UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to

Commission File Number: 333-189129-16

Ancestry.com LLC

(Exact name of registrant as specified in its charter)

Delaware	37-1708583
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
360 West 4800 North Provo, Utah	84604
(Address of principal executive offices)	(Zip Code)

(801) 705-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.     Yes  o    No  x*

* The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports that would have been required during the preceding 12 months had it been subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  o    No  x

As of October 30, 2015, 100% of the registrant’s common interests outstanding (all of which are privately owned and are not traded on any public market) were owned by a sole member.

Ancestry.com LLC

Table of Contents

	Page
Part I. Financial Information
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014	3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2015 and 2014 (unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014 (unaudited)	5
Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38
Item 4. Controls and Procedures	39
Part II. Other Information
Item 1. Legal Proceedings	40
Item 1A. Risk Factors	41
Item 6. Exhibits	64
Signatures	65
Exhibit Index	66

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ANCESTRY.COM LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2015			December 31, 2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	114,114		$	108,494
Restricted cash	3,230			49,086
Accounts receivable, net of allowances of $999 and $540 at September 30, 2015 and December 31, 2014, respectively	10,572			11,241
Current deferred income taxes	1,555			5,277
Prepaid expenses and other current assets	12,276			11,643
Total current assets	141,747			185,741
Property and equipment, net	48,588			37,106
Content databases, net	283,877			282,815
Intangible assets, net	186,753			269,054
Goodwill	948,283			948,283
Other assets	14,053			3,175
Total assets	$	1,623,301		$	1,726,174
LIABILITIES AND MEMBER’S INTERESTS
Current liabilities:
Accounts payable	$	11,957		$	11,515
Accrued expenses	55,534			47,029
Acquisition-related liabilities	3,230			49,086
Deferred revenues	156,098			145,010
Current portion of long-term debt, net	7,079			46,537
Total current liabilities	233,898			299,177
Long-term debt, net	989,868			799,403
Deferred income taxes	73,871			115,461
Other long-term liabilities	40,256			16,406
Total liabilities	1,337,893			1,230,447
Commitments and contingencies
Member’s interests:
Member’s interests	440,605			666,830
Accumulated deficit	(155,197		)	(171,103		)
Total member’s interests	285,408			495,727
Total liabilities and member’s interests	$	1,623,301		$	1,726,174

See accompanying notes to Condensed Consolidated Financial Statements (unaudited)

3

ANCESTRY.COM LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(unaudited)						(unaudited)
Revenues:
Subscription revenues	$	147,554		$	138,962		$	434,679		$	414,117
Product and other revenues	23,920			15,722			70,816			50,265
Total revenues	171,474			154,684			505,495			464,382
Costs of revenues:
Cost of subscription revenues	25,353			24,080			76,632			71,343
Cost of product and other revenues	15,265			10,996			43,413			32,924
Total cost of revenues	40,618			35,076			120,045			104,267
Gross profit	130,856			119,608			385,450			360,115
Operating expenses:
Technology and development	24,409			23,743			72,134			72,544
Marketing and advertising	40,253			42,150			124,633			128,341
General and administrative	14,180			12,927			38,062			42,482
Amortization of acquired intangible assets	27,374			36,993			82,301			111,045
Total operating expenses	106,216			115,813			317,130			354,412
Income from operations	24,640			3,795			68,320			5,703
Interest expense, net	(28,352		)	(17,232		)	(62,182		)	(52,382		)
Other income (expense), net	(156		)	(181		)	(229		)	144
Income (loss) before income taxes	(3,868		)	(13,618		)	5,909			(46,535		)
Income tax benefit	3,318			12,391			9,997			35,322
Net income (loss)	$	(550	)	$	(1,227	)	$	15,906		$	(11,213	)
Comprehensive income (loss)	$	(550	)	$	(1,227	)	$	15,906		$	(11,213	)

See accompanying notes to Condensed Consolidated Financial Statements (unaudited)

4

ANCESTRY.COM LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended September 30,
	2015			2014
	(unaudited)
Operating activities:
Net income (loss)	$	15,906		$	(11,213	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	16,517			15,862
Amortization of content databases	23,530			21,615
Amortization of acquired intangible assets	82,301			111,045
Amortization of debt-related costs	17,616			7,009
Deferred income taxes	(37,868		)	(38,271		)
Stock-based compensation expense	5,715			5,996
Excess tax benefit from stock-based compensation	(23		)	(4,063		)
Changes in operating assets and liabilities:
Accounts receivable	670			491
Other assets	(2,733		)	(3,424		)
Income taxes, net	11,031			1,497
Accounts payable and other liabilities	5,910			437
Deferred revenues	11,088			6,386
Net cash provided by operating activities	149,660			113,367
Investing activities:
Capitalization of content databases	(24,615		)	(29,208		)
Purchases of property and equipment	(9,948		)	(19,109		)
Issuance of related-party note receivable	(10,000		)	—
Net cash used in investing activities	(44,563		)	(48,317		)
Financing activities:
Member’s capital contributions	—			26
Excess tax benefits from stock-based compensation	23			4,063
Proceeds from credit facilities	727,650			—
Principal payments on debt	(584,532		)	(28,178		)
Payment of debt-offering costs	(8,511		)	—
Return-of-capital distributions	(234,107		)	(18,430		)
Payment of contingent consideration	—			(2,900		)
Net cash used in financing activities	(99,477		)	(45,419		)
Net increase in cash and cash equivalents	5,620			19,631
Cash and cash equivalents at beginning of period	108,494			86,554
Cash and cash equivalents at end of period	$	114,114		$	106,185
Supplemental disclosures of cash flow information:
Cash paid for interest	$	36,803		$	37,223
Cash paid for income taxes	16,871			1,227
Supplemental disclosures of non-cash investing and financing activities:
Increase in estimated cost of construction of a building under a build-to-suit lease	$	17,905		$	—

See accompanying notes to Condensed Consolidated Financial Statements (unaudited)

5

ANCESTRY.COM LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Ancestry.com LLC (the “Parent”) is a wholly-owned subsidiary of Ancestry.com Holdings LLC (“Holdings LLC”), which is controlled by Permira funds and co-investors. Holdings LLC is a holding company with no material operations and limited assets other than its ownership of the membership interests of Ancestry.com LLC. Additionally, Holdings LLC has no material liabilities other than the senior unsecured payment-in-kind toggle notes (the "PIK Notes") as indicated in Note 4 herein. Holdings LLC is not individually responsible for any liabilities of Ancestry.com LLC or its subsidiaries solely for reason of being a member or participating in the management of Ancestry.com LLC.

Ancestry.com LLC is a holding company, and all operations are conducted by its wholly-owned subsidiaries. Ancestry.com LLC and its subsidiaries are collectively referred to as “Ancestry.com” or the “Company.” Ancestry.com is an online family history resource that derives revenue primarily on a subscription basis from providing customers access to a proprietary technology platform and an extensive collection of billions of historical records that have been digitized, indexed and made available online.

Basis of Presentation

The Condensed Consolidated Financial Statements include the accounts of Ancestry.com LLC and its consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation of the financial statements. In accordance with Accounting Standards Update (“ASU”) 2015-03, the Company’s deferred financing costs have been reclassified to be presented in the Condensed Consolidated Balance Sheets as a direct deduction from the debt liability rather than as an asset; refer to the Recent Accounting Pronouncements section below for further information. Additionally, the Income Tax Receivable line item has been reclassified to Prepaid Expenses and Other Current Assets on the Condensed Consolidated Balance Sheets.

The following is a reconciliation of the effect of these reclassifications on the Company’s Condensed Consolidated Balance Sheet at December 31, 2014 (in thousands):

	At December 31, 2014
	As Reported		Adjustments			As Revised
Assets:
Income tax receivable	$	458	$	(458	)	$	—
Prepaid expenses and other current assets	12,143		(500		)	11,643
Other assets	28,514		(25,339		)	3,175
Liabilities:
Current portion of long-term debt	47,495		(958		)	46,537
Long-term debt, net	824,742		(25,339		)	799,403

Unaudited Interim Financial Statements

The accompanying Condensed Consolidated Balance Sheets and the Condensed Consolidated Statements of Comprehensive Income (Loss) and Statements of Cash Flows are unaudited. These unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with GAAP on the same basis as the audited Consolidated Financial Statements and, in the opinion of management, include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows.

The majority of the Company’s revenues are subscription revenues, which are recognized ratably over the subscription periods; the costs to acquire subscribers are generally incurred before the Company recognizes the associated subscription revenues. Results of operations may vary between periods due to the timing of when revenues and expenses are recognized. As such, the results of operations for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

6

These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ materially from these estimates.

The Company regularly evaluates its estimates to determine their appropriateness, including testing goodwill for impairment, recoverability of long-lived assets, income taxes, determination of the fair value of stock options included in stock-based compensation expense, timing for recognition of AncestryDNA revenues and construction costs incurred under build-to-suit leases, among others. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded within the Condensed Consolidated Financial Statements.

There have been no changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the nine months ended September 30, 2015, except the adoption of ASU 2015-03 as described below in the Recent Accounting Pronouncements section and for build-to-suit leases as described in Note 7.

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability instead of being presented as an asset. This guidance is effective for public companies for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those years. For all other entities, this guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The new guidance is to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance and represents a change in accounting principle. The Company early adopted this standard as of March 31, 2015. The effect of the adoption of ASU 2015-03 on the Company’s Condensed Consolidated Balance Sheet at December 31, 2014 is shown in the Basis of Presentation section above.

In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. This guidance is effective for public companies for fiscal years and interim periods beginning after December 15, 2015. For all other entities, this guidance is effective for annual periods beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for all entities. The new guidance is to be applied either prospectively to new cloud computing arrangements or retrospectively. The Company early adopted this standard as of March 31, 2015 and applied the guidance prospectively. It did not have a material impact on the Company’s consolidated financial statements.

7

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Further, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. In August 2015, the FASB issued ASU 2015-14, which defers by one year the effective dates of its new revenue recognition standard for public and nonpublic entities. As a result, this guidance will be effective for public companies for interim and annual periods beginning on or after December 15, 2017. For non-public companies, this guidance is effective for annual periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019. Public and nonpublic entities would be permitted to adopt the standard as early as the original public entity effective date; early adoption prior to that date would not be permitted. As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company has elected to delay adoption of new or revised accounting standards applicable to public companies until such pronouncements are made applicable to private companies. Once effective, entities can choose to apply the standard using either a full retrospective approach or a modified retrospective approach. The Company has not yet selected a transition method and is currently assessing the potential impact that this standard will have on its consolidated financial statements.

2. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consisted of the following (in thousands):

	September 30, 2015		December 31, 2014
Cash	$	52,591	$	63,995
Cash equivalents:
Money market funds	61,523		44,499
Total cash and cash equivalents	$	114,114	$	108,494

3. FAIR VALUE MEASUREMENTS

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, accounting guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels. These levels, in order of highest priority to lowest priority, are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

Cash equivalents are classified as Level 1 as they have readily available market prices in an active market. There were no movements between fair value measurement levels of the Company’s cash equivalents during the nine months ended September 30, 2015.

8

The following table summarizes the financial instruments of the Company at fair value based on the valuation approach applied to each class of security at September 30, 2015 (in thousands):

			Fair Value Measurement at Reporting Date Using
	Carrying Value at September 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds	$	61,523	$	61,523	$	—	$	—
Total assets	$	61,523	$	61,523	$	—	$	—

The following table summarizes the financial instruments of the Company at fair value based on the valuation approach applied to each class of security at December 31, 2014 (in thousands):

			Fair Value Measurement at Reporting Date Using
	Carrying Value at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds	$	44,499	$	44,499	$	—	$	—
Total assets	$	44,499	$	44,499	$	—	$	—

The carrying amounts as of September 30, 2015 and December 31, 2014 for accounts receivable and accounts payable approximated their fair values due to the immediate or short-term maturities of these financial instruments. As of September 30, 2015, the fair value of debt was $1.1 billion compared to $911.8 million at December 31, 2014. The fair value of debt was considered a Level 2 measurement as the value was determined using observable market inputs, such as current interest rates, credit quality and prices observable from less active markets.

4. DEBT

Credit Facility

In August 2015, Ancestry.com Inc. (the "Issuer"), a subsidiary of the Parent, entered into a new credit facilities (the "New Credit Facilities"), which consists of a $735.0 million senior secured term loan facility (the "New Term Loan") that matures August 2022 and an $80.0 million senior secured revolving credit facility (the "Revolving Facility") that matures August 2020. The New Term Loan was issued at 99.0% of par or an original issue discount of $7.4 million. In addition, the Company incurred $9.2 million in customary fees and expenses as a part of this transaction. On that same date, the Issuer repaid $554.5 million and all outstanding interest under its then existing senior secured credit facilities (the "Prior Credit Facilities"), which as of the date of repayment had outstanding $449.0 million under a Term B-1 Loan (the "Term B-1 Loan") and $105.5 million outstanding under the Term B-2 Loan (the "Term B-2 Loan"). The Company's indirect parent entity used the net proceeds from the debt transaction and cash-on-hand to pay a return-of-capital distribution of $215.0 million to its shareholders and vested stock-based award holders in September 2015. See Note 5 for additional information about the return-of-capital distribution.

9

In accordance with ASC 470-50 Debt – Modifications and Extinguishments, the Company performed an analysis on a creditor-by-creditor basis to determine if the debt instruments were substantially different. As a result of this analysis, during the three months ended September 30, 2015, the Company recorded $10.5 million of additional interest expense, consisting of $3.7 million of original issue discount and deferred financing costs associated with the Prior Credit Facilities and $6.8 million of the $16.6 million of total costs incurred as a part of this transaction. The original issue discount and deferred financing costs associated with new creditors and creditors under both the Prior Credit Facilities and New Credit Facilities, whose debt instruments were not deemed to be substantially different, will be amortized to interest expense over the debt term using the effective interest method.

Amounts borrowed under the New Term Loan are required to be paid in equal quarterly installments of 0.25% of the original principal amount, commencing in December 2015, with the balance payable upon maturity. If the Issuer's 11% senior notes due in December 2020 (the "Notes") are outstanding 91 days prior to the Notes' maturity date (the "Springing Maturity Date"), the New Credit Facilities will mature on the Springing Maturity Date rather than August 2022. Additionally, subject to certain conditions, a mandatory repayment may be required to be made annually beginning with the fiscal year ended December 31, 2016. The mandatory repayment may be up to 50% of excess cash flow, based on the Company’s first lien leverage ratio (the "First Lien Leverage Ratio") as defined in the credit agreement and net cash proceeds of certain other transactions as calculated at the end of each fiscal year. The Parent and certain of its subsidiaries guarantee the New Credit Facilities. All obligations under the New Credit Facilities are secured by a perfected first priority lien in substantially all of the Company’s tangible and intangible assets.

The New Term Loan and Revolving Facility bear interest on the outstanding unpaid principal amount at a rate equal to an applicable margin plus, at the Issuer’s option, either: (a) a base rate determined by reference to the highest of (i) the administrative agent's prime rate at such time, (ii) 0.50% in excess of the overnight federal funds rate at such time and (iii) the LIBOR rate that is in effect for a LIBOR loan with an interest period of one month plus 1.00%, provided that the base rate for the New Term Loan is not less than 2.00% per annum; or (b) a LIBOR rate, provided that the LIBOR rate for the New Term Loan is not less than 1.00% per annum. The applicable margin shall mean either: (i) in the case of initial term loans maintained as (a) base rate loan, 3.00%, or (b) LIBOR loans, 4.00%, (ii) in the case of initial revolving loans maintained as (a) base rate loans or swingline loans, 2.75% and (b) fixed rate loans, 3.75%. The applicable margin for the Revolving Facility is subject to step-ups and step-downs based on the Company’s First Lien Leverage Ratio. The Issuer is also required to pay a commitment fee of 0.50% per annum on the unutilized commitments under the Revolving Facility, which fee decreases to 0.375% if the First Lien Leverage Ratio is less than or equal to 1.70 to 1.00. As of September 30, 2015, the interest rate on the New Term Loan was equal to a LIBOR floor of 1.00% plus the applicable margin of 4.00%. The interest rates on the Term B-1 Loan and the Term B-2 Loan under the Prior Credit Facilities were equal to a LIBOR floor of 1.00% plus applicable margins of 3.50% and 3.00%, respectively. Additionally, the effective interest rate of the New Term Loan is approximately 5.7% while the effective interest rates of the Term B-1 Term Loan and the Term B-2 Loan under the Prior Credit Facilities were approximately 5.9%.

As of September 30, 2015, no funds had been drawn against the Revolving Facility. Borrowings under the Revolving Facility may be used for the purpose of general working capital, capital expenditures and other general corporate purposes. The New Credit Facilities also provide for a swingline subfacility of $25.0 million, a letter of credit subfacility of $50.0 million and an uncommitted incremental facility in an amount not to exceed the sum of (i) an unlimited amount if, after giving effect to incurrence, the total net secured leverage ratio is less than or equal to 3.00 to 1.00, (ii) to the extent not funded with the proceeds of long-term indebtedness, all prior voluntary prepayments, and (iii) $100.0 million, subject to certain conditions.

The New Credit Facilities permits restricted payments, including dividends, out of available amounts, as defined in the credit agreement. The available amount formulation includes a starter amount of $75.0 million and is adjusted quarterly based on consolidated net income, as defined in the credit agreement, beginning June 30, 2015 plus other additions as listed in the credit agreement. Separately, the New Credit Facilities have a general basket for restricted payments of the greater of $50 million per annum and 20.5% of the last twelve months of EBITDA as defined by the credit agreement. The New Credit Facilities contain customary affirmative and negative covenants and events of default. The Revolving Facility contains a financial covenant prohibiting the First Lien Leverage Ratio from being greater than 4.00, which is tested quarterly when utilization of the Revolving Facility (excluding letters of credit less than or equal to $10.0 million) is greater than 30% of total commitments under the Revolving Facility. As of September 30, 2015, the Company was in compliance with all covenants of the New Credit Facilities.

10

The Issuer, at its discretion, has also entered into interest rate cap agreements with the following terms: (i) $190.0 million total notional amount that currently caps the three-month LIBOR rate at 1.50% expiring March 31, 2016 (ii) $200.0 million total notional amount that caps the three-month LIBOR rate at 2.00% commencing March 31, 2016 and expiring December 30, 2016 and (iii) $300.0 million total notional amount that caps the three-month LIBOR rate at 2.00% commencing December 30, 2016 and expiring June 29, 2018. Changes in the fair value of the interest rate caps are recorded to interest expense in the Condensed Consolidated Statements of Comprehensive Income (Loss) during the period of the change. For the nine months ended September 30, 2015, the Company recorded interest expense of $1.1 million related to the change in the fair value of the interest rate caps. The change in fair value of the interest rate caps for the three months ended September 30, 2015 and September 30, 2014 and the nine months ended September 30, 2014 was immaterial. In addition, the fair value as of September 30, 2015 and December 31, 2014 was immaterial.

