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Executives

Malindi Davies

David Liu - Co-Founder, Executive Chairman, Chief Executive Officer and President

John P. Mueller - Chief Financial Officer, Principal Accounting Officer and Treasurer

Analysts

Sameet Sinha - B. Riley Caris, Research Division

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

Bradley G. Safalow - PAA Research LLC

XO Group (XOXO) Q1 2013 Earnings Call May 9, 2013 4:30 PM ET

Operator

At this time, I would like to welcome everyone to the XO Group Inc.'s First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded. At this time, I would like to turn the conference over to the company.

Malindi Davies

Thank you. Welcome to XO Group's first quarter 2013 conference call and webcast. During the course of this conference call, comments that we make regarding XO Group, that are not historical facts, are forward looking statements and are subject to risks and uncertainties that could cause the actual future events or results to differ materially from these statements. Any such forward looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by the use of words like may, should, expect, plan, intend and other similar terms. You are cautioned that these forward looking statements speak only as of today's date. Our internal projections and beliefs, upon which we base our expectations, may change but we would not necessarily inform you if they do. XO Group's policy is to provide expectations only once per quarter and not to update that information until the next quarter.

The important factors that could cause actual results to differ materially from any forward-looking statements mentioned today include, but are not limited to: one, our online wedding-related and other websites may fail to generate sufficient revenue to survive over the long-term; two, we incur losses for many years, following our inception, and may incur losses in the future; three, we may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall; four, sales to sponsors or advertisers may be delayed or canceled; five, efforts to launch new technology and features may not generate sufficient new revenue or may reduce revenue from existing services; six, we may be unable to develop solutions that generate revenue from advertising delivered to mobile phones and wireless devices; seven, significant fluctuation, to which our quarterly revenue and operating results are subject; eight, the seasonality of the wedding industry; nine, our e-commerce operations are dependent on Internet search engine rankings, and our ability to influence those rankings is limited; 10, the dependence of our registry services business on third parties; and 11, other factors detailed in documents we file from time to time with the Securities and Exchange Commission.

Additionally, if you have not received a copy of today's press release, the release is now posted on the Investor Relations section of the company's website at ir.xogroupinc.com. We have allotted up to 1 hour for today's conference call, including the question-and-answer section that follows.

Please take note that the company is operating under the SEC Regulation FD and encourages you to take full advantage of the Q&A section.

During this call, David will first give you an overview of XO Group's performance and key achievements followed by John with an outline of the financial results. And then, David and John will be available for a question-and-answer session to complete the call. At this time, I'll turn over to our Chief Executive Officer, David Liu.

David Liu

Welcome to our first quarter earnings call, and thank you for joining us. The momentum in our business exiting 2012 carried into the first quarter with yet another strong showing from our local business, online and off-line. Our national and registry businesses also improved and we continue to face challenges in our e-commerce business.

We are proving our value to local vendors, a credit to our exceptional sales and tech teams. The new features and functionality we rolled out early in the first quarter of 2013 are being well received. For example, upgrades to our My Account Vendor Dashboard include a social sharing functionality, which enables our vendors to update their Facebook, Twitter and LinkedIn status directly from our portal. So far, over 25% of our vendors have linked a unique social account and our vendors shared over 9,500 status updates in the first month it was live. I think these early results, are positive and a sign of good things to come as we continue to design and build tools for our vendors, which enable them to run the client acquisition side of their businesses more effectively and efficiently.

Our publishing business delivered another solid quarter with strong gains in the bridal retail and design categories, specifically. Advertisers are viewing our publications not only as a must-have part of their marketing campaigns, but also as a medium to create beautiful and engaging ads. This quarter, close to 1/3 of our national advertisers ran both print and online campaigns, up slightly, compared to last year. The growth in our national online advertising business was driven by our baby property, TheBump.com, on which we were able to attract key new advertisers, including Babies"R"Us and Disney.

