Ancestry.com Inc. Reports Q2 2012 Financial Results
Q2 Total Revenue $119 Million, Up 18% Year-Over-Year Raises Full-Year Revenue and Earnings Guidance
PROVO, Utah, July 25, 2012 (GLOBE NEWSWIRE) -- Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family history resource, reported today financial results for the second quarter ended June 30, 2012.
"Ancestry.com delivered outstanding results in the second quarter, with all key metrics outperforming our expectations," said Tim Sullivan, Chief Executive Officer. "Highlights include surpassing the two million subscriber milestone; commencing the digitization and indexing of the 1940 U.S. census data, around which we have built a great package of features and tools; and a successful launch of our DNA offering, where the initial response has been terrific. We believe we are positioned for a great second half of 2012, both financially and through the continued investment and good progress we are making across our key product initiatives." Ancestry.com Web Sites Highlights Second Quarter 2012 Financial Highlights Recent Business Highlights Business Outlook
The Company's financial and operating expectations for the third quarter and full year 2012 are as follows: Third 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/ under Events and Presentations. Participants can also access the conference call by dialing 719-325-2214 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, August 1, 2012. To access the replay, dial 719-457-0820 and enter the replay passcode 4191216. 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 on 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 has 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 approximately 2 million paying subscribers. More than 10 billion records have been added to the site in the past 15 years. Ancestry users have created more than 38 million family trees containing approximately more than 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.
The Ancestry.com, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13617 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; NBC's failure to renew Who Do You Think You Are?; 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 quarter ended March 31, 2012, 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 plus other 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 capital and equipment and cash paid for income taxes and interest. 6 Assumes mid-point of planned DNA investment
-- 1940 Census state index roll out of 11 states and as of today a total of 26 states
-- Almost 13 million records of the UK National Probate Calendar —the only comprehensive English and Welsh probates (wills) collection
-- Completed the publication of the entire 1911 England & Wales census, making more than 36 million records searchable
-- 14 million UK Land Tax records
-- Assembled the Titanic Anniversary Collection; bringing together archives from the US, UK, and Canada, including passenger lists, crew lists, gravestone inscriptions, and photographs for the first time
Ancestry.com Inc. Consolidated Balance Sheets (in thousands)
June 30,
2012December 31,
2011
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$ 69,615
$ 48,998
Restricted cash
3,689
1,702
Accounts receivable, net
6,626
7,599
Income tax receivable
8,798
1,763
Deferred income taxes
4,823
4,823
Prepaid expenses and other current assets
7,965
7,945
Total current assets
101,516
72,830
Property and equipment, net
24,694
21,701
Content databases, net
84,199
76,646
Intangible assets, net
22,912
17,594
Goodwill
303,102
302,422
Other assets
4,638
2,656
Total assets
$ 541,061
$ 493,849
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$ 9,432
$ 9,817
Accrued expenses
32,442
34,725
Deferred revenues
133,498
108,654
Debt
--
10,000
Total current liabilities
175,372
163,196
Deferred income taxes
16,539
14,925
Other long-term liabilities
6,537
5,219
Total liabilities
198,448
183,340
Commitments and contingencies
Stockholders' equity:
Common stock
49
48
Additional paid-in capital
386,492
374,948
Treasury stock
(175,000)
(162,168)
Accumulated other comprehensive income
431
564
Retained earnings
130,641
97,117
Total stockholders' equity
342,613
310,509
Total liabilities and stockholders' equity
$ 541,061
$ 493,849
Ancestry.com Inc. Consolidated Statements of Income (in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
Revenues:
(unaudited)
(unaudited)
Subscription revenues
$ 113,037
$ 96,707
$ 215,633
$ 181,890
Product and other revenues
6,041
4,601
11,981
10,446
Total revenues
119,078
101,308
227,614
192,336
Costs of revenues:
Cost of subscription revenues
16,403
14,111
32,697
27,998
Cost of product and other revenues
3,584
1,841
6,369
3,669
Total cost of revenues
19,987
15,952
39,066
31,667
Gross profit
99,091
85,356
188,548
160,669
Operating expenses:
Technology and development
18,778
14,242
35,405
27,910
Marketing and advertising
34,944
30,250
74,493
64,058
General and administrative
12,733
10,111
23,375
19,468
Amortization of acquired intangible assets
3,224
4,297
5,785
8,567
Total operating expenses
69,679
58,900
139,058
120,003
Income from operations
29,412
26,456
49,490
40,666
Other expense, net
(54)
(429)
(15)
(536)
Income before income taxes
29,358
26,027
49,475
40,130
Income tax expense
(9,381)
(9,470)
(15,951)
(14,602)
Net income
$ 19,977
$ 16,557
$ 33,524
$ 25,528
Net income per common share
Basic
$ 0.47
$ 0.36
$ 0.78
$ 0.56
Diluted
$ 0.44
$ 0.33
$ 0.74
$ 0.51
Weighted average common shares outstanding
Basic
42,758
45,596
42,766
45,484
Diluted
45,469
49,893
45,598
50,082
Reconciliation of adjusted EBITDA and free cash flow to net income:
Net income
$ 19,977
$ 16,557
$ 33,524
$ 25,528
Other expense, net
54
429
15
536
Income tax expense
9,381
9,470
15,951
14,602
Depreciation
3,606
3,188
7,153
6,452
Amortization
5,811
6,576
10,922
12,982
Stock-based compensation expense
4,056
2,201
7,003
3,926
Adjusted EBITDA
$ 42,885
$ 38,421
$ 74,568
$ 64,026
Capitalization of content databases
(7,538)
(4,204)
(12,678)
(9,951)
Purchases of property and equipment
(5,024)
(3,693)
(10,117)
(4,418)
Cash paid for interest
(83)
(111)
(200)
(226)
Cash paid for income taxes
(13,904)
(3,282)
(20,524)
(3,557)
Free cash flow
$ 16,336
$ 27,131
$ 31,049
$ 45,874
Ancestry.com Inc. Other Data
Three Months Ended June 30, 2012 March 31, 2012 December 31, 2011 September 30, 2011 June 30, 2011 March 31, 2011 Total subscribers
2,005,409
1,869,571
1,702,563
1,701,322
1,672,319
1,615,169 Gross subscriber additions
360,685
389,928
219,886
273,979
321,687
424,531 Monthly churn
3.4%
3.6%
3.8%
4.2%
4.6%
3.7% Subscriber acquisition cost
$81.49
$88.11
$107.88
$93.64
$81.23
$69.56 Average monthly revenue per subscriber
$18.84
$18.49
$18.38
$18.68
$18.88
$18.05 CONTACT: Investors:
Aaron Felix
(801) 705-7942
afelix@ancestry.com
Media:
Melissa Garrett
(801) 705-7104
mgarrett@ancestry.com