Ancestry.com Subscriber Growth of 24%
Year-Over-Year
Total Revenues Up 30%
Year-Over-Year
Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family
history resource, today reported financial results for the quarter
ended September 30, 2011.
"Our third quarter financial performance featured solid growth
in revenue and profitability that was in line with our
expectations. We also continued to see strong subscriber engagement
with our content, as measured by increasing 'discoveries' and
accepted hints, both of which we believe validate the investments
we are making in the core product," said Tim Sullivan, Chief
Executive Officer of Ancestry.com. "We believe we are in the early
days of creating a category that has the potential to be
significantly larger than it is today. We are busy preparing new
initiatives that we expect will further enrich the Ancestry.com
experience, broaden our appeal and enable us to seize the long-term
growth potential of the business."
Ancestry.com Web Sites Highlights
- Subscribers totaled 1,701,000 as of September 30, 2011, growth
of 24% from the end of the third quarter of 2010 and 2% since the
end of the second quarter of 2011.
- Gross subscriber additions were 274,000 in the third quarter of
2011, compared to 252,000 in the third quarter of 2010 and 322,000
in the second quarter of 2011.
- Monthly churn 1 was 4.2% in the third quarter of 2011, compared
to 4.0% in the third quarter of 2010 and 4.6% in the second quarter
of 2011.
- Subscriber acquisition cost 2 in the third quarter of 2011 was
$93.64, compared to $81.58 in the third quarter of 2010 and $81.23
in the second quarter of 2011.
- Average monthly revenue per subscriber 3 in the third quarter
of 2011 was $18.68, compared to $17.75 in the third quarter of 2010
and $18.88 in the second quarter of 2011.
Third Quarter 2011 Financial Highlights
- Total revenues for the third quarter of 2011 were $103.1
million, an increase of 30.0% over $79.3 million in the third
quarter of 2010, driven by growth in our core Ancestry.com Web
sites revenues of 32.1%.
- Operating income for the third quarter of 2011 was $27.2
million, compared to $19.3 million in the third quarter of
2010.
- Net income was $19.1 million, or $0.40 per fully diluted share,
for the third quarter of 2011 compared to $11.8 million, or $0.24
per fully diluted share, in the third quarter of 2010.
- Adjusted EBITDA 4 for the third quarter of 2011 was $40.1
million, compared to $29.0 million in the third quarter of 2010.
Adjusted EBITDA margin for the third quarter of 2011 was 38.9%,
compared to 36.6% in the third quarter of 2010.
- Free cash flow 5 totaled $30.6 million for the third quarter of
2011 compared to $20.1 million for the third quarter of 2010.
- Cash and cash equivalents totaled $46.9 million as of September
30, 2011.
Recent Business Highlights
- Launched 61 content collections during the quarter with records
from 9 countries. Collections of note include:
- California Voter Registers, 1866-1898, with over 3.6 million
records;
- U.S. School Yearbooks, 100 million records added to the
yearbook collection;
- The Sons of the American Revolution Membership Applications,
1889-1970;
- The 1930 Mexico National Census, the most comprehensive
publicly available Mexican census;
- Our largest ever Irish collection with over 25 million vital
records, including civil registration, baptism, marriage and burial
records; and
- German World War I casualty lists from 1914-1917, encompassing
more than 5.2 million records.
- Ancestry.com has reached an agreement with the Landesarchiv
Berlin (State Archives in Berlin) to digitize a collection of
German vital records. This is part of a program to aggregate German
records from 1875 to 1920, an important period in German history
and a time of significant immigration to the United States.
- In August, Ancestry.com was the first entity to formally place
an order for the 1940 Census images with the National Archives and
Records Administration. When complete, more than 3.8 million
original document images containing 130 million-plus records should
be available to search by more than 45 fields, including name,
gender, race, street address, county and state, and parents' places
of birth. It is expected to be Ancestry.com's most comprehensively
indexed set of historical records to date.
- Launched Family Tree Maker (FTM) 2012 with TreeSyncTM, which
enables users to easily bring their desktop trees online to share
with invited guests, engage with the broader community and continue
their research from wherever they are. Bringing these
incremental trees online will also benefit the overall Ancestry
community by allowing additional collaboration using data
previously stored only on individual desktops.