While we are encouraged by the first quarter results and current pipeline, we continue to be cautious given an increasing mix of traffic from mobile as well as ongoing macroeconomic uncertainty affecting our large brand advertisers.

In April this year, we launched the re-platform of our registry back-end system, an old, brittle system that still had code dating back to the late '90s. This is an incredible undertaking by our team. This project required collaboration of personnel across different time zones and continents from New York, Austin, L.A. to Guangzhou, China and it was delivered on aggressive deadlines. I want to thank the teams for all their hard work and dedication. This re-platform, among other things, makes it easier for our retail partners to connect with our registry system as well as allowing for couples to customize and more easily share their registry profiles. The new platform is well designed and more flexible than the old one, which will make it easier for us to merchandise the registry business in new ways over time.

As I have mentioned in the past, parts of our e-commerce business are dependent among search engine referrals. And Google's frequent and significant algorithm changes have challenged that business for the better part of the last 2 years. Additionally, we continue to see a decline in site traffic and in conversion rates as users increasingly receive our promotional e-mails and access our sites via mobile devices.

We launched our mobile-optimized store for The Knot Shop at the end of the first quarter, which should improve our conversion rates with the elegantly designed interface for personalization on the small screen. We expect additional incremental improvements to the store experience as well as a focus on efficiency in the warehouse, will improve this business longer-term.

As I stated last time we spoke, we are not satisfied with low single-digit growth in revenues when we have such strong brands, great relationships and talented employees. While we have achieved the goals we started out with 16 years ago, brand leadership, recurring revenue growth, scale and profitability, we are no longer achieving the growth targets, I think, we can achieve. Given the rapid evolution of the digital media space over the last few years, we believe there's a tremendous opportunity for us to bring new technology and creativity together to facilitate connections between our audience and advertisers during the critical life stages of family formation.

To this end, we have restructured our organization to better able to take advantage of the changing technology in business environment. We're already seeing great ideas from our new teams which, in our old structure, may have been stifled. We are working on several projects, large and small across our properties. Some of them, like our new homepage search functionality, vendor storefronts and mobile-optimized Knot Shop, have already been rolled out. Others are still in development. I look forward to sharing these with you as we continue to come up with even more ways to connect our audience, our brides, newlyweds and first-time parents with the products and services they need easily, seamlessly and beautifully.

With that, I'll turn it over to John for the financial review.

John P. Mueller

Thank you, David. Total revenue for the first quarter was $30.3 million, up 1.7%, compared to the prior year. The results were led by publishing and other revenues and local online advertising revenue, which grew 12.7% and 10.7%, respectively, year-over-year. Registry commission revenue grew 15.7% in the 3 months ended March 31, 2013, compared to the prior year period. National online advertising revenue increased by 3.7% while merchandise revenue was down by 31.9% compared to the first quarter of last year.

For the quarter ended March 31, 2013, the company achieved operating profit of $2.8 million compared to $0.6 million in the prior year. The $2.2 million year-over-year increase was driven by a combination of increased revenue and lower operating expenses, partially offset by lower gross margins in our e-commerce business.

Operating expenses for the quarter ended March 31, 2013, were $22.8 million compared to $24.3 million in the same period last year. The $1.5 million decline was primarily the result of lower stock-based compensation expense, partially offset by increased technology-related expenses.

Diluted earnings per share were $0.07 in the first quarter of 2013 compared to $0.02 in the same period last year. Growth in earnings per share was driven by increased operating profit. We ended the quarter with $74.9 million in cash and no debt. These results are in our press release issued this afternoon.

In addition, supplemental data tables in our press release contain local online advertising metrics, gross profit and margin by business and stock-based compensation charges broken out by product and content, sales and marketing and G&A expense lines.

With that overview, here's a little more detail on our financial performance during the quarter. Our local online advertising revenue increased 10.7% year-over-year in the first quarter. Increases in our vendor count and average vendor spend contributed to the year-over-year growth. The churn rate for the first quarter of 2013 was 29.8%, a 40 basis point decrease compared to the fourth quarter of 2012. Our new storefronts and My Account functionality have been important factors in these positive trends.

