Ancestry.com Inc. Reports Second Quarter 2011 Financial Results
— 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 Second Quarter 2011 Financial Highlights Recent Business Highlights Business Outlook
The Company's financial and operating expectations for the third quarter and full year 2011 are as follows: Third 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 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