- Released a beta version of the Ancestry Content Publisher
platform, which provides a suite of free tools that enables small-
to mid-size archives - such as libraries and genealogical societies
- to preserve their historical documents online while providing
digital access to the materials in their collections to their users
and Ancestry.com subscribers.
Business Outlook
The Company's financial and operating expectations for the
fourth quarter and full year 2011 are as follows:
Fourth Quarter 2011
- Revenues in the range of $103.0 to $105.0 million
- Adjusted EBITDA in the range of $39.0 to $41.0 million
- Ending subscribers of approximately 1,685,000 to 1,695,000
Full Year 2011
- Revenues in the range of $398.5 to $400.5 million (as compared
to the previously expected range of $398.0 to $402.0 million)
- Adjusted EBITDA in the range of $143.0 to $145.0 million (as
compared to the previously expected range of $140.0 to $144.0
million)
- Ending subscribers of approximately 1,685,000 to 1,695,000 (as
compared to the previously expected range of 1,710,000 to
1,730,000)
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 877-718-5104 (within the United States),
or 719-325-4744 (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 approximately 1.7 million paying
subscribers. More than 7 billion records have been added to the
site in the past 15 years. Ancestry users have created more than 28
million family trees containing over 2.8 billion profiles. In
addition to its flagship site www.ancestry.com, Ancestry.com offers
localized Web sites designed for nine countries that empower people
to discover, preserve and share their family history.
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, the size of market, our success in investing in our
business, including investments we are making in our core product,
our ability to profit from new initiatives, 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 meet customer
demands or expectations; the adverse impact of competitive product
announcements or launches; 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
June 30, 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) |
|
September 30, |
December 31, |
|
2011 |
2010 |
Assets |
(unaudited) |
|
Current assets: |
|
|
Cash and cash equivalents |
$ 46,896 |
$ 65,519 |
Restricted cash |
1,734 |
2,476 |
Accounts receivable, net |
6,471 |
6,990 |
Income tax receivable |
13,415 |
8,094 |
Deferred income taxes |
4,473 |
3,873 |
Prepaid expenses and other
current assets |
10,791 |
9,243 |
Total current assets |
83,780 |
96,195 |
Property and equipment,
net |
20,455 |
21,252 |
Content database costs,
net |
73,206 |
65,418 |
Intangible assets, net |
21,438 |
34,281 |
Goodwill |
302,529 |
303,374 |
Other assets |
2,213 |
1,666 |
Total assets |
$ 503,621 |
$ 522,186 |
Liabilities and stockholders' equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 5,210 |
$ 9,451 |
Accrued expenses |
38,008 |
36,978 |
Deferred revenues |
112,478 |
89,301 |
Total current liabilities |
155,696 |
135,730 |
Deferred income taxes |
18,329 |
20,571 |
Other long-term
liabilities |
3,315 |
2,018 |
Total liabilities |
177,340 |
158,319 |
Commitments and contingencies |
|
|
Stockholders' equity: |
|
|
Common stock |
48 |
45 |
Additional paid-in capital |
371,797 |
328,957 |
Treasury stock |
(125,000) |
-- |
Accumulated other comprehensive
income |
635 |
643 |
Retained earnings |
78,801 |
34,222 |