Our national online revenue increased by 3.7% in the first quarter of 2013 compared to the same period last year. The year-over-year growth was primarily due to continued strength in online advertising on TheBump.com, offset by declines in the retail and consumer packaged goods categories on our bridal properties.

For the first quarter of 2013, the share of bridal and non-bridal advertising revenue was 84% and 16%, respectively. The share of bridal advertising revenue declined slightly from 86% 1 year ago.

Our publishing and other revenues increased 12.7% in the first quarter of 2013 compared to the prior year quarter. We continue to see revenue growth from increases in both the number of advertising pages and higher revenue per ad page, demonstrating the value of our magazines to local and national brand advertisers.

Turning to our registry business. Revenue increased $160,000 or 15.7% in the March quarter of 2013 compared to the March quarter of 2012. The year-over-year increase was driven by both a favorable comparison to prior year, in which one of our retail partners was recovering from technical issues and ongoing technical improvements we are implementing with our affiliate partners. And our e-commerce business declined 31.9% in the first quarter of 2013 compared to the prior-year period. As David stated, the year-over-year revenue decline was due to weak SEO rankings, specifically for our American bridal stores. Also, we continue to see a negative impact to our traffic and conversion rates across our sites as users increasingly access our shops via mobile devices.

The e-commerce gross margin decline year-over-year was primarily due to higher shipping expense and increased personalization labor, offset, in part, by lower damage expense due to improved quality control in our warehouse.

Operating expenses were $22.8 million for the quarter ended March 31, 2013, compared to $24.3 million in the prior year quarter. The year-over-year decrease of $1.5 million was primarily due to lower stock-based compensation expense, offset by increased technology costs. The year-over-year decrease in stock-based compensation was due to the timing of annual grants and the impact of a lower estimated accrual for stock-based compensation compared to the prior year. The increase in technology-related expenses is mainly a result of increased headcount, as we work on the projects David outlined earlier.

For our China venture, Ai Jie, net expenses were $1 million for the first quarter of 2013, which is flat, compared to the corresponding period in 2012 as higher sales and marketing expenses were offset by increased revenue year-over-year.

The company's balance sheet at March 31, 2013 reflects cash and cash equivalents of $74.9 million, down $2.5 million, from $77.4 million at December 31, 2012. Cash declined during the first quarter primarily due to $1.6 million of cash used to satisfy withholding obligations for employees related to the vesting of their restricted stock awards as well as capital expenditures of $1.2 million, which was partially offset by cash from operating activities of $0.2 million.

Lastly, on April 10, 2013, we announced a $20 million share repurchase authorization by our Board of Directors.

In conclusion, our results continued to be mixed. We achieved steady growth in our local online and publishing and other business lines, drove incremental improvements on our national online and registry businesses and continued to face challenges in our e-commerce business. We continue to balance our goals of strong profitability with ongoing investments in the future of our business. This concludes our prepared remarks. I will now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Sameet Sinha with B. Riley & Co.

Sameet Sinha - B. Riley Caris, Research Division

A couple of questions regarding some of these new initiatives. I guess on the registry front, you have been able to change the platform. Can you talk about some of the other benefits that you can expect to see? Does GR 360 benefit from this? And are there any early traction with any retailers? Secondly, David, you spoke about restructuring. Can you give us more details about what sort of restructuring was this? And what sort of benefits are you seeing? My next question is, basically, about the -- you mentioned new storefronts. Can you give more details on that? That's 3 and then I have a follow-up.

