– Ancestry.com Subscriber Growth of 26% Year-Over-Year
–
– Total Revenue Up 21% Year-Over-Year –
– Raises FY 2010 Outlook –
Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family
history resource, today reported financial results for the quarter
ended March 31, 2010.
"We are off to an excellent start to 2010, giving us visibility
to growth rates that should exceed our prior expectations for the
year," said Tim Sullivan, Chief Executive Officer of Ancestry.com.
"The core Ancestry.com business displayed good momentum, with
strong subscriber addition trends throughout the quarter, which
were further lifted at quarter's end by the successful NBC family
history series Who Do You Think You Are?. Importantly, the
quality of our subscriber base appears to be solid, evidenced by
our second sequential quarter of decreased monthly churn and
encouraging trends in engagement. As we continue to build the
business in 2010, we are focusing on activities designed to enhance
the subscriber's experience, including enhancement of our content
collection, site functionality and user tools."
Ancestry.com Web Sites Highlights
-
Subscribers totaled 1,212,000 as of March 31, 2010, a 26%
increase over Q1 2009 and a 14% increase over Q4 2009.
-
Subscriber additions were 279,000 in Q1 2010, a 48% increase
over Q1 2009 and a 69% increase over Q4 2009, driven by the success
of marketing programs throughout the quarter and supported by the
launch of Who Do You Think You Are? late in the quarter.
-
Monthly Subscriber Churn1 decreased to 3.3% in Q1
2010, compared to 4.3% in Q1 2009 and 3.6% in Q4 2009.
-
Subscriber acquisition cost2 in Q1 2010 was $69.57,
compared to $62.23 in Q1 2009 and $85.21 in Q4 2009.
-
Average Monthly Revenue per Subscriber3 in Q1 2010
was $16.70, compared to $16.46 in Q1 2009 and $16.67 in Q4
2009.
First Quarter 2010 Financial Highlights
-
Total revenue for the first quarter of 2010 was
$64.4 million, an increase of 21.0% over $53.2 million in the prior
year period, driven by growth in our core Ancestry.com Web sites of
23.4%.
-
Operating income for the first quarter of 2010
was $7.6 million, compared to $6.6 million in the prior year
period.
-
Adjusted EBITDA4 for the first
quarter of 2010 was $17.0 million, compared to $16.5 million in the
first quarter of 2009. Adjusted EBITDA margin for the first quarter
of 2010 was 26.4%, compared to 31.0% in the first quarter of 2009.
As anticipated, the decrease in adjusted EBITDA margin was due to
the timing delay between marketing expenditures related to Who
Do You Think You Are? and revenue recognition for new
subscribers generated by the program.
-
Net income was $4.0 million, or $0.08 per fully
diluted share, for the first quarter of 2010 compared to $3.5
million, or $0.09 per fully diluted share, in the first quarter of
2009.
-
Free cash flow5 totaled $11.4
million in the first quarter of 2010 compared to $8.0 million in
the prior year period.
-
Balance sheet As of March 31, 2010, cash, cash
equivalents, and short-term investments were $128.0 million and
total debt was $97.2 million.
Business Outlook
The Company's financial and operating expectations for the
second quarter and full year 2010 are as follows:
Second Quarter 2010
-
Revenue in the range of $70.0 to $72.0 million
-
Adjusted EBITDA in the range of $20.0 to $22.0 million
-
Ending subscribers of approximately 1,280,000
Full Year 2010
-
Revenue in the range of $275 to $280 million (increased from the
previously expected range of $250 to $255 million)
-
Adjusted EBITDA in the range of $90 to $95 million (increased
from the previously expected range of $83 to $85 million)
-
Ending subscribers in the range of 1,280,000 to 1,300,000
(increased from the previously expected range of 1,200,000 to
1,225,000)
Conference Call & Webcast
Ancestry.com will host a conference call with analysts and
investors today at 3:00 p.m. MT (5:00 p.m. ET). A live webcast of
the conference call will be available at the investor relations
section of the Ancestry.com Web site, http://ir.ancestry.com/.
Participants can also access the conference call by dialing
888-686-9705 (within the United States), or 913-312-1432
(international callers) approximately ten minutes prior to the
start time.
A replay of the call will be available approximately two hours
after the call has ended and will be available through Thursday,
May 6, 2010. To access the replay, dial 888-203-1112 (within the
United States), or 719-457-0820 (international callers) and enter
the replay passcode 6447851. The webcast replay will also be
available for 12 months on the investor relations section of the
Ancestry.com Web site, http://ir.ancestry.com/, under Events and
Presentations.
