Exhibit 99.1
The Knot Reports First Quarter 2006 Financial Results; Net Income Increases
Fourfold to $1.7 Million on a 24% Revenue Gain; Online Advertising Rises 35%;
Reminder: Conference Call Today at 2:30 ET Dial In 800-638-7172 (ID#7774984)
NEW YORK--(BUSINESS WIRE)--May 11, 2006--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 first quarter ended March 31, 2006.
First Quarter 2006 Results
For the first three months of 2006, net revenues rose 24% to $14.8
million from $11.9 million in the first quarter of 2005. Revenue from
national and local online advertising programs increased by 35% over
the prior year's first quarter and publishing and other revenues
recorded a 38% gain. Merchandising revenue declined 7%.
Net income increased to $1.7 million, or $0.07 per basic and
diluted share, from $409,000, or $0.02 per basic and diluted share, in
the first quarter of 2005.
Commenting on The Knot's first quarter results, Chief Executive
Officer David Liu said: "Our online and offline media revenue streams
produced a strong start to our 2006 financial performance. Our
advertisers increasingly view our Knot and Nest brands as unique
vehicles for directly reaching target customers who will be spending
substantial sums on their weddings, honeymoons and early years of
marriage, and they recognize the cost effectiveness of advertising on
our sites and in our publications. Our multiplatform media model
provides us many touch points with the consumer to build the value of
our brand and fulfill consumer demand."
Operating expenses in the current quarter include approximately
$180,000 in legal fees related to The Knot's current litigation with
WeddingChannel.com, Inc. compared to $683,000 for the comparable
period in 2005. On January 17, 2006, a stay was entered in connection
with this litigation, for a period of not less than 60 days, upon the
joint request of the parties. The stay currently remains in effect.
Effective January 1, 2006, The Knot began recording expense
associated with employee stock options including rights associated
with its Employee Stock Purchase Plan, in accordance with Statement of
Financial Accounting Standards No. 123(R). The adoption of this
standard resulted in a reduction in net income of $128,000 or $0.01
per basic share for the three months ended March 31, 2006. There was
no impact on diluted earnings per share. Total stock-based
compensation recorded in the first quarter of 2006, including expense
associated with restricted common shares, was $329,000. There was no
stock-based compensation recorded in the first quarter of 2005.
THE KNOT'S RECENT HIGHLIGHTS
On April 18, the first issue of Travel + Romance, the new annual
magazine from Travel + Leisure and The Knot, hit the newsstands
nationwide, and its companion web site, www.travel-romance.com, went
live. The new magazine features luxury honeymoons, destination wedding
ideas and style and romantic trips for two.
In March, Four Seasons Hotels and Resorts, the world's leading
luxury hotel company, began a collaboration with The Knot creating and
hosting a series of exclusive, intimate and interactive bridal events
at Four Seasons Hotels across the U.S. "The Wedding Event" will be
hosted in six cites, including Atlanta, Boston, Houston, Miami, New
York and Washington D.C. This marketing strategy combines The Knot's
modern wedding style expertise and loyal audience of brides with the
exceptional service, one-of-a-kind experiences and unparalleled
destinations for which Four Seasons is renowned.
CONFERENCE CALL AND WEBCAST
The Knot will host a conference call with investors at 2:30 p.m.,
ET on Thursday, May 11, 2006, to discuss its first quarter financial
results. Participants should dial-in (800) 638-7172, Conference ID#
7774984. Please dial-in 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
#7774984.
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
publishes a diverse collection of print publications including
national and regional editions of "THE KNOT Weddings" magazine and
authors books on wedding and newlywed-related topics. 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 launched several brands
targeted before and beyond the wedding day, including newlywed site
TheNest.com, teen-oriented PromSpot.com and online personals sites,
GreatBoyfriends.com and GreatGirlfriends.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)
March 31, December 31,
2006 2005
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $18,128 $17,685
Short-term investments 13,050 11,550
Accounts receivable, net 5,774 4,805
Inventories 1,786 1,622
Deferred production and marketing costs 584 419
Other current assets 907 881
----------- ---------
Total current assets 40,229 36,962
Property and equipment, net 3,765 2,987
Intangible assets, net 9,080 9,110
Other assets 1,218 326
----------- ---------
Total assets $54,292 $49,385
=========== =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $5,816 $5,574
Deferred revenue 9,929 7,816
Current portion of long-term debt 47 47
----------- ---------
Total current liabilities 15,792 13,437
Long term debt 106 106
Other liabilities 494 505
----------- ---------
Total liabilities 16,392 14,048
Stockholders' equity:
Common stock 233 230
Additional paid-in-capital 78,204 77,550
Deferred compensation -- (221 )
Accumulated deficit (40,537 ) (42,222 )
----------- ---------
Total stockholders' equity 37,900 35,337
----------- ---------
Total liabilities and stockholders' equity $54,292 $49,385
=========== =========
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended
March 31,
-----------------------
2006 2005
----------- -----------
(Unaudited) (Unaudited)
Net revenues:
Sponsorship and advertising $7,799 $5,775
Merchandise 3,138 3,386
Publishing and other 3,814 2,772
----------- -----------
Total net revenues 14,751 11,933
Cost of revenues 3,129 2,912
----------- -----------
Gross profit 11,622 9,021
Operating expenses:
Product and content development 1,786 1,681
Sales and marketing 4,714 3,627
General and administrative 3,262 3,118
Depreciation and amortization 372 281
----------- -----------
Total operating expenses 10,134 8,707
Income from operations 1,488 314
Interest and other income, net 300 130
----------- -----------
Income before income taxes $1,788 $444
=========== ===========
Provision for income taxes 103 35
Net income $1,685 $409
=========== ===========
Basic earnings per share $0.07 $0.02
=========== ===========
Diluted earnings per share $0.07 $0.02
=========== ===========
Weighted average number of common shares
outstanding
Basic 23,084,772 22,410,542
=========== ===========
Diluted 25,578,559 24,296,093
=========== ===========
CONTACT: VMW Corporate & Investor Relations
Vicki Weiner / Sylvia Dresner, 212-616-6161
info@vmwcom.com