David Liu

Sure. So the registry platform, essentially, by updating and modernizing the back-end of the registry, this will enable us to do a lot of the things that we're attempting to do with GR 360. Unfortunately, we can't just plug GR 360 into the new platform because GR 360 was actually built on top of the old one. Now with that said, some of the advantages that we're seeing already are the fact that we can actually onboard retailers much quicker, the user experience and the interface is, I think, much more intuitive. And I think as we roll out some of the features that GR 360 had on this new platform, we should see some pretty positive benefits to the registry business. Regarding the reorganization, so when you -- if you were to look at the company 1 year ago, we were essentially a matrix organization. I had executives who were running the various businesses of national and local advertising with publishing sort of attached to those, and an executive running our e-commerce and registry businesses. And then we had, essentially, the kind of horizontal department managers of tech, of content and product, of marketing. And you essentially had sort of a matrix-ed kind of a management system. What we've actually embarked on over the last year was breaking the company into what I would call autonomous smaller pods, groups of individuals who had very specific services they were building or businesses that they were shepherding and that had dedicated staff, whether it's sales, at creative design, tech, that was assigned to these groups. And they could work far more nimbly and actually be more focused on what they were actually working towards. We're already seeing some benefits with regard to the -- regarding some of the ideas and some of the new products and services that we're looking to launch. And I think it creates a level of accountability that is -- really not have in a matrix environment. The bottlenecks that we experienced in the past, really, and the prioritization challenges we had came from the fact that you would have organizations, who come up with great ideas, sort of toss it over their shoulders and expect an infinite number of resources to be able to execute and manage that. And that just wasn't the case. Now with these smaller groups who have the responsibilities of actually determining what to prioritize, what to do. And if they do build it, they have to maintain it. It gives them a far more sense of ownership and also, they can respond to changes in the marketplace or even changes in the business. So we're pretty excited about what we're going to be able to drive out of that. Your question on local storefronts. This is one of the projects that we started working on early fall. And under a very aggressive deadline, we were able to launch, essentially, a revision and next version of the profiles of the local vendors. When you go to our local vendor profiles today, it is a dramatic improvement from what we had last year, a lot more functionality, a lot more information available for the consumers. And I think that has not only allowed our local salespeople to sell in new vendors but then also you see a slight dip in the attrition rate has enabled us to hold on to a lot more business as well. So we're pretty pleased with the impact of that.

Sameet Sinha - B. Riley Caris, Research Division

One quick follow-up. You're talking about this reorg, would it mean that there'll be duplication of some resources across some of your business units? And would that require additional headcount? Or do you think you can manage within the current -- mostly within the current numbers?

David Liu

We're trying to manage them within the current numbers. There will be duplication. When you start having these autonomous groups, one of the things you do sacrifice is sort of the efficiency of an organization that has horizontal services for everyone. What we have seen, though, is that the benefit that you get is, essentially, much more nimble development and also ideation. You have groups that become very, very focused on executing. And the ownership that comes with the responsibility of running a business or building a service, actually, I think, offsets the possible redundancies that will occur. But we're looking to just begin to harvest some of the benefits of it in the back half of this year.

Operator

Your next question comes from George Askew with Stifel.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

A couple of questions. One on e-commerce and one on China. First, what percentage of your merchandise e-commerce revenue is sourced through SEO currently or in the quarter?

John P. Mueller

George, it's John. It's roughly in the neighborhood of about 20%.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Now -- and the balance, I guess, is coming from other XO Group sites?

John P. Mueller

Yes, we have both internal -- what we call internal placements on our own network of websites. We have affiliate relationships with other publishers and we also send out directed e-mails to our members. And then also have some external placements as well.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

And was it that, the 20% of the business that's SEO-related, that caused the 31% decline in e-commerce revenue or am I mixing it up incorrectly?

