EXHIBIT 99.1
The Knot Reports Second Quarter 2007 Financial Results
Online Advertising and Registry Services Lead Revenue Gains
Conference Call Today at 4:30 p.m. ET Dial-In 800-638-7172
(ID#10416358)
NEW YORK--(BUSINESS WIRE)--Aug. 8, 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 second quarter and six months ended
June 30, 2007.
Second Quarter 2007 Results
For the second quarter ended June 30, 2007, The Knot reported net
revenues of $28.5 million, an increase of 61% from net revenues of
$17.7 million for the second quarter of 2006. Revenue from national
and local online advertising programs increased 50% over the prior
year's second quarter. Merchandise revenue from the sale of wedding
supplies grew 35% while publishing and other revenues recorded a 30%
gain. Registry services revenue, which is derived substantially
through the WeddingChannel business that was acquired in September
2006, was $3.4 million in the recent quarter.
Income before income taxes increased to $8.1 million in the second
quarter of 2007 compared to $4.1 million a year ago. The provision for
income taxes was $3.4 million in the second quarter of 2007 and
$173,000 in the corresponding period in 2006. The provision for income
taxes for the second quarter 2006 was reduced by the utilization of
net operating loss carryforwards. Net income for the second quarter of
2007 was $4.8 million or $0.15 per basic and diluted share as compared
to net income of $3.9 million or $0.17 per basic and $0.15 per diluted
share in the second quarter of 2006.
"Our second quarter results demonstrate the resilience of our
business model; however, 2007 remains a challenging year, and I
believe there is still room for significant improvement across all our
business units," said David Liu, Chief Executive Officer of The Knot.
"Online national advertising grew by 65% for the quarter, powered in
part by short term buys. We must continue our efforts to increase our
share of marketing budgets for both our online and offline businesses.
Our challenge remains to extend our multi-media platform across
multiple life stage brands and to educate our advertisers on how to
build long term relationships with our valuable consumers. We continue
to invest in updating our technology platform so that we may
efficiently meet the ever changing needs of our audience and
advertisers alike."
Six Month Results
For the six months ended June 30, 2007, The Knot reported net
revenues of $49.5 million and net income of $6.4 million or $0.21 per
basic and $0.19 per diluted share as compared to net revenues of $32.5
million and net income of $5.6 million or $0.24 per basic and $0.22
per diluted share in 2006. Income before income taxes was $10.9
million for the first six months of 2007 and $5.8 million in the
corresponding period in 2006. The number of common shares outstanding
were 31,417,909 and 23,448,397 as of June 30, 2007 and 2006,
respectively.
Second Quarter 2007 Financial Highlights:
-- National online revenues were $4.9 million and $8.4 million,
for the three and six months ended June 30, 2007,
respectively, as compared to $3.0 million and $5.7 million for
the corresponding periods in 2006.
-- Local online revenues were $7.6 million and $14.9 million for
the three and six months ended June 30, 2007, respectively, as
compared to $5.4 million and $10.5 million for the
corresponding periods in 2006.
-- Gross profit margins for the six months ended June 30, 2007
were 80% as compared to 78% for the corresponding period in
2006.
-- Stock-based compensation expense was $577,000 and $1.0 million
for the three and six months ended June 30, 2007,
respectively, as compared to $361,000 and $689,000 for the
corresponding periods in 2006.
-- Net cash provided by operating activities was $15.2 million
for the six months ended June 30, 2007 while capital
expenditures amounted to $1.3 million.
Recent Highlights:
-- In April, The Knot Best of Weddings magazine, a
by-brides-for-brides guide to the top wedding sites,
photographers, florists and more in over 40 key cities across
the United States, was launched. The magazine is based on a
unique survey of 25,000 recent brides and grooms capturing
detailed feedback on every wedding business that couples hire.
-- In June, Denise Favorule joined The Knot from Readers Digest
Association as Senior Vice President, Group Publishing
Director, a new position at the Company. Ms. Favorule is
responsible for leading both national and local advertising
sales and marketing as well as spearheading cross-platform
sales efforts across all media properties.
-- In June, The Knot announced the launch of TheNestBaby.com in
response to the growing audience demand for pregnancy advice
and resources. TheNestBaby.com brings modern advice, an active
community and detailed local content together in a single
website.
-- In June, The Knot TV launched a new series that adds 360
minutes of this season's exciting new wedding fashions to its
already extensive lineup of original wedding programming.
Summer 2007 marks the second year that The Knot TV has been
live as the world's only 24/7 wedding TV channel. The channel,
streamed to a bride-to-be audience, features wedding-themed
programming that includes fashion shows, bridal makeovers,
honeymoon specials, real-wedding videos and style inspiration
from celebrity wedding planners and The Knot's TV personality
Carley Roney.
