- Ancestry.com Subscriber Growth of 32%
Year-Over-Year
- Total Revenue Up 36% 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 June 30, 2010.
"Greater than anticipated subscriber additions drove
impressive performance in the quarter and boosted our revenue and
EBITDA expectations for the full year," said Tim Sullivan, Chief
Executive Officer of Ancestry.com. "It's particularly noteworthy
that retention rates and customer behavior trends are remaining
consistent despite the rapid subscriber growth in the first half of
2010. As we move forward, we will continue our focus on building
awareness of the family history category, improving the customer
experience and adding important content collections to
Ancestry.com."
Ancestry.com Web Sites
Highlights
- Subscribers totaled 1,311,000 as of June 30, 2010, a 32%
increase over the end of Q2 2009 and an 8% increase over the end of
Q1 2010.
- Gross Subscriber additions were 291,000 in Q2 2010, an 81%
increase over Q2 2009 and a 4% increase over Q1 2010, driven by the
continued success of marketing programs and the airing of Who Do
You Think You Are? early in the quarter.
- Monthly Subscriber Churn1 increased to 4.3% in Q2 2010,
compared to 3.8% in Q2 2009 and 3.3% in Q1 2010, as expected,
reflecting the large number of new monthly subscribers added in the
first half of 2010.
- Subscriber acquisition cost2 in Q2 2010 was $74.04, compared to
$73.27 in Q2 2009 and $69.57 in Q1 2010.
- Average Monthly Revenue per Subscriber3 in Q2 2010 was $18.02,
compared to $16.42 in Q2 2009 and $16.70 in Q1 2010.
Second Quarter 2010 Financial Highlights
- Total revenue for the second quarter of 2010 was $74.5 million,
an increase of 36.4% over $54.6 million in the prior year period,
driven by growth in our core Ancestry.com Web sites of 41.9%.
- Operating income for the second quarter of 2010 was $15.8
million, compared to $8.7 million in the prior year period.
- Adjusted EBITDA4 for the second quarter of 2010 was $25.3
million, compared to $18.4 million in the second quarter of 2009.
Adjusted EBITDA margin for the second quarter of 2010 was 33.9%,
compared to 33.8% in the second quarter of 2009.
- Net income was $8.5 million, or $0.18 per fully diluted share,
for the second quarter of 2010 compared to $4.7 million, or $0.12
per fully diluted share, in the second quarter of 2009.
- Free cash flow5 totaled $14.4 million in the second quarter of
2010 compared to $6.7 million in the prior year period.
- Balance sheet As of June 30, 2010, cash, cash equivalents, and
short-term investments were $134.0 million and total debt was $76.2
million.
Recent Business Highlights
- The Company closed the acquisition of Genline.se, the leading
Swedish family history Web site. At closing, Genline had more than
17,000 paying members with access to 26 million pages of digitized
Swedish church records spanning more than 400 years from the 17th
to the 20th century.
- NBC announced its renewal of Who Do You Think You Are? for a
second season, which is currently expected to air in the first
quarter of 2011.
- Season 1 of Who Do You Think You Are? is currently expected to
air in re-runs starting on August 13, 2010.
- The Company added several new important content collections,
including U.S. Land Ownership Atlases from 1860-1920 and the UK
Waterloo Medal Roll from 1815.
Business Outlook
The Company's financial and operating expectations for the third
quarter and full year 2010 are as follows:
Third Quarter 2010
- Revenue in the range of $75.0 to $77.0 million
- Adjusted EBITDA in the range of $24.0 to $26.0 million
- Ending subscribers of approximately 1,345,000
Full Year 2010
- Revenue in the range of $290 to $295 million (increased from
the previously expected range of $275 to $280 million)
- Adjusted EBITDA in the range of $93 to $97 million (increased
from the previously expected range of $90 to $95 million)
- Ending subscribers in the range of 1,360,000 to 1,370,000
(increased from the previously expected range of 1,280,000 to
1,300,000)
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). An accompanying
slide presentation and 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 888-668-1643 (within the
United States), or 913-312-6688 (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 Friday,
August 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 7549001. 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) is the world's largest online
family history resource, with more than one million paying
subscribers. More than 5 billion records have been added to the
site in the past 13 years. Ancestry users have created more than 18
million family trees containing over 1.8 billion profiles.