Senior Notes

The Issuer has outstanding $300.0 million of fixed-rate 11.0% Notes due in December 2020. Interest on the Notes is payable semi-annually in arrears on June 15 and December 15 of each year. The Issuer may redeem all or any portion of the Notes at any time prior to December 15, 2016 at a price equal to 100% of the aggregate principal plus an applicable premium, as defined in the indenture governing the Notes, and accrued interest. The Issuer may redeem any portion or all of the Notes on or after December 15, 2016 at redemption prices as set forth in the indenture, plus accrued and unpaid interest. In addition, the Issuer may redeem up to 35% of the aggregate principal of the Notes with an amount equal to the proceeds of certain equity offerings any time prior to December 15, 2015 at 111% plus accrued interest. Upon a change of control, the Issuer is required to make an offer to redeem all of the Notes from the holders at 101% of the principal amount thereof plus accrued interest. The Notes are guaranteed by the Parent and certain of its subsidiaries. The effective interest rate of the Notes is approximately 12.0%.

The indenture governing the Notes generally permits restricted payments, as defined in the indenture, including dividends, out of a cumulative basket, which grows quarterly based on 50% of the Company’s cumulative consolidated net income since October 1, 2012, as defined in the indenture. In addition, as a condition to making such payments, the Company must be in compliance with a pro-forma fixed charge coverage ratio greater than or equal to 2.0 to 1.0. Separately, the indenture has a general basket for such payments of the greater of $50.0 million or 2.5% of total assets.

Outstanding long-term debt consists of the following (in thousands):

	September 30, 2015									December 31, 2014
	Outstanding Principal			Unamortized Discount and Deferred Financing Costs			Net Carrying Amount			Outstanding Principal			Unamortized Discount and Deferred Financing Costs			Net Carrying Amount
New Term Loan	$	735,000		$	(27,069	)	$	707,931		$	—		$	—		$	—
Term B-1 Loan	—			—			—			452,533			(21,763		)	430,770
Term B-2 Loan	—			—			—			132,000			(4,758		)	127,242
Notes	300,000			(10,984		)	289,016			300,000			(12,072		)	287,928
Total debt	1,035,000			(38,053		)	996,947			884,533			(38,593		)	845,940
Less: Current portion	(7,350		)	271			(7,079		)	(48,348		)	1,811			(46,537		)
Long-term debt	$	1,027,650		$	(37,782	)	$	989,868		$	836,185		$	(36,782	)	$	799,403

The following is a schedule by year of future principal payments as of September 30, 2015 (in thousands):

Years Ending December 31,	New Term Loan		Notes		Total
2015	$	1,837	$	—	$	1,837
2016	7,350		—		7,350
2017	7,350		—		7,350
2018	7,350		—		7,350
2019	7,350		—		7,350
Thereafter	703,763		300,000		1,003,763
Total future principal payments	$	735,000	$	300,000	$	1,035,000

11

Ancestry.com Holdings LLC Senior Unsecured PIK Notes

The Company’s parent, Holdings LLC, previously issued $400.0 million of PIK Notes due October 15, 2018. In March 2015, Holdings LLC repurchased $9.8 million of the PIK Notes plus accumulated interest. To fund this repurchase, the Company issued a $10.0 million note receivable to Holdings LLC at 5% interest payable annually with a maturity date of December 31, 2017, which is subordinated to the PIK Notes. This note is recorded as a related-party note receivable in Other Assets in the Condensed Consolidated Balance Sheet.

Interest on the PIK Notes is payable semi-annually in arrears on April 15 and October 15 each year through maturity. The first and last interest payments on the PIK Notes are required to be payable entirely in cash. All other interest payments are required to be paid in cash, subject to cash availability and restricted payment capacity, as defined in the indenture. If interest payments are not required to be paid in cash, Holdings LLC will be entitled to pay all or a portion of the interest payment by increasing the principal amount of the PIK Notes or issuing new PIK Notes in an amount equal to the interest payment for the applicable interest period (“PIK Interest”). Cash interest on the PIK Notes will accrue at the rate of 9.625% per annum; PIK Interest will accrue at the rate of 10.375% per annum.

The PIK Notes are senior unsecured obligations of Holdings LLC and are structurally subordinated to all the Company’s existing and future indebtedness. Additionally, the Company did not guarantee the PIK Notes, nor were any of its assets pledged as collateral for the PIK Notes. As the Company is not an obligor or a guarantor on the PIK Notes, the debt is recorded only in the financial statements of Holdings LLC and is not reflected in the Condensed Consolidated Financial Statements of the Company. While not required, the Company has made and intends to make future payments to Holdings LLC in order to fund payments related to the PIK Notes, provided that such payments are permitted under the covenants of the New Credit Facilities and the Notes. For the nine months ended September 30, 2015 and September 30, 2014, the Company declared and paid its parent, Holdings LLC, return-of-capital distributions of $19.1 million and $18.4 million, respectively, related to the PIK Notes.

5. STOCK-BASED COMPENSATION

In September 2015, the Company's indirect parent entity paid a return-of-capital distribution of $215.0 million to its shareholders and vested stock-based award holders using the net proceeds from the debt transaction, as described in Note 4 herein, and cash-on-hand. Under the terms of the Ancelux Topco S.C.A. Equity Incentive Plan (the "Topco Plan") and the predecessor plans under which the equity awards were issued, an equitable adjustment was required to be made to all stock-based awards outstanding upon a return-of-capital distribution such that no dilution or enlargement of benefit occurred. The stock-based awards outstanding as of the date of distribution were modified as follows:

• Vested option holders received an immediate cash distribution.

• Unvested option holders will receive a cash distribution upon vesting of the original award. Options granted typically vest over a five-year term with 20% of the options vesting on the first anniversary of the grant date and the remainder vesting in equal quarterly installments over next 16 quarters thereafter.

• RSU holders either received an immediate cash distribution or will receive a cash distribution upon vesting of the awards dependent upon the terms of the individual award and the equity plan under which the award was originally granted.

In accordance with ASC 718, Compensation-Stock Compensation, the changes to the awards were accounted for as a modification. As such, the fair value of each award immediately before and after the modification was compared, and no incremental stock-compensation was recognized. A maximum of $15.2 million of future cash distributions may be paid over the next five years contingent upon vesting of the original awards as a result of this modification.

12

Stock-based compensation was included in the following captions within the Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of revenues	$	24	$	27	$	71	$	88
Technology and development	671		794		2,060		2,428
Marketing and advertising	148		331		446		796
General and administrative	1,071		1,020		3,138		2,684
Total stock-based compensation expense	$	1,914	$	2,172	$	5,715	$	5,996

6. INCOME TAXES

For the three and nine months ended September 30, 2015, the Company recorded income tax benefits of $3.3 million and $10.0 million, respectively, compared to income tax benefits of $12.4 million and $35.3 million for the three and nine months ended September 30, 2014, respectively. For the three months ended September 30, 2015, the Company’s effective income tax rate was 85.8%, compared to an effective income tax rate of 91.0% for the three months ended September 30, 2014. The change in the effective income tax rate resulted primarily from decreased tax benefits during the three months ended September 30, 2015 related to the expiration of various statutes associated with uncertain tax positions. For the nine months ended September 30, 2015, the Company’s effective income tax rate was (169.2)%, compared to an effective income tax rate of 75.9% for the nine months ended September 30, 2014. The change in the effective income tax rate resulted primarily from the foreign tax rate benefit. This benefit increased the effective income tax rate during the ninemonths ended September 30, 2014, due to the Company's loss before income taxes, but decreased the effective income tax rateduring the ninemonths ended September 30, 2015, due to the Company's income before income taxes.

The Company is subject to income taxes in U.S. and foreign jurisdictions and to examination by tax authorities. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company’s total gross unrecognized tax benefits at September 30, 2015 and December 31, 2014 were $20.3 million and $16.1 million, respectively. The $4.2 million increase in the gross unrecognized tax benefits at September 30, 2015 compared to December 31, 2014 resulted primarily from positions taken on the Company’s income tax returns related to intercompany transactions and foreign earnings. The gross uncertain tax positions, if recognized, would result in a reduction of tax expense.

7. COMMITMENTS AND CONTINGENCIES

In January 2015, the Company entered into a build-to-suit lease agreement for a new corporate headquarters, to be constructed in Lehi, Utah. The lease has an anticipated start date of mid-2016 with a 10-year initial term and $37.6 million of lease payments. The Company has concluded that it is the deemed owner of the building (for accounting purposes only) during the construction period. Accordingly, the Company has recorded a construction-in-progress asset as a component of Property and equipment, net of $17.9 million and a corresponding construction financing obligation recorded as a component of Other long-term liabilities in its Condensed Consolidated Balance Sheet as of September 30, 2015. The Company will continue to increase the construction-in-progress asset and corresponding long-term liability as additional building costs are incurred by the landlord during the construction period.

The Company establishes assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only, or build-to-suit leases, to the extent the Company is involved in the construction of the asset or takes construction risk prior to commencement of a lease. Upon completion of the construction of facilities under build-to-suit leases, the Company evaluates whether these arrangements meet the criteria for sale-leaseback accounting treatment.

     In February 2015, the Company entered into a 10-year content digitization and publication agreement that requires the Company to make escalating minimum annual royalty payments totaling $20.5 million over the life of the contract. As of September 30, 2015, no material payments have been made under the terms of the contract.

13

General Legal Proceedings

On May 4, 2015, DNA Genotek Inc. (“Genotek”) filed a complaint against Ancestry.com DNA, LLC (“Ancestry DNA”) in the United States District Court for the District of Delaware (Case No. 1:15-cv-00355-SLR). The complaint asserts causes of action for (1) infringement of U.S. Patent No. 8,221,381; (2) breach of contract for allegedly breaching the Terms and Conditions that governed Ancestry DNA’s purchase of Genotek Saliva Collection Products; (3) conversion; (4) trespass to chattel; and (5) action to quiet title. Genotek seeks preliminary and permanent injunctive relief, unspecified monetary damages, and an award of Genotek’s costs and attorneys’ fees incurred in connection with this action. Genotek did not serve this complaint on Ancestry DNA until June 4, 2015 and filed an amended complaint on July 24, 2015. The amended complaint asserts the same causes of action as the original complaint. Ancestry DNA has not yet filed a response to the complaint. AncestryDNA filed a motion to dismiss Genotek’s willful infringement, conversion, trespass to chattel, and action to quiet title claims on August 10, 2015. Genotek responded to the motion to dismiss on September 3, 2015, and AncestryDNA filed its reply brief on September 18, 2015. On October 20, 2015, AncestryDNA filed an Inter Partes Review Petition (IPR2016-00060) with the United States Patent and Trademark Office, challenging the validity of claims 1-20, 39-41, 43-47, and 49 of U.S. Patent No. 8,221,381. AncestryDNA intends to defend the litigation vigorously. While no assurances can be given as to outcomes or liability, if any, the Company does not believe that this litigation will be resolved in a manner that would have a material adverse effect on the Company's financial statements.

On July 30, 2015 DNA Genotek, Inc. (“Genotek”) filed a complaint in the United States District Court for the District of Delaware against Spectrum DNA, Spectrum Solutions L.L.C., and Spectrum Packaging L.L.C. (“Spectrum”) alleging that Spectrum’s sale of the saliva collection device created by AncestryDNA constitutes infringement of U.S. Patent No. 8,221,381. While Ancestry is not a party to this lawsuit, Ancestry has agreed to indemnify Spectrum against Genotek’s patent infringement claims. Two motions are currently pending before the court. On September 4, 2015, Spectrum filed a motion to dismiss for lack of personal jurisdiction, and Genotek filed its answering brief on September 30, 2015. Spectrum filed its reply brief on October 16, 2015. The second motion is Genotek’s motion for a preliminary injunction seeking to enjoin the sale of the allegedly infringing saliva collection devices to non-Ancestry parties, filed on August 24, 2015. Spectrum filed its answering brief to the preliminary injunction motion on October 2, 2015. Genotek’s reply brief in support of its motion is due November 5, 2015. AncestryDNA intends to defend the litigation vigorously. While no assurances can be given as to outcomes or liability, if any, the Company does not believe that this litigation will be resolved in a manner that would have a material adverse effect on the Company's financial statements.

As part of the acquisition of Archives.com from Inflection LLC, completed in August 2012, a Marketing Agreement between Inflection LLC and Z-CORP dba OneGreatFamily.com (“OGF”) was assigned to Ancestry.com Operations Inc. On or about October 10, 2014, OGF initiated a proceeding in the Fourth Judicial District Court of the State of Utah against Ancestry.com Inc. and Ancestry.com Operations Inc., which is captioned Z-CORP et al. v. Ancestry.com Inc. et al. (Civil No. 140401466). In regards to the assigned Marketing Agreement, the complaint alleges breach of contract, breach of implied covenant of good faith and fair dealing, conversion and intentional interference with prospective economic relations with alleged damages totaling over $30 million and punitive damages. On or about November 13, 2014 Ancestry.com filed a motion to dismiss the complaint in its entirety, for failing to state claims upon which relief may be granted. The Court heard oral arguments on the motion to dismiss on March 9, 2015. On April 1, 2015, the court issued a ruling granting the Company’s motion to dismiss, dismissing all claims but one with prejudice and on the merits. After OGF conceded the law had changed regarding its last claim, the final claim was dismissed without prejudice by consent of both parties. On May 13, 2015, OGF appealed the court’s ruling to the Utah Supreme Court, which subsequently assigned the appeal to the Utah Court of Appeals. OGF submitted their initial brief on September 4, 2015, and the Company's initial brief seeking to affirm the trial court is due November 6, 2015. OGF is appealing only the trial court’s dismissal of OGF’s claims for breach of contract, breach of implied covenant of good faith and fair dealing, and punitive damages.

The Company has and may become party to various other legal proceedings and other claims that arise in the ordinary course of business or otherwise in the future. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. While the Company cannot assure the ultimate outcome of any legal proceeding or contingency in which it is or may become involved, the Company does not believe that any pending legal claim or proceeding arising in the ordinary course will be resolved in a manner that would have a material adverse effect on its business. Although the Company considers the likelihood of such an outcome to be remote, if one or more of these legal matters resulted in an adverse money judgment against the Company, such a judgment could have a material adverse effect on its operating results and financial conditions and may result in the Company being required to pay significant monetary damages.

14

Appraisal Litigation (In re: Appraisal of Ancestry.com Inc.)

On October 21, 2012, the Company’s predecessor entered into a definitive merger agreement with Global Generations Merger Sub Inc. and its parent company, Ancestry US Holdings Inc., to acquire the Company’s predecessor entity for $32 per share of common stock (the “Merger”). Following the consummation of the Merger on December 28, 2012, three former shareholders, who, combined, owned approximately 1.4 million shares of the predecessor entity’s common stock, instituted two separate appraisal proceedings against Ancestry.com Inc. in the Court of Chancery of the State of Delaware pursuant to Del. C. § 262: Merion Capital, L.P. v. Ancestry.com, Inc. (C.A. No. 8173) and Merlin Partners LP et al. v. Ancestry.com Inc. (C.A. No. 8175). The two appraisal petitions alleged that the $32 per share price paid to the predecessor entity’s shareholders in the Merger did not represent the fair value of the Company on the date the Merger was consummated. On June 24, 2013, the Court consolidated the two pending appraisal proceedings as In re: Appraisal of Ancestry.com Inc. On February 9, 2015, the Court issued an order directing the Company to pay the fair value of $32 per share plus interest from the closing of the Merger through the date of payment. Therefore, on February 9, 2015, the Company paid a total of $51.1 million, which included releasing $45.3 million of restricted cash for the fair value of $32 per share plus $5.8 million for accrued interest.

8. SUBSEQUENT EVENTS

In October 2015, the Company declared and paid its parent, Holdings LLC, a return-of-capital distribution of $19.3 million. Holdings LLC used the majority of the proceeds of the return-of-capital distribution to pay accumulated interest on its PIK notes.

9. GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Ancestry.com LLC and by certain of its direct and indirect restricted subsidiaries (“Guarantor Subsidiaries”) in accordance with the indenture. All other subsidiaries that do not guarantee the Notes are “Non-Guarantors.” Each subsidiary is 100% owned directly or indirectly by the Parent, and there are no significant restrictions on the ability of the Parent or any of the Guarantor Subsidiaries to obtain funds from its subsidiaries by dividend or loan. The Parent conducts substantially all of its business through its subsidiaries. In servicing payments on the Notes and other indebtedness, the Issuer will rely on cash flows from these subsidiaries. The indenture governing the Notes provides for customary guarantee release provisions allowing the guarantee of a Guarantor Subsidiary to be automatically and unconditionally released upon certain conditions such as a sale, exchange, or transfer of substantially all of the assets or equity of the Guarantor Subsidiary, the repayment of the indebtedness that gave rise to the obligation of the Guarantor Subsidiary to guarantee the Notes, or the designation of the Guarantor Subsidiary as an Unrestricted Subsidiary, as defined in the indenture. The indenture does not provide for automatic release of the Parent’s guarantee of the Notes. See Note 4 for further information regarding the Notes.

The Guarantor Subsidiaries are exempt from reporting under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to Rule 12h-5 under the Exchange Act. As such, the Company is presenting the following Condensed Consolidating Balance Sheets, Statements of Comprehensive Income (Loss) and Statements of Cash Flows as set forth below of the Parent, Issuer, Guarantor Subsidiaries and the Non-Guarantor subsidiaries.

Basis of Presentation

The same accounting policies as described in the Condensed Consolidated Financial Statements are used by each entity in the Condensed Consolidated Financial Statements, except for the use of the equity method of accounting to reflect ownership interests in subsidiaries, which are eliminated upon consolidation. Consolidating entries and eliminations in the following Condensed Consolidated Financial Statements represent adjustments to (a) eliminate intercompany transactions between or among the Parent, the Issuer, the Guarantor Subsidiaries and the Non-Guarantors, (b) eliminate the investments in subsidiaries and (c) record consolidating entries.

All direct and indirect domestic subsidiaries are included in Ancestry U.S. Holdings Inc.’s consolidated U.S. tax return. In the Condensed Consolidated Financial Statements, income tax benefit (expense) has been allocated based on each such domestic subsidiary’s relative pretax income to the consolidated pretax income (loss).

Management believes that the allocations and adjustments noted above are reasonable. However, such allocations and adjustments may not be indicative of the actual amounts that would have been incurred had the Parent, Guarantor Subsidiaries and Non-Guarantors operated independently.

15

Certain prior period amounts have been reclassified to conform to the current year presentation of the financial statements. Other than the adjustments related to the adoption of ASU 2015-03, as discussed in the Recent Accounting Pronouncements section in Note 1, these reclassifications did not have a significant impact on the Condensed Consolidated Financial Statements. Refer to the Basis of Presentation section in Note 1 for a reconciliation of the effect of the adoption of ASU 2015-03 on the Company’s Condensed Consolidated Balance Sheets as of December 31, 2014. The reclassification of deferred financing costs described in Note 1 is applicable only to the Issuer.