Use of Non-GAAP Measures
Management believes that adjusted EBITDA and free cash flow are
useful measures of operating performance because they exclude items
that we do not consider indicative of our core performance. In the
case of adjusted EBITDA, we adjust net income for such things as
interest, taxes, stock based compensation and certain non-cash and
non-recurring items. Free cash flow subtracts from adjusted
EBITDA the capitalization of content database costs, capital
expenditures and cash paid for income taxes and interest
expense. However, these non-GAAP measures should be considered
in addition to, not as a substitute for or superior to, net income
and net cash provided by operating activities, or other financial
measures prepared in accordance with GAAP. A reconciliation to the
GAAP equivalents of these non-GAAP measures is contained in tabular
form on the attached unaudited financial statements.
Our management uses adjusted EBITDA and free cash flow as
measures of operating performance; for planning purposes, including
the preparation of our annual operating budget; to allocate
resources to enhance the financial performance of our business; to
evaluate the effectiveness of our business strategies; to provide
consistency and comparability with past financial performance; to
facilitate a comparison of our results with those of other
companies; and in communications with our board of directors
concerning our financial performance. We also use adjusted EBITDA
and have used free cash flow as factors when determining
management's incentive compensation.
About Ancestry.com
Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online
family history resource, has digitized and put online over four
billion records over the past 13 years. Ancestry users have created
nearly 16 million family trees containing over 1.6 billion
profiles. Ancestry.com has local Web sites directed at nine
countries, including its flagship Web site at
http://www.ancestry.com.
Forward-looking Statements
This press release contains forward-looking statements. These
statements relate to future events or to future financial
performance and involve known and unknown risks, uncertainties, and
other factors that may cause our actual results, levels of
activity, performance, or achievements to be materially different
from those anticipated in these forward-looking statements. In some
cases, you can identify forward-looking statements by the use of
words such as "appears," "may," "designed," "expect," "intend,"
"focus," "seek," "anticipate," "believe," "estimate," "predict,"
"potential," "should," or "continue" or the negative of these terms
or other comparable terminology. These statements include
statements describing our subscriber base, our activities to
enhance subscribers' experience and our business outlook. You
should not place undue reliance on forward-looking statements
because they involve known and unknown risks, uncertainties and
other factors that are, in some cases, beyond our control and that
could materially affect actual results, levels of activity,
performance, or achievements.
Factors that could materially affect actual results, levels of
activity, performance or achievements, and our ability to execute
on our business strategy include those listed under the caption
"Risk Factors" of the Ancestry.com Annual Report on Form 10-K for
the year ended December 31, 2009.
We assume no obligation to publicly update or revise these
forward-looking statements for any reason, whether as a result of
new information, future events, or otherwise.
1 Monthly churn is a measure representing the
number of subscribers that cancel in the quarter divided by the sum
of beginning subscribers and subscriber additions during the
quarter. To arrive at monthly churn, we divide the results by
three.
2 Subscriber acquisition cost is external
marketing and advertising expense, divided by total subscriber
additions in the period.
3 Average monthly revenue per subscriber is total
subscription revenues earned in the period from subscriptions to
the Ancestry.com Web sites divided by the average number of
subscribers in the period, divided by the number of months in the
period. The average number of subscribers for the period is
calculated by taking the average of the beginning and ending number
of subscribers for the period.
4 Adjusted EBITDA is defined as net income (loss)
plus net interest (income) expense; income tax expense; non-cash
charges including depreciation, amortization, impairment of
intangible assets and stock-based compensation expense; and other
(income) expense.
5 Free cash flow subtracts from adjusted EBITDA
capitalization of content database costs, capital expenditures and
cash paid for income taxes and interest expense.
|
Ancestry.com Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(in thousands)
|
|
|
December 31,
|
March 31,
|
|
|
2009
|
2010
|
|
|
|
(unaudited)
|
|
Assets
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$ 66,941
|
$ 97,666
|
|
Restricted cash
|
2,181
|
2,252
|
|
Short-term investments
|
33,331
|
30,315
|
|
Accounts receivable, net
|
5,860
|
5,208
|
|
Income tax receivable
|
2,017
|
473
|
|
Deferred income taxes
|
8,797
|
8,797
|
|
Prepaid expenses and other current assets
|
5,380
|
3,871
|
|
Total current assets
|
124,507
|
148,582
|
|
Property and equipment, net
|
19,430
|
17,973
|
|
Content database costs, net
|
49,650
|
50,609
|
|
Intangible assets, net
|
41,484
|
37,805
|
|
Goodwill
|
285,466
|
285,466
|
|
Other assets
|
2,811
|
2,538
|
|
Total assets
|
$ 523,348
|
$ 542,973
|
|
Liabilities and stockholders' equity
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$ 6,877
|
$ 7,743
|
|
Accrued expenses
|
18,850
|
21,916
|
|
Escrow liability
|
1,763
|
1,819
|
|
Deferred revenues
|
69,711
|
84,145
|
|
Current portion of long-term debt
|
28,416
|
28,445
|
|
Total current liabilities
|
125,617
|
144,068
|
|
Long-term debt, less current portion
|
71,609
|
68,722
|
|
Deferred income taxes
|
30,117
|
28,967
|
|
Other long-term liabilities
|
1,115
|
1,115
|
|
Total liabilities
|
228,458
|
242,872
|
|
Commitments and contingencies
|
|
|
|
Stockholders' equity:
|
|
|
|
Common stock
|
42
|
42
|
|
Additional paid-in capital
|
272,513
|
273,732
|
|
Accumulated other comprehensive loss
|
(41)
|
(11)
|
|
Retained earnings
|
22,376
|
26,338
|
|
Total stockholders' equity
|
294,890
|
300,101
|
|
Total liabilities and stockholders' equity
|
$ 523,348
|
$ 542,973
|
|
|
|
Ancestry.com Inc.
