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Ancestry.com Subscriber Growth of 16% Year-Over-Year
Q1 Total Revenue $108.5 Million, Up 19% Year-Over-Year
Announces New $100 Million Share Repurchase Authorization
PROVO, Utah, April 25, 2012 (GLOBE NEWSWIRE) -- Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family history resource, today reported financial results for the first quarter ended March 31, 2012.
"The first quarter marked a strong start to the year. Our key financial metrics, including revenue, adjusted EBITDA and subscribers, all came in above our expectations," said Tim Sullivan, Chief Executive Officer of Ancestry.com. "The April release of the 1940 US census records appears to have driven tremendous interest in family history. We began to benefit during the first quarter with our successful 1930 US census promotion, and we continue to see strong website traffic, underscoring our conviction in the mass market appeal of family history. As 2012 unfolds, we are moving forward on a number of exciting product initiatives, including improved features and tools like our new image viewer and hinting capabilities, and the build-out of our DNA offering."
In addition to the first quarter results announcement, the Company reported that its board of directors has approved a new $100 million common stock repurchase authorization. Also, in a separate press release issued today, Ancestry.com announced it has entered into a definitive agreement to acquire Archives.com, a leading family history website, for approximately $100 million in cash plus assumed liabilities, subject to customary closing conditions including HSR clearance.
Ancestry.com Web Sites Highlights
- Subscribers totaled 1,870,000 as of March 31, 2012, a 16% increase over the first quarter of 2011 and a 10% increase from the end of the fourth quarter of 2011.
- Gross subscriber additions were 390,000 in the first quarter of 2012, compared to 425,000 in the first quarter of 2011 and 220,000 in the fourth quarter of 2012.
- Monthly churn1 was 3.6% in the first quarter of 2012, compared to 3.7% in the first quarter of 2011 and 3.8% in the fourth quarter of 2011.
- Subscriber acquisition cost2 in the first quarter of 2012 was $88.11, compared to $69.56 in the first quarter of 2011 and $107.88 in the fourth quarter of 2011.
- Average monthly revenue per subscriber3 in the first quarter of 2012 was $18.49, compared to $18.05 in the first quarter of 2011 and $18.38 in the fourth quarter of 2011.
First Quarter 2012 Financial Highlights
- Total revenue for the first quarter of 2012 was $108.5 million, an increase of 19% over $91.0 million in the first quarter of 2011, driven by growth in the Company's core Ancestry.com Web sites revenues of 22%.
- Operating income for the first quarter of 2012 was $20.1 million, compared to $14.2 million in the first quarter of 2011.
- Adjusted EBITDA4 for the first quarter of 2012 was $31.7 million, compared to $25.6 million in the first quarter of 2011. Adjusted EBITDA margin for the first quarter of 2012 was 29.2%, compared to 28.1% in the first quarter of 2011.
- Net income was $13.5 million, or $0.30 per fully diluted share, for the first quarter of 2012 compared to $9.0 million, or $0.18 per fully diluted share, in the first quarter of 2011.
- Free cash flow5 totaled $14.7 million for the first quarter of 2012 compared to $18.7 million for the first quarter of 2011.
- Cash and cash equivalents totaled $48.0 million as of March 31, 2012.
Recent Business Highlights
- The third season of the Who Do You Think You Are? television series premiered on February 3, 2012.
The Company ended the quarter with more than 9 billion records; new collections included:
-- Almost 9 million Massachusetts birth, marriage and death records
-- Over 7 million records from the Historical Society of Pennsylvania Partnership
-- 1911 England census indexes
-- Approximately 139 million records from the London Electoral Registers that detail the names and addresses of registered voters
-- Nearly 2.6 million Australian convict records from the New South Wales Convict Indents, 1788-1842 and New South Wales Colonial Secretary's Papers, 1788-1856
- The Company launched a new interactive image viewer that includes "gridline technology," which highlights rows, columns and cells to feature specific ancestors on a record page, provides narrative pop up tips to tell more of the record's story, plus new dynamic viewing controls.
