Lifestyle website brand XO Group (NYSE:XOXO) reported earnings on Tuesday July 31 before the bell, which sent the stock markedly lower in premarket trade. This earnings season has been a challenging one as investors harshly punished misses and contained their excitement over beats, and XOXO stock was no exception with the share price falling more than 10% in premarket trade after second-quarter results that didn’t impress. As of this writing, however, XOXO has already gained back some of the loss.

XO reported EPS of $0.19 on revenue of $43.2 million, compared to analysts’ expectations for earnings of $0.19 per share on revenue of $42.9 million. Overall, the results met expectations but investors punished XOXO stock anyway. Despite the market’s reaction, CEO Mike Steib was positive about the results, saying that the “local marketplace business delivered strong results again” and “products drove increased engagement between our couples and business partners.”

Busy Year for XOXO Stock

The firm has had a busy quarter pushing out new features on The Knot, its wedding planning site. These features appear to have made a significant impact on XO group’s overall success. Earlier this year, the company announced new Alexa Skills that would allow couples using the website to get live updates on their wedding planning process through Amazon.com Inc.’s (NASDAQ:AMZN) Alexa voice assistant. The voice commands allow Alexa to update couples on things like to-do lists, RSVPs and how much is left in their wedding budget. 

The Alexa Skills are expected to make the planning process even easier, add to The Knot’s value proposition for newly engaged couples, and make the site the only wedding-planning option that stretches across mobile, desktop and smart speaker devices.

While the integration with Alexa is certainly a benefit, it’s the firm’s All-in-One Wedding Planner and new Wedding Vision feature that investors have been most excited about. The Wedding Vision essentially gives couples a way to define their style and create a vision board depicting the type of wedding they want. While such ‘vision boards’ have become popular for brides on Pinterest, finding cakes, venues, flowers, etc. that correspond with those pinned from all over the world on Pinterest within a couple’s location and price point can be frustrating. The Knot is able to use its huge network of local vendors in order to find those that correspond to the kind of wedding a couple has defined using the site’s Wedding Vision feature.

So far the feature appears to be drawing couples in- the firm has seen membership on The Knot rise 20% over the past year and 66% of those who joined used the Wedding Vision feature. Not only does the feature help brides, it also gives vendors a reason to work with The Knot as well. Vendors not only get a clearer idea of what a couple is looking for, but it allows them to create faster, more accurate quotes for their services.

New Management

The second quarter also saw XO group bring on Zohar Yardeni as Executive Vice President, Product. Yardeni was most recently a Product Manager at Facebook and his experience crafting meaningful user experience is seen helping XO continue to develop its portfolio of sites to deliver unparalleled service for both users and vendors. 

It will be interesting to see what kind of impact Yardeni will have during the back half of the year and whether or not XO’s other sites — The Bump and GigMasters — will roll out new features similar to what we’ve seen with The Knot this year. 

XOXO Forward Guidance

Management stuck with its aggressive long-term financial targets, saying the firm hopes to deliver double digit revenue growth rates and gross margins between 90-95%, which translates into adjusted EBITDA margins between 20% and 22%. This quarter the firm missed the mark with revenue growth of just 2.5%  but was able to turn in adjusted margins of 24.1%. 

Moving forward investors will be looking for XO’s new offerings to continue to gain momentum, attract new users and have more of an impact on the firm’s overall revenue.

XOXO stock is also likely to be helped by economic tailwinds as Americans continue to spend more of their disposable income and economic conditions remain healthy. However, any economic downturn could negatively impact the brand as it would cause people to tighten their purse strings and eliminate non-essential spending. 

As of this writing Laura Hoy was long AMZN.

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