– Ancestry.com Subscriber Growth of 31%
Year-Over-Year –
– 2010 Total Revenue Up 34%
Year-Over-Year –
– Provides FY 2011 Outlook –
Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family
history resource, today reported financial results for the quarter
and full year ended December 31, 2010.
"2010 was a productive and very successful year for
Ancestry.com. We drove substantial gains in our subscriber base
both domestically and internationally, delivered strong financial
results and executed on our plan to position the Company for
long-term growth," said Tim Sullivan, Chief Executive Officer of
Ancestry.com. "Highlights included investments in our product and
our talent base, the completion of three complementary
acquisitions, and our highly successful partnership with NBC in
bringing Who Do You Think You Are? to the U.S. The hard work
will continue in 2011, but we believe these achievements give us a
solid foundation for growth in the coming year and beyond."
Ancestry.com Web Sites Highlights
- Subscribers totaled 1,395,000 as of December 31, 2010, a 31%
increase over the end of 2009 and up modestly since the end of the
third quarter of 2010.
- Gross subscriber additions were 203,000 in the fourth quarter
of 2010, compared to 165,000 in the fourth quarter of 2009 and
252,000 in the third quarter of 2010.
- Monthly churn[1] was 3.9% in the fourth quarter of 2010,
compared to 3.6% in the fourth quarter of 2009 and 4.0% in the
third quarter of 2010.
- Subscriber acquisition cost[2] in the fourth quarter of 2010
was $96.87, compared to $85.21 in the fourth quarter of 2009 and
$81.58 in the third quarter of 2010.
- Average monthly revenue per subscriber[3] in the fourth quarter
of 2010 was $17.78, compared to $16.67 in the fourth quarter of
2009 and $17.75 in the third quarter of 2010.
Fourth Quarter and Full Year 2010 Financial
Highlights
- Total revenue for the fourth quarter of 2010 was $82.7 million,
an increase of 37.6% over $60.1 million in the fourth quarter of
2009, driven by growth in our core Ancestry.com Web sites revenues
of 41.1%. For the full year 2010, total revenue was $300.9 million,
an increase of 33.8% over the full year 2009, with Ancestry.com Web
site revenue growth of 37.7%.
- Operating income for the fourth quarter of 2010 was $17.9
million, compared to $8.8 million in the fourth quarter of 2009.
For the full year 2010, operating income was $60.6 million compared
to $32.0 million for the full year 2009.
- Adjusted EBITDA[4] for the fourth quarter of 2010 was $29.7
million, compared to $18.7 million in the fourth quarter of 2009.
Adjusted EBITDA margin for the fourth quarter of 2010 was 35.9%,
compared to 31.1% in the fourth quarter of 2009. For the full year
2010, adjusted EBITDA was $101.0 million, compared to $71.6 million
for the full year 2009. Adjusted EBITDA margin for the full year
2010 was 33.6%, up from 31.8% for the full year 2009.
- Net income was $12.6 million, or $0.25 per fully diluted share,
for the fourth quarter of 2010 compared to $9.1 million, or $0.20
per fully diluted share, in the fourth quarter of 2009. For the
full year 2010, net income was $36.8 million, or $0.76 per fully
diluted share, compared to $21.3 million, or $0.51 per fully
diluted share, for the full year 2009. The fourth quarter of
2010 included expenses of $1.0 million ($0.02 per share) associated
with the November 10, 2010 secondary offering.
- Free cash flow[5] totaled $60.4 million for the full year 2010
compared to $29.6 million for the full year 2009.
- Cash, cash equivalents, and short-term investments totaled
$65.5 million as of December 31, 2010.
Recent Business Highlights
- Partnered with NBC for the second season of the Who Do You
Think You Are? television series, which premiered on February 4,
2011.
- Added several new important content collections, including U.S.
Military cadet applications, U.S. Penitentiary records, and early
London parish registers spanning nearly 300 years.
- Released new iPad app, available for free at the iTunes App
Store, allowing consumers a new way to share and update family
trees, old photos and records.
- Released Ancestry.com Family Tree Maker® 2011 for Mac on the
Mac App Store.
Business Outlook
The Company's financial and operating expectations for the first
quarter and full year 2011 are as follows:
First Quarter 2011
- Revenue in the range of $86.0 to $88.0 million
- Adjusted EBITDA in the range of $22.0 to $24.0 million
- Ending subscribers of approximately 1,545,000
Full Year 2011
- Revenue in the range of $370.0 to $375.0 million
- Adjusted EBITDA in the range of $125.0 to $130.0 million
- Ending subscribers of approximately 1,700,000 to 1,725,000
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 888-578-6632 (within the
United States), or 719-325-2226 (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,
March 4, 2011. To access the replay, dial 888-203-1112 (within
the United States), or 719-457-0820 (international callers) and
enter the replay passcode 1368993. 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 the
incentive compensation pool.