- The Company upgraded the Ancestry.com Web sites "hinting" capability, which now enables more and better real-time hints, and created an "all-hints" page on the website where users can see and interact with all of their hints in one place.
- The Company upgraded and made refinements to the Facebook app, including the ability to invite others to the Facebook app, see which of your Facebook friends are using the app, "like" the app and more.
- The Company introduced upgraded capabilities for the iPhone/iPad and Android mobile apps.
Share Repurchase Program
Ancestry.com reported that its board of directors has authorized the repurchase of up to $100 million of its outstanding common stock. Shares may be repurchased from time to time through March 31, 2013 in the open market or in privately negotiated transactions. The Company expects to fund any repurchases using cash on hand or draws on a credit facility. The amount and timing of specific repurchases, if any, will depend on market conditions, stock price, and other factors. As of March 31, 2012, Ancestry.com had 42.6 million shares of common stock outstanding.
The Company's financial and operating expectations for the second quarter and full year 2012 are as follows:
Second Quarter 2012
- Revenue in the range of $115 to $117 million
- Adjusted EBITDA excluding DNA investment6 of $43 to $45 million
- DNA investment of $2 to $3 million
- Adjusted EBITDA in the range of $40.5 to $42.5 million
- Ending subscribers in the range of 1,965,000 to 1,980,000
Full Year 2012
- Revenue in the range of $460 to $470 million
- Adjusted EBITDA excluding DNA investment6 of $167.5 to $177.5 million
- DNA investment of $10 to $15 million
- Adjusted EBITDA in the range of $155 to $165 million
- Ending subscribers of approximately 1,965,000 to 1,985,000
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 719-325-2212 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 Wednesday, May 4, 2012. To access the replay, dial 719-457-0820 and enter the replay passcode 9248042. 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
The Company believes that adjusted EBITDA and free cash flow are useful measures of operating performance because they exclude items that the Company does not consider indicative of its core performance. In the case of adjusted EBITDA, net income is adjusted for such expenses as interest, income taxes, stock-based compensation and certain non-cash and non-recurring items. Free cash flow subtracts from adjusted EBITDA the capitalization of content databases, 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 in the attached unaudited summary financial statements.
The Company uses adjusted EBITDA and free cash flow as measures of operating performance; for planning purposes, including the preparation of the annual operating budget; to allocate resources to enhance the financial performance of its business; to evaluate the effectiveness of its business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of its results with those of other companies; and in communications with its board of directors concerning its financial performance. The Company also uses 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 over 1.8 million paying subscribers. More than 9 billion records have been added to the site in the past 15 years. Ancestry users have created more than 34 million family trees containing approximately 4 billion profiles. In addition to its flagship site, Ancestry.com offers several localized Web sites designed to empower people to discover, preserve and share their family history.
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 the Company's 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 the Company's subscriber base, its reach, its activities to enhance subscribers' experience and deliver product innovations and enhancements, improved features and tools, its activities to develop and promote its products (including DNA services), its business outlook, its leadership position and its 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 the Company 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 the Company's control. In particular, such risks and uncertainties include the Company's continued ability to attract and retain subscribers; its continued ability to acquire content and make it available online; its ability to add tools and features and provide value to satisfy customer demand; difficulties encountered in integrating acquired businesses and retaining customers; the timing and amount of investments in the Company's DNA service; market conditions; the Company's common stock price; the availability of cash and credit; the adverse impact of competitive product announcements; failure of the third season of Who Do You Think You Are? to yield results comparable to the earlier seasons; 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 Annual Report on Form 10-K for the fiscal year ended December 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.
1 Monthly churn is a measure representing the number of subscribers to the Ancestry.com Web sites 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 associated with the Ancestry.com Web sites, divided by gross subscriber additions to the Ancestry.com Web sites 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 other (income) expense, net; income tax expense; non-cash charges including depreciation, amortization, impairment of intangible assets and stock-based compensation expense; and certain non-recurring (income) expenses.