Conference Call and Replay Information
The Knot will host a conference call with investors at 4:30 p.m.
ET on Wednesday, August 8, 2007 to discuss its second quarter 2007
financial results. Participants should dial in 800-638-7172 Reference
# 10416358 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 webcast,
participants should visit The Knot website at least 15 minutes prior
to the conference call in order to download or install any necessary
audio software.
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 #
10416358.
About The Knot, Inc.
The Knot, Inc. (NASDAQ: KNOT; www.theknot.com) is a leading
lifestage media company targeting couples planning their weddings and
future lives together. The Company's flagship brand, The Knot, is the
nation's leading wedding resource, reaching over a million engaged
couples each year through the most visited wedding website
TheKnot.com, The Knot national and local wedding magazines, The Knot
books (published by Random House and Chronicle) and television
programming bearing The Knot name. The Company also owns
WeddingChannel.com, the second most visited wedding website overall
and the most visited wedding gift registry website, which further
increases the Company's share of the bridal market. Company brand The
Nest focuses on the newlywed-to-pregnancy lifestage with popular
lifestyle website TheNest.com, The Nest magazine, a home decor book
series with Clarkson Potter and baby offshoot TheNestBaby.com. Other
websites under The Knot, Inc. umbrella are party planning site
PartySpot.com; teen-oriented PromSpot.com; online personals site
GreatBoyfriends.com; local baby site Lilaguide.com; and e-commerce and
service sites for the wedding category such as ShopforWeddings.com,
WeddingTracker.com, and GiftRegistryLocator.com.
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)
June 30, December 31,
2007 2006
(Unaudited) (Audited)
----------- ------------
Current assets:
Cash and cash equivalents $44,737 $73,633
Short-term investments 50,857 7,000
Accounts receivable, net 11,663 9,743
Inventories 2,099 1,345
Deferred production and marketing
costs 394 584
Deferred tax assets, current portion 5,966 8,369
Other current assets 1,141 1,500
----------- ------------
Total current assets 116,857 102,174
Property and equipment, net 8,079 9,376
Intangible assets, net 32,832 34,015
Goodwill 33,280 33,854
Deferred tax assets 22,010 24,490
Other assets 290 342
----------- ------------
Total assets $213,348 $204,251
=========== ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $7,710 $7,661
Deferred revenue 11,821 10,497
Current portion of long-term debt 51 51
----------- ------------
Total current liabilities 19,582 18,209
Deferred tax liabilities 14,534 15,014
Long term debt 55 55
Other liabilities 500 548
----------- ------------
Total liabilities 34,671 33,826
Stockholders' equity:
Common stock 314 311
Additional paid-in-capital 190,764 188,909
Accumulated deficit (12,401) (18,795)
----------- ------------
Total stockholders' equity 178,677 170,425
----------- ------------
Total liabilities and stockholders' equity $213,348 $204,251
=========== ============
The Knot, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues:
Online sponsorship and
advertising $12,521 $8,354 $23,298 $16,153
Registry Services 3,356 84 5,117 143
Merchandise 6,500 4,813 11,130 7,892
Publishing and other 6,109 4,478 9,970 8,292
----------- ----------- ----------- -----------
Total net revenues 28,486 17,729 49,515 32,480
Cost of revenues 5,651 4,058 9,667 7,187
----------- ----------- ----------- -----------
Gross profit 22,835 13,671 39,848 25,293
Operating expenses:
Product and content
development 3,306 1,828 6,450 3,613
Sales and marketing 6,447 4,368 12,337 9,083
General and
administrative 3,987 3,326 8,072 6,588
Depreciation and
amortization 2,198 453 4,306 825
----------- ----------- ----------- -----------
Total operating
expenses 15,938 9,975 31,165 20,109
Income from operations 6,897 3,696 8,683 5,184
Interest and other
income, net 1,236 363 2,223 663
----------- ----------- ----------- -----------
Income before income
taxes $8,133 $4,059 $10,906 $5,847
Provision for income
taxes 3,373 173 4,512 276
Net income $4,760 $3,886 $6,394 $5,571
=========== =========== =========== ===========
Basic earnings per
share $0.15 $0.17 $0.21 $0.24
=========== =========== =========== ===========
Diluted earnings per
share $0.15 $0.15 $0.19 $0.22
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding
Basic 30,898,378 23,173,216 30,855,336 23,129,238
=========== =========== =========== ===========
Diluted 32,759,935 25,783,965 32,795,590 25,681,506
=========== =========== =========== ===========
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