The Knot Reports First Quarter 2008 Financial Results
Online Advertising Grows 20% while the Company Continues Investments
NEW YORK, NY (May 8, 2008) – The Knot Inc. (NASDAQ-KNOT, http://www.theknot.com), a leading lifestage media company targeting couples planning their wedding and future life together, today reported financial results for its first quarter ended March 31, 2008.
First Quarter 2008 Results
For the first three months of 2008, net revenues rose 13 percent to $23.8 million from $21.0 million in the first quarter of 2007. Revenue from national and local online advertising programs increased by 20 percent over the prior year’s first quarter while publishing and other revenues recorded a 17 percent gain. E-commerce revenues representing merchandise revenue from the sale of wedding supplies and registry services commissions aggregated $6.4 million and were relatively flat compared to 2007.
Net income for the first quarter of 2008 was $579,000 or $0.02 per basic and diluted share. Net income in the first quarter of 2007 was $1.6 million or $0.05 per basic and diluted share.
“The first quarter results reflect anticipated increases in operating expenses due to investments to update our technology platform and expand our management, sales, and marketing teams. In 2008, our goal is to establish the operational and technological platform that will allow us to effectively scale the company’s multiplatform lifestage media business as we move into 2009,” said David Liu, Chairman and Chief Executive Officer of The Knot. “Despite the ongoing investment of significant resources toward platform upgrades, we are pleased that our online advertising business continues to drive our growth.”
First Quarter 2008 Financial Highlights
- National and local online revenues were $4.7 million and $8.2 million respectively, compared to $3.5 million and $7.3 million for the first quarter of 2007.
- Gross profit margins for each of the three months ended March 31, 2008 and 2007 were 81 percent.
- Stock-based compensation expense was $747,000 in the first quarter compared to $472,000 for the first quarter of 2007.
- Net cash provided by operating activities was $6.0 million for the three months ended March 31, 2008, while capital expenditures amounted to $2.4 million for the same period.
- For the three months ended March 31, 2008, The Knot recorded a temporary impairment charge of $1.1 million, net of tax, with respect to its investments in auction rate securities. The charge was reflected in other comprehensive loss in stockholders’ equity.
- In February, WeddingChannel.com, subsidiary of The Knot Inc., announced Amazon.com (NASDAQ: AMZN) as the newest addition to its unmatched roster of premier registry retailers. This collaboration enables engaged couples to create, manage, and monitor their wedding registry from leading online retailer Amazon.com via a patented multiregistry system on WeddingChannel.com, which makes it easy for millions of wedding guests to find and purchase a gift from 20 different retailers all on one site.
- Also in February, The Knot announced the acquisition of The Bump Media, Inc., publisher ofThe Bump, a local magazine and website dedicated to pregnancy and first-time parenthood. The acquisition further enhances the company’s mission of helping couples at key lifestages connect with the content and services they need. This addition also provides the baby and maternity advertisers in The Knot local network an increased opportunity to reach this important market.
Conference Call and Webcast
The Knot will host a conference call with investors at 4:30 p.m. ET on Thursday, May 8, 2008, to discuss its first quarter results. Participants should dial in (800) 638-7172, Conference ID #44715637. Please dial in 10 minutes prior to the call is scheduled to begin.
Participants can also access the live broadcast over the Internet on the Investor Relations section of TheKnot.com, accessible at www.theknot.com/investor-relations. To access the webcast, participants should visit The Knot 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 be archived on TheKnot.com approximately two hours after the conference call ends for a period of two weeks and will also be available at (800) 642-1687, reference #44715637.
About The Knot
The Knot (NASDAQ: KNOT; http://www.theknot.com) is a leading lifestage media company. The company’s flagship brand, The Knot, is the nation’s leading wedding resource, reaching well over a million engaged couples each year through the #1 wedding website TheKnot.com. Other brand products include The Knot national and local magazines, The Knot books (published by Random House and Chronicle), and television programming bearing The Knot name (aired on Style Network and Comcast). The company also owns WeddingChannel.com, the most visited wedding gift registry website. The Nest brand focuses on the newlywed-to-pregnancy lifestage, with the popular lifestyle website TheNest.com, a home decor book series with Clarkson Potter, The Nestmagazine, and baby offshoot TheNestBaby.com. Also under The Knot Inc. umbrella are WeddingTracker.com; GiftRegistryLocator.com; party planning site PartySpot.com; teen-oriented PromSpot.com; and local baby services and community site LilaGuide.com. The Knot Inc. 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 company’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 company’s unproven business model, (ii) the company’s history of losses, (iii) the significant fluctuation to which The Knot quarterly revenues and operating results are subject, (iv) the seasonality of the wedding industry, (v) the dependence of our registry services business on the continued use of the WeddingChannel website by our retail partners 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.