XO Group Reports First Quarter 2012 Financial Results

XO Group Inc. (NYSE: XOXO, www.xogroupinc.com), formerly The Knot, Inc., the premier media and technology company devoted to weddings, pregnancy, and everything in between, today reported financial results for the three months ended March 31, 2012.

First Quarter Summary Results

Total revenue for the first quarter was $29.8 million, up 8.1% compared to the prior year. The results were again led by local online advertising, and publishing and other, which grew 20.1% and 15.9%, respectively, year over year. National online advertising declined 3.5%. The e-commerce and registry businesses were also down, 1.7% and 10.2% year over year, respectively.

For the quarter ended March 31, 2012, gross margin improved by 275 basis points over the prior year partially due to improvements in the e-commerce business as it recovered from the inefficiencies related to back-end system improvements initiated last year. The Company’s operating profit was $0.6 million compared to an operating loss of $1.1 million in the prior year quarter. The $1.7 million increase in operating profit was due to revenue growth and improved gross margins across all business lines which were partly offset by an increase in expenses including compensation, investment in Ijie.com in China, and rent. Net income for the quarter was $0.4 million or $0.02 per diluted share, compared to a net loss of $0.7 million or a loss of $0.02 per diluted share in the prior year quarter.

The Company’s balance sheet at March 31, 2012 reflects cash and cash equivalents of $68.7 million, down $8.7 million from $77.4 million at December 31, 2011. Cash declined during the first quarter, primarily due to the repurchase of 1.4 million shares of common stock for $12.7 million and capital expenditures of $0.6 million.

“We entered the year with strong momentum in the local online advertising business and our magazine business, which continued throughout the first quarter, although our national online advertising and e-commerce businesses continue to be challenged. We are working to drive profitable growth across the Company even as we invest in new products for our audience and advertisers,” said Chief Executive Officer David Liu.

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