Exhibit 99.1
The Knot Reports Continuing Strong Revenue
Gains for the Third Quarter of 2005; Revenue Growth of 23% in Third
Quarter Includes 49% Online Advertising Gain
NEW YORK--(BUSINESS WIRE)--Nov. 10, 2005--
Reminder: Conference Call Today at 2:30
Dial-In 800-638-7172 (ID#1356899)
The Knot, Inc. (NASDAQ: KNOT, www.theknot.com), a life stage media
company offering the premier wedding resource, today reported
financial results for its third quarter and nine months ended
September 30, 2005.
Third Quarter 2005 Results
The Knot reported third quarter net revenues of $13.1 million, up
23% from net revenues of $10.7 million for the third quarter of 2004.
The major contributor to the higher revenues was an increase in local
and national online advertising, which rose 49% over the prior year.
Publishing and other revenues rose over the prior year's quarter by
25% while merchandise revenue declined 10%.
Commenting on the third quarter revenue results, CEO David Liu
said, "The expansion of the local vendor base in our online markets
and an increase in their average spend resulted in a 57% gain in local
online revenue over the prior year. Local vendors account for a
significant percentage of the overall wedding budget and,
increasingly, they are recognizing the value of being part of our
online city and regional guides as a means of accessing brides." The
Company also had a 35% gain in national online advertising. "This
growth in national revenue demonstrates further acceptance of the use
of The Knot brand as a compelling buy for advertisers as well as
recognition of our ability to deliver an audience of over 1 million
members who are using our site to plan their weddings an average of 14
months in advance of the big day. We are also pleased to see this
recognition extended to our offline media properties which also
experienced strong gains in the quarter," continued Mr. Liu.
The Knot reported net income for the third quarter of 2005 of
$722,000 or $0.03 per basic and diluted share. Gross margins rose to
77% from 71% in the prior year's third quarter due to a higher mix of
online advertising revenue and improved merchandise margins. Total
operating expenses in the third quarter included approximately $1.5
million in professional fees related to the Company's ongoing
litigation with WeddingChannel.com, Inc.
The Knot reported net income of $1.0 million or $0.05 per basic
and $0.04 per diluted share in the third quarter of 2004. Operating
expenses in the prior year quarter reflected a non-cash gain of $1.2
million due to the settlement of a previously recorded liability with
a distribution partner and $985,000 in legal fees related to
WeddingChannel.com, Inc.
"While we have continued to expand our core business in weddings,
both online and offline this year, we have also been adding talented
professionals on the editorial, information technology and sales sides
of the business. This investment puts us in excellent position to
aggressively pursue our life stage marketing strategy and extend the
reach of The Knot brand to newlyweds and first-time parents," Mr. Liu
concluded.
For the nine months ended September 30, 2005, The Knot reported
net revenues of $38.6 million and net income of $2.5 million, or $0.11
per basic and $0.10 per diluted share, compared to net revenues of
$31.3 million and net income of $1.1 million or $0.05 per basic and
diluted share in 2004. Professional fees related to the Company's
current litigation with WeddingChannel.com, Inc. were approximately
$3.7 million for the nine months this year compared to $2.0 million
for the comparable period in 2004.
Recent Highlights
In the last two months, The Knot has signed affiliate agreements
with Meredith Corporation and Johnson and Johnson for the marketing of
The Knot baby products, including personalized goods on the websites
of Americanbaby.com and Babycenter.com. This new business opportunity
allows The Knot to further leverage its fulfillment and distribution
facility and capability to personalize high margin goods, and marks
the Company's first entry into the lucrative baby market.
In September, Zale Corporation, North America's largest specialty
retailer of fine jewelry, announced that it has entered into a
multi-platform marketing partnership with The Knot, bringing together
two leaders in the wedding industry. The marketing partnership will
promote Zale Corporation's brands, which include Zales Jewelers,
Gordon's Jewelers and Bailey Banks & Biddle Fine Jewelers, to the
annual audience of over one million brides and grooms who turn to The
Knot for their wedding planning trends and needs. Under the terms of
the agreement, the multiplatform campaign will integrate Zale
Corporation's sponsorship throughout The Knot's offline and online
properties including content programs on The Knot TV, The Knot's
recently launched 24/7 streaming video network.
In August, The Knot rolled out new programming on The Knot TV. The
five-to-ten minute programs are hosted by our Editor-in-Chief Carley
Roney and provide information on wedding styles, cakes, bouquets and
flower trends that are very much on the minds of Knotties.
