Ancestry.com Inc. Reports Q1 2012 Financial Results
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 First Quarter 2012 Financial Highlights Recent Business Highlights 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. Business Outlook
The Company's financial and operating expectations for the second quarter and full year 2012 are as follows: Second Quarter 2012 Full Year 2012 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. About Ancestry.com
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. 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 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
-- 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, 1788-1856Ancestry.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 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