Ancestry.com Subscriber Growth of 33%
Year-Over-Year Total Revenues Up 41%
Year-Over-Year Raises FY 2011 Outlook
Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family
history resource, today reported financial results for the quarter
ended March 31, 2011.
"Ancestry.com had an outstanding start to 2011, ending the first
quarter with over 1.6 million subscribers and delivering record
financial performance. The investments we are making in content and
in our product are generating positive feedback from users, and our
ongoing marketing programs, along with the second season of Who Do
You Think You Are? on NBC, are helping to further broaden interest
in the family history category," said Tim Sullivan, Chief Executive
Officer of Ancestry.com. "We intend to continue investing in the
business through product enhancements, content acquisition and the
further ramp-up of our talent base to support our anticipated
growth in 2011 and beyond."
Ancestry.com Web Sites Highlights
- Subscribers totaled 1,615,000 as of March 31, 2011, growth of
33% from the end of the first quarter of 2010 and 16% since the end
of 2010.
- Gross subscriber additions were 425,000 in the first quarter of
2011, compared to 279,000 in the first quarter of 2010 and 203,000
in the fourth quarter of 2010.
- Monthly churn1 was 3.7% in the first quarter of 2011, compared
to 3.3% in the first quarter of 2010 and 3.9% in the fourth quarter
of 2010.
- Subscriber acquisition cost2 in the first quarter of 2011 was
$69.56, compared to $69.57 in the first quarter of 2010 and $96.87
in the fourth quarter of 2010.
- Average monthly revenue per subscriber3 in the first quarter of
2011 was $18.05, compared to $16.70 in the first quarter of 2010
and $17.78 in the fourth quarter of 2010.
First Quarter 2011 Financial Highlights
- Total revenues for the first quarter of 2011 were $91.0
million, an increase of 41.3% over $64.4 million in the first
quarter of 2010, driven by growth in our core Ancestry.com Web
sites revenues of 42.7%.
- Operating income for the first quarter of 2011 was $14.2
million, compared to $7.6 million in the first quarter of
2010.
- Net income was $9.0 million, or $0.18 per fully diluted share,
for the first quarter of 2011 compared to $4.0 million, or $0.08
per fully diluted share, in the first quarter of 2010.
- Adjusted EBITDA4 for the first quarter of 2011 was $25.6
million, compared to $17.0 million in the first quarter of 2010.
Adjusted EBITDA margin for the first quarter of 2011 was 28.1%,
compared to 26.4% in the first quarter of 2010.
- Free cash flow5 totaled $18.7 million for the first quarter of
2011 compared to $11.4 million for the first quarter of 2010.
- Cash and cash equivalents totaled $102.3 million as of March
31, 2011.
Recent Business Highlights
- Who Do You Think You Are? television series successfully
completed its second season and NBC announced its renewal for a
third season, which is currently expected to air in the first
quarter of 2012.
- Addition of several new important content collections,
including U.S. slave manifest records, the definitive 19th century
collection of Irish historical records, and newly digitized U.S.
Civil War records.
- Ancestry.com's mobile app for the iPhone, iPad, and iPod
reached 1 million downloads last week, with over 400,000 of those
downloads happening in Q1 alone.
Business Outlook
The Company's financial and operating expectations for the
second quarter and full year 2011 are as follows:
Second Quarter 2011
- Revenues in the range of $98.0 to $100.0 million
- Adjusted EBITDA in the range of $35.0 to $37.0 million
- Ending subscribers of approximately 1,670,000
Full Year 2011
- Revenues in the range of $395.0 to $400.0 million (increased
from the previously expected range of $370.0 to $375.0
million)
- Adjusted EBITDA in the range of $135.0 to $140.0 million
(increased from the previously expected range of $125.0 to $130.0
million)
- Ending subscribers of approximately 1,710,000 to 1,730,000
(increased from the previously expected range of 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 800-946-0774 (within the United States),
or 719-457-2640 (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, May
6, 2011. To access the replay, dial 888-203-1112 (within the United
States), or 719-457-0820 (international callers) and enter the
replay passcode 9389152. 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 expense and certain
non-cash and non-recurring items. Free cash flow subtracts from
adjusted EBITDA the capitalization of content database costs,
purchases of property and equipment and cash paid for income taxes
and interest. 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 more than 1.6 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 24
million family trees containing over 2.4 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 activities to enhance
subscribers' experience, our activities to promote and enhance our
products, our business outlook, our intent to acquire content, our
leadership position and our opportunities and prospects for growth,
including growth in revenues, adjusted EBITDA, number of
subscribers and employees. 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; our inability to
develop and refine new and existing products; 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
inability to attract and retain 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 Annual Report on Form 10-K for the year ended
December 31, 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.
1 Monthly churn is a measure representing the number
of subscribers that cancel in the quarter divided by the sum of
beginning subscribers and gross 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 and other (income) expense; income tax expense; and
non-cash charges including depreciation, amortization, impairment
of intangible assets and stock-based compensation
expense.
