– Ancestry.com Subscriber Growth of 28%
Year-Over-Year –
–Total Revenues Up 36% 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 June 30, 2011.
"Our strong second quarter financial performance demonstrates
that our investments in content, product and marketing continue to
drive subscriber growth, enhance the user experience, and increase
our brand awareness," said Tim Sullivan, Chief Executive Officer of
Ancestry.com. "Going forward we plan to continue to make
investments that can help drive our business and position us well
for long-term growth."
Ancestry.com Web Sites Highlights
- Subscribers totaled 1,672,000 as of June 30, 2011, growth of
28% from the end of the second quarter of 2010 and 4% since the end
of the first quarter of 2011.
- Gross subscriber additions were 322,000 in the second quarter
of 2011, compared to 291,000 in the second quarter of 2010 and
425,000 in the first quarter of 2011.
- Monthly churn1 was 4.6% in the second quarter of 2011, compared
to 4.3% in the second quarter of 2010 and 3.7% in the first quarter
of 2011.
- Subscriber acquisition cost2 in the second quarter of 2011 was
$81.23, compared to $74.04 in the second quarter of 2010 and $69.56
in the first quarter of 2011.
- Average monthly revenue per subscriber3 in the second quarter
of 2011 was $18.88, compared to $18.02 in the second quarter of
2010 and $18.05 in the first quarter of 2011.
Second Quarter 2011 Financial Highlights
- Total revenues for the second quarter of 2011 were $101.3
million, an increase of 36.1% over $74.5 million in the second
quarter of 2010, driven by growth in our core Ancestry.com Web
sites revenues of 36.6%.
- Operating income for the second quarter of 2011 was $26.5
million, compared to $15.8 million in the second quarter of
2010.
- Net income was $16.6 million, or $0.33 per fully diluted share,
for the second quarter of 2011 compared to $8.5 million, or $0.18
per fully diluted share, in the second quarter of 2010.
- Adjusted EBITDA4 for the second quarter of 2011 was $38.4
million, compared to $25.3 million in the second quarter of 2010.
Adjusted EBITDA margin for the second quarter of 2011 was 37.9%,
compared to 33.9% in the second quarter of 2010.
- Free cash flow5 totaled $27.1 million for the second quarter of
2011 compared to $14.4 million for the second quarter of 2010.
- Cash and cash equivalents totaled $71.0 million as of June 30,
2011.
Recent Business Highlights
- Extended relationship with NBC for the third season of the "Who
Do You Think You Are?" television series in the U.S; in addition,
NBC is currently re-airing episodes from season 2.
- Addition of several new important content collections,
including U.S. Navy Cruise Books, Sons of the American Revolution
membership applications, vital records from Liverpool, Dorset and
West Yorkshire, England and church books from Brandenburg, Germany
from 1700-1874.
- Multiple product releases, including New Web Search to provide
easy access to additional content on the internet, as well as
improvements to our new user conversion experience.
Business Outlook
The Company's financial and operating expectations for the third
quarter and full year 2011 are as follows:
Third Quarter 2011
- Revenues in the range of $102.0 to $104.0 million
- Adjusted EBITDA in the range of $38.0 to $40.0 million
- Ending subscribers of approximately 1,700,000
Full Year 2011
- Revenues in the range of $398.0 to $402.0 million (increased
from the previously expected range of $395.0 to $400.0
million)
- Adjusted EBITDA in the range of $140.0 to $144.0 million
(increased from the previously expected range of $135.0 to $140.0
million)
- Ending subscribers of approximately 1,710,000 to 1,730,000
(unchanged from the previously expected range)
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 877-627-6544 (within the United States),
or 719-325-4821 (international callers) approximately ten minutes
prior to the start time.
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 net
income, the most directly comparable GAAP measure, 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 1.7 million paying
subscribers. More than 7 billion records have been added to the
site in the past 14 years. Ancestry users have created more than 26
million family trees containing over 2.6 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 "may," "designed," "expect," "intend," "seek,"
"anticipate," "believe," "estimate," "predict," "potential,"
"should," "continue" or "will" 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 plans to invest in our business, our intent to acquire
content, our leadership position and our opportunities and
prospects for growth, including growth in revenues, adjusted
EBITDA, 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; our inability to
develop and refine new and existing products; failure of subsequent
seasons of Who Do You Think You Are? to yield results comparable to
prior seasons; 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 Quarterly Report on Form 10-Q for the quarter ended
March 31, 2011, 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, except as required by law.
