Exhibit 99.1
The Knot Reports Third Quarter and Nine Month 2006 Financial Results
Net Income Increases to $3.3 Million on a 41% Revenue Gain
Reminder: Conference Call Today at 2:30 Dial-In 800-638-7172
(ID#8734121)
NEW YORK--(BUSINESS WIRE)--Nov. 13, 2006--The Knot, Inc. (NASDAQ:
KNOT, www.theknot.com), a leading lifestage media company targeting
couples planning their weddings and future lives together, today
reported financial results for its third quarter and nine months ended
September 30, 2006.
WeddingChannel Acquisition
As previously announced, on September 8, 2006, The Knot completed
its acquisition of WeddingChannel.com, Inc. The results of operations
for WeddingChannel are included in the results of operations for The
Knot since that date.
Third Quarter 2006 Results
For the third quarter of 2006, The Knot reported net revenues of
$18.5 million, up 41% from net revenues of $13.1 million in the third
quarter of 2005. The current period includes revenue contributed from
the WeddingChannel operation of approximately $1.5 million. Each of
the Knot's revenue streams contributed to the remaining gain of $3.9
million which represented growth of 30% over the prior year. National
and local online advertising revenues led the increase, up 35% over
the prior year. Merchandising revenue continued to rebound and was
ahead by 25% while publishing and other revenue rose by 24%.
"As the clear market leader in the bridal category, we are moving
quickly to maximize our platforms for our advertisers who want to
directly reach the largest audience of brides and grooms," said Knot
CEO David Liu. "We are pleased with the progress we are making in the
integration of the WeddingChannel operations. We initially focused on
the consolidation of the warehouse and fulfillment functions for the
wedding supplies business at our facility in Redding, California. This
was completed in September."
The Knot reported net income for the third quarter of 2006 of $3.3
million, or $0.12 per basic and $0.11 per diluted share, up sharply
from net income of $722,000 or $0.03 per basic and diluted share in
the third quarter of 2005. Total operating expenses in the third
quarter of 2006 include approximately $295,000 of amortization of
acquired intangibles recorded in connection with the acquisition of
WeddingChannel. Total operating expenses in the third quarter of 2005
included approximately $1.5 million in professional fees related to
the Company's prior litigation with WeddingChannel.
"During the quarter, we made a further investment to extend our
reach in the newlywed space with the launch of the premier issue of
The NEST magazine, which we have started publishing on a controlled
circulation basis," Mr. Liu said. "The response so far has been
enthusiastic, and the November holiday issue has new advertisers on
board. Our brand strategy calls for cross platform product extensions,
and we are following the same plan that has built a loyal audience for
The Knot. The purchasing power of our audience from engagement to
first time parents is beginning to attract a wide range of advertisers
who want to influence our audience early in the buying cycle," Mr. Liu
concluded.
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 $111,000 and
$383,000 for the three and nine months ended September 30, 2006,
respectively, or $0.02 and $0.01 per basic and diluted share. There
was no impact on basic and diluted earnings per share for the three
months ended September 30, 2006. Total stock-based compensation,
including expenses associated with restricted common shares, was
$388,000 and $1.1 million for the three and nine months ended
September 30, 2006, respectively. Stock-based compensation expense was
$24,000 for each of the three and nine months ended September 30,
2005.
For the nine months ended September 30, 2006, The Knot reported
net revenues of $51.0 million and net income of $8.8 million, or $0.36
per basic and $0.33 per diluted share, compared to net revenues of
$38.6 million and net income of $2.5 million or $0.11 per basic and
$0.10 per diluted share in 2005. Professional fees related to the
Company's prior litigation with WeddingChannel.com, Inc. were
approximately $3.7 million for the nine months in 2005.
Recent Highlights
On September 8, 2006, The Knot completed its acquisition of
WeddingChannel.com, Inc. The Knot issued approximately 1.15 million
shares of its common stock and paid approximately $61.7 million in
cash, which includes an estimated working capital adjustment of $3.8
million, in exchange for all of the capital stock and stock options of
WeddingChannel. The Knot funded the cash portion of the purchase price
with cash on hand and the net proceeds of its Follow-On Offering of
common stock completed on August 15, 2006.
The Company also added three new members to its Board of Directors
in September. The new directors are: Eileen Naughton, Regional Sales
Director of Google, Ira Carlin, Chairman-International of MAGNA Global
Worldwide, and Peter Sachse, Chairman and CEO of Macys.com. These new
additions to the Board bring a unique blend of collective experience
and leadership in growing media brands, expanding global operations,
managing media and marketing initiatives and steering companies
through important transitions.
