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— Ancestry.com Subscriber Growth of 28% Year-Over-Year —
—Total Revenues Up 36% Year-Over-Year —
— Raises FY 2011 Outlook —
PROVO, Utah, July 27, 2011 (GLOBE NEWSWIRE) -- 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.
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.
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.
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