David Liu

George, David here. So -- a few years ago, we acquired a company called American Bridal, and one of the benefits that we were able to drive through that system was that they were essentially selling very similar products that we were on The Knot Shop and they had done a very good job with their SEO. But they were essentially drop-shipping. And so they had much -- they had inferior margins, they were doing decent volume. And so when we acquired them, we looked at the product mix, we essentially replaced their drop-ship products with the products that we had directly sourced. And we were able to drive increased significant revenue growth and also do it very profitably and it really enhance the margins off that business. The thing that really caught us and -- the sequence of algorithm changes that impacted that particular business came from the fact that when we launched the exact same product, but under the American Bridal moniker and brand, Google was viewing that as sort of duplicative content, identified as content farmed and essentially dropping what was the most valuable asset that American Bridal really had, which was a lot of the SEO results. So we've seen continued declines in that particular business. And along with -- there were a number of, what I would call, sub-branded sort of web storefronts that we were -- had running, things like GroomsmenGifts.com or destinations like that, that we're also now getting hit because of duplicative content issue. So when we talk about being impacted by SEO, it's not necessarily the SEO traffic that was coming directly to Knot Shop, it was the kind of outside ecosystems that our merchandising operations was supporting that has been hit.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

Got it. That's a great explanation. I appreciate that. Is -- so what's the fix? I mean have these issues continued into the first or second week here of May, I mean -- or do -- how do you fix that kind of an issue?

David Liu

Well, so -- obviously, we're not happy with the results and we actually think we can do much better than what we are. I think one of the things that -- and it's more of a tactical issue. When you're faced with a number of sort of back-end issues when we implemented new technologies in the background, and you have the SEO come on, you wind up dealing with, what I would call, like the immediate fires, and your focal point is like getting through those. I think the ball that was dropped for us was really looking a little bit further down the road and sort of identifying some more macro trends that are also occurring in this particular category. And we didn't get ahead of that. Now fortunately, we live in -- and particularly, in this particular business, a very forgiving space. Number one, your audience and your consumers churn 100% every year and, essentially, what you have is a crack at rebuilding your business each and every year. One of the challenges, but also one of the benefits. So we look at the opportunity now as to can we hit that reset button and provide a value proposition to the consumers that's truly unique that can be very profitable and that is touching upon the strengths of our brand and our distribution? I think the launch of the mobile interface for the Shop will have a positive benefit. If you actually play with it, it is, by far, I would say, best-in-class. There's no other mobile shopping experience with personalization that is done as elegantly. But I think we now need to actually look a little bit further down the road and deal with our product mix, our merchandising strategies, our pricing strategies and kind of hit the reset on this. The short-term fires are behind us. Unfortunately, the declines in revenues are not fun to watch, but the goal is to get this business back to profitable growth trajectory.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Just -- and turning to China real quickly. You mentioned revenue growth offsets the increase --or was offset by the increase in sales marketing spending. Can you give us a sense of what was the revenue generated in the quarter out of China? And is sales and marketing the biggest piece of the expense base there or are there other -- how should we think of sort of that business from a P&L standpoint?

John P. Mueller

Revenue is just not significant to describe at this point in time. I think on the fourth quarter call, we expected -- we said we expected the quarterly expense for Ai Jie to be about $1.5 million. It was $1.0 million in the first quarter, so a little bit lower than what we were expecting, but we are sort of maintaining our view that, I think, over the next 3 quarters, it would be at a rate of about $1.5 million a quarter in expense.

Operator

[Operator Instructions] Your next question comes from Brad Safalow with PAA Research.

Bradley G. Safalow - PAA Research LLC

Just a quick question on the e-commerce division. For allocating overhead to that division, did it actually generate an operating loss in the quarter?

John P. Mueller

We don't break that -- break it out.

Bradley G. Safalow - PAA Research LLC

Okay. And then just in terms of -- Dave, you mentioned the new platform on the registry side and then starting to work at GR 360, what's the timeframe for making those necessary technology changes?

David Liu

Well, now that the re-platform's complete, you're going to start seeing features rolling out continuously. The team is actually -- there's an entire product roadmap that we will continue to be improving on with each month.

Bradley G. Safalow - PAA Research LLC

Okay. And is there anything you can point to with the new platform, where you see traction with new merchants that are interested or have already signed up with -- on the site?

David Liu

There's always a pipeline of retailers that are looking to sign up. I think the issue for us has always been the amount of effort that it actually took them to integrate or for us to integrate. Some of the challenges that we had experienced in the past is, I think, vastly simplified. We don't talk about the sort of prospective retailers that are coming on board, but we've been adding them continuously this first half of the year.