The Nest brand celebrated the launch of the first book directed to
its growing newlywed audience, The Nest Newlywed Handbook: An Owner's
Manual to Modern Married Life. The first in a series of four with
Clarkson Potter, The Nest Newlywed Handbook debuted on October 11th
with a six-city media tour featuring editor in chief, Carley Roney.
The tour was an overwhelming success producing broadcast publicity in
each market with appearances on Good Day Atlanta, Fox 5 Morning News
D.C. and PBS "To the Contrary" among others.
NOVEMBER 13 CONFERENCE CALL AND WEBCAST
The Knot will host a conference call with investors at 2:30 p.m.
ET today to discuss its third quarter financial results. Participants
should dial in at 800-638-7172 ((ID#8734121) 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 #
8734121
About The Knot, Inc.
The Knot (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 1 million
engaged couples each year through the web, newsstands, bookstores,
national television and more. Its wedding websites, TheKnot.com and
WeddingChannel.com are the most-trafficked online wedding destinations
for information and registry gifts. The Company also offers a diverse
collection of print publications including national and regional
wedding magazines, seven books, a video on demand (VOD) service for
Comcast Cable, and content distribution partnerships with MSN, Scripps
Howard, and The McClatchy Company. The Knot owns and operates several
brands targeted before and beyond the wedding day, including newlywed
resource The Nest (www.thenest.com), party-planning portal
PartySpot.com, teen site PromSpot.com, online personals site
GreatBoyfriends.com, and a localized information resource for parents,
"the lilaguide" (lilaguide.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 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,
2006 2005
(Unaudited) (Audited)
------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 70,652 $ 17,685
Short-term investments 7,000 11,550
Accounts receivable, net 8,901 4,805
Inventories 1,913 1,622
Deferred production and marketing costs 541 419
Other current assets 1,571 881
------------- ------------
Total current assets 90,578 36,962
Property and equipment, net 10,018 2,987
Intangible assets, net 45,522 205
Goodwill 38,786 8,905
Deferred tax assets 11,860 --
Other assets 506 326
------------- ------------
Total assets $ 197,270 $ 49,385
============= ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 11,162 $ 5,574
Deferred revenue 11,449 7,816
Current portion of long-term debt 47 47
------------- ------------
Total current liabilities 22,658 13,437
Deferred tax liabilities 18,401 --
Long term debt 106 106
Other liabilities 811 505
------------- ------------
Total liabilities 41,976 14,048
Stockholders' equity:
Common stock 310 230
Additional paid-in-capital 188,372 77,550
Deferred compensation -- (221)
Accumulated deficit (33,388) (42,222)
------------- ------------
Total stockholders' equity 155,294 35,337
------------- ------------
Total liabilities and stockholders' equity $ 197,270 $ 49,385
============= ============
Note: Certain amounts as of December 31, 2005 have been reclassified
to conform to the current presentation.
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
---------------------------------------------------
2006 2005 2006 2005
---------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues:
Online sponsorship
and advertising $ 9,380 $ 6,687 $ 25,533 $ 18,516
Registry services 955 63 1,098 210
Merchandise 4,273 3,275 12,166 10,581
Publishing and
other 3,898 3,092 12,190 9,309
------------ ------------ ------------ ------------
Total net revenues 18,506 13,117 50,987 38,616
Cost of revenues 4,200 3,048 11,388 8,835
---------------------------------------------------
Gross profit 14,306 10,069 39,599 29,781
Operating
expenses:
Product and
content
development 2,170 1,743 5,784 5,197
Sales and
marketing 4,657 3,516 13,740 10,674
General and
administrative 4,233 3,917 10,820 10,891
Depreciation and
amortization 975 341 1,800 901
---------------------------------------------------
Total operating
expenses 12,035 9,517 32,144 27,663
Income from
operations 2,271 552 7,455 2,118
Interest and other
income, net 1,082 207 1,745 504
---------------------------------------------------
Income before
income taxes $ 3,353 759 $ 9,200 2,622
Provision for
income taxes 90 37 366 151
Net income $ 3,263 $ 722 $ 8,834 $ 2,471
===================================================
Basic earnings per
share $ 0.12 $ 0.03 $ 0.36 $ 0.11
===================================================
Diluted earnings
per share $ 0.11 $ 0.03 $ 0.33 $ 0.10
===================================================
Weighted average
number of common
shares
outstanding
Basic 27,472,080 22,802,123 24,592,760 22,623,619
===================================================
Diluted 29,766,300 25,085,676 27,059,012 24,701,236
===================================================
Note: Certain amounts for the three and nine months ended
September 30, 2005 have been reclassified to conform to the current
presentation.
CONTACT: VMW Corporate & Investor Relations
Vicki Weiner/Sylvia Dresner, 212-616-6161
info@vmwcom.com