Is it too late to object to the proposed pairing of your portfolio and The Knot (NASDAQ:KNOT)?

The online wedding-planning specialist posted disappointing third-quarter results last night. Earnings of $0.09 per share fell short of both the $0.11 a share it earned a year earlier and the $0.10 a share that broken-hearted analysts were hoping for. The company has now missed Wall Street's profit targets in two of the past three quarters. (Their second quarter managed to break the trend.)

Revenue climbed 35% higher to hit $25 million. However, $3.7 million of that came from the Wedding Channel acquisition that was completed toward the end of last year's third quarter. In other words, roughly half of that top-line gain is not organic.

The Knot is also struggling with near-term challenges. It has had a tough time attracting techies, with several unfilled IT and engineering job openings forcing the company to push out plans for website enhancements. It's also suffering from a higher cancellation rate among its lead-seeking analysts, though that's probably the result of the company flying too close to the sun.

The Knot has been aggressively ramping up the rates it charges its advertisers. Armed with sponsor anecdotes that show The Knot is delivering their best leads -- yet the website remains a small portion of their overall marketing budget -- The Knot has had double-digit percentage price increases in each of the past four years.

Price Hike









*Source: The Knot third-quarter conference call.

That 30% increase in June is clearly a doozy. Top lead-generating companies like Travelzoo (NASDAQ:TZOO) and Bankrate (NASDAQ:RATE) have a delicate balance between attracting travel and financial institutions, respectively, and making sure they can milk as much out of them as possible.

After acquiring the online bridal registry titan Wedding Channel, The Knot must have felt as if it had cornered the market. That's inopportune cockiness. Sure, that was good enough to land an exclusive online bridal registry deal with Macy's (NYSE:M) back in April, but wedding service providers weren't born yesterday. Conde Nast's and GE's (NYSE:GE) iVillage create their own leads through paid search players like Google.

It's a shame, because The Knot still has some admirable qualities. Don't let the bottom-line slip fool you, though. Pre-tax profits actually climbed 55% higher. It just doesn't translate that way on the bottom line because the company had tax loss carryforwards a year ago and has tacked on 10% more shares outstanding over the past year. So operating margins widened significantly during the period, and that will serve The Knot well, as future financials are stacked against similarly taxed numbers.

So let's stick with The Knot for now. There's something about "in sickness and in health" in the vows somewhere. Besides, The Knot isn't as sick as it seems.

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Longtime Fool contributor Rick Munarriz regrets that wasn't around when he got married years ago. If it had been, he could have had a punctual person working the video camera that day. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.