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) |
| |
June 30, |
December
31, |
| |
2011 |
2010 |
| Assets |
(unaudited) |
|
| Current assets: |
|
|
| Cash and cash equivalents |
$ 71,019 |
$ 65,519 |
| Restricted cash |
1,940 |
2,476 |
| Accounts receivable, net |
5,679 |
6,990 |
| Income tax receivable |
15,362 |
8,094 |
| Deferred income taxes |
2,779 |
3,873 |
| Prepaid expenses and other
current assets |
8,977 |
9,243 |
| Total current assets |
105,756 |
96,195 |
| Property and equipment,
net |
19,234 |
21,252 |
| Content database costs,
net |
71,098 |
65,418 |
| Intangible assets, net |
25,825 |
34,281 |
| Goodwill |
302,802 |
303,374 |
| Other assets |
2,010 |
1,666 |
| Total assets |
$ 526,725 |
$ 522,186 |
| Liabilities and stockholders' equity |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 9,970 |
$ 9,451 |
| Accrued expenses |
38,224 |
36,978 |
| Deferred revenues |
114,285 |
89,301 |
| Total current liabilities |
162,479 |
135,730 |
| Deferred income taxes |
16,534 |
20,571 |
| Other long-term
liabilities |
2,017 |
2,018 |
| Total liabilities |
181,030 |
158,319 |
| Commitments and contingencies |
|
|
| Stockholders' equity: |
|
|
| Common stock |
47 |
45 |
| Additional paid-in capital |
362,968 |
328,957 |
| Treasury stock |
(78,095) |
-- |
| Accumulated other comprehensive
income |
1,025 |
643 |
| Retained earnings |
59,750 |
34,222 |
| Total stockholders' equity |
345,695 |
363,867 |
| Total liabilities and
stockholders' equity |
$ 526,725 |
$ 522,186 |
| |
| |
| Ancestry.com
Inc. |
| Consolidated Statements
of Income |
| (in thousands, except
per share data) |
| |
|
|
|
|
| |
Three Months
Ended |
Six Months
Ended |
| |
June 30, 2011 |
June 30, 2010 |
June 30, 2011 |
June 30, 2010 |
| Revenues: |
(unaudited) |
(unaudited) |
|
|
| Subscription revenues |
$ 96,707 |
$ 70,544 |
$ 181,890 |
$ 130,104 |
| Product and other revenues |
4,601 |
3,916 |
10,446 |
8,777 |
| Total revenues |
101,308 |
74,460 |
192,336 |
138,881 |
| Costs of revenues: |
|
|
|
|
| Cost of subscription
revenues |
14,111 |
11,228 |
27,998 |
22,729 |
| Cost of product and other
revenues |
1,841 |
1,280 |
3,669 |
2,774 |
| Total cost of revenues |
15,952 |
12,508 |
31,667 |
25,503 |
| Gross profit |
85,356 |
61,952 |
160,669 |
113,378 |
| Operating expenses: |
|
|
|
|
| Technology and development |
14,242 |
9,992 |
27,910 |
19,919 |
| Marketing and advertising |
30,250 |
24,490 |
64,058 |
46,936 |
| General and administrative |
10,111 |
8,032 |
19,468 |
15,774 |
| Amortization of acquired
intangible assets |
4,297 |
3,679 |
8,567 |
7,358 |
| Total operating expenses |
58,900 |
46,193 |
120,003 |
89,987 |
| Income from operations |
26,456 |
15,759 |
40,666 |
23,391 |
| Interest and other income
(expense), net |
(429) |
(1,429) |
(536) |
(2,573) |
| Income before income taxes |
26,027 |
14,330 |
40,130 |
20,818 |
| Income tax expense |
(9,470) |
(5,807) |
(14,602) |
(8,333) |
| Net income |
$ 16,557 |
$ 8,523 |
$ 25,528 |
$ 12,485 |
| |
|
|
|
|
| Net income per common share |
|
|
|
|
| Basic |
$ 0.36 |
$ 0.20 |
$ 0.56 |
$ 0.29 |
| Diluted |
$ 0.33 |
$ 0.18 |
$ 0.51 |
$ 0.26 |
| Weighted average common shares
outstanding |
|
|
|
|
| Basic |
45,596 |
42,764 |
45,484 |
42,612 |
| Diluted |
49,893 |
48,015 |
50,082 |
47,754 |
| |
|
|
|
|
| Reconciliation of
adjusted EBITDA and free cash flow to net income: |
|
|
|
| Net income |
$ 16,557 |
$ 8,523 |
$ 25,528 |
$ 12,485 |
| Interest and other expense,
net |
429 |
1,429 |
536 |
2,573 |
| Income tax expense |
9,470 |
5,807 |
14,602 |
8,333 |
| Depreciation |
3,188 |
2,740 |
6,452 |
5,604 |
| Amortization |
6,576 |
5,509 |
12,982 |
11,022 |
| Stock-based compensation
expense |
2,201 |
1,262 |
3,926 |
2,266 |
| Adjusted EBITDA |
$ 38,421 |
$ 25,270 |
$ 64,026 |
$ 42,283 |
| Capitalization of content
database costs |
(4,204) |
(2,349) |
(9,951) |
(5,141) |
| Purchases of property and
equipment |
(3,693) |
(2,221) |
(4,418) |
(3,628) |
| Cash paid for interest |
(111) |
(476) |
(226) |
(1,477) |
| Cash paid for income taxes |
(3,282) |
(5,778) |
(3,557) |
(6,181) |
| Free cash flow |
$ 27,131 |
$ 14,446 |
$ 45,874 |
$ 25,856 |
| |
| |
| Ancestry.com
Inc. |
| Other
Data |
| |
|
|
|
|
|
| |
Three Months
Ended |
| |
June 30, 2011 |
March 31, 2011 |
December 31,
2010 |
September 30,
2010 |
June 30, 2010 |
| Total subscribers |
1,672,319 |
1,615,169 |
1,394,910 |
1,376,974 |
1,310,562 |
| Gross subscriber
additions |
321,687 |
424,531 |
202,509 |
251,738 |
290,589 |
| Monthly churn |
4.6% |
3.7% |
3.9% |
4.0% |
4.3% |
| Subscriber acquisition
cost |
$81.23 |
$69.56 |
$96.87 |
$81.58 |
$74.04 |
| Average monthly revenue per
subscriber |
$18.88 |
$18.05 |
$17.78 |
$17.75 |
$18.02 |
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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