Exhibit 99.1
The Knot Reports Fourth Quarter and 2005 Year
End Financial Results; 2005 Net Income Rises Threefold on a 24%
Revenue Gain; Online Advertising Rises 47%
NEW YORK--(BUSINESS WIRE)--Feb. 9, 2006--
Reminder: Conference Call Today at 2:30 ET
Dial In 800-638-7172 (ID# 4399782)
The Knot, Inc. (NASDAQ: KNOT, www.theknot.com), a leading national
lifestage media company offering the premier wedding resource, today
reported financial results for its fourth quarter and twelve months
ended December 31, 2005.
2005 Financial Performance
For the year ended December 31, 2005, The Knot's net revenue rose
to $51.4 million, an increase of 24% from $41.4 million in 2004. The
revenue growth was the result of a 47% increase in national and local
online advertising programs and a 21% gain in publishing. These strong
gains in The Knot's media revenue substantially more than offset a 4%
decline in merchandising revenue.
Net income for 2005 was $4.0 million, or $0.17 per basic and $0.16
per diluted share, as compared to $1.3 million, or $0.06 per basic and
$0.05 per diluted share in 2004. Gross margins rose to 78% from 73% in
the prior year due to a higher mix of online advertising revenues and
improved margins for merchandise revenue.
Total operating expenses for the year increased to $36.9 million
from $29.1 million in the prior year. Operating expenses for the year
include approximately $4.8 million in legal fees related to The Knot's
litigation with WeddingChannel.com, Inc. which was an increase of $1.7
million over similar legal fees recorded in 2004. In addition,
operating expenses in 2004 reflected a non-cash gain of $1.2 million
due to the settlement of a previously recorded liability with a
distribution partner. On January 18, 2006, the Company filed a Form
8-K stating that on January 17, 2006, a stay was entered in the
litigation between The Knot, Inc. and WeddingChannel.com, Inc., for a
period of not less than 60 days, upon the joint request of the
parties.
Commenting on The Knot's 2005 results, Chief Executive Officer
David Liu said: "We are encouraged by the continuing strong growth in
our online and offline media revenue streams and our ability to drive
bottom line results by maintaining strong margins. The advertising
gains reflect our expanding base of local and national advertisers and
their increased spending budgets for our sites and our publications.
Our strong financial foundation enables us to expand our core
business, while investing in other life stage opportunities beyond
weddings."
Fourth Quarter 2005 Results
For the fourth quarter of 2005, the Company reported net revenues
of $12.8 million, a 27% increase from the $10.1 million recorded in
the comparable quarter of 2004. The Company also reported net income
for the fourth quarter of 2005 of $1.5 million, or $0.06 per basic and
diluted share, compared with $185,000 or $0.01 per basic and diluted
share in the comparable quarter of 2004. Total operating expenses for
the fourth quarter of 2005 and 2004 included approximately $1.1
million and $1.2 million, respectively, in professional fees incurred
in connection with the WeddingChannel.com, Inc. litigation.
"We are building a truly 21st century media company, offering a
full complement of online and offline services for an expanding
market. Our ability to provide advertisers the opportunity to reach
our loyal community of members wherever they are looking for
information continues to drive our solid financial results," Mr. Liu
concluded.
THE KNOT'S RECENT HIGHLIGHTS
In December, American Express and The Knot announced a strategic
partnership with the launch of two new co-branded, no annual fee
consumer credit cards, The Knot Credit Card from American Express,
developed for couples planning their wedding, and The Nest Credit Card
from American Express, designed specifically for newlyweds. New
cardmembers receive a unique planning kit which includes a valuable
organizer for their specific new life stage as well as discount offers
and special promotions from American Express and Knot and Nest
advertisers.
CONFERENCE CALL AND WEBCAST
The Knot will host a conference call with investors at 2:30 p.m.,
ET on Thursday, February 9, 2006, to discuss its fourth quarter and
year end 2005 financial results. Participants should dial in
800-638-7172 (ID# 4399782) 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 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 reference
#4399782.
About The Knot, Inc.
The Knot, Inc. (Nasdaq: KNOT) 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 Company 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 two gift book series. 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 MSN and Comcast. The Knot, Inc. has recently launched several
brands targeted before and beyond the wedding day, including
teen-oriented PromSpot.com, newlywed site TheNest.com and online
personals site, GreatBoyfriends.com. The Knot, Inc. is based in New
York.
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.
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)
December 31, December 31,
2005 2004
------------ ------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $17,685 $3,488
Short-term investments 11,550 19,550
Accounts receivable, net 4,805 3,152
Inventories 1,622 1,411
Deferred production and marketing costs 419 269
Other current assets 881 726
------------ ------------
Total current assets 36,962 28,596
Property and equipment, net 2,987 2,468
Intangible assets, net 9,110 8,634
Other assets 326 296
------------ ------------
Total assets $49,385 $39,994
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $5,574 $4,181
Deferred revenue 7,816 5,910
Current portion of long-term debt 47 43
------------ ------------
Total current liabilities 13,437 10,134
Long term debt 106 153
Other liabilities 505 505
------------ ------------
Total liabilities 14,048 10,792
Stockholders' equity:
Common stock 230 223
Additional paid-in-capital 77,550 75,154
Deferred compensation (221 ) --
Accumulated deficit (42,222 ) (46,175)
------------ ------------
Total stockholders' equity 35,337 29,202
------------ ------------
Total liabilities and stockholders' equity $49,385 $39,994
============ ============
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
---------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net revenues:
Sponsorship and
advertising $7,328 $5,011 $25,844 $17,624
Merchandise 1,800 2,114 12,591 13,064
Publishing and
other 3,665 2,940 12,973 10,709
---------------------------------------------------
Total net revenues 12,793 10,065 51,408 41,397
Cost of revenues 2,267 2,135 11,101 11,144
---------------------------------------------------
Gross profit 10,526 7,930 40,307 30,253
Operating
expenses:
Product and
content
development 1,682 1,418 6,879 5,162
Sales and
marketing 3,538 2,918 14,212 12,068
General and
administrative 3,600 3,225 14,491 11,092
Depreciation and
amortization 370 229 1,271 817
---------------------------------------------------
Total operating
expenses 9,190 7,790 36,853 29,139
Income from
operations 1,336 140 3,454 1,114
Interest and other
income, net 259 106 763 300
---------------------------------------------------
Income before
income taxes $1,595 $246 $4,217 $1,414
===================================================
Provision for
income taxes 114 61 265 139
Net income $1,481 $185 $3,952 $1,275
===================================================
Basic earnings per
share $0.06 $0.01 $0.17 $0.06
===================================================
Diluted earnings
per share $0.06 $0.01 $0.16 $0.05
===================================================
Weighted average
number of common
shares outstanding
Basic 22,989,034 22,252,906 22,715,724 22,073,885
===================================================
Diluted 25,407,705 23,780,720 24,878,652 23,650,408
===================================================
CONTACT: VMW Corporate & Investor Relations
Vicki Weiner/Sylvia Dresner, 212-616-6161
info@vmwcom.com