Ancestry.com has local Web sites directed at nine countries,
including its flagship Web site at 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," "continue" or "work" or the negative of
these terms or other comparable terminology. These statements
include statements describing our subscriber base, our activities
to enhance subscribers' experience, our business outlook and our
opportunities and prospects for growth. 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 an inability to continue to add
subscribers through our marketing programs or integrations or
inability to add subscribers at a cost that would support or
increase margins, increase in churn, inability to provide
additional products or services to allow for increases in per
subscriber revenues, inability to acquire attractive additional
content and other "Risk Factors" described from time to time in our
filings with the Securities and Exchange Commission.
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, the results are divided by
three.
2 Subscriber acquisition cost is external marketing and
advertising expense, divided by gross subscriber additions in the
quarter.
3 Average monthly revenue per subscriber is total subscription
revenues earned in the quarter from subscriptions to the
Ancestry.com Web sites divided by the average number of subscribers
in the quarter, divided by three. The average number of subscribers
for the quarter is calculated by taking the average of the
beginning and ending number of subscribers for the
quarter.
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. |
Consolidated Balance
Sheets |
(in
thousands) |
|
June 30, |
December 31, |
|
2010 |
2009 |
Assets |
(unaudited) |
|
Current assets: |
|
|
Cash and cash equivalents |
$ 103,417 |
$ 66,941 |
Restricted cash |
2,351 |
2,181 |
Short-term investments |
30,535 |
33,331 |
Accounts receivable, net |
4,925 |
5,860 |
Income tax receivable |
473 |
2,017 |
Deferred income taxes |
9,176 |
8,797 |
Prepaid expenses and other current
assets |
3,510 |
5,380 |
Total current assets |
154,387 |
124,507 |
Property and equipment, net |
17,454 |
19,430 |
Content database costs, net |
51,130 |
49,650 |
Intangible assets, net |
34,126 |
41,484 |
Goodwill |
285,206 |
285,466 |
Other assets |
2,142 |
2,811 |
Total assets |
$ 544,445 |
$ 523,348 |
Liabilities and stockholders' equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 9,339 |
$ 6,877 |
Accrued expenses |
21,019 |
18,850 |
Escrow liability |
1,883 |
1,763 |
Deferred revenues |
88,799 |
69,711 |
Current portion of long-term
debt |
10,395 |
28,416 |
Total current liabilities |
131,435 |
125,617 |
Long-term debt, less current
portion |
65,835 |
71,609 |
Deferred income taxes |
27,859 |
30,117 |
Other long-term liabilities |
1,115 |
1,115 |
Total liabilities |
226,244 |
228,458 |
Commitments and contingencies |
|
|
Stockholders' equity: |
|
|
Common stock |
43 |
42 |
Additional paid-in capital |
283,290 |
272,513 |
Accumulated other comprehensive
income (loss) |
7 |
(41) |
Retained earnings |
34,861 |
22,376 |
Total stockholders' equity |
318,201 |
294,890 |
Total liabilities and stockholders'
equity |
$ 544,445 |
$ 523,348 |
|
Ancestry.com
Inc. |
Consolidated Statements
of Operations |
(in thousands, except