About Ancestry.com
Ancestry.com Inc. (Nasdaq:ACOM) is the world's largest online
family history resource, with nearly 1.4 million paying
subscribers. More than 6 billion records have been added to the
site in the past 14 years. Ancestry users have created more than 20
million family trees containing over 2 billion profiles.
Ancestry.com has local Web sites directed at nine countries that
help people discover, preserve and share their family history,
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 reach, our
activities to enhance subscribers' experience, our activities to
promote our products, our business outlook, our leadership position
and our opportunities and prospects for growth, including growth in
revenues, adjusted EBITDA and number of subscribers. These
forward-looking statements are based on information available to us
as of the date of this press release. Forward-looking statements
involve a number of risks and uncertainties that could cause actual
results to differ materially from those anticipated by these
forward-looking statements. Such risks and uncertainties include a
variety of factors, some of which are beyond our control. In
particular, such risks and uncertainties include our continued
ability to attract and retain subscribers; our continued ability to
acquire content and make it available online; difficulties
encountered in integrating acquired businesses and retaining
customers; failure of our products to continue to meet customer
demand; the adverse impact of competitive product announcements;
failure of the second season of Who Do You Think You Are? to yield
results comparable to the first season; failure to achieve
anticipated revenues and operating performance; changes in overall
economic conditions; the loss of key employees; competitors'
actions; pricing and gross margin pressures; inability to control
costs and expenses; and significant litigation.
Information concerning additional factors that could cause
results to differ materially from those projected in the
forward-looking statements is contained under the caption "Risk
Factors" in our Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2010, and in discussions in other of our
SEC filings.
These forward-looking statements should not be relied upon as
representing our views as of any subsequent date and 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.
Ancestry.com
Inc. |
Consolidated Balance
Sheets |
(in
thousands) |
|
December 31, |
December 31, |
|
2010 |
2009 |
Assets |
(unaudited) |
|
Current assets: |
|
|
Cash and cash
equivalents |
$ 65,519 |
$ 66,941 |
Restricted cash |
2,476 |
2,181 |
Short-term
investments |
-- |
33,331 |
Accounts receivable,
net |
6,990 |
5,860 |
Income tax
receivable |
8,094 |
2,017 |
Deferred income
taxes |
3,873 |
8,797 |
Prepaid expenses and
other current assets |
9,243 |
5,380 |
Total current assets |
96,195 |
124,507 |
Property and equipment,
net |
21,252 |
19,430 |
Content database costs,
net |
65,418 |
49,650 |
Intangible assets,
net |
34,281 |
41,484 |
Goodwill |
303,374 |
285,466 |
Other assets |
1,666 |
2,811 |
Total assets |
$ 522,186 |
$ 523,348 |
Liabilities and stockholders' equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 9,451 |
$ 6,877 |
Accrued expenses |
30,785 |
18,850 |
Escrow liability |
6,193 |
1,763 |
Deferred revenues |
89,301 |
69,711 |
Current portion of
long-term debt |
-- |
28,416 |
Total current
liabilities |
135,730 |
125,617 |
Long-term debt, less
current portion |
-- |
71,609 |
Deferred income
taxes |
20,571 |
30,117 |
Other long-term
liabilities |
2,018 |
1,115 |
Total liabilities |
158,319 |
228,458 |
Commitments and
contingencies |
|
|
Stockholders'
equity: |
|
|
Common stock |
45 |
42 |
Additional paid-in
capital |
328,957 |
