Ancestry.com Inc. Reports 2010 Financial Results
– Ancestry.com Subscriber Growth of 31% Year-Over-Year – – 2010 Total Revenue Up 34% Year-Over-Year – – Provides FY 2011 Outlook –
PROVO, Utah, Feb. 24, 2011 (GLOBE NEWSWIRE) -- Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family history resource, today reported financial results for the quarter and full year ended December 31, 2010.
"2010 was a productive and very successful year for Ancestry.com. We drove substantial gains in our subscriber base both domestically and internationally, delivered strong financial results and executed on our plan to position the Company for long-term growth," said Tim Sullivan, Chief Executive Officer of Ancestry.com. "Highlights included investments in our product and our talent base, the completion of three complementary acquisitions, and our highly successful partnership with NBC in bringing Who Do You Think You Are? to the U.S. The hard work will continue in 2011, but we believe these achievements give us a solid foundation for growth in the coming year and beyond." Ancestry.com Web Sites Highlights Fourth Quarter and Full Year 2010 Financial Highlights Recent Business Highlights Business Outlook
The Company's financial and operating expectations for the first quarter and full year 2011 are as follows: First Quarter 2011 Full Year 2011 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 888-578-6632 (within the United States), or 719-325-2226 (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, March 4, 2011. To access the replay, dial 888-203-1112 (within the United States), or 719-457-0820 (international callers) and enter the replay passcode 1368993. 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 and certain non-cash and non-recurring items. Free cash flow subtracts from adjusted EBITDA the capitalization of content database costs, capital expenditures and cash paid for income taxes and interest expense. 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 nearly 1.4 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 20 million family trees containing over 2 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 subscriber base, our reach, our activities to enhance subscribers' experience, our activities to promote our products, our business outlook, our leadership position
and our 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 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;
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 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 Quarterly Report on Form 10-Q for the quarterly period ended September 30, 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 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 (income) expense; income tax expense; non-cash charges including depreciation, amortization, impairment of intangible assets and stock-based compensation expense; and other (income) expense.
[5] Free cash flow subtracts from adjusted EBITDA capitalization of content database costs, capital expenditures and cash paid for income taxes and interest expense.Ancestry.com Inc. Consolidated Balance Sheets (in thousands)
December 31, December 31,
2010 2009
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$ 65,519
$ 66,941
Restricted cash
2,476
2,181
Short-term investments
--
33,331
Accounts receivable, net
6,990
5,860
Income tax receivable
8,094
2,017
Deferred income taxes
3,873
8,797
Prepaid expenses and other current assets
9,243
5,380
Total current assets
96,195
124,507
Property and equipment, net
21,252
19,430
Content database costs, net
65,418
49,650
Intangible assets, net
34,281
41,484
Goodwill
303,374
285,466
Other assets
1,666
2,811
Total assets
$ 522,186
$ 523,348
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$ 9,451
$ 6,877
Accrued expenses
30,785
18,850
Escrow liability
6,193
1,763
Deferred revenues
89,301
69,711
Current portion of long-term debt
--
28,416
Total current liabilities
135,730
125,617
Long-term debt, less current portion
--
71,609
Deferred income taxes
20,571
30,117
Other long-term liabilities
2,018
1,115
Total liabilities
158,319
228,458
Commitments and contingencies
Stockholders' equity:
Common stock
45
42
Additional paid-in capital
328,957
272,513
Accumulated other comprehensive income (loss)
643
(41)
Retained earnings
34,222
22,376
Total stockholders' equity
363,867
294,890
Total liabilities and stockholders' equity
$ 522,186
$ 523,348
Ancestry.com Inc. Consolidated Statements of Income (in thousands, except per share data)
Three Months Ended Year Ended December 31, 2010 December 31, 2009 December 31, 2010 December 31, 2009
Revenues:
(unaudited)
(unaudited)
Subscription revenues
$ 77,327
$ 55,201
$ 281,670
$ 207,707
Product and other revenues
5,408
4,908
19,261
17,195
Total revenues
82,735
60,109
300,931
224,902
Costs of revenues:
Cost of subscription revenues
12,413
10,428
46,409
40,183
Cost of product and other revenues
1,769
1,927
5,698
6,140
Total cost of revenues
14,182
12,355
52,107
46,323
Gross profit
68,553
47,754
248,824
178,579
Operating expenses:
Technology and development
11,849
9,546
42,296
36,236
Marketing and advertising
23,512
17,399
94,573
61,625
General and administrative
10,475
7,971
35,390
32,540
Amortization of acquired intangible assets
4,810
4,052
15,959
16,217
Total operating expenses
50,646
38,968
188,218
146,618
Income from operations
17,907
8,786
60,606
31,961
Interest expense
(187)
(1,355)
(5,083)
(6,139)
Interest income
46
46
386
792
Other income, net
41
7
439
21
Income before income taxes
17,807
7,484
56,348
26,635
Income tax expense
(5,256)
1,587
(19,503)
(5,340)
Net income
$ 12,551
$ 9,071
$ 36,845
$ 21,295
Net income per common share
Basic
$ 0.28
$ 0.22
$ 0.85
$ 0.55
Diluted
$ 0.25
$ 0.20
$ 0.76
$ 0.51
Weighted average common shares outstanding
Basic
45,125
40,857
43,592
38,930
Diluted
49,980
45,458
48,722
41,533
Reconciliation of adjusted EBITDA and free cash flow to net income:
Net Income
$ 12,551
$ 9,071
$ 36,845
$ 21,295
Interest expense, net
141
1,309
4,697
5,347
Income tax expense
5,256
(1,587)
19,503
5,340
Depreciation expense
3,418
2,844
11,773
10,936
Amortization expense
6,813
5,868
23,526
23,214
Stock-based compensation
1,528
1,209
5,069
5,474
Other income, net
(41)
(7)
(439)
(21)
Adjusted EBITDA
$ 29,666
$ 18,707
$ 100,974
$ 71,585
Capitalization of content database costs
(5,340)
(3,543)
(13,874)
(9,398)
Purchase of property and equipment
(5,071)
(5,796)
(12,968)
(13,362)
Cash paid for interest
(117)
(1,116)
(2,645)
(7,740)
Cash paid for income taxes
(4,783)
(2,487)
(11,128)
(11,472)
Free cash flow
$ 14,355
$ 5,765
$ 60,359
$ 29,613
Ancestry.com Inc. Other Data
Three Months Ended December 31, 2010 September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 Total Subscribers
1,394,910
1,376,974
1,310,562
1,211,978
1,066,123 Gross subscriber additions
202,509
251,738
290,589
279,100
165,241 Monthly churn
3.9%
4.0%
4.3%
3.3%
3.6% Subscriber acquisition cost
$ 96.87
$ 81.58
$ 74.04
$ 69.57
$ 85.21 Average monthly revenue per subscriber
$ 17.78
$ 17.75
$ 18.02
$ 16.70
$ 16.67 CONTACT: Investors:
Ancestry.com Inc.
Ryan Ostler
(801) 705-7942
rostler@ancestry.com
Media:
Brainerd Communicators, Inc.
Ray Yeung / Jo Anne Barrameda
(212) 986-6667
yeung@braincomm.com / barrameda@braincomm.com