The Knot (KNOT.OB) grows ad revenue, loses product revenue (4Q04 earnings)

| About: XO Group (XOXO)

The Knot Inc. (ticker: KNOT.OB), publisher of wedding planning web site and home setup website, announced Q4 results and guidance. Key points:

Q4 results

  • EPS of  $0.01 same as a year earlier.
  • Net revenues of $10.1 million, up  24% year over year.
  • Sources of revenue growth: 40% increase in online advertising, 23% gain in publishing and other revenue and  4% decrease in merchandise sales (cause: technical problems with warehouse management software).
  • Sources of revenue: online advertising $5 million, merchandise sales (wedding supplies and registry gifts) $2.1 million, publishing and other $2.9 million.
  • Gross margins were 79%, up from 74% a year earlier, due to a higher mix of advertising revenues.
  • Gross margin break-down: merchandise 46%, publishing 68%, online advertising 96%.
  • Operating expenses of  $7.8 million were 35% of revs and were up from $5.8 a year earlier, but included $1.1 million of litigation fees with Wedding Channel.
  • Net income was $185,000, versus $284,000 a year earlier.
  • Local online advertiser base rose to 11,000, up 30% year over year. Their average annual spend of $1,200 is up 10% year over year.
  • 68 local markets now online.
  • Cash balance increased by $350,000 to about $23 million at year end.

Quick comments:

  • The Knot acquired the assets of GreatBoyfriends LLC in January ( and The company says: "This acquisition further expands the Company's relationship with women, ages 25-40, and marks its arrival into the online personals domain. and are unique referral-based online dating services that offer singles access to "pre approved" potential suitors."
  • The Knot has a current market cap of about $118 million, and an enterprise value of about $90 million.

KNOT chart below.