per share data) |
|
|
|
|
|
|
3 Months
Ended |
6 Months
Ended |
|
June 30, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
Revenues: |
(unaudited) |
(unaudited) |
Subscription revenues |
$ 70,544 |
$ 50,719 |
$ 130,104 |
$ 99,903 |
Product and other revenues |
3,916 |
3,854 |
8,777 |
7,903 |
Total revenues |
74,460 |
54,573 |
138,881 |
107,806 |
Costs of revenues: |
|
|
|
|
Cost of subscription revenues |
11,228 |
9,966 |
22,729 |
19,722 |
Cost of product and other
revenues |
1,280 |
1,310 |
2,774 |
2,824 |
Total cost of revenues |
12,508 |
11,276 |
25,503 |
22,546 |
Gross profit |
61,952 |
43,297 |
113,378 |
85,260 |
Operating expenses: |
|
|
|
|
Technology and development |
9,992 |
8,692 |
19,919 |
17,548 |
Marketing and advertising |
24,490 |
15,065 |
46,936 |
29,986 |
General and administrative |
8,032 |
6,777 |
15,774 |
14,340 |
Amortization of acquired intangible
assets |
3,679 |
4,055 |
7,358 |
8,113 |
Total operating expenses |
46,193 |
34,589 |
89,987 |
69,987 |
Income from operations |
15,759 |
8,708 |
23,391 |
15,273 |
Interest expense |
(1,493) |
(1,515) |
(2,709) |
(3,356) |
Interest income |
76 |
567 |
139 |
698 |
Other income (expense), net |
(12) |
2 |
(3) |
10 |
Income before income taxes |
14,330 |
7,762 |
20,818 |
12,625 |
Income tax expense |
(5,807) |
(3,082) |
(8,333) |
(4,442) |
Net income |
$ 8,523 |
$ 4,680 |
$ 12,485 |
$ 8,183 |
|
|
|
|
|
Net income per common share |
|
|
|
|
Basic |
$ 0.20 |
$ 0.12 |
$ 0.29 |
$ 0.21 |
Diluted |
$ 0.18 |
$ 0.12 |
$ 0.26 |
$ 0.21 |
Weighted average common shares
outstanding |
|
|
|
|
Basic |
42,764 |
38,287 |
42,612 |
38,257 |
Diluted |
48,015 |
40,159 |
47,754 |
39,625 |
|
|
|
|
|
Reconciliation of
adjusted EBITDA and free cash flow to net income: |
|
|
|
Net Income |
$ 8,523 |
$ 4,680 |
$ 12,485 |
$ 8,183 |
Interest expense, net |
1,417 |
948 |
2,570 |
2,658 |
Income tax expense |
5,807 |
3,082 |
8,333 |
4,442 |
Depreciation expense |
2,740 |
2,687 |
5,604 |
5,330 |
Amortization expense |
5,509 |
5,771 |
11,022 |
11,541 |
Stock-based compensation |
1,262 |
1,277 |
2,266 |
2,803 |
Other income (expense), net |
12 |
(2) |
3 |
(10) |
|
|
|
|
|
Adjusted EBITDA |
$ 25,270 |
$ 18,443 |
$ 42,283 |
$ 34,947 |
Capitalization of content database
costs |
(2,349) |
(1,886) |
(5,141) |
(3,672) |
Purchase of property and
equipment |
(2,221) |
(3,546) |
(3,628) |
(6,151) |
Cash paid for interest |
(476) |
(1,388) |
(1,477) |
(5,416) |
Cash paid for income taxes |
(5,778) |
(4,919) |
(6,181) |
(4,956) |
Free cash flow |
$ 14,446 |
$ 6,704 |
$ 25,856 |
$ 14,752 |
|
Ancestry.com
Inc. |
Other
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
March 31, 2010 |
December 31,
2009 |
September 30,
2009 |
June 30, 2009 |
March 31, 2009 |
Total Subscribers |
1,310,562 |
1,211,978 |
1,066,123 |
1,028,180 |
990,959 |
959,411 |
Subscriber additions |
290,589 |
279,100 |
165,241 |
159,795 |
160,394 |
188,561 |
Monthly churn |
4.3% |
3.3% |
3.6% |
3.6% |
3.8% |
4.3% |
Subscriber acquisition
cost |
$ 74.04 |
$ 69.57 |
$ 85.21 |
$ 70.55 |
$ 73.27 |
$ 62.23 |
Average monthly revenue per
subscriber |
$ 18.02 |
$ 16.70 |
$ 16.67 |
$ 16.48 |
$ 16.42 |
$ 16.46 |
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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