Bradley G. Safalow - PAA Research LLC

Okay. And then what -- from a mobile perspective, what percentage of your traffic is now coming from mobile across all your major platforms?

David Liu

Yes. So in total, we have about 46% of our traffic is coming through a mobile device. It is very different between our brands. And so if you were to look at The Knot, it's about 39%. If you were to look on The Bump, it's actually 64%. And so there's a pretty widespread. Wedding Channel has got about 33%, The Nest has about 39%. And it's all trending up. I mean, this is not a kind of trend that is abating right now.

Bradley G. Safalow - PAA Research LLC

Okay. And in terms of your efforts to make sure you have the right mobile experience, where would you say you are in that process for each of your major platforms?

David Liu

I would say we are nowhere. With what we're working on, some of the services that I talked about that the groups are working on are going to be mobile first. And so, we've had the advantage over the last few years of being very early into the mobile space. We've launched, at this point, company-wide, close to a dozen mobile apps to varying degrees of success and effectiveness. But I think what we have been able to glean out of this is, number one, the user behavior and the relationships that work best in the mobile environment. But then, more importantly, a path towards monetization of that behavior because -- I think, the traditional ad models that you see in web publishing, just doesn't translate very well into the mobile experience. And so, one of the things that we're in development on are a number of mobile services that we actually think can make a pretty dramatic difference in our business.

Bradley G. Safalow - PAA Research LLC

And just on that point and then I'll turn it over, what -- I mean, when you think about -- with advertising behavior, are they purchasing at all on your mobile platforms or the revenues you're generating today are almost exclusively coming from, obviously, print and then desktop experience?

David Liu

Yes, the vast majority of ad revenue's coming from the web and digital experience and print. We have had our mobile apps sponsored. But one of the issues is that, particularly, when you have a platform or a distribution mechanism that's really in its infancy, most of the ad budgets that you see people pulling from are either the kind of experimental or the kind of outside the norm budgets that are not going to be the well-funded ones. And so, there is a little bit of a waiting for the industry to catch up. There are, certainly, standards that need to be established, measurements that need to be sort of integrated, so that one can actually manage a campaign just from on the buying side. But we also think that the mobile experience is a far more personal and intimate one and advertising as in kind of in its most effective becomes rather intrusive. And so there's a balancing act that one has to be very careful about. And I think, one of the things that our teams have been working on is a pretty, I think, innovative solution for that.

Operator

The next question comes from Sameet Sinha with B. Riley & Co.

Sameet Sinha - B. Riley Caris, Research Division

A couple of questions. In the publishing division, you spoke about increasing number of pages plus ad revenue per page. Can you talk about -- I mean, was there an effective increase in pricing that you got that you're able to see, especially in light of the fact that many of your competitors are out of business? Secondly, in terms of -- a lot of time has been spent on mobile, but in terms of mobile commerce, would your site be able to support commerce to the fullest extent, meaning storing the credit card information so that the experience is seamless rather than the consumer having to type in the credit card information at every transaction? And my third question, in terms of the buyback, if I remember correctly, I think there was some dilution because of stock issued to employees and your kind of your buyback just cavort that dilution. Is there a possibility that there could be a higher, a more increased buyback to actually reduce the shares outstanding?

David Liu

All right. So on the publishing front, we've had small rate hikes but that isn't, I would say, the reason for its strength. Publishing has been on a roll for the last almost 3, 4 years. Some of it is because our competitors are certainly hurting but I would say that our teams have just done an extraordinary job across the board, whether you talk about our editorial, the design, our sales force, our marketing groups, the sales planners. We've been able to break new categories. We've been able to bring in, really, top-notch advertisers. And if you look at the product, it is just significantly better than anything else on the marketplace. And that is a collective joint effort among significant parts of the company. So I think publishing is one of those areas that -- I think, in the digital space people seem to pooh-pooh, but in our industry and our world, it is our relevant products that consumers will continue to use. And the advertisers see real value in, that's why were seeing growth in that part of our business. When it comes to the mobile commerce side, I think what we're looking at is kind of a layer of mobile services, which we'll certainly be able to encompass mobile transactions. That's not necessarily something -- we see our strengths and focusing on. There are organizations that are very effective in helping people transmit funds through a mobile device. And in those instances where we can actually utilize those, we will. For us, we're much more focused on creating services for our consumers, which are our brides. And they rely on us to inspire them with great ideas, to find great products. And that's something we think mobile will enable us to do even better than the web experience. John, you want to talk about the buybacks?