16

ANCESTRY.COM LLC

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

September 30, 2015

	Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Elimination			Total
ASSETS
Current assets:
Cash and cash equivalents	$	19,383	$	1,992	$	90,343	$	2,396		$	—		$	114,114
Restricted cash	—		—		3,230		—			—			3,230
Accounts receivable, net of allowances	—		—		10,357		215			—			10,572
Current deferred income taxes	—		—		1,555		—			—			1,555
Prepaid expenses and other current assets	—		16		11,907		353			—			12,276
Intercompany receivables	53		—		180		938			(1,171		)	—
Total current assets	19,436		2,008		117,572		3,902			(1,171		)	141,747
Property and equipment, net	—		—		48,177		411			—			48,588
Content databases, net	—		—		283,137		740			—			283,877
Intangible assets, net	—		—		186,753		—			—			186,753
Goodwill	—		—		947,613		670			—			948,283
Investment in subsidiary	267,372		1,224,467		218,384		110			(1,710,333		)	—
Other assets	—		1,129		12,703		221			—			14,053
Total assets	$	286,808	$	1,227,604	$	1,814,339	$	6,054		$	(1,711,504	)	$	1,623,301
LIABILITIES AND MEMBER’S INTERESTS
Current liabilities:
Accounts payable	$	—	$	—	$	11,784	$	173		$	—		$	11,957
Accrued expenses	—		10,121		43,933		1,480			—			55,534
Acquisition-related liabilities	—		—		3,230		—			—			3,230
Deferred revenues	—		—		156,069		29			—			156,098
Current portion of long-term debt, net	—		7,079		—		—			—			7,079
Intercompany payables	3		—		954		213			(1,170		)	—
Total current liabilities	3		17,200		215,970		1,895			(1,170		)	233,898
Long-term debt, net	—		989,868		—		—			—			989,868
Deferred income taxes	—		—		73,916		(45		)	—			73,871
Other long-term liabilities	—		—		40,115		141			—			40,256
Total liabilities	3		1,007,068		330,001		1,991			(1,170		)	1,337,893
Total member’s interests	286,805		220,536		1,484,338		4,063			(1,710,334		)	285,408
Total liabilities and member’s interests	$	286,808	$	1,227,604	$	1,814,339	$	6,054		$	(1,711,504	)	$	1,623,301

17

ANCESTRY.COM LLC

CONDENSED CONSOLIDATING BALANCE SHEETS (continued)

(in thousands)

December 31, 2014

	Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Elimination			Total
ASSETS
Current assets:
Cash and cash equivalents	$	297	$	153	$	104,690	$	3,354		$	—		$	108,494
Restricted cash	—		45,280		3,806		—			—			49,086
Accounts receivable, net of allowances	—		—		6,690		4,551			—			11,241
Current deferred income taxes	—		—		5,277		—			—			5,277
Prepaid expenses and other current assets	—		—		11,291		352			—			11,643
Intercompany receivables	46		—		2,895		811			(3,752		)	—
Total current assets	343		45,433		134,649		9,068			(3,752		)	185,741
Property and equipment, net	—		—		36,551		555			—			37,106
Content databases, net	—		—		281,998		817			—			282,815
Intangible assets, net	—		—		269,054		—			—			269,054
Goodwill	—		—		947,563		720			—			948,283
Investment in subsidiary	496,781		1,278,254		423,266		48			(2,198,349		)	—
Other assets	—		318		2,617		240			—			3,175
Total assets	$	497,124	$	1,324,005	$	2,095,698	$	11,448		$	(2,202,101	)	$	1,726,174
LIABILITIES AND MEMBER’S INTERESTS
Current liabilities:
Accounts payable	$	—	$	60	$	11,026	$	429		$	—		$	11,515
Accrued expenses	—		7,051		35,747		4,231			—			47,029
Acquisition-related liabilities	—		45,280		3,806		—			—			49,086
Deferred revenues	—		—		144,969		41			—			145,010
Current portion of long-term debt, net	—		46,537		—		—			—			46,537
Intercompany payables	—		—		825		2,927			(3,752		)	—
Total current liabilities	—		98,928		196,373		7,628			(3,752		)	299,177
Long-term debt, net	—		799,403		—		—			—			799,403
Deferred income taxes	—		—		115,497		(36		)	—			115,461
Other long-term liabilities	—		—		16,406		—			—			16,406
Total liabilities	—		898,331		328,276		7,592			(3,752		)	1,230,447
Total member’s interests	497,124		425,674		1,767,422		3,856			(2,198,349		)	495,727
Total liabilities and member’s interests	$	497,124	$	1,324,005	$	2,095,698	$	11,448		$	(2,202,101	)	$	1,726,174

18

ANCESTRY.COM LLC

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended September 30, 2015

	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total
Total revenues	$	—		$	—		$	171,119		$	3,182		$	(2,827	)	$	171,474
Total cost of revenues	—			—			43,122			323			(2,827		)	40,618
Gross profit	—			—			127,997			2,859			—			130,856
Operating expenses:
Technology and development	—			—			24,017			392			—			24,409
Marketing and advertising	—			—			38,217			2,036			—			40,253
General and administrative	—			55			13,647			478			—			14,180
Amortization of acquired intangible assets	—			—			27,374			—			—			27,374
Total operating expenses	—			55			103,255			2,906			—			106,216
Income (loss) from operations	—			(55		)	24,742			(47		)	—			24,640
Interest income (expense), net	—			(28,495		)	143			—			—			(28,352		)
Other expense, net	—			—			(128		)	(28		)	—			(156		)
Income (loss) before income taxes	—			(28,550		)	24,757			(75		)	—			(3,868		)
Income tax benefit (expense)	—			10,421			(7,107		)	4			—			3,318
Income (loss) before loss from subsidiaries	—			(18,129		)	17,650			(71		)	—			(550		)
Income (loss) from subsidiaries	(550		)	4,866			(13,334		)	—			9,018			—
Net income (loss)	$	(550	)	$	(13,263	)	$	4,316		$	(71	)	$	9,018		$	(550	)
Comprehensive income (loss)	$	(550	)	$	(13,263	)	$	4,316		$	(71	)	$	9,018		$	(550	)

Three Months Ended September 30, 2014

	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total
Total revenues	$	—		$	—		$	154,189		$	4,749		$	(4,254	)	$	154,684
Total cost of revenues	—			—			38,464			866			(4,254		)	35,076
Gross profit	—			—			115,725			3,883			—			119,608
Operating expenses:
Technology and development	—			—			23,142			601			—			23,743
Marketing and advertising	—			—			39,898			2,252			—			42,150
General and administrative	—			30			12,193			704			—			12,927
Amortization of acquired intangible assets	—			—			36,993			—			—			36,993
Total operating expenses	—			30			112,226			3,557			—			115,813
Income (loss) from operations	—			(30		)	3,499			326			—			3,795
Interest income (expense), net	—			(17,194		)	(39		)	1			—			(17,232		)
Other income (expense), net	—			—			16			(197		)	—			(181		)
Income (loss) before income taxes	—			(17,224		)	3,476			130			—			(13,618		)
Income tax benefit (expense)	—			5,501			6,948			(58		)	—			12,391
Income (loss) before loss from subsidiaries	—			(11,723		)	10,424			72			—			(1,227		)
Loss from subsidiaries	(1,227		)	(4,824		)	(16,475		)	—			22,526			—
Net income (loss)	$	(1,227	)	$	(16,547	)	$	(6,051	)	$	72		$	22,526		$	(1,227	)
Comprehensive income (loss)	$	(1,227	)	$	(16,547	)	$	(6,051	)	$	72		$	22,526		$	(1,227	)

19

ANCESTRY.COM LLC

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Nine Months Ended September 30, 2015

	Parent		Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total
Total revenues	$	—	$	—		$	504,389		$	10,416		$	(9,310	)	$	505,495
Total cost of revenues	—		—			128,302			1,053			(9,310		)	120,045
Gross profit	—		—			376,087			9,363			—			385,450
Operating expenses:
Technology and development	—		—			70,933			1,201			—			72,134
Marketing and advertising	—		—			118,566			6,067			—			124,633
General and administrative	—		485			35,969			1,608			—			38,062
Amortization of acquired intangible assets	—		—			82,301			—			—			82,301
Total operating expenses	—		485			307,769			8,876			—			317,130
Income (loss) from operations	—		(485		)	68,318			487			—			68,320
Interest income (expense), net	—		(62,590		)	408			—			—			(62,182		)
Other expense, net	—		—			(223		)	(6		)	—			(229		)
Income (loss) before income taxes	—		(63,075		)	68,503			481			—			5,909
Income tax benefit (expense)	—		23,023			(12,899		)	(127		)	—			9,997
Income (loss) before loss from subsidiaries	—		(40,052		)	55,604			354			—			15,906
Income (Loss) from subsidiaries	15,906		10,710			(28,988		)	—			2,372			—
Net income (loss)	$	15,906	$	(29,342	)	$	26,616		$	354		$	2,372		$	15,906
Comprehensive income (loss)	$	15,906	$	(29,342	)	$	26,616		$	354		$	2,372		$	15,906

Nine Months Ended September 30, 2014

	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total
Total revenues	$	—		$	—		$	462,895		$	15,190		$	(13,703	)	$	464,382
Total cost of revenues	—			—			115,303			2,667			(13,703		)	104,267
Gross profit	—			—			347,592			12,523			—			360,115
Operating expenses:
Technology and development	—			—			71,093			1,451			—			72,544
Marketing and advertising	—			—			120,194			8,147			—			128,341
General and administrative	—			127			40,310			2,045			—			42,482
Amortization of acquired intangible assets	—			—			111,045			—			—			111,045
Total operating expenses	—			127			342,642			11,643			—			354,412
Income (loss) from operations	—			(127		)	4,950			880			—			5,703
Interest income (expense), net	—			(52,265		)	(121		)	4			—			(52,382		)
Other income (expense), net	—			(8		)	163			(11		)	—			144
Income (loss) before income taxes	—			(52,400		)	4,992			873			—			(46,535		)
Income tax benefit (expense)	—			18,340			17,157			(175		)	—			35,322
Income (loss) before loss from subsidiaries	—			(34,060		)	22,149			698			—			(11,213		)
Loss from subsidiaries	(11,213		)	(22,818		)	(56,180		)	—			90,211			—
Net income (loss)	$	(11,213	)	$	(56,878	)	$	(34,031	)	$	698		$	90,211		$	(11,213	)
Comprehensive income (loss)	$	(11,213	)	$	(56,878	)	$	(34,031	)	$	698		$	90,211		$	(11,213	)

20

ANCESTRY.COM LLC

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended September 30, 2015

	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total
Net cash provided by (used in) operating activities	$	129,527		$	34,470		$	171,897		$	(904	)	$	(185,330	)	$	149,660
Investing activities:
Capitalization of content databases	—			—			(24,615		)	—			—			(24,615		)
Purchases of property and equipment	—			—			(9,933		)	(15		)	—			(9,948		)
Issuance of related-party note receivable	—			—			(10,000		)	—			—			(10,000		)
Investment in subsidiaries	—			(23,024		)	—			(62		)	23,086			—
Return of capital from subsidiaries	123,666			64,938			209,152			—			(397,756		)	—
Net cash provided by (used in) investing activities	123,666			41,914			164,604			(77		)	(374,670		)	(44,563		)
Financing activities:
Member's capital contributions	—			—			—			—			—			—
Excess tax benefits from stock-based compensation	—			—			—			23			—			23
Proceeds from credit facilities	—			727,650			—			—			—			727,650
Principal payments on debt	—			(584,532		)	—			—			—			(584,532		)
Payment of debt-offering costs	—			(8,511		)	—			—			—			(8,511		)
Return-of-capital distributions	(234,107		)	—			—			—			—			(234,107		)
Payment of contingent consideration	—			—			—			—			—			—
Capital contribution from parent	—			—			23,086			—			(23,086		)	—
Return of capital to parent	—			(209,152		)	(188,604		)	—			397,756			—
Intercompany dividends paid	—			—			(185,330		)	—			185,330			—
Net cash provided by (used in) financing activities	(234,107		)	(74,545		)	(350,848		)	23			560,000			(99,477		)
Net increase (decrease) in cash and cash equivalents	19,086			1,839			(14,347		)	(958		)	—			5,620
Cash and cash equivalents at beginning of period	297			153			104,690			3,354			—			108,494
Cash and cash equivalents at end of period	$	19,383		$	1,992		$	90,343		$	2,396		$	—		$	114,114

21

ANCESTRY.COM LLC

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (continued)

(in thousands)

Nine Months Ended September 30, 2014

	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total
Net cash provided by (used in) operating activities	$	37,327		$	87,709		$	151,068		$	(3,761	)	$	(158,976	)	$	113,367
Investing activities:
Capitalization of content databases	—			—			(29,208		)	—			—			(29,208		)
Purchases of property and equipment	—			—			(19,059		)	(50		)	—			(19,109		)
Issuance of related-party note receivable	—			—			—			—			—			—
Investment in subsidiaries	—			(18,340		)	(33		)	(33		)	18,406			—
Return of capital from subsidiaries	—			—			41,630			—			(41,630		)	—
Net cash used in investing activities	—			(18,340		)	(6,670		)	(83		)	(23,224		)	(48,317		)
Financing activities:
Member’s capital contributions	26			—			—			—			—			26
Excess tax benefits from stock-based compensation	—			—			4,063			—			—			4,063
Proceeds from credit facilities	—			—			—			—			—			—
Principal payments on debt	—			(28,178		)	—			—			—			(28,178		)
Payment of debt-offering costs	—			—			—			—			—			—
Return-of-capital distributions	(18,430		)	—			—			—			—			(18,430		)
Payment of contingent consideration	—			—			(2,900		)	—			—			(2,900		)
Capital contribution from parent	—			—			18,373			33			(18,406		)	—
Return of capital to parent	—			(41,630		)	—			—			41,630			—
Intercompany dividends paid	—			—			(143,652		)	(15,324		)	158,976			—
Net cash used in financing activities	(18,404		)	(69,808		)	(124,116		)	(15,291		)	182,200			(45,419		)
Net increase (decrease) in cash and cash equivalents	18,923			(439		)	20,282			(19,135		)	—			19,631
Cash and cash equivalents at beginning of period	338			562			60,362			25,292			—			86,554
Cash and cash equivalents at end of period	$	19,261		$	123		$	80,644		$	6,157		$	—		$	106,185

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements relating to future events and future performance. All statements other than those that are purely historical may be forward-looking statements. We may, in some cases, use words such as “project,” “believe,” “anticipate,” “continue,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “will” or “may,” or other words that convey uncertainty of future events or outcomes, to identify these forward-looking statements. Forward-looking statements in this Quarterly Report include statements about:

• our future financial performance, including our revenues, cost of revenues and operating expenses, and our ability to sustain profitability and achieve long-term growth;

• our ability to generate additional revenues on a cost-effective basis;

• our ability to attract and retain subscribers;

• the size of our total addressable market;

• our high degree of leverage and our ability to service our debt;

• our intention to make payments to our parent, including those related to the PIK Notes;

• our ability or our parent’s ability to take on additional debt;

• risks related to the “Notes” and to high yield debt securities generally;

• the potential impact of debt covenant restrictions on our flexibility in operating our business;

• our ability to monetize and to create a meaningful mobile experience for our subscribers;

• our ability to develop new products or technologies that will appeal to our subscribers and drive growth in our business;

• our pricing and subscription package mix;

• our ability to acquire content and make it available online;

• our ability to attract and retain highly qualified personnel;

• our continued investment in and expansion of our international operations, including our international launch of AncestryDNA;

• our competitive position;

• our ability to manage costs and control margins and trends;

• our liquidity and working capital requirements and the availability of cash and credit;

• our ability to protect users’ data and privacy concerns and to comply with privacy and security standards and laws, including data related to our AncestryDNA and AncestryHealth services;

• the impact of external market forces, including changes in the macroeconomic environment, interest rates and foreign currency exchange rates;

• the impact of claims or litigation; and

• the impact of current and potential legislation and regulatory changes on privacy, subscription renewal, DNA or other aspects of our business.

23

Although we believe that the assumptions underlying the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss in this Quarterly Report under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and elsewhere, including information contained in our Annual Report on Form 10-K. You should read these factors and the other cautionary statements made in this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report.

If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. All subsequent written or spoken forward-looking statements attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this Quarterly Report are made only as of the date of this Quarterly Report, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Overview

Ancestry.com LLC (the “Parent”) is a holding company, and all operations are conducted by its wholly-owned subsidiaries. Ancestry.com LLC and its subsidiaries are collectively referred to as “Ancestry.com,” “we” or “us.” Ancestry.com is the world’s largest online family history resource with over 2.2 million paying subscribers around the world to its core Ancestry websites, including its flagship site www.ancestry.com and its Ancestry international websites, as of September 30, 2015.

We believe that most people have a fundamental desire to understand who they are and from where they came. Our mission is to help everyone discover, preserve and share their family history. The foundation of our service is an extensive collection of more than 16 billion historical records that we have digitized, indexed and added to our core Ancestry websites. We believe we provide ongoing value to our subscribers by regularly adding new historical content, by enhancing our services and platforms with new tools and features, by improving the integration between our products and by enabling greater collaboration among our users through the growth of our global community.

We also operate a suite of family history products, which complement our core Ancestry websites. Our AncestryDNA service allows customers to not only discover their genetic ethnicity but to also find ancestors using just their DNA. We also offer other subscription-based services, such as Archives.com, Fold3.com and Newspapers.com. These products and services contribute toward acquiring new subscribers by allowing us to reach consumers with varying family history interests.    

The following discussion and analysis is based on and should be read in conjunction with the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report, as well as the Consolidated Financial Statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations and other information in our Annual Report on Form 10-K.

Key Business Metrics

Our management regularly reviews a number of financial and operating metrics, including the following key operating metrics to evaluate our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate forward-looking projections. The following key operating metrics reflect data with respect to our Ancestry.com websites and exclude our other subscription-based websites, such as Archives.com, Fold3.com, and Newspapers.com.

• Total Subscribers. A subscriber is an individual who pays for renewable access or redeems a gift subscription to one of our core Ancestry websites. Total subscribers is defined as the number of subscribers at the end of the period.

• Net Subscriber Additions. Net subscriber additions is the total number of new customers who purchase a subscription or redeem a gift subscription to our core Ancestry websites less the total number of subscribers who choose not to renew a completed subscription in the period.

24

Our key business metrics are presented for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014 (in thousands):

	Three Months Ended
	September 30, 2015	June 30, 2015	September 30, 2014
Total subscribers at end of quarter	2,243	2,220	2,125
Net subscriber additions	23	1	16

The following table presents the percentage of total subscribers by subscription duration type at September 30, 2015, June 30, 2015 and September 30, 2014:

	September 30, 2015		June 30, 2015		September 30, 2014
Annual	37	%	37	%	40	%
Semi-annual	25		25		21
Quarterly	2		2		2
Monthly	36		36		37
Total	100	%	100	%	100	%

Components of Condensed Consolidated Statements of Comprehensive Income (Loss)

Revenues

Subscription revenues. We derive subscription revenues primarily from providing access to our core Ancestry websites, and we recognize subscription revenues, net of estimated cancellations, ratably over the subscription period. We offer a 14-day free trial to our core Ancestry websites, after which, unless cancelled, we charge the full period subscription amount. No revenue is recognized or allocated to the 14-day free-trial period. Amounts received from subscribers for which the performance obligations have not been fulfilled are recorded in deferred revenue. We have established an allowance for sales returns based on historical subscription cancellations. Actual customer subscription cancellations are charged against the allowance or deferred revenues to the extent that revenue has not yet been recognized.