5 Free cash flow subtracts from adjusted EBITDA
capitalization of content database costs, purchases of property and
equipment and cash paid for income taxes and interest.
| |
| Ancestry.com
Inc. |
| Consolidated Balance
Sheets |
| (in
thousands) |
| |
| |
March 31, |
December 31, |
| |
2011 |
2010 |
| Assets |
(unaudited) |
|
| Current assets: |
|
|
| Cash and cash equivalents |
$ 102,263 |
$ 65,519 |
| Restricted cash |
1,984 |
2,476 |
| Accounts receivable, net |
6,687 |
6,990 |
| Income tax receivable |
6,690 |
8,094 |
| Deferred income taxes |
3,873 |
3,873 |
| Prepaid expenses and other current
assets |
8,978 |
9,243 |
| Total current assets |
130,475 |
96,195 |
| Property and equipment, net |
18,731 |
21,252 |
| Content database costs, net |
69,221 |
65,418 |
| Intangible assets, net |
30,143 |
34,281 |
| Goodwill |
303,478 |
303,374 |
| Other assets |
1,518 |
1,666 |
| Total assets |
$ 553,566 |
$ 522,186 |
| Liabilities and stockholders' equity |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 7,210 |
$ 9,451 |
| Accrued expenses |
33,549 |
36,978 |
| Deferred revenues |
109,237 |
89,301 |
| Total current liabilities |
149,996 |
135,730 |
| Deferred income taxes |
19,663 |
20,571 |
| Other long-term liabilities |
1,986 |
2,018 |
| Total liabilities |
171,645 |
158,319 |
| Commitments and contingencies |
|
|
| Stockholders' equity: |
|
|
| Common stock |
46 |
45 |
| Additional paid-in capital |
337,554 |
328,957 |
| Accumulated other comprehensive
income |
1,128 |
643 |
| Retained earnings |
43,193 |
34,222 |
| Total stockholders' equity |
381,921 |
363,867 |
| Total liabilities and stockholders'
equity |
$ 553,566 |
$ 522,186 |
| |
| |
| Ancestry.com
Inc. |
| Consolidated Statements
of Income |
| (in thousands, except
per share data) |
| |
|
|
| |
Three Months
Ended |
| |
March 31, 2011 |
March 31, 2010 |
| Revenues: |
(unaudited) |
| Subscription revenues |
$ 85,183 |
$ 59,560 |
| Product and other revenues |
5,845 |
4,861 |
| Total revenues |
91,028 |
64,421 |
| Costs of revenues: |
|
|
| Cost of subscription revenues |
13,887 |
11,501 |
| Cost of product and other revenues |
1,828 |
1,494 |
| Total cost of revenues |
15,715 |
12,995 |
| Gross profit |
75,313 |
51,426 |
| Operating expenses: |
|
|
| Technology and development |
13,668 |
9,927 |
| Marketing and advertising |
33,808 |
22,446 |
| General and administrative |
9,357 |
7,742 |
| Amortization of acquired intangible
assets |
4,270 |
3,679 |
| Total operating expenses |
61,103 |
43,794 |
| Income from operations |
14,210 |
7,632 |
| Interest and other income (expense),
net |
(107) |
(1,144) |
| Income before income taxes |
14,103 |
6,488 |
| Income tax expense |
(5,132) |
(2,526) |
| Net income |
$ 8,971 |
$ 3,962 |
| |
|
|
| Net income per common share |
|
|
| Basic |
$ 0.20 |
$ 0.09 |
| Diluted |
$ 0.18 |
$ 0.08 |
| Weighted average common shares
outstanding |
|
|
| Basic |
45,371 |
42,459 |
| Diluted |
50,250 |
47,454 |
| |
|
|
| Reconciliation of
adjusted EBITDA and free cash flow to net income: |
|
| Net income |
$ 8,971 |
$ 3,962 |
| Interest and other (income) expense,
net |
107 |
1,144 |
| Income tax expense |
5,132 |
2,526 |
| Depreciation |
3,264 |
2,864 |
| Amortization |
6,405 |
5,513 |
| Stock-based compensation expense |
1,725 |
1,004 |
| |
|
|
| Adjusted EBITDA |
$ 25,604 |
$ 17,013 |
| Capitalization of content database
costs |
(5,747) |
(2,792) |
| Purchases of property and equipment |
(725) |
(1,407) |
| Cash paid for interest |
(115) |
(1,001) |
| Cash paid for income taxes |
(275) |
(403) |
| Free cash flow |
$ 18,742 |
$ 11,410 |
| |
| |
| Ancestry.com
Inc. |
| Other
Data |
| |
|
| |
Three Months
Ended |
| |
March 31, 2011 |
December 31,
2010 |
September 30,
2010 |
June 30, 2010 |
March 31, 2010 |
| Total subscribers |
1,615,169 |
1,394,910 |
1,376,974 |
1,310,562 |
1,211,978 |
| Gross subscriber
additions |
424,531 |
202,509 |
251,738 |
290,589 |
279,100 |
| Monthly churn |
3.7% |
3.9% |
4.0% |
4.3% |
3.3% |
| Subscriber acquisition
cost |
$69.56 |
$96.87 |
$81.58 |
$74.04 |
$69.57 |
| Average monthly revenue per
subscriber |
$18.05 |
$17.78 |
$17.75 |
$18.02 |
$16.70 |
CONTACT: Investors:
Ancestry.com Inc.
Ryan Ostler
(801) 705-7942
rostler@ancestry.com
Media:
Ancestry.com Inc.
Heather Erickson
(801) 705-7104
herickson@ancestry.com
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