John P. Mueller

Well, I guess, in terms of the amount of the buyback, it's an authorization of $20 million. As you know, in the past 2 years, when we completed a total of $90 million buybacks, we did that sort of, I think, $20 million or $25 million at a time. So I think we sort of take it one step at a time because you can't do $40 million until you do $20 million. So we'll focus on this first tranche.

Operator

[Operator Instructions] You have a question from George Askew with Stifel.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

A question on the new mobile version of The Knot Wedding Shop that launched just, I guess, about 6 or 8 weeks ago. Can you give us a sense of the traffic, the conversions that you've seen already? I know it's early but is it living up to expectations? Are you seeing activity that you hoped to see? Just any indication there.

David Liu

Yes. So it went live on the 25th of March, and it really is too early to say what the impact will be. Suffice it to say, it is a vast improvement on not having a mobile experience. So we think there will be a positive trends on that.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

Is it a platform or a platform that you can apply to The Bump, The Nest and some of the other brands? I mean, the technology there, can you kind of re-purpose it, 80% of it, for example, into the other brands?

David Liu

In terms of the store experience and the personalization that goes into that, as long as there's product that's relevant, we can certainly apply that to the other brands. But it is primarily a kind of a mobile user interface for the commerce platform. And it's not necessarily a kind of a publishing platform, if that's what you mean.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

Yes. I mean, I'm just thinking, if you, I mean theoretically, you can change the logos and the inventory, the pictures and the SKUs, could you -- could that be a Bump mobile e-commerce site or a Nest site? Is it an opportunity to roll out those 2 other platforms, for example, in the next 6 or 8 months if things go well with the initial launch?

David Liu

That's always a possibility. Yes.

Operator

Your next question is from Brad Safalow with PAA Research.

Bradley G. Safalow - PAA Research LLC

And you guys haven't talked about it in a while, but can you give us an update on what you're doing with The Nest? And what are your strategic goals for that asset?

David Liu

Sure. So The Nest is really the bridge brand, right? It is a -- it connects the 2 day-driven life stages of weddings and pregnancy. And we're able to engage the consumers on a wider range of topics and services, which now allows us to attract what we've been historically calling the non-endemic advertising categories. And so it fits really well in with many of the corporate buys. We're able to attract a significant number of new RFPs for The Nest. And I think when you have the marketers trying to target the female consumer more broadly, The Nest becomes a far more relevant brand than what I would call the niche audiences of The Knot and The Bump. And so we're pretty excited about some of the new things that are going to be coming out under that brand and it is -- certainly has been a strong contributor to our advertising sales efforts.

Bradley G. Safalow - PAA Research LLC

Okay. And then can you -- there are a lot of things you guys are either attempting to fix or kind of evolve with in terms of your platforms. Can you rank each of these initiatives in terms of strategic importance? And perhaps where we, as investors, can think about them chronologically?

David Liu

Well, that's a good question. I would say the ongoing development around our local business is always a priority. It is our largest revenue stream. We have a bunch of things that we're looking to develop that will improve the experience not only for our local vendors, but also for our consumers. I would say mobile, kind of broadly speaking across all the brands and all the businesses, is a pretty significant focus for us. And I think the trend lines of mobile access to our websites only reinforces the importance of that. And then in registry, where we are -- we've been working hard for over the last year rebuilding that platform. We have it running and it is -- had been showing some really positive results and we now have the ability to innovate and add really exciting features and experiences for the consumers. So I would say that the stack rank of those 3 are probably the pretty significant priorities for us.