272,513 |
Accumulated other
comprehensive income (loss) |
643 |
(41) |
Retained earnings |
34,222 |
22,376 |
Total stockholders'
equity |
363,867 |
294,890 |
Total liabilities and
stockholders' equity |
$ 522,186 |
$ 523,348 |
|
Ancestry.com
Inc. |
Consolidated Statements
of Income |
(in thousands, except
per share data) |
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31,
2010 |
December 31,
2009 |
December 31,
2010 |
December 31,
2009 |
Revenues: |
(unaudited) |
(unaudited) |
|
|
Subscription
revenues |
$ 77,327 |
$ 55,201 |
$ 281,670 |
$ 207,707 |
Product and other
revenues |
5,408 |
4,908 |
19,261 |
17,195 |
Total revenues |
82,735 |
60,109 |
300,931 |
224,902 |
Costs of revenues: |
|
|
|
|
Cost of subscription
revenues |
12,413 |
10,428 |
46,409 |
40,183 |
Cost of product and other
revenues |
1,769 |
1,927 |
5,698 |
6,140 |
Total cost of
revenues |
14,182 |
12,355 |
52,107 |
46,323 |
Gross profit |
68,553 |
47,754 |
248,824 |
178,579 |
Operating expenses: |
|
|
|
|
Technology and
development |
11,849 |
9,546 |
42,296 |
36,236 |
Marketing and
advertising |
23,512 |
17,399 |
94,573 |
61,625 |
General and
administrative |
10,475 |
7,971 |
35,390 |
32,540 |
Amortization of acquired
intangible assets |
4,810 |
4,052 |
15,959 |
16,217 |
Total operating
expenses |
50,646 |
38,968 |
188,218 |
146,618 |
Income from operations |
17,907 |
8,786 |
60,606 |
31,961 |
Interest expense |
(187) |
(1,355) |
(5,083) |
(6,139) |
Interest income |
46 |
46 |
386 |
792 |
Other income, net |
41 |
7 |
439 |
21 |
Income before income taxes |
17,807 |
7,484 |
56,348 |
26,635 |
Income tax expense |
(5,256) |
1,587 |
(19,503) |
(5,340) |
Net income |
$ 12,551 |
$ 9,071 |
$ 36,845 |
$ 21,295 |
|
|
|
|
|
Net income per common share |
|
|
|
|
Basic |
$ 0.28 |
$ 0.22 |
$ 0.85 |
$ 0.55 |
Diluted |
$ 0.25 |
$ 0.20 |
$ 0.76 |
$ 0.51 |
Weighted average common shares
outstanding |
|
|
|
|
Basic |
45,125 |
40,857 |
43,592 |
38,930 |
Diluted |
49,980 |
45,458 |
48,722 |
41,533 |
|
|
|
|
|
Reconciliation of
adjusted EBITDA and free cash flow to net income: |
|
|
|
Net Income |
$ 12,551 |
$ 9,071 |
$ 36,845 |
$ 21,295 |
Interest expense,
net |
141 |
1,309 |
4,697 |
5,347 |
Income tax expense |
5,256 |
(1,587) |
19,503 |
5,340 |
Depreciation
expense |
3,418 |
2,844 |
11,773 |
10,936 |
Amortization expense |
6,813 |
5,868 |
23,526 |
23,214 |
Stock-based
compensation |
1,528 |
1,209 |
5,069 |
5,474 |
Other income, net |
(41) |
(7) |
(439) |
(21) |
|
|
|
|
|
Adjusted EBITDA |
$ 29,666 |
$ 18,707 |
$ 100,974 |
$ 71,585 |
Capitalization of content
database costs |
(5,340) |
(3,543) |
(13,874) |
(9,398) |
Purchase of property and
equipment |
(5,071) |
(5,796) |
(12,968) |
(13,362) |
Cash paid for
interest |
(117) |
(1,116) |
(2,645) |
(7,740) |
Cash paid for income
taxes |
(4,783) |
(2,487) |
(11,128) |
(11,472) |
Free cash flow |
$ 14,355 |
$ 5,765 |
$ 60,359 |
$ 29,613 |
|
Ancestry.com
Inc. |
Other
Data |
|
|
|
|
|
|
|
Three Months
Ended |
|
December 31,
2010 |
September 30,
2010 |
June 30, 2010 |
March 31, 2010 |
December 31,
2009 |
Total Subscribers |
1,394,910 |
1,376,974 |
1,310,562 |
1,211,978 |
1,066,123 |
Gross subscriber
additions |
202,509 |
251,738 |
290,589 |
279,100 |
165,241 |
Monthly churn |
3.9% |
4.0% |
4.3% |
3.3% |
3.6% |
Subscriber acquisition
cost |
$ 96.87 |
$ 81.58 |
$ 74.04 |
$ 69.57 |
$ 85.21 |
Average monthly revenue per
subscriber |
$ 17.78 |
$ 17.75 |
$ 18.02 |
$ 16.70 |
$ 16.67 |
[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.
CONTACT: Investors:
Ancestry.com Inc.
Ryan Ostler
(801) 705-7942
rostler@ancestry.com
Media:
Brainerd Communicators, Inc.
Ray Yeung / Jo Anne Barrameda
(212) 986-6667
yeung@braincomm.com / barrameda@braincomm.com
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