
advertising pages for the 2004 Fall/Winter issue of The Knot Weddings
magazine as well as growth of advertising programs in The Knot's local
wedding magazines, which are published in 18 major U.S. markets.
"We are experiencing a significant increase of national
advertisers as well as growth within our local vendor base" said David
Liu, CEO of The Knot. "This trend reflects rising recognition of The
Knot's reach to its active membership of over one million couples,
representing the largest aggregation of a prime audience that will be
spending on their weddings in the coming 12-18 months."
Merchandising revenue continues to under-perform, declining 18%
from the prior year. "During the quarter we instituted further cost
cutting measures at our Redding, California distribution facility that
will begin to take effect in the fourth quarter. Concurrently, we are
preparing to test launch our new e-commerce technology platform.
Together, we believe these steps will improve our e-commerce
performance in 2005," Liu added.
The Knot reported net income for the third quarter of 2004 of $1.0
million, or $0.05 per basic and $0.04 per diluted share. Gross margins
rose to 71% from 65% in the prior year's third quarter due to a higher
mix of advertising revenues. Total operating expenses for the third
quarter, which increased to $6.6 million from $6.2 in the prior year,
reflected a non-cash gain of $1.2 million due to the settlement of a
previously recorded liability with a distribution partner. In
addition, operating expenses for the recent quarter included
approximately $985,000 of professional fees related to The Knot's
current litigation with WeddingChannel.com, Inc. The Knot reported net
income of $202,000 or $0.01 per basic and diluted share in the third
quarter of 2003.
Member activity on The Knot increased in the third quarter with
112 million average monthly page views versus 87 million average
monthly page views in the year earlier quarter. Today, over 70% of
traffic on TheKnot.com is direct without a referring URL, testament to
the dominant brand and service offering. As of September 30, 2004, The
Knot's cumulative membership was over 5.4 million compared to the
approximately 4.4 million in 2003.
For the first nine months of 2004, The Knot reported net revenues
of $31.3 million, and net income of $1.1 million or $0.05 per basic
and diluted share compared to net revenues of $28.5 million and net
income of $778,000 or $0.04 per basic and diluted share in 2003.
In October, the Company launched The Nest and transitioned the
substantial base of couples who have wed in the last two years to a
new site, www.thenest.com, which focuses exclusively on the needs of
newlyweds. "Our focus is maximizing the lifetime value of our
membership database," Mr. Liu said. "We have a very loyal and active
audience which joins The Knot to prepare for a major event in their
lives. Since a substantial proportion of 'Knotties' continue to remain
active on our site after their weddings, we see a natural expansion of
our business to the newlywed market. We are very encouraged by the
early positive feedback from our audience base for this new business
which further leverages our membership and operating infrastructure."
THE KNOT'S RECENT HIGHLIGHTS
During the third quarter, The Knot's recognized wedding expert,
Editor in Chief Carley Roney, remained in the national broadcast
spotlight with several high profile appearances, including a trio of
appearances on NBC's TODAY Show annual wedding series. Carley also
hosted a 30-city broadcast media tour in October. The media tour
generated over 2.2 million viewers.
In August, consistent with the Company's strategy to deliver smart
and stylish wedding content to engaged couples wherever and whenever
they need it, The Knot entered into a partnership with Comcast Cable
to launch the first-ever all-weddings Video-on-Demand service. "The
Knot Weddings" service, now available to Comcast cable subscribers
nationwide, provides viewers with 24/7 access to over 45 hours of
wedding-related programming including real wedding stories from the
critically-acclaimed TV series, Real Weddings From The Knot as well as
more than 60 exclusive runway fashion shows and special program
packages on hot wedding trends. New programs are added to "The Knot
Weddings" service each month.
CONFERENCE CALL AND WEBCAST
The Knot will host a conference call with investors at 2:30 p.m.,
ET on Thursday, November 11, 2004, to discuss its third 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.
REPLAY INFORMATION
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 passcode
#1694519
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, MSN and Comcast.
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 and produces a televised documentary series on The
Oxygen Network, "Real Weddings From The Knot" and a weddings Video On
Demand service for Comcast Cable. 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)
September 30, December 31,
2004 2003
----------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $22,688 $22,511
Accounts receivable, net 2,917 2,883
Inventories 1,932 1,195
Deferred production and marketing costs 246 318
Other current assets 486 747
----------------------
Total current assets 28,269 27,654
Property and equipment, net 2,089 2,006
Intangible assets, net 8,659 8,734
Other assets 291 313
----------------------
Total assets $39,308 $38,707
======================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $3,702 $5,790
Deferred revenue 5,951 4,891
Current portion of long-term debt 40 40
----------------------
Total current liabilities 9,693 10,721
Long term debt 196 196
Other liabilities 502 490
----------------------
Total liabilities 10,391 11,407
Stockholders' equity:
Common stock 222 217
Additional paid-in-capital 75,055 74,533
Accumulated deficit (46,360) (47,450)
----------------------
Total stockholders' equity 28,917 27,300
----------------------
Total liabilities and stockholders' equity $39,308 $38,707
======================
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------
2004 2003 2004 2003
--------------------------------------------
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Net revenues:
Sponsorship and
advertising $4,478 $3,117 $12,613 $8,888
Merchandise 3,717 4,520 10,951 13,320
Publishing and other 2,476 2,102 7,769 6,340
--------------------------------------------
Total net revenues 10,671 9,739 31,333 28,548
Cost of revenues 3,081 3,394 9,009 9,628
--------------------------------------------
Gross profit 7,590 6,345 22,324 18,920
Operating expenses:
Product and content
development 1,283 1,112 3,744 3,216
Sales and marketing 2,099 3,020 9,150 8,639
General and administrative 3,074 1,852 7,866 5,618
Non-cash compensation - 1 - 32
Depreciation and
amortization 190 174 589 665
--------------------------------------------
Total operating expenses 6,646 6,159 21,349 18,170
Income from operations 944 186 975 750
Interest and other income,
net 82 21 193 63
--------------------------------------------
Income before income taxes 1,026 207 1,168 813
============================================
Provision for income taxes 21 5 78 35
Net income $1,005 $202 $1,090 $778
============================================
Basic earnings per share $0.05 $0.01 $0.05 $0.04
============================================
Diluted earnings per share $0.04 $0.01 $0.05 $0.04
============================================
Weighted average number of
common shares outstanding
Basic 22,189,580 18,605,468 22,013,776 18,470,638
============================================
Diluted 23,505,692 20,492,003 23,606,535 19,734,658
============================================
CONTACT: The Knot Inc.
Amy Shey Jacobs, 212-219-8555, ext. 1246
ashey@theknot.com