Bradley G. Safalow - PAA Research LLC

Okay. And I know some of these are fluid. Are there any specific like by this period we'll have meaningful progress on any of those, whether it be in this percentage of our sites? Let's say, for e-commerce you're going to be M dot or we'll have mobile apps across all our platforms? I don't know how we should think about that in gauging your progress on mobile. And then registry, you talked about that already, a little bit, but I don't know if you have any specific dates you can direct us to or -- to measure your progress.

David Liu

Yes. There isn't really any clear goal lines that I could point to and say, "This is where we're trying to get the football across." There are things launching literally every month. And we have the challenge of being a relatively small business that's very complicated. And we have a number of teams working simultaneously on various efforts. So I think with each subsequent quarter, we'll have more and more to talk about and more and more things that we'll be able to sort of reveal to our shareholders and as well as our consumers. And I think we're in a very good position to be able to take advantage of what I consider pretty disruptive changes in the market place, given the fact that we do have such a strong brand, a great relationship with the audience and a kind of vibrant commercial platform to leverage. So between now and the end of the year, there's -- the product roadmap is chock-full, and I think you'll all be very excited with some of the things that we're going to be launching.

Operator

Your next question is from George Askew with Stifel.

George I. Askew - Stifel, Nicolaus & Co., Inc., Research Division

In China, you mentioned that you've increased the investment in sales and marketing which soaked up a bit of the -- was soaked up by the revenue, a little bit of revenue, I guess, in the quarter. What -- obviously, sales and marketing people are out there selling and hopefully generating revenue. When should we see some revenue generated by the people you've been hiring -- you hired in the quarter? And what are they selling?

David Liu

Sure. So we're making some really good progress in China. And it's actually very exciting what the team is sort of coalescing around. I would say, at this point, we are the #1 luxury brand in weddings. The local domestic competitors are really good at creating, what I would call like kind of, discount classified message board type experiences. But for most of the real brand marketers, we are the destination for them to reach this demo. We talked a little bit about the magazine that we launched in Beijing. The second issue came out. It has grown significantly, primarily because the local vendors in Beijing have recognized this as an extraordinary marketing opportunity and it's a beautiful product. We're in discussions now with expanding that into second- and third-tier cities. And so as we begin to ramp that up, we should be able to start seeing some revenue contributions as that grows. The other thing that we launched in the end of last year was the sort of a workshop. And what we realized is that there is a real vacuum of information when it comes to the kind of trade side. And we had launched this workshop to try to bring in -- I think, the target our team had was to try to bring in 200 wedding planners from around the country to -- and we were going to demonstrate the techniques of some of the top and high-end wedding planners from Beijing and Shanghai over a couple of days. We had close to 900 people come from all around the country and we have people now asking us to launch this workshop in other provinces. So we actually see the opportunity to build out sort of a B2B service offering to engage more wedding vendors with our brand there as being a great opportunity that double sells nicely with the extension of our print product. Now keep in mind, the print product is actually creating valuable online inventory because, with the print product, comes I think what we call the Ai Jie-preferred vendor listings program that the sales force is selling. So it's -- you measure the progress in China in baby steps. But I would say, over the last 2, 3 years, the teams have really been able to get some momentum, not only with driving traffic, but also beginning to build the brand and creating a very legitimate and reputable brand in these local markets.

Operator

At this time, there are no further questions. Are there any further remarks?

Malindi Davies

Yes. We like to thank you again for joining us this afternoon. Our upcoming conference schedule is posted on the Investor Relations section of our website. If you have missed any part of today's call, you could access the replay of the entire conference call in the Investor Relations section of the company's website at xogroupinc.com, or at (855) 859-2056, conference ID 60012012. If you have any additional questions, please don't hesitate to contact us at ir@xogrp.com. Thank you.

Operator

Thank you. This concludes today's conference call. You may now disconnect.

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