Subscription revenues from our core Ancestry websites accounted for approximately 91% and 92% of total subscription revenues for the three and nine months ended September 30, 2015, respectively. Total subscription revenues also include subscriptions to our other websites, such as Archives.com, Fold3.com and Newspapers.com. We attribute subscription revenues by country based on the billing address of the subscriber, regardless of the website to which the person subscribes. The following table presents subscription revenue by geographic region (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
United States	$	116,181	$	106,094	$	340,159	$	316,067
United Kingdom	16,276		16,561		48,663		48,678
All other countries	15,097		16,307		45,857		49,372
Total subscription revenues	$	147,554	$	138,962	$	434,679	$	414,117

Product and other revenues. Product and other revenues include sales of our AncestryDNA services, genealogical research services, shipping revenue, Family Tree Maker desktop software and other products and services. We recognize revenue from sales of our AncestryDNA services when the DNA results are delivered to the customer or when the likelihood of the DNA kit being submitted by the customer for testing is remote, as determined based on historical return patterns. Revenues related to our other products or services are recognized upon shipment of the product or completion of the services, as applicable.

25

Expenses

Personnel-related costs for each category of cost of revenues and operating expenses include salaries, bonuses, stock-based compensation, employee benefit costs and employer payroll taxes.

Cost of Revenues

Cost of subscription revenues. Cost of subscription revenues consists primarily of amortization of content databases, web server operating costs, personnel-related costs of web support and customer service employees, credit card processing fees and outside service costs for customer services. Web-server operating costs include depreciation, software licensing on web servers and related equipment and web-hosting costs.

Cost of product and other revenues. Cost of product and other revenues consists of AncestryDNA service costs, personnel-related costs of customer service and other product fulfillment employees, direct costs of other products sold, shipping costs and credit card processing fees.

Operating Expenses

Technology and development. Technology and development expenses consist primarily of personnel-related costs and outside service costs. Technology and development personnel-related costs include the personnel costs of developing new products and tools and maintaining and testing our websites. Our development personnel are primarily based in the United States and are focused on creating accessibility to content and tools for individuals to do family history research. Outside service costs are primarily incurred for third-party product development and quality assurance services.

Marketing and advertising. Marketing and advertising expenses consist primarily of external marketing expenses, such as television, search and display advertising and personnel-related costs. Marketing and advertising costs are principally incurred in the United States, the United Kingdom, Australia and Canada.

General and administrative. General and administrative expenses consist principally of personnel-related and outside service expenses related to our executive, finance, legal, human resources and other administrative functions.

Amortization of acquired intangible assets. Amortization of acquired intangible assets is the amortization expense associated with subscriber relationships and contracts, technologies, trademarks and trade names and other acquired intangible assets.

Interest Expense, Net, Other Income (Expense), Net and Income Tax Benefit

Interest expense, net. Interest expense, net includes interest expense associated with our debt, amortization of deferred financing costs and original issue discount costs associated with the issuance of our debt, including accelerated amortization of costs as a result of any debt restructuring or prepayments, and interest income earned on cash and cash equivalents or related-party notes receivable. Our interest expense varies based on the level of debt outstanding and changes in interest rates.

Other income (expense), net. Other income (expense), net primarily includes foreign currency transaction and remeasurement gains and losses, which vary based on changes in foreign currency exchange rates.

Income tax benefit. Income tax benefit consists of federal and state income taxes in the United States and income taxes in certain foreign jurisdictions.

26

Results of Operations

The following table sets forth our statements of operations, as included in the Condensed Consolidated Statements of Comprehensive Income (Loss), as a percentage of total revenues for the three and nine months ended September 30, 2015 and 2014. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
Subscription revenues	86.1	%	89.8	%	86.0	%	89.2	%
Product and other revenues	13.9		10.2		14.0		10.8
Total revenues	100.0		100.0		100.0		100.0
Costs of revenues:
Cost of subscription revenues	14.8		15.6		15.1		15.4
Cost of product and other revenues	8.9		7.1		8.6		7.1
Total cost of revenues	23.7		22.7		23.7		22.5
Gross profit	76.3		77.3		76.3		77.5
Operating expenses:
Technology and development	14.2		15.3		14.3		15.6
Marketing and advertising	23.5		27.2		24.7		27.6
General and administrative	8.2		8.5		7.5		9.1
Amortization of acquired intangible assets	16.0		23.9		16.3		23.9
Total operating expenses	61.9		74.9		62.8		76.2
Income from operations	14.4		2.4		13.5		1.3
Interest expense, net	(16.6	)	(11.1	)	(12.3	)	(11.3	)
Other income (expense), net	(0.1	)	(0.1	)	—		—
Income (loss) before income taxes	(2.3	)	(8.8	)	1.2		(10.0	)
Income tax benefit	2.0		8.0		1.9		7.6
Net income (loss)	(0.3	)%	(0.8	)%	3.1	%	(2.4	)%

Revenues, Costs of Revenues and Gross Profit

	Three Months Ended September 30,								Nine Months Ended September 30,
	2015			2014			% Change		2015			2014			% Change
	(In thousands)								(In thousands)
Revenues:
Subscription revenues	$	147,554		$	138,962		6.2	%	$	434,679		$	414,117		5.0	%
Product and other revenues	23,920			15,722			52.1		70,816			50,265			40.9
Total revenues	171,474			154,684			10.9		505,495			464,382			8.9
Cost of revenues:
Cost of subscription revenues	25,353			24,080			5.3		76,632			71,343			7.4
Cost of product and other revenues	15,265			10,996			38.8		43,413			32,924			31.9
Total cost of revenues	40,618			35,076			15.8		120,045			104,267			15.1
Gross profit	$	130,856		$	119,608		9.4	%	$	385,450		$	360,115		7.0	%
Gross profit percentage	76.3		%	77.3		%			76.3		%	77.5		%

27

Subscription revenues

For the three months ended September 30, 2015, our subscription revenues increased $8.6 million compared to the three months ended September 30, 2014. This increase was primarily due to an increase in the average number of total subscribers and in the average monthly revenue per subscriber for the three months ended September 30, 2015 compared to the three months ended September 30, 2014. Premium packages, which may include subscriptions bundled with our other subscriptions services such as Newspapers.com and Fold3.com, and monthly subscription durations have a higher average monthly revenue per subscriber than standard packages and longer-term subscription durations. For the three months ended September 30, 2015, changes in average foreign currency exchange rates had a two percentage point negative impact on subscription revenues compared to the three months ended September 30, 2014.

For the nine months ended September 30, 2015, our subscription revenues increased $20.6 million compared to the nine months ended September 30, 2014. The increase was driven by the same factors that influenced the three-month results. For the nine months ended September 30, 2015, changes in average foreign currency exchange rates had a one-and-a-half percentage point negative impact on subscription revenues compared to the nine months ended September 30, 2014.

Product and other revenues

For the three months ended September 30, 2015, our product and other revenues increased $8.2 million compared to the three months ended September 30, 2014. The increase was primarily due to an $8.7 million increase in AncestryDNA revenues due to higher sales volume. Additionally, revenues from genealogical research services increased for the three months ended September 30, 2015 compared to the three months ended September 30, 2014, partially offset by a decrease in revenue from product lines that have been discontinued.

For the nine months ended September 30, 2015, our product and other revenues increased $20.6 million compared to the nine months ended September 30, 2014. The increase was primarily due to a $22.0 million increase in AncestryDNA revenues due to higher sales volume. Additionally, revenues from genealogical research services increased $2.0 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. These increases were partially offset by a $3.3 million decrease in revenues from Family Tree Maker software and discontinued products.

Cost of subscription revenues

For the three months ended September 30, 2015, our cost of subscription revenues increased $1.3 million compared to the three months ended September 30, 2014. The increase was primarily due to an increase in content database amortization.

For the nine months ended September 30, 2015, our cost of subscription revenues increased $5.3 million compared to the nine months ended September 30, 2014. The increase was primarily due to a $2.6 million increase in web-hosting costs and a $1.9 million increase in content database amortization due to the continued addition of new content records to our content database for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Cost of product and other revenues

For the three months ended September 30, 2015, our cost of product and other revenues increased $4.3 million compared to the three months ended September 30, 2014. The increase was primarily due to a $4.5 million increase in costs associated with AncestryDNA due to higher sales volume, partially offset by a reduction in per-unit processing costs. Additionally, costs from genealogical research services increased in relation to its revenues for the three months ended September 30, 2015 compared to the three months ended September 30, 2014. These increases were partially offset by a decrease in costs from discontinued products.

For the nine months ended September 30, 2015, our cost of product and other revenues increased $10.5 million compared to the nine months ended September 30, 2014. The increase was primarily due to an $11.1 million increase in costs associated with AncestryDNA due to higher sales volume, partially offset by a reduction in per-unit processing costs. Additionally, costs from genealogical research services increased $1.5 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. These increases were partially offset by a $1.9 million decrease in costs for Family Tree Maker software and discontinued products.

28

Operating Expenses

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015		2014		% Change		2015		2014		% Change
	(In thousands)						(In thousands)
Operating expenses:
Technology and development	$	24,409	$	23,743	2.8	%	$	72,134	$	72,544	(0.6	)%
Marketing and advertising	40,253		42,150		(4.5	)	124,633		128,341		(2.9	)
General and administrative	14,180		12,927		9.7		38,062		42,482		(10.4	)
Amortization of acquired intangible assets	27,374		36,993		(26.0	)	82,301		111,045		(25.9	)
Total operating expenses	$	106,216	$	115,813	(8.3	)%	$	317,130	$	354,412	(10.5	)%

Technology and development

For the three and nine months ended September 30, 2015, our technology and development expenses did not change materially compared to the three and nine months ended September 30, 2014.

Marketing and advertising

For the three months ended September 30, 2015, our marketing and advertising expenses decreased $1.9 million compared to the three months ended September 30, 2014. The decrease was primarily due to a $2.3 million decrease in external marketing expenses.

For the nine months ended September 30, 2015, our marketing and advertising expenses decreased $3.7 million compared to the nine months ended September 30, 2014. The decrease was primarily due to a $3.0 million decrease in external marketing expenses.

General and administrative

For the three months ended September 30, 2015, our general and administrative expenses increased $1.3 million compared to the three months ended September 30, 2014. This increase was primarily due to a $0.7 million increase in one-time expenses primarily related to professional service fees related to the return-of-capital distribution paid to our indirect parent entity's shareholders and vested stock-based award holders during the three months ended September 30, 2015.

For the nine months ended September 30, 2015, our general and administrative expenses decreased $4.4 million compared to the nine months ended September 30, 2014. This decrease was primarily due to a $3.0 million decrease in professional service fees related to litigation. Additionally, we received $0.8 million for payment on an outstanding insurance claim in the nine months ended September 30, 2015.

Amortization of acquired intangible assets

For the three months ended September 30, 2015, our amortization of acquired intangible assets decreased $9.6 million compared to the three months ended September 30, 2014. These decreases were primarily due to certain intangible assets being amortized on an accelerated basis over the estimated useful life of the asset.

For the nine months ended September 30, 2015, our amortization of acquired intangible assets decreased $28.7 million compared to the nine months ended September 30, 2014. The decrease was driven by the same factors that influenced the three-month results.

29

Interest Expense, Net, Other Income (Expense), Net and Income Tax Benefit

	Three Months Ended September 30,								Nine Months Ended September 30,
	2015			2014			% Change		2015			2014			% Change
	(In thousands)								(In thousands)
Interest expense, net	$	(28,352	)	$	(17,232	)	64.5	%	$	(62,182	)	$	(52,382	)	18.7	%
Other income (expense), net	(156		)	(181		)	(13.8	)	(229		)	144			(259.0	)
Income tax benefit	3,318			12,391			(73.2	)	9,997			35,322			(71.7	)
Other data:
Effective tax rate	85.8		%	91.0		%			(169.2		)%	75.9		%

Interest expense, net

For the three months ended September 30, 2015, interest expense, net increased $11.1 million compared to the three months ended September 30, 2014. In August 2015, we repaid all amounts outstanding under our then existing senior secured credit facilities and on that same date entered into a new credit facilities. Due to this transaction, we recorded $10.5 million of additional interest expense during the three months ended September 30, 2015 compared to the three months ended September 30, 2014. The additional interest expense incurred included the acceleration of $3.7 million of original issue discount and deferred financing costs associated with our prior credit facilities and $6.8 million of costs incurred as a part of this transaction.

For the nine months ended September 30, 2015, interest expense, net increased $9.8 million compared to the nine months ended September 30, 2014. The increase was driven by the same factors that influenced the three-month results.

Other income (expense), net

For the three months ended September 30, 2015, other income (expense), net changed primarily due to changes in foreign currency exchange rates compared to the three months ended September 30, 2014.

For the nine months ended September 30, 2015, other income (expense), net changed primarily due to changes in foreign currency exchange rates compared to the nine months ended September 30, 2014.

Income tax benefit

For the three months ended September 30, 2015, we recorded an income tax benefit of $3.3 million resulting in an effective income tax rate of 85.8%, compared to an income tax benefit of $12.4 million, resulting in an effective income tax rate of 91.0%, for the three months ended September 30, 2014. The change in the effective income tax rate resulted primarily from decreased tax benefits during the three months ended September 30, 2015 related to the expiration of various statutes associated with uncertain tax positions.

For the nine months ended September 30, 2015, we recorded an income tax benefit of $10.0 million resulting in an effective income tax rate of (169.2)%, compared to an income tax benefit of $35.3 million, resulting in an effective income tax rate of 75.9%, for the nine months ended September 30, 2014. The change in the effective income tax rate resulted primarily from the foreign tax rate benefit. This benefit increased the effective income tax rate during the ninemonths ended September 30, 2014, due to our loss before income taxes, but decreased the effective income tax rateduring the ninemonths ended September 30, 2015 due to our income before income taxes.

30

Other Financial Data

In addition to our results discussed above determined under accounting principles generally accepted in the United States of America (“GAAP”), we believe adjusted EBITDA and free cash flow are useful to investors as supplemental measures to evaluate the overall operating performance of our business. For the three and nine months ended September 30, 2015 and 2014, our adjusted EBITDA and free cash flow were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015		2014		% Change		2015		2014		% Change
	(In thousands)						(In thousands)
Adjusted EBITDA(1)	$	67,392	$	55,853	20.7	%	$	196,383	$	160,221	22.6	%
Free cash flow(2)	44,197		31,043		42.4		108,146		73,454		47.2

⁽¹⁾  Adjusted EBITDA. We define adjusted EBITDA as net income (loss) plus interest expense, net; other (income) expense, net; income tax expense (benefit); and non-cash charges including depreciation, amortization, and stock-based compensation expense.

⁽²⁾  Free cash flow. We define free cash flow as net income (loss) plus interest expense, net; other (income) expense, net; income tax expense (benefit); and non-cash charges including depreciation, amortization, and stock-based compensation expense; minus capitalization of content databases, purchases of property and equipment and cash received (paid) for income taxes and interest.

We believe adjusted EBITDA and free cash flow are useful to investors as supplemental measures to evaluate our overall operating performance. Adjusted EBITDA and free cash flow are financial data that are not calculated in accordance with GAAP. The tables below provide a reconciliation of these non-GAAP financial measures to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP. We prepare adjusted EBITDA and free cash flow to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate these adjustments and the reasons we consider them appropriate, as well as the material limitations of non-GAAP measures.

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 and in communications with our Operating Committee concerning our financial performance. Adjusted EBITDA has also been used as a financial performance objective in determining the bonus pool under our recent performance incentive programs. Management believes that the use of adjusted EBITDA and free cash flow provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. Management believes that it is useful to exclude non-cash charges such as depreciation, amortization and stock-based compensation from adjusted EBITDA and free cash flow because (i) the amount of such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of stock-based awards, as the case may be.

Although adjusted EBITDA and free cash flow are frequently used by investors and securities analysts in their evaluations of companies, adjusted EBITDA and free cash flow each have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under GAAP.

Some of these limitations are:

• adjusted EBITDA and free cash flow do not reflect our future requirements for contractual commitments, and adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures;

• adjusted EBITDA and free cash flow do not reflect changes in, or cash requirements for, our working capital;

• adjusted EBITDA does not reflect interest income or interest expense;

• adjusted EBITDA does not reflect cash requirements for income taxes;

• adjusted EBITDA and free cash flow do not reflect the non-cash component of employee compensation;

• although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for these replacements; and

31

• other companies in our industry may calculate adjusted EBITDA or free cash flow or similarly titled measures differently than we do, limiting their usefulness as comparative measures.

The following table presents a reconciliation of our adjusted EBITDA and free cash flow to net income (loss), the most comparable GAAP measure, for the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Reconciliation of adjusted EBITDA and free cash flow to net income (loss)(1):
Net income (loss)	$	(550	)	$	(1,227	)	$	15,906		$	(11,213	)
Interest expense, net	28,352			17,232			62,182			52,382
Other (income) expense, net	156			181			229			(144		)
Income tax benefit	(3,318		)	(12,391		)	(9,997		)	(35,322		)
Depreciation	5,411			5,564			16,517			15,862
Amortization	35,427			44,322			105,831			132,660
Stock-based compensation expense	1,914			2,172			5,715			5,996
Adjusted EBITDA	$	67,392		$	55,853		$	196,383		$	160,221
Capitalization of content databases	(8,075		)	(9,689		)	(24,615		)	(29,208		)
Purchases of property and equipment	(3,504		)	(6,131		)	(9,948		)	(19,109		)
Cash paid for interest (2)	(7,550		)	(6,877		)	(36,803		)	(37,223		)
Cash paid for income taxes	(4,066		)	(2,113		)	(16,871		)	(1,227		)
Free cash flow	$	44,197		$	31,043		$	108,146		$	73,454

⁽¹⁾  Net income (loss) and therefore adjusted EBITDA and free cash flow for the three and nine months ended September 30, 2015 include $1.5 million and $2.1 million, respectively, of professional service fees related to litigation and costs associated with a return-of-capital distribution declared in August 2015 to our parent company, Ancestry.com Holdings LLC. For the three and nine months ended September 30, 2014, net loss and therefore adjusted EBITDA and free cash flow include $0.8 million and $4.3 million, respectively, of professional service fees related to litigation and costs associated with the return-of-capital distribution declared in February 2014 by our parent.

⁽²⁾  Cash paid for interest for the nine months ended September 30, 2015 and 2014 does not include $19.1 million and $18.4 million of payments made to our parent related to the interest obligations on its senior unsecured PIK notes. No payments related to interest on the PIK notes were made to our parent during the three months ended September 30, 2015 and 2014.