|
|
Condensed Consolidated Statements of
Operations
|
|
(in thousands, except share and per share
data)
|
|
|
|
|
|
|
3 Months Ended
|
|
|
March 31, 2009
|
March 31, 2010
|
|
Revenues:
|
(unaudited)
|
|
Subscription revenues
|
$ 49,184
|
$ 59,560
|
|
Product and other revenues
|
4,049
|
4,861
|
|
Total revenues
|
53,233
|
64,421
|
|
Costs of revenues:
|
|
|
|
Cost of subscription revenues
|
9,756
|
11,501
|
|
Cost of product and other revenues
|
1,514
|
1,494
|
|
Total cost of revenues
|
11,270
|
12,995
|
|
Gross profit
|
41,963
|
51,426
|
|
Operating expenses:
|
|
|
|
Technology and development
|
8,856
|
9,927
|
|
Marketing and advertising
|
14,921
|
22,446
|
|
General and administrative
|
7,563
|
7,742
|
|
Amortization of acquired intangible assets
|
4,058
|
3,679
|
|
Total operating expenses
|
35,398
|
43,794
|
|
Income from operations
|
6,565
|
7,632
|
|
Interest expense
|
(1,841)
|
(1,216)
|
|
Interest income
|
131
|
63
|
|
Other income, net
|
8
|
9
|
|
Income before income taxes
|
4,863
|
6,488
|
|
Income tax expense
|
(1,360)
|
(2,526)
|
|
Net income
|
$ 3,503
|
$ 3,962
|
|
|
|
|
|
Net income per common share
|
|
|
|
Basic
|
$ 0.09
|
$ 0.09
|
|
Diluted
|
$ 0.09
|
$ 0.08
|
|
Weighted average common shares outstanding
|
|
|
|
Basic
|
38,226,190
|
42,458,850
|
|
Diluted
|
39,138,631
|
47,454,170
|
|
|
|
|
|
Reconciliation of adjusted EBITDA and free cash flow to
net income:
|
|
|
Net Income
|
$ 3,503
|
$ 3,962
|
|
Interest expense, net
|
1,710
|
1,153
|
|
Income tax expense
|
1,360
|
2,526
|
|
Depreciation expense
|
2,643
|
2,864
|
|
Amortization expense
|
5,770
|
5,513
|
|
Stock-based compensation
|
1,526
|
1,004
|
|
Other income, net
|
(8)
|
(9)
|
|
Adjusted EBITDA
|
$ 16,504
|
$ 17,013
|
|
Capitalization of content database costs
|
(1,786)
|
(2,792)
|
|
Purchase of property and equipment
|
(2,605)
|
(1,407)
|
|
Cash paid for interest
|
(4,028)
|
(1,001)
|
|
Cash paid for income taxes
|
(37)
|
(403)
|
|
Free cash flow
|
$ 8,048
|
$ 11,410
|
|
|
|
Ancestry.com Inc.
|
|
Other Data
|
|
|
|
|
|
|
|
|
|
March 31, 2009
|
June 30, 2009
|
September 30, 2009
|
December 31, 2009
|
March 31, 2010
|
|
Total Subscribers
|
959,411
|
990,959
|
1,028,180
|
1,066,123
|
1,211,978
|
|
Subscriber additions
|
188,561
|
160,394
|
159,795
|
165,241
|
279,100
|
|
Monthly churn
|
4.3%
|
3.8%
|
3.6%
|
3.6%
|
3.3%
|
|
Subscriber acquisition cost
|
$ 62.23
|
$ 73.27
|
$ 70.55
|
$ 85.21
|
$ 69.57
|
|
Average monthly revenue per subscriber
|
$ 16.46
|
$ 16.42
|
$ 16.48
|
$ 16.67
|
$ 16.70
|
CONTACT: Brainerd Communicators, Inc.
Investors:
Corey Kinger
(212) 986-6667
investorrelations@ancestry.com
Media:
Ray Yeung
yeung@braincomm.com
Jo Anne Barrameda
barrameda@braincomm.com
(212) 986-6667
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