EXHIBIT 99.1
The Knot Reports First Quarter 2007 Financial Results
Revenue Rises 43% and Pre-Tax Income Increases 55%
Reminder: Conference Call Today at 4:30 ET Dial In (800) 638-7172,
Conference ID# 6138776
NEW YORK--(BUSINESS WIRE)--May 9, 2007--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 first quarter ended March 31, 2007.
First Quarter 2007 Results
For the first three months of 2007, net revenues rose 43% to $21.0
million from $14.8 million in the first quarter of 2006. Revenue from
national and local online advertising programs increased by 38% over
the prior year's first quarter. Merchandise revenue from the sale of
wedding supplies grew 50% while publishing and other revenues recorded
a small gain. Registry services revenue, which is derived
substantially through the WeddingChannel business that was acquired in
September 2006, amounted to $1.8 million in the recent quarter.
Income before income taxes increased to $2.8 million in the first
quarter of 2007 as compared to $1.8 million a year ago. The provision
for income taxes was $1.1 million in the first quarter of 2007 and
$103,000 in the corresponding period in 2006. The provision for income
taxes for the first quarter 2006 was reduced by the utilization of net
operating loss carryforwards. Net income for the first quarter of 2007
was $1.6 million or $0.05 per basic and diluted share as compared to
$0.07 per basic and diluted share in the first quarter of 2006.
Commenting on The Knot's results, Chief Executive Officer David
Liu said, "We are very pleased with the strong growth in our local
online advertising and merchandise businesses and the performance of
the registry services operation acquired through WeddingChannel. We
are working to resolve the performance issues affecting our national
online advertising programs so we can begin to more effectively sell
consolidated marketing packages across The Knot and WeddingChannel
websites. Meanwhile we see great potential for growth in several
recent initiatives including the launch of lilaguide.com,
thenestbaby.com and The Knot's lifestyle gift registry powered by
Macy's."
First Quarter 2007 Financial Highlights
-- National and local online revenues were $3.5 million and $7.3
million, respectively, for the three months ended March 31,
2007, as compared to $2.7 million and $5.1 million for the
corresponding period in 2006.
-- Gross profit margins for merchandise revenue were
approximately 53% and 50% for the three months ended March 31,
2007 and 2006, respectively.
-- Gross profit margins for publishing and other revenue were
approximately 61% and 67% for the three months ended March 31,
2007 and 2006, respectively.
-- Total operating expenses for the three months ended March 31,
2007 included approximately $1.0 million representing the
amortization of acquired intangible assets recorded in
connection with the acquisition of WeddingChannel.
-- Stock-based compensation expense was $472,000 and $329,000 for
the three months ended March 31, 2007 and 2006, respectively.
-- Net cash provided by operating activities was $7.5 million in
the first quarter of 2007 while capital expenditures amounted
to $657,000.
Recent Developments
In February, the Company launched Lilaguide.com, the web's first
hub for real parent reviews of local baby stores, gear, and services.
Lilaguide.com has 32,000 listings and over 120,000 reviews from
parents who want to share their advice on baby products, services and
activities in 5,000 neighborhoods across the United States.
In March, The Knot signed a two-year agreement with Macy's Wedding
& Gift Registry making Macy's the exclusive retail partner providing
products on TheKnot.com registry. The Lifestyle Registry, a registry
tool located on TheKnot.com, is designed to help couples jump-start
the overwhelming process of registering for gifts and customize their
registry to fit their lifestyle needs. This innovative tool is an
example of The Knot's commitment to making planning a wedding and its
surrounding events easier for its users.
Also, in March, The Knot Guide to Destination Weddings, The Knot's
latest book, arrived on bookshelves in support of one of the biggest
trends in weddings. Author Carley Roney debuted the book on NBC's
TODAY Show as she talked ideas and fashion for far-flung nuptials.
Conference Call and Webcast
The Knot will host a conference call with investors at 4:30 p.m.,
ET on Wednesday, May 9, 2007, to discuss its first quarter financial
results. Participants should dial-in (800) 638-7172, Conference ID#
6138776. 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.
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
#6138776.
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) risks
related to The Knot's recent acquisition of WeddingChannel, (iv) the
significant fluctuation to which The Knot's quarterly revenues and
operating results are subject, (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,
2007 2006
----------- ------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $48,733 $73,633
Short-term investments 39,375 7,000
Accounts receivable, net 9,969 9,743
Inventories 1,653 1,345
Deferred production and marketing costs 535 584
Deferred tax assets, current portion 7,877 8,369
Other current assets 1,426 1,500
----------- ------------
Total current assets 109,568 102,174
Property and equipment, net 8,731 9,376
Intangible assets, net 33,774 34,015
Goodwill 33,392 33,854
Deferred tax assets 23,617 24,490
Other assets 320 342
----------- ------------
Total assets $209,402 $204,251
=========== ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $6,680 $7,661
Deferred revenue 14,036 10,498
Current portion of long-term debt 51 51
----------- ------------
Total current liabilities 20,767 18,210
Deferred tax liabilities 15,004 15,014
Long term debt 55 55
Other liabilities 530 548
----------- ------------
Total liabilities 36,356 33,827
Stockholders' equity:
Common stock 313 311
Additional paid-in-capital 189,894 188,909
Accumulated deficit (17,161) (18,796)
----------- ------------
Total stockholders' equity 173,046 170,424
----------- ------------
Total liabilities and stockholders' equity $209,402 $204,251
=========== ============
Note: Certain prior year amounts have been reclassified to conform
to the current year's presentation.
The Knot Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended
March 31,
----------------------
2007 2006
----------------------
(Unaudited)(Unaudited)
Net revenues:
Online sponsorship and advertising $10,776 $7,799
Registry Services 1,760 59
Merchandise 4,631 3,079
Publishing and other 3,861 3,814
----------------------
Total net revenues 21,029 14,751
Cost of revenues 4,016 3,129
----------------------
Gross profit 17,012 11,622
Operating expenses:
Product and content development 3,144 1,786
Sales and marketing 5,890 4,714
General and administrative 4,085 3,262
Depreciation and amortization 2,108 372
----------------------
Total operating expenses 15,227 10,134
Income from operations 1,785 1,488
Interest and other income, net 987 300
----------------------
Income before income taxes $2,772 $1,788
----------------------
Provision for income taxes 1,138 103
----------------------
Net income $1,634 $1,685
======================
Basic earnings per share $0.05 $0.07
======================
Diluted earnings per share $0.05 $0.07
======================
Weighted average number of common shares
outstanding
Basic 30,811,815 23,084,722
======================
Diluted 32,832,516 25,578,559
======================
Note: Certain prior year amounts have been reclassified to conform
to the current year's presentation.
CONTACT: VMW Corporate & Investor Relations
Vicki Weiner/Sylvia Dresner, 212-616-6161
info@vmwcom.com