The two-notch downgrade occurred shortly after The Knot initiated a $670 million debt deal to refinance its $660 million loan and push out its maturity by two and a half years.
In a report Monday, the analysts at Moody's said revenue and earnings have deteriorated considerably over the past year and a half, partly due to evolving search engine traffic patterns, including the growing prevalence of AI-generated search results and reduced user engagement. Moody's projects another revenue decline in 2026 after a 2% drop in 2025, with earnings margins expected to hover in the low 20s.
Permira Holdings LLP owns The Knot, a 30-year-old company whose marketplace links couples organizing weddings to local vendors like florists, photographers, and DJs. Couples are increasingly relying on AI tools to discover and book wedding vendors, squeezing The Knot's marketplace and reducing its appeal to businesses that pay to advertise on the platform. The Moody's analysts also flagged high vendor turnover as a point of concern.
The Knot was founded in the late 1990s as a wedding planning website and has grown into a global events marketplace spanning weddings, baby showers, and other celebrations. The company generates revenue primarily through vendor advertising and premium listings, making it heavily dependent on maintaining strong traffic from search engines.
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Since early 2025, The Knot has appointed a new CEO, CFO, and CTO. Raina Moskowitz, who became CEO in January 2025 after joining from Etsy Inc., cut jobs globally in October during a restructuring that also closed offices in Argentina, Colombia, Peru, Chile, and Uruguay.
"We've entered a new chapter defined by rapid tech transformation and new possibilities for how people create, plan, and connect," Moskowitz wrote in a staff memo posted to the company's website. The company later introduced a ChatGPT app offering personalized vendor recommendations.
The pricing of the new loan reveals the level of risk involved. The new loan's interest rate is 5.25 percentage points over the benchmark, plus an additional 1 percentage point if debt is four times or more EBITDA. That is a wider spread than the previous 3.75 percentage points; Bloomberg data show the old loan slid to 70 cents on the dollar this month from roughly 99 cents late last year.
The Knot and Permira officials chose not to comment.
S&P Global Ratings, meanwhile, kept its B rating on The Knot and projected that revenue would recover in 2026. However, it cautioned that a downgrade could occur if debt remains above seven times earnings, and that declining vendor retention, new investments without corresponding revenue growth, or debt-financed acquisitions or dividend payments to its owner could trigger such an outcome. S&P analysts detailed these concerns in a report Monday.
The outcome may hinge on how The Knot adapts to a landscape where AI is fundamentally changing how couples search for wedding services.
The divergence between Moody's and S&P highlights the uncertainty surrounding The Knot's future. The company's heavy reliance on search traffic makes it particularly vulnerable to shifts in how users discover and compare vendors. With AI-powered search tools becoming more sophisticated, The Knot must find new ways to maintain its relevance and demonstrate value to both couples and the businesses that advertise on its platform. The success of its restructuring efforts and new AI integrations will likely determine whether the company can reverse its downward trajectory or face further financial strain.
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