In July, The Knot signed a video license agreement with Microsoft
Corporation to distribute its original video content to MSN Video
viewers on MSN.com. Launching in November 2005, The Knot will be the
premier wedding partner on MSN.com's Lifestyle channel, offering a
daily-changing series of video clips on topics ranging from bridal
fashion and wedding planning to beauty makeovers and honeymoons.
NOVEMBER 10 CONFERENCE CALL AND WEBCAST
The Knot will host a conference call with investors at 2:30 p.m.,
ET on Thursday, November 10, 2005, to discuss its third quarter 2005
financial results. Participants should dial in at 800-638-7172 (#
1356899) 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 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 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 #
1356899.
ABOUT THE KNOT, INC.
The Knot, Inc. (NASDAQ: KNOT; www.theknot.com) is a leading
lifestage media and services company. The Company's flagship brand,
The Knot, is the nation's leading wedding resource that reaches over
one million engaged couples each year through the Web, newsstands,
bookstores, national television and more. Its award-winning website,
TheKnot.com, is the most-trafficked online wedding destination. The
Knot also offers a diverse collection of print publications including
national and regional editions of "The Knot Weddings" magazine, a book
trilogy with Broadway Books and a gift book series with Chronicle
Books. The Company also produces a TV series on The Oxygen Network, a
video-on-demand (VOD) service for Comcast Cable and has content
distribution partnerships with America Online, MSN and Comcast.
The Knot, Inc. has launched several brands targeted before and
beyond the wedding day, including teen-oriented PromSpot.com and
newlywed site TheNest.com, as well as the recently acquired online
personals site, GreatBoyfriends.com. 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 risks and related costs
associated with ongoing litigation, (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,
including its recent filings on Forms 10-K/A 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,
2005 2004
--------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $17,173 $3,488
Short-term investments 10,000 19,550
Accounts receivable, net 3,924 3,152
Inventories 1,799 1,411
Deferred production and marketing costs 298 269
Other current assets 563 726
--------------------------
Total current assets 33,757 28,596
Property and equipment, net 3,084 2,468
Intangible assets, net 9,140 8,634
Other assets 286 296
--------------------------
Total assets $46,267 $39,994
==========================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $4,427 $4,181
Deferred revenue 7,677 5,910
Current portion of long-term debt 43 43
--------------------------
Total current liabilities 12,147 10,134
Long term debt 153 153
Other liabilities 515 505
--------------------------
Total liabilities 12,815 10,792
Stockholders' equity:
Common stock 230 223
Additional paid-in-capital 77,089 75,154
Deferred Compensation (164) -
Accumulated deficit (43,703) (46,175)
--------------------------
Total stockholders' equity 33,452 29,202
--------------------------
Total liabilities and stockholders' equity $46,267 $39,994
==========================
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------------------------------------
2005 2004 2005 2004
------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues:
Online sponsorship
and advertising $6,687 $4,478 $18,516 $12,613
Merchandise 3,338 3,717 10,791 10,951
Publishing and other 3,092 2,476 9,309 7,769
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Total net revenues 13,117 10,671 38,616 31,333
Cost of revenues 3,048 3,081 8,835 9,009
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Gross profit 10,069 7,590 29,781 22,324
Operating expenses:
Product and content
development 1,743 1,283 5,197 3,744
Sales and marketing 3,516 2,099 10,674 9,150
General and
administrative 3,917 3,074 10,891 7,866
Depreciation and
amortization 341 190 901 589
------------------------------------------------
Total operating
expenses 9,517 6,646 27,663 21,349
Income from operations 552 944 2,118 975
Interest and other
income, net 207 82 504 193
------------------------------------------------
Income before income
taxes 759 1,026 2,622 1,168
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Provision for income
taxes 37 21 151 78
Net income 722 $1,005 $2,471 $1,090
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Basic earnings per
share $0.03 $0.05 $0.11 $0.05
================================================
Diluted earnings per
share $0.03 $0.04 $0.10 $0.05
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Weighted average
number of common
shares outstanding
Basic 22,802,123 22,189,580 22,623,619 22,013,776
================================================
Diluted 25,085,676 23,505,692 24,701,236 23,606,535
================================================
CONTACT: VMW Corporate & Investor Relations
Vicki Weiner or Sylvia Dresner, 212-616-6161
info@vmwcom.com