Liquidity and Capital Resources

Credit Facility

In August 2015, Ancestry.com Inc. (the "Issuer"), a subsidiary of the Parent, entered into a new credit facilities (the "New Credit Facilities"), which consists of a $735.0 million senior secured term loan facility (the "New Term Loan") that matures August 2022 and an $80.0 million senior secured revolving credit facility (the "Revolving Facility") that matures August 2020. The New Term Loan was issued at 99.0% of par or an original issue discount of $7.4 million. In addition, the Company incurred $9.2 million in customary fees and expenses as a part of this transaction. On that same date, the Issuer repaid $554.5 million and all outstanding interest under its then existing senior secured credit facilities (the "Prior Credit Facilities"), which as of the date of repayment had outstanding $449.0 million under a Term B-1 Loan (the "Term B-1 Loan") and $105.5 million outstanding under the Term B-2 Loan (the "Term B-2 Loan"). The Company's indirect parent entity used the net proceeds from the debt transaction and cash-on-hand to pay a return-of-capital distribution of $215.0 million to its shareholders and vested stock-based award holders in September 2015. See Notes 4 and 5 in the Condensed Consolidated Financial Statements herein for additional information about these transactions.

32

Amounts borrowed under the New Term Loan are required to be paid in equal quarterly installments of 0.25% of the original principal amount commencing in December 2015, with the balance payable upon maturity. If the Issuer's 11% senior notes due in December 2020 (the "Notes") are outstanding 91 days prior to the Notes' maturity date (the "Springing Maturity Date"), the New Credit Facilities will mature on the Springing Maturity Date rather than August 2022. Additionally, subject to certain conditions, a mandatory repayment may be required to be made annually beginning with the fiscal year ended December 31, 2016. The mandatory repayment may be up to 50% of excess cash flow, based on our first lien leverage ratio (the "First Lien Leverage Ratio") as defined in the credit agreement and net cash proceeds of certain other transactions as calculated at the end of each fiscal year. The Parent and certain of its subsidiaries guarantee the New Credit Facilities. All obligations under the New Credit Facilities are secured by a perfected first priority lien in substantially all of our tangible and intangible assets.

The New Term Loan and Revolving Facility bear interest on the outstanding unpaid principal amount at a rate equal to an applicable margin plus, at the Issuer’s option, either: (a) a base rate determined by reference to the highest of (i) the administrative agent's prime rate at such time, (ii) 0.50% in excess of the overnight federal funds rate at such time and (iii) the LIBOR rate that is in effect for a LIBOR loan with an interest period of one month plus 1.00%, provided that the base rate for the New Term Loan is not less than 2.00% per annum; or (b) a LIBOR rate, provided that the LIBOR rate for the New Term Loan is not less than 1.00% per annum. The applicable margin shall mean either: (i) in the case of initial term loans maintained as (a) base rate loan, 3.00%, or (b) LIBOR loans, 4.00%, (ii) in the case of initial revolving loans maintained as (a) base rate loans or swingline loans, 2.75% and (b) fixed rate loans, 3.75%. The applicable margin for the Revolving Facility is subject to step-ups and step-downs based on our First Lien Leverage Ratio. The Issuer is also required to pay a commitment fee of 0.50% per annum on the unutilized commitments under the Revolving Facility, which fee decreases to 0.375% if the First Lien Leverage Ratio is less than or equal to 1.70 to 1.00. As of September 30, 2015, the interest rate on the New Term Loan was equal to a LIBOR floor of 1.00% plus the applicable margin of 4.00%. The effective interest rate of the New Term Loan is approximately 5.7%.

As of September 30, 2015, no funds had been drawn against the Revolving Facility. Borrowings under the Revolving Facility may be used for the purpose of general working capital, capital expenditures and other general corporate purposes. The New Credit Facilities also provide for a swingline subfacility of $25.0 million, a letter of credit subfacility of $50.0 million

and an uncommitted incremental facility in an amount not to exceed the sum of (i) an unlimited amount if, after giving effect to

incurrence, the total net secured leverage ratio is less than or equal to 3.00 to 1.00, (ii) to the extent not funded with the proceeds of long-term indebtedness, all prior voluntary prepayments, and (iii) $100.0 million, subject to certain conditions.

The New Credit Facilities permits restricted payments, including dividends, out of available amounts, as defined in the credit agreement. The available amount formulation includes a starter amount of $75.0 million and is adjusted quarterly based on consolidated net income, as defined in the credit agreement, beginning June 30, 2015 plus other additions as listed in the credit agreement. Separately, the New Credit Facilities have a general basket for restricted payments of the greater of $50 million per annum and 20.5% of the last twelve months of EBITDA as defined by the credit agreement. The New Credit Facilities contain customary affirmative and negative covenants and events of default. The Revolving Facility contains a financial covenant prohibiting the First Lien Leverage Ratio from being greater than 4.00, which is tested quarterly when utilization of the Revolving Facility (excluding letters of credit less than or equal to $10.0 million) is greater than 30% of total commitments under the Revolving Facility. Without the written consent of the required lenders, the Issuer is not permitted to incur loans under the Revolving Facility unless it is in compliance with the Financial Covenant as of the last day of the most recently completed test period. As of September 30, 2015, we were in compliance with all covenants of the New Credit Facilities.

The Issuer, at its discretion, has also entered into interest rate cap agreements with the following terms: (i) $190.0 million total notional amount that currently caps the three-month LIBOR rate at 1.50% expiring March 31, 2016 (ii) $200.0 million total notional amount that caps the three-month LIBOR rate at 2.00% commencing March 31, 2016 and expiring December 30, 2016 and (iii) $300.0 million total notional amount that caps the three-month LIBOR rate at 2.00% commencing December 30, 2016 and expiring June 29, 2018.

Senior Notes

The Issuer has outstanding $300.0 million of fixed-rate 11.0% notes (the “Notes”) due in December 2020. Interest on the Notes is payable semi-annually in arrears on June 15 and December 15 of each year. The Issuer may redeem all or any portion of the Notes at any time prior to December 15, 2016 at a price equal to 100% of the aggregate principal plus an applicable premium, as defined in the indenture governing the Notes, and accrued interest. The Issuer may redeem any portion or all of the Notes on or after December 15, 2016 at redemption prices as set forth in the indenture, plus accrued and unpaid interest. In addition, the Issuer may redeem up to 35% of the aggregate principal of the Notes with an amount equal to the proceeds of certain equity offerings any time prior to December 15, 2015 at 111% plus accrued interest. Upon a change of control, the Issuer is required to make an offer to redeem all of the Notes from the holders at 101% of the principal amount thereof plus accrued interest. The effective interest rate of the Notes is approximately 12.0%.

33

The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Ancestry.com LLC and each of its direct and indirect restricted subsidiaries that guarantee indebtedness under the New Credit Facilities. Not all of Ancestry.com LLC’s subsidiaries guarantee the Notes, and restricted subsidiaries guarantee the notes only to the extent provided for in the indenture. In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries, the non-guarantor subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Issuer.

The Notes contain customary covenants, including limitations on indebtedness; limitations on liens; limitations on mergers, consolidations and liquidations; limitations on asset sales; limitations on dividends, other payments in respect of capital stock and other restricted payments; limitations on transactions with affiliates; and other payment restrictions affecting restricted subsidiaries. Events of default under the Notes include, among others, nonpayment of interest, principal, fees or other amounts; cross-defaults; covenant defaults; bankruptcy events with respect to us, or any of our material restricted subsidiaries; material unsatisfied or unstayed final judgments; or actual or asserted invalidity of any material guarantee.

The indenture governing the Notes generally permits restricted payments, as defined in the indenture, including dividends, out of a cumulative basket, which grows quarterly based on 50% of our cumulative consolidated net income, since October 1, 2012, as defined in the indenture. In addition, as a condition to making such payments, we must be in compliance with a pro-forma fixed charge coverage ratio greater than or equal to 2.0 to 1.0. Separately, the indenture has a general basket for such payments of the greater of $50.0 million or 2.5% of total assets.

Ancestry.com Holdings LLC Senior Unsecured PIK Notes

Our parent, Ancestry.com Holdings LLC (“Holdings LLC”), previously issued $400.0 million of senior unsecured payment-in-kind toggle notes (the "PIK Notes”) due October 15, 2018. In March 2015, Holdings LLC repurchased $9.8 million of the PIK Notes plus accumulated interest. To fund this repurchase, we issued a $10.0 million note receivable to our parent at 5% interest payable annually with a maturity date of December 31, 2017, which is subordinated to the PIK Notes. This note is recorded as a related-party note receivable in Other Assets in the Condensed Consolidated Balance Sheet.

Interest on the PIK Notes is payable semi-annually in arrears on April 15 and October 15 each year through maturity. The first and last interest payments on the PIK Notes are required to be payable entirely in cash. All other interest payments are required to be paid in cash, subject to cash availability and restricted payment capacity, as defined in the indenture. If interest payments are not required to be paid in cash, Holdings LLC will be entitled to pay all or a portion of the interest payment by increasing the principal amount of the PIK Notes or issuing new PIK Notes in an amount equal to the interest payment for the applicable interest period (“PIK Interest”). Cash interest on the PIK Notes will accrue at the rate of 9.625% per annum; PIK Interest will accrue at the rate of 10.375% per annum.

The PIK Notes are senior unsecured obligations of Holdings LLC and are structurally subordinated to all our existing and future indebtedness. Additionally, we did not guarantee the PIK Notes, nor were any of our assets pledged as collateral for the PIK Notes. As we are not an obligor or a guarantor on the PIK Notes, the debt is recorded only in the financial statements of Holdings LLC and is not reflected in the Condensed Consolidated Financial Statements of Ancestry.com LLC. While not required, we have made and intend to make future payments to Holdings LLC related to the PIK Notes, provided that such payments are permitted under the covenants of the New Credit Facilities and Notes. If interest on the PIK Notes is paid in cash, annual interest payments will total approximately $37.6 million.

Liquidity

Our primary sources of liquidity are our cash and cash equivalents, our cash flows from operations and amounts available under our Revolving Facility. As of September 30, 2015, we had $114.1 million in cash and cash equivalents and $80 million of availability on our Revolving Facility.

Operating costs include costs such as marketing and advertising, personnel-related expenses, capital expenditures related to content databases and equipment, investments in new service offerings and technologies and web-hosting costs and business acquisitions. Expenditures have increased as operations and the number of personnel have grown, and our expenditures may continue to increase in the future. Our future cash expenditures may vary significantly from those now planned and will depend on many factors including:

• amounts we must pay to service our debt;

• payments we intend to make to our parent, including those related to the PIK Notes;

• our marketing and advertising expenditures;

• the development of new services and enhancement of functionality in our technology and tools;

• our ability to attract and retain subscribers;

34

• market acceptance of our services;

• the launch of additional services and expansion into new markets;

• the level of new content acquisition required to retain and acquire subscribers;

• amounts we must invest in our infrastructure to support our operations;

• the resources for our development, marketing and administrative organizations;

• our relationships with subscribers and vendors;

• our engaging in additional business acquisitions; and

• amounts we must spend to integrate and operate acquired businesses.

We expect cash and cash equivalents on hand, cash flows from operations and amounts available under our Revolving Facility will provide adequate funds for our currently anticipated operating and recurring cash needs (e.g., debt service, working capital and capital expenditures) for at least the next twelve months; however, our substantial level of debt and debt service obligations as well as our intention to make further payments to our parent related to the PIK Notes could have important consequences including:

• making it more difficult for us to satisfy our obligations with respect to our debt, which could result in an event of default under the indenture governing the Notes and the agreements governing our other debt, including the New Credit Facilities;

• limiting our ability to obtain additional financing on satisfactory terms to fund our working capital requirements, capital expenditures, acquisitions, investments, debt service requirements and other general corporate requirements;

• increasing our vulnerability to general economic downturns and industry conditions, which could place us at a disadvantage compared to our competitors that are less leveraged and can therefore take advantage of opportunities that our leverage prevents us from pursuing;

• allowing increases in floating interest rates to negatively impact our cash flows;

• having our financing documents place restrictions on the manner in which we conduct our business, including restrictions on our ability to pay dividends, make investments, incur additional debt and sell assets; and

• reducing the amount of our cash flows available to fund working capital requirements, capital expenditures, acquisitions, investments, other debt obligations and other general corporate requirements, because we will be required to use a substantial portion of our cash flows to service debt obligations.

In the future, any credit ratings agency may lower a given credit rating, if that rating agency judges that our business, the economic environment, or other future circumstances so warrant. A ratings downgrade could impair our ability to access the capital markets and increase the cost of obtaining capital.

We and/or our parent entities (the “Ancestry Group”) may also seek, depending on market conditions, to refinance certain categories of our debt, or may also, from time to time, seek to repurchase the Notes or PIK Notes in the open market or otherwise, or repay portions of our New Credit Facilities. The Ancestry Group may also seek to incur additional debt for which we would need to fund the interest and principal payments, which may impact our ability to satisfy our cash requirements. Any such transaction would be subject to market conditions, compliance with the New Credit Facilities and the indenture governing the Notes and various other factors.

35

Cash Flow Analysis

Summary cash flow information for cash and cash equivalents for the nine months ended September 30, 2015 and 2014 is set forth below. We consider cash and cash equivalents in evaluating our overall cash position.

	Nine Months Ended September 30,
	2015			2014			% Change
	(in thousands)
Net cash and cash equivalents provided by (used in):
Operating activities	$	149,660		$	113,367		32.0	%
Investing activities	(44,563		)	(48,317		)	(7.8	)
Financing activities	(99,477		)	(45,419		)	119.0
Net increase in cash and cash equivalents	$	5,620		$	19,631		(71.4	)%

Net cash provided by operating activities

For the nine months ended September 30, 2015, net cash provided by operating activities was $149.7 million, an increase of $36.3 million compared to the nine months ended September 30, 2014, due to a $27.1 million increase in net income (loss) and a $20.6 million increase in the changes in operating assets and liabilities, partially offset by an $11.4 million decrease in non-cash adjustments. The decrease in adjustments for non-cash items primarily consisted of a $28.7 million decrease in amortization of intangible assets due to certain intangible assets being amortized on an accelerated basis, partially offset by a decrease of $4.0 million in excess tax benefits from stock-based compensation and by a $2.8 million increase in other non-cash items such as depreciation and amortization of content databases. Additionally, due to the restructuring of our credit facilities in third quarter of 2015, we recorded $10.5 million of additional non-cash interest expense. The increase in the changes in operating assets and liabilities was primarily due to the timing of cash receipts and payments in the ordinary course of business, including tax payments, partially offset by a payment of $5.8 million for accrued interest related to the shareholder litigation settled in February 2015.

Net cash used in investing activities

For the nine months ended September 30, 2015, net cash used in investing activities totaled $44.6 million, a decrease of $3.8 million compared to the nine months ended September 30, 2014. This change was primarily due to a $13.8 million decrease in purchase of property and equipment and investment in content databases for the nine months ended September 30, 2015, compared to the nine months ended September 30, 2014. This decrease was partially offset by a $10.0 million note receivable issued to our parent, Holdings LLC, in March 2015 to repurchase a portion of the PIK Notes plus accumulated interest.

Net cash used in financing activities

For the nine months ended September 30, 2015, net cash used in financing activities totaled $99.5 million, an increase of $54.1 million compared to the nine months ended September 30, 2014. In August 2015, we repaid the outstanding principal of $554.5 million of our Prior Credit Facilities and on that date entered into the New Credit Facilities, which we received proceeds of $727.7 million, net of the original issue discount cost. As a part of this transaction, we also paid $8.5 million of debt-offering costs. The net proceeds of this transaction plus cash on-hand were used to pay our indirect parent entity's shareholders and vested stock-based award holders a return-of-capital distribution $215.0 million. Also, the debt principal payments on our Prior Credit Facilities increased $1.9 million during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. These changes were partially offset by $2.9 million of contingent consideration payments related to a prior year acquisition made during the nine months ended September 30, 2014.

36

Contractual Obligations

In January 2015, we entered into a build-to-suit lease agreement for a new corporate headquarters, to be constructed in Lehi, Utah. The lease has an anticipated start date of mid-2016 with a 10-year initial term and $37.6 million of lease payments. We have concluded that we are the deemed owner of the building (for accounting purposes only) during the construction period. Accordingly, we have recorded a construction-in-progress asset as a component of Property and equipment, net of $17.9 million and a corresponding construction financing obligation recorded as a component of Other long-term liabilities in our Condensed Consolidated Balance Sheet as of September 30, 2015. We will continue to increase the construction-in-progress asset and corresponding long-term liability as additional building costs are incurred by the landlord during the construction period. See Note 7 in the Condensed Consolidated Financial Statements contained herein for further information.

In February 2015, we entered into a 10-year content digitization and publication agreement that requires us to make escalating minimum annual royalty payments totaling $20.5 million over the life of the contract. As of September 30, 2015, no material payments have been made under the terms of the contract.

There have been no other significant changes in our contractual obligations since December 31, 2014.

Off-Balance Sheet Arrangements

We do not engage in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, as part of our ongoing business. Accordingly, our operating results, financial condition and cash flows are not subject to off-balance sheet risks.

Recently Issued Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability instead of being presented as an asset. This guidance is effective for public companies for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those years. For all other entities, this guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The new guidance is to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance and represents a change in accounting principle. We early adopted this standard as of March 31, 2015. The effect of the adoption of ASU 2015-03 on our Condensed Consolidated Balance Sheets at December 31, 2014 is shown in the Basis of Presentation section in Note 1 to the Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. This guidance is effective for public companies for fiscal years and interim periods beginning after December 15, 2015. For all other entities, this guidance is effective for annual periods beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for all entities. The new guidance is to be applied either prospectively to new cloud computing arrangements or retrospectively. We early adopted this standard as of March 31, 2015 and applied the guidance prospectively. It did not have a material impact on our consolidated financial statements.

37

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Further, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. In August 2015, the FASB issued ASU 2015-14, which defers by one year the effective dates of its new revenue recognition standard for public and nonpublic entities. As a result, this guidance will be effective for public companies for interim and annual periods beginning on or after December 15, 2017. For non-public companies, this guidance is effective for annual periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019. Public and nonpublic entities would be permitted to adopt the standard as early as the original public entity effective date; early adoption prior to that date would not be permitted. As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),we have elected to delay adoption of new or revised accounting standards applicable to public companies until such pronouncements are made applicable to private companies. Once effective, entities can choose to apply the standard using either a full retrospective approach or a modified retrospective approach. We have not yet selected a transition method and are currently assessing the potential impact that this standard will have on our consolidated financial statements.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and related disclosures. These estimates and assumptions are often based on historical experience and judgments that we believe to be reasonable under the circumstances at the time made. However, all such estimates and assumptions are inherently uncertain and unpredictable and actual results may differ. It is possible that other professionals, applying their own judgment to the same facts and circumstances, could develop and support alternative estimates and assumptions that could result in material changes to our operating results and financial condition. We evaluate our estimates and assumptions on an ongoing basis.