5 Free cash flow subtracts from adjusted EBITDA capitalization of content databases, purchases of property and equipment and cash paid for income taxes and interest.
6 Assumes mid-point of planned DNA investment
Ancestry.com Inc. Consolidated Balance Sheets (in thousands) March 31, December 31, 2012 2011 Assets (unaudited) Current assets: Cash and cash equivalents $ 48,048 $ 48,998 Restricted cash 3,697 1,702 Accounts receivable, net 12,847 7,599 Income tax receivable 2,472 1,763 Deferred income taxes 4,823 4,823 Prepaid expenses and other current assets 8,227 7,945 Total current assets 80,114 72,830 Property and equipment, net 23,281 21,701 Content databases, net 79,352 76,646 Intangible assets, net 26,150 17,594 Goodwill 303,359 302,422 Other assets 3,635 2,656 Total assets $ 515,891 $ 493,849 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 12,908 $ 9,817 Accrued expenses 34,910 34,725 Deferred revenues 128,352 108,654 Debt -- 10,000 Total current liabilities 176,170 163,196 Deferred income taxes 16,034 14,925 Other long-term liabilities 6,401 5,219 Total liabilities 198,605 183,340 Commitments and contingencies Stockholders' equity: Common stock 48 48 Additional paid-in capital 380,744 374,948 Treasury stock (175,000) (162,168) Accumulated other comprehensive income 830 564 Retained earnings 110,664 97,117 Total stockholders' equity 317,286 310,509 Total liabilities and stockholders' equity $ 515,891 $ 493,849 Ancestry.com Inc. Consolidated Statements of Income (in thousands, except per share data) Three Months Ended March 31, 2012 March 31, 2011 Revenues: (unaudited) Subscription revenues $ 102,596 $ 85,183 Product and other revenues 5,940 5,845 Total revenues 108,536 91,028 Costs of revenues: Cost of subscription revenues 16,294 13,887 Cost of product and other revenues 2,785 1,828 Total cost of revenues 19,079 15,715 Gross profit 89,457 75,313 Operating expenses: Technology and development 16,627 13,668 Marketing and advertising 39,549 33,808 General and administrative 10,642 9,357 Amortization of acquired intangible assets 2,561 4,270 Total operating expenses 69,379 61,103 Income from operations 20,078 14,210 Other income (expense), net 39 (107) Income before income taxes 20,117 14,103 Income tax expense (6,570) (5,132) Net income $ 13,547 $ 8,971 Net income per common share Basic $ 0.32 $ 0.20 Diluted $ 0.30 $ 0.18 Weighted average common shares outstanding Basic 42,774 45,371 Diluted 45,680 50,250 Reconciliation of adjusted EBITDA and free cash flow to net income: Net income $ 13,547 $ 8,971 Other (income) expense, net (39) 107 Income tax expense 6,570 5,132 Depreciation 3,547 3,264 Amortization 5,111 6,405 Stock-based compensation expense 2,947 1,725 Adjusted EBITDA $ 31,683 $ 25,604 Capitalization of content databases (5,140) (5,747) Purchases of property and equipment (5,093) (725) Cash paid for interest (117) (115) Cash paid for income taxes (6,620) (275) Free cash flow $ 14,713 $ 18,742 Ancestry.com Inc. Other Data Three Months Ended March 31, 2012 December 31, 2011 September 30, 2011 June 30, 2011 March 31, 2011 Total subscribers 1,869,571 1,702,563 1,701,322 1,672,319 1,615,169 Gross subscriber additions 389,928 219,886 273,979 321,687 424,531 Monthly churn 3.6% 3.8% 4.2% 4.6% 3.7% Subscriber acquisition cost $88.11 $107.88 $93.64 $81.23 $69.56 Average monthly revenue per subscriber $18.49 $18.38 $18.68 $18.88 $18.05