KNOT INC

CIK:0001062292|SEC Filings

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net revenue	$ 43,057	$ 40,609	$ 124,516	$ 120,351
Costs and expenses (exclusive of depreciation and amortization, shown separately below):
Cost of revenue	1,793	2,307	6,050	7,133
Product and content development	12,620	11,131	35,445	34,137
Sales and marketing	13,187	12,197	38,967	39,761
General and administrative	9,075	7,809	23,307	23,740
Depreciation and amortization	1,350	1,565	4,664	5,234
Total costs and expenses	38,025	35,009	108,433	110,005
Income from operations	5,032	5,600	16,083	10,346
Loss in equity interests	(24)	(33)	(67)	(1,204)
Interest and other income, net	246	161	657	359
Income before income taxes	5,254	5,728	16,673	9,501
Income tax expense	960	2,148	3,482	3,225
Net income	$ 4,294	$ 3,580	$ 13,191	$ 6,276
Net income per share:
Basic earnings per share (in dollars per share)	$ 0.17	$ 0.14	$ 0.52	$ 0.25
Diluted earnings per share (in dollars per share)	$ 0.17	$ 0.14	$ 0.51	$ 0.25
Weighted average number of shares used in calculating net income per share:
Basic (in shares)	25,220	24,858	25,130	25,054
Diluted (in shares)	26,011	25,124	25,717	25,353
Restricted stock
Weighted average number of shares used in calculating net income per share:
Dilutive securities included in dilutive shares (in shares)	339	226	306	262
Options
Weighted average number of shares used in calculating net income per share:
Dilutive securities included in dilutive shares (in shares)	452	40	278	35
Employee Stock Purchase Plan
Weighted average number of shares used in calculating net income per share:
Dilutive securities included in dilutive shares (in shares)	0	0	3	2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 13,191	$ 6,276
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,664	5,234
Stock-based compensation expense	5,995	6,037
Deferred income taxes	987	1,781
Allowance for doubtful accounts	141	1,164
Loss in equity interests	67	1,204
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable, net	(2,193)	1,691
Increase in prepaid expenses and other assets, net	(84)	(871)
Decrease in accrued compensation and employee benefits	(844)	(2,045)
Increase in accounts payable, accrued expenses, and other	3,108	321
Increase/(decrease) in deferred revenue	1,196	(2,442)
Decrease in deferred rent	(580)	(474)
Decrease in other liabilities, net	(974)	(635)
Net cash provided by operating activities	24,674	17,241
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(1,438)	(217)
Additions to capitalized software	(4,813)	(3,346)
Maturity of U.S. Treasury Bills	1,245	1,248
Purchases of U.S. Treasury Bills and Investments	(1,219)	(1,232)
Acquisitions, net of cash acquired	0	(3,150)
Other investing activities	(250)	(113)
Net cash used in investing activities	(6,475)	(6,810)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock	0	(13,322)
Proceeds pursuant to employee stock purchase plans	865	796
Proceeds from exercise of stock options	714	392
Taxes paid related to net share settlements of stock-based compensation awards	(2,830)	(3,204)
Net cash used in financing activities	(1,251)	(15,338)
Increase/(decrease) in cash and cash equivalents	16,948	(4,907)
Cash and cash equivalents at beginning of period	106,092	105,703
Cash and cash equivalents at end of period	$ 123,040	$ 100,796

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 123,040	$ 106,092
Accounts receivable, net	19,427	17,375
Prepaid expenses and other current assets	4,386	5,327
Total current assets	146,853	128,794
Long-term restricted investments	1,181	1,181
Property and equipment, net	13,803	11,829
Intangible assets, net	3,293	4,019
Goodwill	51,438	51,438
Deferred tax assets, net	5,137	6,124
Investments	1,625	1,442
Other assets	907	223
Total assets	224,237	205,050
Current liabilities:
Accrued compensation and employee benefits	6,912	6,611
Accounts payable and accrued expenses	8,044	5,273
Deferred revenue	15,087	13,891
Total current liabilities	30,043	25,775
Deferred rent	2,785	3,365
Other liabilities	802	1,776
Total liabilities	33,630	30,916
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized and zero shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	0	0
Common stock, $0.01 par value; 100,000,000 shares authorized and 25,936,625 and 25,696,796 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	260	258
Additional paid-in capital	185,271	180,695
Retained earnings/(accumulated deficit)	5,076	(6,819)
Total stockholders’ equity	190,607	174,134
Total liabilities and stockholders’ equity	$ 224,237	$ 205,050