We consider the assumptions and estimates associated with the testing goodwill for impairment, recoverability of long-lived assets, income taxes, determination of the fair value of stock options included in stock-based compensation expense, timing for recognition of AncestryDNA revenues and construction costs incurred under build-to-suit leases to be our critical accounting estimates. For further information on our significant accounting policies, see Note 1 to our 2014 Consolidated Financial Statements included in our Annual Report on Form 10-K and Note 1 of the Condensed Consolidated Financial Statements contained herein.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business, which currently are comprised primarily of interest rate risks and foreign currency exchange risks. For financial market risks related to interest rates and foreign currency exchange, refer to the “Quantitative and Qualitative Disclosures about Market Risk” contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. Our exposure to foreign currency exchange risk has not changed significantly since December 31, 2014.

Our New Credit Facilities bears interest at variable rates and exposes us to interest rate risk. As such, our net income (loss) and debt service payments are sensitive to movements in interest rates. There are many economic factors outside our control that have in the past, and may in the future, impact rates of interest, including publicly announced indices that underlie the interest obligations related to a certain portion of our debt. The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. Factors that impact interest rates include domestic or international governmental monetary policies, inflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. If interest rates increase, our debt service obligations on the variable-rate indebtedness would increase even though the amount borrowed remained the same, and our net income (loss) would decrease (increase). Such increases in interest rates could have a material adverse effect on our financial condition and results of operations.

38

The New Term Loan and Revolving Facility bear interest on the outstanding unpaid principal amount at a rate equal to an applicable margin plus, at the Issuer’s option, either: (a) a base rate determined by reference to the highest of (i) the administrative agent's prime rate at such time, (ii) 0.50% in excess of the overnight federal funds rate at such time and (iii) the LIBOR rate that is in effect for a LIBOR loan with an interest period of one month plus 1.00%, provided that the base rate for the New Term Loan is not less than 2.00% per annum; or (b) a LIBOR rate, provided that the LIBOR rate for the New Term Loan is not less than 1.00% per annum. The applicable margin shall mean either: (i) in the case of initial term loans maintained as (a) base rate loan, 3.00%, or (b) LIBOR loans, 4.00%, (ii) in the case of initial revolving loans maintained as (a) base rate loans or swingline loans, 2.75% and (b) fixed rate loans, 3.75%. The applicable margin for the Revolving Facility is subject to step-ups and step-downs based on our first lien leverage ratio. As of September 30, 2015, the interest rate on the New Term Loan was equal to a LIBOR floor of 1.00% plus the applicable margin of 4.00%.  

The Issuer, at its discretion, has also entered into interest rate cap agreements with the following terms: (i) $190.0 million total notional amount that currently caps the three-month LIBOR rate at 1.50% expiring March 31, 2016 (ii) $200.0 million total notional amount that caps the three-month LIBOR rate at 2.00% commencing March 31, 2016 and expiring December 30, 2016 and (iii) $300.0 million total notional amount that caps the three-month LIBOR rate at 2.00% commencing December 30, 2016 and expiring June 29, 2018. A hypothetical 1% increase in current interest rates on the variable portion of our New Term Loan would increase our interest expense over the next twelve months by $2.4 million or our borrowing rate by approximately 33 basis points due to the 1.0% LIBOR floor that exists in our New Credit Facilities.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this Quarterly Report our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in this Quarterly Report include controls and procedures designed to ensure that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all error and all fraud. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Ancestry.com have been detected.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

39

PART II

Item 1. Legal Proceedings

General

On May 4, 2015, DNA Genotek Inc. (“Genotek”) filed a complaint against Ancestry.com DNA, LLC (“Ancestry DNA”) in the United States District Court for the District of Delaware (Case No. 1:15-cv-00355-SLR). The complaint asserts causes of action for (1) infringement of U.S. Patent No. 8,221,381; (2) breach of contract for allegedly breaching the Terms and Conditions that governed Ancestry DNA’s purchase of Genotek Saliva Collection Products; (3) conversion; (4) trespass to chattel; and (5) action to quiet title. Genotek seeks preliminary and permanent injunctive relief, unspecified monetary damages, and an award of Genotek’s costs and attorneys’ fees incurred in connection with this action. Genotek did not serve this complaint on Ancestry DNA until June 4, 2015 and filed an amended complaint on July 24, 2015. The amended complaint asserts the same causes of action as the original complaint. Ancestry DNA has not yet filed a response to the complaint. AncestryDNA filed a motion to dismiss Genotek’s willful infringement, conversion, trespass to chattel, and action to quiet title claims on August 10, 2015. Genotek responded to the motion to dismiss on September 3, 2015, and AncestryDNA filed its reply brief on September 18, 2015. On October 20, 2015, AncestryDNA filed an Inter Partes Review Petition (IPR2016-00060) with the United States Patent and Trademark Office, challenging the validity of claims 1-20, 39-41, 43-47, and 49 of U.S. Patent No. 8,221,381. AncestryDNA intends to defend the litigation vigorously. While no assurances can be given as to outcomes or liability, if any, we do not believe that this litigation will be resolved in a manner that would have a material adverse effect on our financial statements.

On July 30, 2015 DNA Genotek, Inc. (“Genotek”) filed a complaint in the United States District Court for the District of Delaware against Spectrum DNA, Spectrum Solutions L.L.C., and Spectrum Packaging L.L.C. (“Spectrum”) alleging that Spectrum’s sale of the saliva collection device created by AncestryDNA constitutes infringement of U.S. Patent No. 8,221,381. While Ancestry is not a party to this lawsuit, Ancestry has agreed to indemnify Spectrum against Genotek’s patent infringement claims. Two motions are currently pending before the court. On September 4, 2015, Spectrum filed a motion to dismiss for lack of personal jurisdiction, and Genotek filed its answering brief on September 30, 2015. Spectrum filed its reply brief on October 16, 2015. The second motion is Genotek’s motion for a preliminary injunction seeking to enjoin the sale of the allegedly infringing saliva collection devices to non-Ancestry parties, filed on August 24, 2015. Spectrum filed its answering brief to the preliminary injunction motion on October 2, 2015. Genotek’s reply brief in support of its motion is due November 5, 2015. AncestryDNA intends to defend the litigation vigorously.  While no assurances can be given as to outcomes or liability, if any, we do not believe that this litigation will be resolved in a manner that would have a material adverse effect on our financial statements.

As part of the acquisition of Archives.com from Inflection LLC, completed in August 2012, a Marketing Agreement between Inflection LLC and Z-CORP dba OneGreatFamily.com (“OGF”) was assigned to Ancestry.com Operations Inc. On or about October 10, 2014, OGF initiated a proceeding in the Fourth Judicial District Court of the State of Utah against Ancestry.com Inc. and Ancestry.com Operations Inc., which is captioned Z-CORP et al. v. Ancestry.com Inc. et al. (Civil No. 140401466). In regards to the assigned Marketing Agreement, the complaint alleges breach of contract, breach of implied covenant of good faith and fair dealing, conversion and intentional interference with prospective economic relations with alleged damages totaling over $30 million and punitive damages. On or about November 13, 2014 Ancestry.com filed a motion to dismiss the complaint in its entirety, for failing to state claims upon which relief may be granted. The Court heard oral arguments on the motion to dismiss on March 9, 2015. On April 1, 2015, the court issued a ruling granting our motion to dismiss, dismissing all claims but one with prejudice and on the merits. After OGF conceded the law had changed regarding its last claim, the final claim was dismissed without prejudice by consent of both parties. On May 13, 2015, OGF appealed the court’s ruling to the Utah Supreme Court, which subsequently assigned the appeal to the Utah Court of Appeals. OGF submitted their initial brief on September 4, 2015, and our initial brief seeking to affirm the trial court is due November 6, 2015. OGF is appealing only the trial court’s dismissal of OGF’s claims for breach of contract, breach of implied covenant of good faith and fair dealing, and punitive damages.

40

We have and may become party to various other legal proceedings and other claims that arise in the ordinary course of business or otherwise in the future. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While we cannot assure the ultimate outcome of any legal proceeding or contingency in which we are or may become involved, we do not believe that any pending legal claim or proceeding arising in the ordinary course will be resolved in a manner that would have a material adverse effect on our business. Although we consider the likelihood of such an outcome to be remote, if one or more of these legal matters resulted in an adverse money judgment against us, such a judgment could have a material adverse effect on our operating results and financial conditions and may result in us being required to pay significant monetary damages. See the risk factors “Expenses or liabilities resulting from litigation could materially adversely affect our results of operations and financial condition” and “Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our websites, content indexes, and marketing and advertising activities,” under the heading “Risk Factors.”

Item 1A. Risk Factors

A wide range of factors could materially affect our performance. The following factors and other information included in this Quarterly Report should be carefully considered. Although the risk factors described below are the ones management deems significant, additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. If any of the following events actually occur, our business, financial condition and results of operations could be adversely affected.

Risks Related to Our Business

We may have already engaged as subscribers substantially all of the total addressable market for family history services. If our efforts to retain existing and to attract new subscribers do not succeed, our number of subscribers could decline and our revenues may be materially adversely affected.

We generate substantially all of our revenues from subscriptions to our services, and we expect that we will continue to depend upon subscription revenues for substantially all of our revenues in the foreseeable future. We must continue to retain existing and to attract new subscribers both to grow our business and to replace subscribers who choose to cancel their subscriptions. We seek to do this in part by investing in existing and new product platforms, services and technologies, such as AncestryDNA, Newspapers.com, and mobile, and by expanding to new markets. If consumers do not perceive our services to be reliable, valuable and of high quality, if we fail to sufficiently invest in our product platform, if we fail to regularly introduce new and improved services and more content, if we introduce new services that are not favorably received by the market, if we fail to adequately address public concern regarding privacy and data security, if consumer interest in online family history services declines, or if we find that we have already engaged as subscribers substantially all of the total addressable market for family history services, we may not be able to retain existing or to attract new subscribers and our revenues could be materially adversely affected. Subscribers choose to cancel their subscriptions for many personal reasons, including a desire to reduce discretionary spending, a perception that they do not have sufficient time to use the service or otherwise do not use the service sufficiently or customer service issues are not satisfactorily resolved.

The relative service levels, pricing and related features of competitors to our products and services, and the size of the family history market are some additional factors that may adversely impact our ability to retain existing subscribers and to attract new subscribers. Some of our current competitors provide genealogical records free of charge. Some governments or private organizations may make historical records available online at no cost to consumers, and some commercial entities could choose to make such records available on an advertising-supported basis rather than a subscription basis. In addition to competition from outside services, certain of our products, such as Archives.com, may compete with our core Ancestry websites for subscribers. If consumers are able to satisfy their family history research needs at no or lower cost, they may not perceive value in our higher priced products and services. Further, our number of subscribers may decrease as a result of a full penetration of the total addressable market for, or a declining interest in, family history research.

Any of these factors could cause our number of subscribers to fall, which could materially adversely impact our business, financial condition and results of operations. If we are unable to effectively retain existing subscribers and to attract new subscribers or our number of subscribers declines, our business, financial condition and results of operations could be materially adversely affected.

41

Our business may not grow or may contract, which could negatively affect our financial condition and results of operations.

While we have experienced periods of rapid growth in the past, we do not expect rapid growth rates in future periods. As such, you should not rely on the growth of any prior year or other period as an indication of our future performance. If our business does not grow while we continue to devote substantial resources and funds to improving our existing or to developing new technologies and product offerings, to continue acquiring new and relevant content and also to expanding awareness of our brand and category through marketing, our margins in the near term may be reduced. If our revenue growth rate were to decline or become negative, it could materially adversely affect our financial condition and results of operations.

Our business strategy and projections rely on a number of assumptions, some or all of which may be incorrect. For example, it is difficult to predict the acceptance by the market of our products and services. Also, we believe that consumers will be willing to pay for subscriptions to our online family history resources, notwithstanding the fact that some of our current and future competitors may provide such resources free of charge. We cannot accurately predict whether our products and services will achieve significant acceptance by potential users in larger numbers than at present as we may have already engaged substantially all of the total addressable market for family history research. You should, therefore, not rely on our historic growth rates as an indication of future growth.

Consumers of Internet-based services are increasingly converting to mobile platforms, and we have faced challenges in our efforts to provide users with a mobile experience that converts them to subscribers. If we are unable to provide our mobile users with access to the full range of our services, or adapt our products to other technological changes and subscriber needs for mobile platforms, we may not remain competitive and our business may decline.

As consumers of web services increasingly rely exclusively on mobile devices, our mobile app and the mobile web are becoming important ways for users to engage with our service. Despite our efforts to date, we have not been able to meaningfully monetize mobile users of our services, and we may not be able to monetize the engagement of our mobile users in the future. If our mobile app or mobile web experience is slow, subject to intermittent failures, difficult to use or does not contain the same important functionality available on our desktop experience, it may not meet the user’s expectations and as a result could damage our reputation, prevent us from retaining existing or acquiring new subscribers and may have a material adverse effect on our business and results of operations.

Most mobile apps are downloaded from various service providers that charge us commissions on in-app sales of our services, but do not currently charge us fees or commissions for distribution of our mobile apps. If one or more of these service providers were to modify their terms of service or other policies to increase their commission fee on in-app purchases, begin to impose fees or commissions upon us in connection with their distribution of our mobile apps or prohibit us from distributing our mobile apps on their platforms, we may be unable to attract on a cost-effective basis a similar number of new registered users that we can convert to subscribers, which could materially affect our financial condition and results of operations.

Products or technologies we invest in or develop could be costly, may not be well received by the market and may not ultimately drive growth in our business.

As part of our business strategy, we have made and will continue to make significant investments in the development or acquisition of new products and technologies. There is no assurance that new products or technologies will positively contribute to our results of operations in the future. Our existing subscribers may not be attracted to or may react negatively to the products that we offer as a result of these investments. These products or businesses may not succeed in enticing new subscribers or may face regulatory obstacles. Acquiring or launching new products and technologies may demand a disproportionate amount of management’s attention and distract them from their focus on our existing offerings. If acquisitions, new businesses, new product launches, or major product feature releases, are unsuccessful or cause negative reactions with our existing subscribers, our brand and reputation, our results of operations, financial condition and key metrics, such as net subscriber additions, may be materially adversely affected. We may not be successful in addressing these risks or any other problems encountered in connection with our investments.

The technologies that we use in our business are rapidly changing. To remain competitive, we must continue to provide relevant content and enhance and improve the functionality and features of our products and services. For example, we recently made significant improvements to our existing website and certain other changes to our core service. Existing subscribers that have become accustomed to the prior experience on our website may not agree that the changes are improvements and may prefer the prior experience and as such, may cancel their subscription. However, if we fail to improve our services and technologies in step with the evolution of technology, or if competitors introduce new solutions embodying new technologies, our existing products and services may become obsolete. Our future success will depend on, among other things, our ability to:

• anticipate demand for new products and services;

42

• enhance our existing solutions, cross-platform compatibility, systems capacity and processing speed; and

• respond to technological advances on a cost-effective and timely basis.

Developing or acquiring the technologies for our products entails significant technical and business risks. We may use new or acquired technologies ineffectively, or we may fail to adapt our products and services to the demands of our subscribers. If we face material delays in introducing new or enhanced solutions, our subscribers may forego the use of our solutions in favor of those of our competitors.

Our operating results fluctuate from period to period and may not immediately reflect downturns or upturns in subscriptions, which could make our operating results difficult to predict and affect future operating results.

Our quarterly and annual operating results are tied to certain financial and operational metrics that have fluctuated in the past and may fluctuate significantly in the future. As a result, you should not rely upon our past operating results as indicators of future performance. Our operating results depend on numerous factors, many of which are outside of our control. For the reasons set forth in this Risk Factors section or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indicators of our future performance, and our revenues and operating results in the future may differ materially from the expectations of management or investors.

We recognize revenues from subscribers ratably over the term of their subscriptions. Since the majority of our subscription durations have historically been greater than six months, a large portion of our revenues for each quarter has reflected deferred revenues from subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any one quarter will not necessarily be fully reflected in revenues in that quarter but will negatively affect our revenues in future quarters. Accordingly, the effect of significant downturns or upturns in subscriptions or market acceptance of our service, or changes in subscriber cancellation rates, may not fully impact our results of operations until future periods.

In addition, the largely long-term commitments of our subscribers historically have enhanced our near-term visibility on our revenues, which we believe has enabled us to more effectively manage our business and provide working capital benefits. If the mix of our subscriptions were to change from longer to shorter durations, our near-term visibility on our revenues could decrease and it could become more difficult to manage our business and effectively budget future working capital requirements.

We continuously attempt to attract subscribers through marketing. If our marketing efforts do not attract additional subscribers on a cost-effective basis, or if we are unable to manage our marketing and advertising expenses, it could materially harm our results of operations.

Our future profitability, as well as the maintenance and enhancement of our brands, will depend in large part on the effectiveness and efficiency of our marketing and advertising expenditures, which are significant. We use a diverse mix of marketing and advertising programs to promote our products and services, and we periodically adjust our mix of these programs. Significant increases in the pricing of one or more of our marketing and advertising channels could increase our marketing and advertising expense or cause us to choose less effective marketing and advertising channels. We have experienced price increases in some of our marketing and advertising channels. Television advertising comprises a large percentage of our marketing and advertising expense, which may have significantly higher costs than other channels and which could materially adversely affect our profitability. Further, we may over time become disproportionately reliant on one channel or partner, which could increase our operating expenses.

If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace existing marketing and advertising channels with similarly effective channels, our marketing and advertising expenses could increase substantially, our subscriber levels could be affected adversely, and our business, financial condition and results of operations may suffer. In addition, we may be required to incur significantly higher marketing and advertising expenses than we currently anticipate if excessive numbers of subscribers cancel our services or for other reasons. Our expanded marketing efforts may increase our subscriber acquisition cost, as additional expenses may not result in sufficient subscriber growth to offset cost, which would have an adverse effect on our business, financial condition and results of operations. Because we recognize revenues ratably over the subscription period, we have incurred and may in the future incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenues associated with such expenses, and our marketing and advertising expenditures may not result in increased revenues.

43

We have purchased and intend to continue to purchase product integration in and television advertising associated with television shows relevant to family history research, which have aired in the United States and other countries in past years. Television shows that focus on family history research have caused increased interest in our core business. If we do not receive benefits from family history research related television shows or if such shows do not continue to be well received or are canceled, the visibility of our core business and our brand may be reduced and our results of operations, financial condition and key metrics, such as net subscriber additions, may be materially adversely affected.

We face competition from a number of different sources, some of which offer products or services at lower prices than we do, and our failure to compete effectively could materially impact our revenues, results of operations and financial condition.

We face competition in our business from a variety of organizations, some of which provide products or services at lower prices than we do, including for free. Many external factors, including the cost of marketing, third-party services, content acquisition and technology and our current and future competitors’ pricing and marketing strategies can significantly affect our competitive strategies, including pricing. If we fail to meet our subscribers’ and customers' expectations, we could fail to retain existing or attract new subscribers and customers either of which could harm our business and results of operations.

Our core Ancestry websites and our other products and services face competition from:

• FamilySearch, and its website FamilySearch.org, a genealogy organization that is part of The Church of Jesus Christ of Latter-day Saints. FamilySearch has an extensive collection of paper and microfilm records. FamilySearch has digitized a large quantity of these records and has published them online at FamilySearch.org, where it makes them available to the public for free and through thousands of family history centers located throughout the world. FamilySearch is a well-funded organization and is undertaking a large-scale digitization project to make its collection available online. While we have engaged, and continue to engage, in certain collaborative efforts with FamilySearch to digitize and make historical records available online, FamilySearch has partnered and may in the future partner with other commercial entities to broaden the distribution of its records.

