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8-K - FORM 8-K - Ancestry.com Inc.d384963d8k.htm
EX-99.3 - EX-99.3 - Ancestry.com Inc.d384963dex993.htm
EX-99.2 - EX-99.2 - Ancestry.com Inc.d384963dex992.htm

Exhibit 99.1

 

LOGO

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 – 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

 

   

Subscribers totaled approximately 2,005,000 as of June 30, 2012, a 20% increase over the end of the second quarter of 2011 and a 7% increase from the end of the first quarter of 2012.

 

   

Gross subscriber additions were 361,000 in the second quarter of 2012, compared to 322,000 in the second quarter of 2011 and 390,000 in the first quarter of 2012.

 

   

Monthly churn1 was 3.4% in the second quarter of 2012, compared to 4.6% in the second quarter of 2011 and 3.6% in the first quarter of 2012.

 

   

Subscriber acquisition cost2 in the second quarter of 2012 was $81.49, compared to $81.23 in the second quarter of 2011 and $88.11 in the first quarter of 2012.

 

   

Average monthly revenue per subscriber3 in the second quarter of 2012 was $18.84, compared to $18.88 in the second quarter of 2011 and $18.49 in the first quarter of 2012.

Second Quarter 2012 Financial Highlights

 

   

Total revenue for the second quarter of 2012 was $119.1 million, an increase of 18% over $101.3 million in the second quarter of 2011.

 

   

Operating income for the second quarter of 2012 was $29.4 million, compared to $26.5 million in the second quarter of 2011.

 

   

Adjusted EBITDA4 for the second quarter of 2012 was $42.9 million, compared to $38.4 million in the second quarter of 2011. Adjusted EBITDA margin for the second quarter of 2012 was 36.0%, compared to 37.9% in the second quarter of 2011.

 

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.


   

Net income was $20.0 million, or $0.44 per fully diluted share, for the second quarter of 2012 compared to $16.6 million, or $0.33 per fully diluted share, in the second quarter of 2011.

 

   

Free cash flow5 totaled $16.3 million for the second quarter of 2012 compared to $27.1 million for the second quarter of 2011.

 

   

Cash and cash equivalents totaled $69.6 million as of June 30, 2012.

Recent Business Highlights

 

   

The Company surpassed the 2 million subscriber milestone.

 

   

The Company launched AncestryDNA May 3, 2012 providing Ancestry subscribers the ability to genetically understand their ethnicity, find recent common ancestors, and communicate with genetic cousins.

 

   

The Company initiated the roll out of the 1940 US Census, processed 3.2 million images and over 130 million records.

 

   

The Company ended the quarter with approximately 10.4 billion records; new collections included:

 

   

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

 

   

The Company continued making refinements and improvements to its “hinting” capability, which allowed subscribers persistent hinting across the site header and menu bar, and created a hints widget within specific content collections.

 

   

The Company allowed Google search engines to crawl the 1940 census driving natural searches and qualified traffic to the Ancestry site.

 

   

The Company continued development on its Facebook app by launching a beta version allowing subscribers to add living family members and Facebook photos to their Ancestry trees.

Business Outlook

The Company’s financial and operating expectations for the third quarter and full year 2012 are as follows:

Third Quarter 2012

 

   

Revenue in the range of $122.0 to $125.0 million

 

   

Adjusted EBITDA excluding DNA investment6 of $49.3 to $51.8 million

 

   

DNA investment of $2.5 to $3 million

 

   

Adjusted EBITDA in the range of $46.5 to $49.0 million

 

   

Ending subscribers in the range of 2,000,000 to 2,020,000

Full Year 2012

 

   

Revenue in the range of $473.0 to $480.0 million

 

   

Adjusted EBITDA excluding DNA investment6 of $181.5 to $186.5 million

 

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


   

DNA investment of $10 to $13 million

 

   

Adjusted EBITDA in the range of $170.0 to $175.0 million

 

   

Ending subscribers of approximately 2,000,000 to 2,020,000

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/ 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


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.

For more information:

 

Investors:    Media:
Aaron Felix    Melissa Garrett
(801) 705-7942    (801) 705-7104
afelix@ancestry.com    mgarrett@ancestry.com


Ancestry.com Inc.

Consolidated Balance Sheets

(in thousands)

 

     June 30,
2012
    December 31,
2011
 
     (unaudited)        

Assets

    

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.

(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