This summary is based on the fourth quarter fiscal 2006 earnings call conducted by The Knot Inc. (KNOT: chart) on February 13, 2007.

Management:

- Chief Executive Officer and Cofounder:David Liu
- Chief Financial Officer: Richard Szefc

Key Investors Issues

- Net revenue of $21.7 million, was up 70% from $12.8 million a year ago.
- Net income was $14.6 million or 45 cents a share, up 873%.
- Cash generated through operations was $17.7 million and capital expenditures were $360,000.

Full Year Highlights:

- Net revenues increased to $72.7 million from $51.4 million in 2005 representing an increase of 41%.
- Net income was $23.4 million or 82 cents a share, up 484% from $4 million or 16 cents a share in the prior year.
- Cash, cash equivalents and short-term investments were a little over $80 million.

Fourth Quarter Highlights

The firm reported net revenue of $21.7 million, which represented a 70% increase from $12.8 million a year ago, with $5.2 million of this revenue attributable to WeddingChannel, which was acquired in September of this year.

- Net income was $14.6 million or 45 cents a share, up 873% from $1.5 million or 6 cents a share in the prior year on revenue growth and a non-cash income tax benefit of $9.4 million related to the remaining net operating loss carry forwards.
- Online advertising program revenue rose 51% to $11 million, while revenue from national and local advertising programs rose 72% and 40% respectively on increased spending by national account and local vendors and increases in the local vendor base.
- The separate local vendor base expanded by 2000 active clients for a year-over-year increase of 14%.

Merchandise revenue, which is derived from the sale of wedding supplies are retailed to members with $2.8 million, a 64% increase.

- Registry services revenue, which is a new line item in the P&L in 2006 represents commissioned earned from retail partners.
- These commission amounted to $1.9 million of which $1.8 million was contributed through WeddingChannel.
- Publishing and other revenue amounted to $5.9 million as compared to $3.7 million recorded in the comparable period last year, including $1.1 million of revenue generated from the WeddingChannel trade show held in New York in October.

Overall gross margin percentage approximated 81% from 79% for all of 2006, with the margin improvement from the higher mix of registry services revenue.

- Merchandise revenues margins also improved to 53% due to the price increases, new product offerings and higher margins and reduced promotions.
- Publishing and other margins were lower due in part to the continuing investment and production cost for the NestMagazine.
- Total operating expenses before depreciation and amortization were $12.7 million or 59% of total net revenues.
- The firm has completed the review of the opportunities for operating efficiencies and cost synergies in connection with the integration of the two companies.
- It has identified payroll and payroll related cost savings as well as reductions in non-payroll sales and marketing and general and administration expenses of $6 million. sset.

As of December 31, 2006, cash, cash equivalents and short-term investments were a little over $80 million.

- Cash generated through operations was $17.7 million and capital expenditures were $360,000.
- The firm currently estimates that capital expenditures will range from $2.0 to $2.5 million in 2007.

Operational Review:

- The firm spent the better part of 2005 implementing a new commerce platform in inventory management system and new merchandising strategy.
- At the same time, it was defending itself in a patent lawsuit that was draining both time and resources.
- Condé Nast was gearing up to relaunch the website with their three bridal titles under a single consolidated website to attack the firm’s online position intensifying the battle for the attention of the wedding audience online.

The acquisition of WeddingChannel in the third quarter of 2006 was a transformative event, as WeddingChannel is the nation’s leading destination for online registry purchases.

- With an estimated $13 billion spent annually on wedding gifting in the United States close to half of that goes to wedding registries.
- Thus with the WeddingChannel’s current position it represents a huge opportunity for growth.
- Additionally, the acquisition ended the patent lawsuit after the acquisition over 80% of the online wedding media audience come to the firm’s two sites.
- The firm also purchased Lilaguide, the company that publishes 23 regional parenting guides with ratings and reviews of local vendors, services and products accumulated from surveys of parents in each local market.