• Commercial entities, including online genealogical research services, genetic testing services, library content distributors, search engines and portals, retailers of books and software related to genealogical research and family tree creation and family history oriented social networking websites.

• Non-profit entities and organizations, genealogical societies, governments and agencies that may make vital statistics or other records available to the public for free or that partner with commercial entities to make their records widely available.

We expect our competition to grow both through industry consolidation and the emergence of new participants in our existing markets. We will also face competitors, and potentially greater competition, in new markets that we have entered or will enter into in the future, such as the competition we face in our AncestryDNA and AncestryHealth businesses. Our current and future competitors may include other Internet-based businesses, genetic companies or health service providers, governments, religious organizations, not-for-profit entities and other entities. The markets for Internet-based services and health information and genetic services evolve at a very rapid pace, and our competitors may offer products and services that are superior to any of our products and services or may release new products sooner than we can. In addition, Internet business models are constantly changing. The online family history market could move to an advertising-supported model to the detriment of our subscription-based model, or the consumer genetic testing market could move to a research-supported model. Our competitors may have greater resources, more well-established brand recognition or more sophisticated technologies, such as search algorithms or DNA or health technologies, than we do. Our competitors may more easily provide products and services in domestic and international markets or offer new categories of products or services before we do, or at lower prices, which may give them a competitive advantage in attracting subscribers or customers. In addition to competition from outside sources, certain of our products may compete with our core Ancestry websites for subscribers.

To compete effectively, we may need to expend significant resources on content acquisition, technology or marketing and advertising, which could reduce our margins and have a material adverse effect on our business, financial condition and results of operations. If we do not compete effectively, our ability to retain and expand our subscriber and customer base, and our revenues, results of operations and financial condition, could be materially adversely affected.

44

Changes that we make to the prices and the types of subscriptions that we offer may affect our subscriber mix and cancellation rates, which could have a significant negative impact on our revenues and number of total subscribers.

We continually evaluate and test the types of subscriptions that we offer. Based on the results of any product or price testing conducted, we may change the price and subscription packages we offer and market. Our pricing and subscription packaging strategy may influence subscribers to choose a certain subscription or duration. If our pricing and subscription packaging strategy fails, we may experience higher cancellation volumes and be unable to attract new subscribers, which may result in decreased immediate and long-term revenues and a loss in the number of total subscribers. In the future, we may continue to perform product and price tests involving our users and to make changes to our products and prices, the results of which could affect our number or mix of subscribers and may have a material adverse impact on our results of operations and key operating metrics, including the number of total subscribers.

In addition, if regulators or third-party businesses imposed new requirements regarding charging our subscribers recurring subscription fees, such new regulations could materially adversely affect our revenues, financial condition and results of operations.

Challenges in acquiring historical content and making it available online could materially adversely affect our ability to retain and expand our subscriber base, and therefore could materially affect our business, financial condition and results of operations.

In order to retain and expand our subscriber base, both domestically and internationally, we must continue to expend significant resources to acquire significant amounts of additional historical content, digitize it and make it available to our subscribers online. We face legal, logistical, cultural and commercial challenges in acquiring new content. Relevant governmental records may be widely dispersed and held at a national, state or local level. Religious and private records are even more widely dispersed.

These problems often pose particular challenges in acquiring content internationally. Desirable content may not be available to us on favorable terms, or at all, due to competition for a particular collection, privacy concerns relative to information contained in a given collection or our lack of negotiating leverage with a certain content provider. For example, some of our most popular databases include “vital records” content—namely, historical birth, marriage and death records—made available by certain governmental agencies. To help prevent identity theft, or other malicious activities, governments may attempt to restrict the release of or increase the difficulty of accessing all or substantial portions of their vital records content, and particularly birth records, to third parties. If these efforts are successful, it may limit, increase the cost of or altogether prevent us from acquiring these types of vital record content or continuing to make them available online. In some cases, we have had to lobby for legislation to be changed or otherwise work to surmount administrative or other bureaucratic hurdles to enable government or other bodies to grant us access to records.

While we own or license most of the images in our database, we generally do not own the underlying historical documents. If owners of content have sold or licensed the rights to digitize that content, even on a non-exclusive basis, they may elect not to sell or license it for digitization purposes to any other person. Therefore, if one of our competitors acquires rights to digitize a set of content, even on a non-exclusive basis, we may be unable to acquire rights to digitize that content. Conversely, the owners of historical records may allow more than one party to digitize those records and our competitors may digitize and make available the same content that we offer. In some cases, acquisition of content involves competitive bidding, and we may choose not to bid or may not successfully bid to acquire content rights. In addition, a number of governmental bodies and other organizations are interested in making historical content available for free and owners of historical records may license or sell their records to such governmental bodies and organizations in addition to or instead of licensing or selling their content to us. Our inability to offer certain vital records or other valuable content as part of our family history research databases or the widespread availability of such content elsewhere at lower cost or for free could result in our subscription services becoming less valuable to consumers, which could have a material adverse impact on our number of subscribers, and therefore on our business, financial condition and results of operations.

45

We depend in part upon third-party licenses for some of our historical content, and a loss of these licenses, or disputes regarding royalties under these licenses, could adversely affect our ability to retain and expand our subscriber base, and therefore could materially affect our revenues, financial condition and results of operations.

We acquire a portion of our content pursuant to ongoing license agreements. Some of these agreements have finite terms, and we may not be able to renew the agreements on terms that are advantageous to us or at all. For example, we license a significant amount of our United Kingdom content from The National Archives of the United Kingdom under several license agreements that generally have ten-year terms, with varying automatic extension periods. The agreements are generally terminable by either party for breach by the other party and by The National Archives of the United Kingdom upon our insolvency or bankruptcy. Some of these agreements also contain change in control provisions that may permit The National Archives of the United Kingdom to terminate these licenses.

If a current or future license for a significant content collection were to be terminated or there were disputes regarding royalties under these licenses, we may not be able to obtain a new license on terms advantageous to us or at all, and we could be required to remove the relevant content from our websites, either immediately or after some period of time. If a content provider were to license or sell us content in violation of that content provider’s agreements with other parties or if we misused any of the licensed content, we could be required to remove that content from our websites and potentially face liability. If we were required to remove a material amount of content from our websites, as a result of the termination of one or more licenses or otherwise, it could adversely affect our business and results of operations. Some of these license agreements restrict the manner in which we use the applicable content, which could limit our ability to leverage that content for new uses as we expand our business.

Acquiring, digitizing and indexing new content can take a significant amount of time and expense, can expose us to risks associated with the loss or damage of historical documents, and our costs to do so may exceed the realized benefits. Our inability to maintain or acquire content or make new content available online in a timely and cost-effective manner, or liability for loss of historical documents, could have a material adverse effect on our business, financial condition and results of operations.

Digitizing and indexing new historical content can take a significant amount of time and expense, and we generally incur the expenses related to such content significantly in advance of the time we can make it available to our subscribers. We have made significant investments to acquire, digitize and index content, including content acquired through business acquisitions, and we expect to continue to spend significant resources on content. If the costs incurred to acquire, digitize, or index content exceeds the realized benefit, it could harm our financial results.

We do not have long-term contracts with any of our transcription vendors. If we were to transition away from one of our larger transcription vendors for any reason, we may be required to provide extensive training to the other vendors, which could delay our ability to make our new content available to our subscribers, and our relationships with the other transcription vendors may be on financial or other terms less favorable to us than our existing arrangements. Our inability to maintain or acquire content or to make new content available online in a timely and cost-effective manner would have a material adverse effect on our business, financial condition and results of operations.

While we are digitizing content, we may be in possession of valuable and irreplaceable original historical documents. While we maintain insurance with respect to such documents, any loss or damage to such documents, while in our possession, could cause us significant expense and could have a material adverse effect on our reputation and the potential willingness of content owners to license or lend their content to us.

Our failure to attract, integrate and retain highly qualified key personnel could harm our business, and if we are unable to integrate appropriate personnel, we may not be able to successfully implement our business plan.

To execute our business plan, we must attract and retain highly-qualified personnel. Competition for these employees is intense, particularly for skilled engineers, and we may not be successful in attracting and retaining qualified personnel. We have experienced and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, in making employment decisions, particularly in the Internet and high-technology industries, job candidates often consider the value of the stock-based awards they may receive in connection with their employment and may be concerned about the value and liquidity of the stock-based awards we offer. When adding staff, we may not make optimal hiring decisions or may not integrate personnel effectively. Additions to personnel may increase our cost base, which could make it more difficult to decrease expenses in the short term. If we fail to attract and effectively integrate new personnel, or fail to retain and motivate our current personnel, our business and future prospects could be materially adversely affected.

46

We depend on the continued service and performance of our key personnel, including Timothy Sullivan, our President and Chief Executive Officer. We do not maintain key man insurance on any of our officers or key employees. We also do not have long-term employment agreements with our officers or key employees. In addition, much of our key technology and systems are custom-made for our business by our personnel. The loss of key personnel, including key members of our management team, as well as certain of our key marketing, product development or technology personnel could disrupt our operations and have an adverse effect on our ability to operate our business.

We currently outsource some of our customer service, product development activities and DNA testing services to third parties, which exposes us to significant risks if these parties fail to perform under our agreements with them.

Because we currently outsource some of our customer service, product development activities and DNA testing services to third parties, we have less control over the work produced by these providers than over our own employees. If customer service or DNA testing personnel fail to perform in accordance with the terms of our agreements, we may fail to meet customer expectations. If third-party developers fail to adequately protect or transfer our intellectual property rights in our products, our intellectual property portfolio could be damaged. These outcomes could result in negative publicity, damage our reputation and brands and have a material adverse effect on our business and results of operations.

We use a single-source laboratory for our DNA testing and a single-source manufacturer for producing our DNA kits, which could materially harm our business by adversely affecting the availability, quality and cost of our DNA services.

We use a single-source laboratory for our DNA testing and a single-source manufacturer for producing our DNA kits. If testing or production is delayed or curtailed by such sources, we may not be able to meet our customers’ expectations with respect to timing, quality and price. Even if we were able to locate alternative laboratories or manufacturing facilities, qualification of an alternative supplier, obtaining the appropriate technology and establishment of reliable services could result in delays and a possible loss of sales, which could materially harm our operating results. We may also be unable to locate an alternative supplier that can provide the necessary services and technology at comparable prices, which could result in an increase in the cost of our DNA services.

Reliance on single-source suppliers subjects us to a risk of delays, as well as a risk of increased cost and/or reduced quality of our DNA services. In addition, faulty analyses from our DNA testing provider could harm our reputation and may adversely affect our future DNA revenues and the success of our DNA testing services.

Cyber-attacks, continued service outages or significant disruptions in service on our websites or in our computer systems, which are currently hosted primarily by a single third party, could damage our reputation and result in a loss of subscribers, which would harm our business and operating results.

Our brand, reputation and ability to attract, retain and serve our subscribers depend upon the reliable performance of our websites, network infrastructure, content delivery processes and payment systems. We have experienced interruptions in these systems in the past, including server failures and electronic attacks that temporarily slowed down our websites’ performance and users’ access to content, or made our websites inaccessible, and we may experience network security breaches or other interruptions in the future. We have experienced “distributed-denial-of-service” and other attacks in the past that have caused our systems to respond slowly or be inaccessible. Our efforts to fix these disruptions may redirect resources from product development or other business initiatives and may not result in lasting benefits. Rapid advances in technology may prevent us from anticipating all potential security threats or promptly identifying all security breaches, and the limits and costs of technology, skills and manpower could prevent us from adequately addressing these threats. Interruptions in these systems, whether due to system failures, computer viruses, worms, malicious software programs or physical or electronic attacks or break-ins, could affect the security or availability of our websites and prevent our subscribers from accessing our data and using our products and services. Problems with the reliability or security of our systems may cause shutdowns or service disruptions, harm our reputation, result in regulatory penalties or litigation, impair our ability to attract new subscribers and cause subscribers to cancel, and the cost of remedying these problems and improving cyber-defense systems could negatively affect our business, financial condition and results of operations.

47

Substantially all of our communications, network and computer hardware used to operate our websites are co-located in a third-party facility in Salt Lake City, Utah. We do not own or control the operation of this facility. We also store certain data in a third-party facility in Ireland. We also use third-party off-site backup services, and we have disaster recovery plans in place. Our disaster recovery plans are not fully redundant to our facility in Utah. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, computer viruses, earthquakes and similar events. The occurrence of any of the foregoing events at one or more facilities could result in reduced functionality or interruption of our websites, damage to our systems and hardware or could cause them to fail completely, and our insurance may not cover such events or may be insufficient to compensate us for losses that may occur. A network or communications failure or interruption of our system could also result in our customers losing access to or experiencing reduced functionality of our websites.

In addition, we utilize third-party Internet-based or “cloud” computing services in connection with our business operations, including with our DNA testing services, our credit card processing and our disaster recovery systems. Cloud computing services are vulnerable to the same disruptions, attacks and break-ins as our co-located systems and facilities, but we may have reduced visibility of the potential vulnerabilities of cloud computing services. Disruptions of the cloud computing services we use may result in customers losing access or in reduced functionality of our websites. Problems faced by our third-party web hosting provider, with telecommunications network providers or with the systems by which these providers allocate capacity among their customers, including us, could adversely affect the experience of our subscribers. Our third-party web hosting providers, including our co-located facilities and the cloud computing services that we use, could decide to stop providing services to us without adequate notice. In addition, any financial difficulties, such as bankruptcy reorganization, faced by our third-party web hosting providers or any other service providers may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, if our third-party web hosting providers are unable to keep up with our growing needs for capacity, this could have a material adverse effect on our business. Any errors, defects, disruptions or other performance problems with our services could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

We face many risks associated with our plans to continue to expand our international offerings and marketing and advertising efforts, which could have a material adverse effect on our business, financial condition and results of operations.

As of September 30, 2015, approximately 29% of subscribers to our core Ancestry websites were from locations outside the United States. We are subject to many of the risks of doing business internationally, including the following:

• exposure to foreign currency exchange rate fluctuations;

• compliance with foreign laws and the interpretation of those laws, including tax, employment, and anti-bribery laws and regulations pertaining to the sale and use of genetic information;

• compliance with changing and conflicting legal and regulatory regimes;

• compliance with U.S. laws affecting operations outside of the United States, including the Foreign Corrupt Practices Act;

• compliance with varying and conflicting intellectual property laws;

• difficulties in staffing and managing international operations;

• prevention of business or user fraud; and

• implementation and maintenance of effective internal controls and processes across diverse operations and a dispersed employee base.

We anticipate that our continuing international expansion, including the launch of AncestryDNA internationally earlier in 2015, will entail increased marketing and advertising of our products, services and brands, the development of localized websites and products throughout our geographical markets and increased costs associated with the compliance with the varying regulatory environments in the international markets that we have and may expand into. We may not succeed in these efforts or achieve our subscriber acquisition or other goals. For some international markets, customer preferences and buying behaviors may be different than those in our current markets, and we may use business models that are different from our traditional subscription models. Our revenues from new foreign markets may not exceed the costs of acquiring, establishing, marketing and maintaining international offerings, and therefore may not be profitable on a sustained basis, if at all. The risks of international expansion include:

• difficulties in developing and marketing our offerings and brands as a result of distance, language and cultural differences;

48

• more stringent consumer, data and privacy protection laws;

• inability to effectively deal with local socio-economic and political conditions;

• technical difficulties and costs associated with the localization of our service offerings;

• strong local competitors; and

• lack of experience in certain geographical markets.

One or more of these factors could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to improve market recognition of and loyalty to our brands, or if our reputation were to be harmed, we could lose subscribers or fail to increase the number of subscribers, which could have a material adverse effect on our revenues, results of operations and financial condition.

We believe that maintaining and enhancing our Ancestry brand and other brands is critical to our success. We believe that the importance of brand recognition and loyalty will only increase in light of increasing competition in our markets. We plan to continue to promote our brands, both domestically and internationally, but there is no guarantee that our selected strategies will increase the favorable recognition of our brands. Some of our existing and potential competitors, including search engines, media companies and government and religious institutions have well-established brands with greater brand recognition than we have.

Additionally, from time to time, our subscribers express dissatisfaction with our service, including, among other things, dissatisfaction with our auto-renewal and other billing policies, our handling of personal data and the way our services operate. To the extent that dissatisfaction with our service is widespread or not adequately addressed, our brand may be adversely impacted. If our efforts to promote and maintain our brand are not successful, our operating results and our ability to attract and retain subscribers may be adversely affected. In addition, even if our brand recognition and loyalty increase, this may not result in increased use of our products and services or higher revenues. Many individuals are passionate about family history research and participate in blogs and social media on this topic both on our websites and elsewhere. If actions we take or changes we make to our products, services or performance, such as redesigning our website, upset these individuals, their blogging and contributions to social media could negatively affect our brand and reputation, which could have a material adverse effect on our revenues, results of operations and financial condition.

Acquisitions, if any, may not be completed within the expected timeframe or at all, and could prove difficult to integrate, disrupt our ongoing business or have a material adverse effect on our results of operations.

As part of our business strategy, we have engaged and may in the future engage in acquisitions of businesses to augment our organic or internal growth. While we have engaged in acquisitions in the past, our experience with integrating and managing acquired businesses is still limited. Acquisitions involve challenges and risks in negotiation, execution, valuation and integration. Moreover, we may not be able to find suitable acquisition opportunities on terms that are acceptable to us or if we do, we may be delayed or unsuccessful in completing the transaction. We could assume the economic risks of such failed or unsuccessful acquisitions. Even if successfully negotiated, closed and integrated, certain acquisitions may not advance our business strategy, may fall short of expected return-on-investment targets or may fail. In addition, we may be exposed to unknown or unanticipated costs and liabilities, including litigation, against the companies we acquire. Any future acquisition could involve the aforementioned or numerous other risks and we may not be successful in addressing these risks or any other problems encountered in connection with any attempted acquisitions. Our failure to address these risks or other problems could cause us to fail to realize the anticipated benefits of such acquisitions and could have a material adverse effect on our business, financial condition and results of operations.

Undetected product or service errors or defects could result in the loss of revenues, delayed market acceptance of our products or services or claims against us.

We offer a variety of Internet-based services and software products, which are complex and frequently upgraded. Our Internet-based services and software products may contain undetected errors, defects, failures or viruses, especially when first introduced or when new versions or enhancements are released. Despite product testing, our products, or third-party products that we incorporate into our products, may contain undetected errors, defects or viruses that could, among other things:

• require us to make extensive changes to our subscription services or software products, which would increase our expenses;

49

• expose us to claims for damages;

• require us to incur additional technical support costs;

• cause a negative registered user reaction that could reduce future sales;

• generate negative publicity regarding us and our subscription services and software products; or

• result in subscribers delaying their subscription or software purchase or electing not to renew their subscriptions.

Any of these occurrences could have a material adverse effect upon our business, financial condition and results of operations.