Total stockholders' equity |
326,281 |
363,867 |
Total liabilities and
stockholders' equity |
$ 503,621 |
$ 522,186 |
|
Ancestry.com
Inc. |
Consolidated Statements
of Income |
(in thousands, except
per share data) |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30,
2011 |
September 30,
2010 |
September 30,
2011 |
September 30,
2010 |
Revenues: |
(unaudited) |
(unaudited) |
|
|
Subscription revenues |
$ 98,093 |
$ 74,239 |
$ 279,983 |
$ 204,343 |
Product and other revenues |
5,008 |
5,076 |
15,454 |
13,853 |
Total revenues |
103,101 |
79,315 |
295,437 |
218,196 |
Costs of revenues: |
|
|
|
|
Cost of subscription
revenues |
15,292 |
11,267 |
43,290 |
33,996 |
Cost of product and other
revenues |
1,558 |
1,155 |
5,227 |
3,929 |
Total cost of revenues |
16,850 |
12,422 |
48,517 |
37,925 |
Gross profit |
86,251 |
66,893 |
246,920 |
180,271 |
Operating expenses: |
|
|
|
|
Technology and development |
14,773 |
10,528 |
42,683 |
30,447 |
Marketing and advertising |
30,266 |
24,125 |
94,324 |
71,061 |
General and administrative |
9,753 |
9,141 |
29,221 |
24,915 |
Amortization of acquired
intangible assets |
4,304 |
3,791 |
12,871 |
11,149 |
Total operating expenses |
59,096 |
47,585 |
179,099 |
137,572 |
Income from operations |
27,155 |
19,308 |
67,821 |
42,699 |
Interest and other income
(expense), net |
(393) |
(1,585) |
(929) |
(4,158) |
Income before income taxes |
26,762 |
17,723 |
66,892 |
38,541 |
Income tax expense |
(7,711) |
(5,914) |
(22,313) |
(14,247) |
Net income |
$ 19,051 |
$ 11,809 |
$ 44,579 |
$ 24,294 |
|
|
|
|
|
Net income per common share |
|
|
|
|
Basic |
$ 0.43 |
$ 0.27 |
$ 0.99 |
$ 0.56 |
Diluted |
$ 0.40 |
$ 0.24 |
$ 0.90 |
$ 0.50 |
Weighted average common shares
outstanding |
|
|
|
|
Basic |
44,670 |
43,984 |
45,209 |
43,075 |
Diluted |
48,173 |
48,774 |
49,436 |
48,186 |
|
|
|
|
|
Reconciliation of
adjusted EBITDA and free cash flow to net income: |
|
|
|
Net income |
$ 19,051 |
$ 11,809 |
$ 44,579 |
$ 24,294 |
Interest and other expense,
net |
393 |
1,585 |
929 |
4,158 |
Income tax expense |
7,711 |
5,914 |
22,313 |
14,247 |
Depreciation |
3,341 |
2,751 |
9,793 |
8,355 |
Amortization |
6,681 |
5,691 |
19,663 |
16,713 |
Stock-based compensation
expense |
2,942 |
1,275 |
6,868 |
3,541 |
Adjusted EBITDA |
$ 40,119 |
$ 29,025 |
$ 104,145 |
$ 71,308 |
Capitalization of content
database costs |
(4,673) |
(3,393) |
(14,624) |
(8,534) |
Purchases of property and
equipment |
(4,573) |
(4,269) |
(8,991) |
(7,897) |
Cash paid for interest |
(107) |
(1,051) |
(333) |
(2,528) |
Cash paid for income taxes |
(126) |
(164) |
(3,683) |
(6,345) |
Free cash flow |
$ 30,640 |
$ 20,148 |
$ 76,514 |
$ 46,004 |
|
|
|
|
|
Ancestry.com
Inc. |
Other
Data |
|
|
|
|
|
|
|
Three Months
Ended |
|
September 30,
2011 |
June 30, 2011 |
March 31, 2011 |
December 31,
2010 |
September 30,
2010 |
Total subscribers |
1,701,322 |
1,672,319 |
1,615,169 |
1,394,910 |
1,376,974 |
Gross subscriber
additions |
273,979 |
321,687 |
424,531 |
202,509 |
251,738 |
Monthly churn |
4.2% |
4.6% |
3.7% |
3.9% |
4.0% |
Subscriber acquisition
cost |
$93.64 |
$81.23 |
$69.56 |
$96.87 |
$81.58 |
Average monthly revenue per
subscriber |
$18.68 |
$18.88 |
$18.05 |
$17.78 |
$17.75 |
CONTACT: Investors:
Ancestry.com Inc.
Deborah Crawford
(801) 705-7942
dcrawford@ancestry.com
Media:
Ancestry.com Inc.
Heather Erickson
(801) 705-7104
herickson@ancestry.com
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