Privacy concerns could require us to incur significant expense and modify our operations or future plans in a manner that could result in restrictions and prohibitions on our use of certain information, and therefore harm our business.

As part of our business, we make biographical and historical data available through our websites, we use registered users’ personal data for internal purposes and we host websites and message boards, among other things, that contain content supplied by third parties. In addition, we collect biological information in the form of DNA samples used for genetic testing in connection with our DNA service and other health information in connection with our health service. The foregoing data and information are also used for research purposes. For privacy or security reasons, privacy groups, governmental agencies and individuals may seek to restrict or prevent our use or publication of certain biological or historical information pertaining to individuals, particularly living persons. Because most of our genetic testing of DNA samples is outsourced to third-party service providers, we have less control over privacy and security measures. If our third-party DNA testing or research providers fail to comply with privacy and security standards, as required pursuant to the terms of our agreements with such providers, this could have a material adverse effect on our business, financial condition and results of operations.

We also face additional privacy issues as we expand into other international markets, as many nations have privacy protections more stringent than those in the United States, particularly in Europe where privacy laws continue to become more expansive. For example, the Court of Justice for the European Union and the Article 29 Working Group recently declared the U.S. Safe Harbor Agreement under the Data Protective Directive from the European Union as invalid causing uncertainty around transfers of personal data outside of the European Union. The protection of consumer privacy has also increasingly become a focus of U.S. regulators, and the impact of recent and potential future enhanced privacy protections in the United States is uncertain. For example, we recently received an initial inquiry from the Office of the Attorney General of the State of New York requesting information regarding AncestryDNA's privacy policies and procedures. We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards or contractual obligations. Increased domestic or international regulation of data utilization and distribution practices, including self-regulation, could require us to modify our operations and incur significant expense, which could have a material adverse effect on our business, financial condition and results of operations. If our users’ private content were to become publicly available or, if third parties were able to gain unauthorized access to such content, in particular the DNA testing information, we may face liability and harm to our brand and reputation.

Our possession and use of personal information presents risks that could harm our business. Unauthorized disclosure or use of such data, whether through breach of our network security or otherwise, could expose us to significant liability and damage our reputation.

Maintaining the security of our information technology and network systems infrastructure, including the cloud computing services that we use, is of critical importance because we handle confidential subscriber, registered user, employee and other sensitive data, such as names, addresses, credit card numbers and genetic and other personal information. In addition, our online systems include the content that our registered users upload onto our websites, such as family records and photos. This content is often personally meaningful, and our registered users may rely on our online system to store digital copies of such content. If we were to lose such content, if our users’ private content were to become publicly available or if third parties were able to gain unauthorized access to such content, we may face liability and harm to our brand and reputation.

Almost all of our subscribers use credit and debit cards to purchase our products and services. If we or our processing vendors were to have problems with our billing systems, it could have an adverse effect on our subscriber satisfaction and could cause one or more of the major credit card companies to disallow our continued use of their payment services. In addition, if our billing system fails to work properly and, as a result, we do not charge our subscribers’ credit cards on a timely basis or at all, our business, financial condition, cash flows and results of operations could be materially affected.

50

We and our vendors use commercially available encryption technology to transmit personal information when taking orders. We use security and business controls to limit access and use of personal information, including registered users’ uploaded content. However, third parties may be able to circumvent these security and business measures, including by developing and deploying viruses, worms and other malicious software programs that are designed to attack or attempt to infiltrate our systems and networks. In addition, employee error, vendor error, malfeasance or other errors in the storage, use or transmission of personal information could result in data loss, theft of subscriber information or a breach of registered user or employee privacy.

There can be no assurances that we will be able to continue to operate our facilities and customer service and sales operations in accordance with industry practices, such as Payment Card Industry Data Security Standards. Even if we remain compliant with those standards, we may not be able to prevent security breaches involving customer data. If we experience a security breach or other lapse in the handling of confidential information, the incident could give rise to risks including data loss, litigation and liability, and could harm our reputation or disrupt our operations, any of which could materially adversely affect our business. In addition, various states and countries have differing laws regarding protection of customer privacy and confidential information, including notification requirements in the event of certain breaches or losses of information. Privacy laws continue to become more far-reaching, particularly in Europe, and consumer privacy has also become an area of enhanced focus in the United States. The impact of expanded laws and regulatory action is still uncertain and we may be required to adapt quickly to changes in the regulatory landscape. Efforts to comply with these laws and regulations increase our costs of doing business, and failure to achieve compliance could result in substantial liability to our business and harm our reputation. In the event of a security breach or loss of confidential information, we could be subject to fines, penalties, damages and other remedies under applicable laws, any of which could have a material adverse impact on our reputation, business, operating results and financial condition.

If third parties improperly obtain and use the personal information of our registered users or employees, we may be required to expend significant resources in efforts to address these problems. A major breach of our network security and systems, including the cloud computing services that we use, could have serious negative consequences for our businesses, including possible fines, penalties and damages, reduced demand for our products and services, an unwillingness of subscribers to provide us with their credit card or payment information, an unwillingness of registered users to upload family records or photos onto our websites, harm to our reputation and brand and loss of our ability to accept and process subscriber credit card orders. Similarly, if a well-publicized breach of data security at any other major consumer website were to occur, there could be a general public loss of confidence in the use of the Internet for commercial transactions. Any of these events could have material adverse effects on our business, financial condition and results of operations. In addition, we may have inadequate insurance coverage to compensate for any related losses.

Any claims related to activities of registered users and the content they upload could result in expenses that could harm our results of operations and financial condition.

Our registered users often upload their own content onto our websites. The terms of use of such content are set forth in the terms and conditions of our websites and a submission agreement to which registered users must agree when they upload their content. Disputes or negative publicity about the use of such content could make users more reluctant to upload personal content or harm our reputation. We do not review or monitor content uploaded by our registered users, and could face claims arising from or liability for making any such content available on our websites. In addition, our collaboration tools and other features of our site allow subscribers to contact each other. While subscribers can choose to remain anonymous in such communications, subscribers may choose to engage with one another without anonymity. If any such contact were to lead to fraud or other harm, we may face claims against us and negative publicity. Litigation to defend these claims or efforts to counter any negative publicity could be costly and any other liabilities we incur in connection with any such claims may have a material adverse effect on our business, financial condition and results of operations.

Increases in credit card processing fees would increase our operating expenses and materially adversely affect our results of operations, and the termination of our relationship with any major credit card company could have a severe, negative impact on our ability to collect revenues from subscribers.

The majority of our subscribers pay for our products and services using credit cards. From time to time, the major credit card companies or the issuing banks may increase the fees that they charge for each transaction using their cards. An increase in those fees would require us to increase the prices we charge for our products and services or negatively impact our profitability, either of which could materially affect our business, financial condition and results of operations.

51

In addition, our credit card fees may be increased by credit card companies if our chargeback rate or the refund rate exceeds certain thresholds. If we are unable to maintain our chargeback rate at acceptable levels, our credit card fees for chargeback transactions, or for all credit card transactions, may be increased, and, if the problem significantly worsens, credit card companies may further increase our fees or terminate their relationships with us. Any increases in our credit card fees could adversely affect our results of operations, particularly if we elect not to raise our subscription rates to offset the increase. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to collect revenues from subscribers.

If government regulation of the Internet or other areas of our business changes, we may need to change the way we conduct our business in a manner that is less profitable or incur greater operating expenses, which could harm our results of operations.

The adoption, modification or interpretation of laws or regulations relating to the Internet or other areas of our business could adversely affect the manner in which we conduct our business or the overall popularity or growth in use of the Internet. Such laws and regulations may cover automatic subscription renewal, credit card processing procedures, sales and other procedures, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts, consumer protection, net neutrality, broadband residential Internet access and the characteristics and quality of services. In foreign countries, such as countries in Europe and Asia, such laws may be more restrictive than in the United States. It is not clear how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the Internet. For example, the Court of Justice for the European Union and the Article 29 Working Group recently declared the U.S. Safe Harbor Agreement under the Data Protective Directive from the European Union as invalid causing uncertainty around transfers of personal data outside of the European Union. If we are required to comply with new regulations or legislation or new interpretations of existing regulations or legislation, this compliance could cause us to incur additional expenses, make it more difficult to renew subscriptions automatically, make it more difficult to attract new subscribers, make it more difficult to use our current service providers (data processors) or otherwise alter our business model. Any of these outcomes could have a material adverse effect on our business, financial condition or results of operations.

Our revenues may be materially adversely affected if we are required to charge sales taxes in additional jurisdictions and/or other taxes for our products and services.

We collect or have imposed upon us sales or other taxes related to the products and services we sell in certain states and other jurisdictions. Additional states or one or more countries or other jurisdictions may seek to impose sales or other tax collection obligations on us in the future or states or jurisdictions in which we already collect tax may increase the amount of taxes we are required to collect. A successful assertion by any country, state or other jurisdiction in which we do business that we should be collecting sales or other taxes on the sale of our products and services could, among other things, result in substantial tax liabilities for past sales, create significant administrative burdens for us, discourage registered users from purchasing from us or otherwise substantially harm our business and results of operations. Further, if additional sales or other taxes were imposed in jurisdictions where we do business, we may be unable to fully pass these costs on to our subscribers, which may also harm our business and results of operations.

52

Our revolving facility may not be sufficient for our needs, and we may require additional capital for business opportunities, acquisitions or unforeseen circumstances. If such sources are not available to us, or are not available on acceptable terms, we may not be able to expand and our business and/or our operating results and financial condition may be materially harmed.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business opportunities, including developing new features and products or enhancing our existing solutions, improving our operating infrastructure or acquiring complementary businesses and technologies. Our revolving facility, which provides for $80.0 million of borrowings (the "Revolving Facility"), may not be sufficient for our needs. Accordingly, we and/or our parent entities (“the Ancestry Group”) may engage in debt financing to secure additional funds; however, we may not be able to obtain additional financing on terms favorable to us, if at all. For example, our new credit facilities, which consists of a $735.0 million term loan facility and the Revolving Facility (the "New Credit Facilities"), and the indentures governing the 11% senior notes due 2020 (the "Notes") and the senior unsecured payment-in-kind toggle notes due 2018 (the “PIK Notes”) contain restrictive covenants relating to capital-raising activities by us and our direct parent, Ancestry.com Holdings LLC ("Holdings LLC"), and other financial and operational matters. Any debt financing obtained by us or our parent entities in the Ancestry Group in the future could involve further restrictive covenants, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to grow our business and to respond to business challenges could be significantly impaired, and our business may be materially harmed. Please refer to Item 2, Liquidity and Capital Resources, of Part I for further information.

We face risks associated with currency exchange rate fluctuations, which could adversely affect our revenues and operating results.

For the nine months ended September 30, 2015, approximately 18% of our total revenues earned and approximately 6% of our total expenses incurred were in currencies other than the United States dollar, such as the British pound sterling, the Australian dollar, the Canadian dollar and the Euro. As a result, we are at risk for exchange rate fluctuations between such foreign currencies and the United States dollar, which could affect our revenues and results of operations. If the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in decreased revenues, operating expenses and net income. We may not be able to offset adverse foreign currency impact with increased subscription pricing or volume. We attempt to limit our exposure by paying our operating expenses incurred in foreign jurisdictions with revenues received in the applicable currency, but if we do not have enough local currency to pay all our expenses in that currency, we are exposed to currency exchange rate risk with respect to those expenses. Even if we were to implement hedging strategies to mitigate foreign currency risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and would involve costs and risks of their own, such as ongoing management time and expertise, external costs to implement the strategies and potential accounting implications.

Our business may be significantly impacted by a change in the economy, including any resulting effect on consumer spending.

Our business may be affected by changes in the economy generally, including any resulting effect on consumer spending specifically. Our products and services are discretionary purchases, and consumers may reduce their discretionary spending on our products and services during an economic downturn. Although we did not experience a material increase in subscription cancellations or a material reduction in subscription renewals during the economic downturn, we may yet be impacted if employment and personal income do not continue to improve or if global economic conditions deteriorate. Conversely, consumers may spend more time using the Internet during an economic downturn and may have less time for our products and services in a period of economic growth. In addition, media prices, including television advertising, are unpredictable and prices may increase if the economy continues to recover or grows, which could significantly increase our already substantial marketing and advertising expenses. As a result, our business, financial condition and results of operations may be significantly impacted by changes in the global economy generally.

53

We have made significant estimates and judgments in calculating our income tax provision and other tax assets and liabilities. If these estimates or judgments are incorrect, our operating results and financial condition may be materially affected.

We are subject to regular review and audit by both domestic and foreign tax authorities. Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition. In addition, the determination of our provision for income taxes and other tax assets and liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain at the present time. Although we believe our estimates and judgments are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may have a material effect on our operating results and financial condition.

We earn a significant amount of our operating income from outside the United States, and there have been proposals to change U.S. and foreign tax laws that would significantly impact how we are taxed on foreign earnings. Although we cannot predict whether or in what form any proposed legislation may pass, if enacted it could have a material adverse impact on our future tax expense and cash flow.

Expenses or liabilities resulting from litigation could materially adversely affect our results of operations and financial condition.

We have and may become party to various legal proceedings and other claims that arise in the ordinary course of business, or otherwise in the future. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. In addition, any such claims or litigation may be time-consuming and costly, divert management resources, require us to change our products and services, require us to accept returns of software products or have other adverse effects on our business. While we cannot assure the ultimate outcome of any legal proceeding or contingency in which we are or may become involved, we do not believe that any pending legal claim or proceeding arising in the ordinary course will be resolved in a manner that would have a material adverse effect on our business. However, if one or more of these legal matters resulted in an adverse monetary judgment against us, such a judgment could have a material adverse effect on our results of operations and financial condition. See also the risk factor “Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our websites, content indexes, and marketing and advertising activities” below. Please refer to Item 1 of Part II for more information about our current legal proceedings.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. We are an emerging growth company until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws. For so long as we remain an emerging growth company, we will not be required to:

• have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended; and

• comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and

• submit certain executive compensation matters to shareholders advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

• include detailed compensation discussion and analysis in our filings under the Exchange Act, and instead may provide a reduced level of disclosure concerning executive compensation.

54

Although we intend to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act for us are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longer satisfy the conditions of an emerging growth company. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act.

In addition, as an “emerging growth company,” we have elected under the JOBS Act to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Therefore, our financial statements may not be comparable to those of companies that comply with standards that are otherwise applicable to public companies.

Risks Related to Our Indebtedness

We have a substantial amount of debt, which exposes us to various risks.

We have substantial debt, totaling approximately $1.0 billion as of September 30, 2015, consisting of approximately $735.0 million under our New Credit Facilities and $300.0 million in Notes and as a result, we have significant debt service obligations. We also have the ability to borrow up to $80.0 million under the Revolving Facility. Our substantial level of debt and debt service obligations as well as our intention to pay distributions to our parent related to the PIK Notes could have important consequences including:

• making it more difficult for us to satisfy our obligations with respect to our debt, which could result in an event of default under the indenture governing the Notes and the agreements governing our other debt, including the New Credit Facilities;

• limiting our ability to obtain additional financing on satisfactory terms to fund our working capital requirements, capital expenditures, acquisitions, investments, debt service requirements and other general corporate requirements;

• increasing our vulnerability to general economic downturns and industry conditions, which could place us at a disadvantage compared to our competitors that are less leveraged and can therefore take advantage of opportunities that our leverage prevents us from pursuing;

• potentially allowing increases in floating interest rates to negatively impact our cash flows;

• having our financing documents place restrictions on the manner in which we conduct our business, including restrictions on our ability to pay dividends, make investments, incur additional debt and sell assets; and

• reducing the amount of our cash flows available to fund working capital requirements, capital expenditures, acquisitions, investments, other debt obligations and other general corporate requirements, because we will be required to use a substantial portion of our cash flows to service debt obligations.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our debt.

Our direct parent, Holdings LLC, has outstanding $390.2 million in senior unsecured PIK Notes. In addition to servicing our debt, we intend to make payments to Holdings LLC related to the PIK Notes, which may exacerbate the risks associated with our debt under the New Credit Facilities and the Notes.

Our direct parent, Holdings LLC, has outstanding a total of $390.2 million of 9.625%/10.375% senior unsecured PIK Notes, which mature on October 15, 2018. Holdings LLC is a holding company with no material operations and limited assets other than its ownership of the membership interests of Ancestry.com LLC. While covenants in our New Credit Facilities and the indenture governing the Notes limit the amount of cash that we are able to distribute to our parent companies, to the extent cash is available, we intend to make payments to Holdings LLC related to the PIK Notes. Paying cash to our parent for the PIK Notes will reduce the amount of cash available to pay our debt obligations and could also compound the consequences and risks of our debt and could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under the New Credit Facilities and the Notes.

55

Despite current debt levels, we and/or other members of the Ancestry Group may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

We and/or other members of the Ancestry Group may be able to, and may, incur substantial additional debt, including secured debt, in the future. Although our New Credit Facilities and the indentures governing the Notes and the PIK Notes contain restrictions on the incurrence of additional debt and the ability to make payments to related entities to fund their debt obligations, these restrictions are subject to a number of significant qualifications and exceptions, and any debt we incur in compliance with these restrictions could be substantial. If we incur additional debt on top of our current debt levels, this would exacerbate the risks related to our substantial debt levels. Furthermore, as we increase our debt level and/or incur indebtedness that is contractually or structurally subordinated to our other indebtedness, we may be required to pay higher interest rates on additional debt, which would increase our cost of capital and could have a material adverse effect on our financial condition and results of operations.

Our debt agreements include covenants that restrict our ability to operate our business, and this may impede our ability to respond to changes in our business or to take certain important actions.

Our New Credit Facilities and the indentures governing the Notes and PIK Notes each contain, and the terms of any of our future debt would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to engage in acts that may be in our best long-term interests. For example, the credit agreement governing our New Credit Facilities and the indentures governing the Notes and PIK Notes restrict our and our subsidiaries’ ability to:

• incur additional debt;

• pay dividends on our capital stock and make other restricted payments;

• make investments and acquisitions;

• engage in transactions with our affiliates;

• sell assets;

• make acquisitions or merge; and

• create liens.

In addition, our New Credit Facilities require us to comply with a financial covenant prohibiting the total net first lien leverage ratio from being greater than 4.00x, which will be tested quarterly when the principal amount of all revolving loans, swingline loans, and letter of credit (in excess of $10.0 million) exceeds 30% of total commitments under the Revolving Facility. These restrictions could limit our ability to obtain future financings, make needed capital expenditures, respond to and withstand future downturns in our business or the economy in general or otherwise conduct corporate activities that may be necessary or desirable. We may also be prevented from taking advantage of business opportunities that arise because of limitations imposed on us by these restrictive covenants. In addition, it may be costly or time-consuming for us to obtain any necessary waiver or amendment of these covenants, or we may not be able to obtain a waiver or amendment on any terms.

A breach of any of these covenants could result in a default under our New Credit Facilities or the Notes, as the case may be, that would allow lenders or noteholders to declare our outstanding debt immediately due and payable. If we are unable to pay those amounts because we do not have sufficient cash on hand or are unable to obtain alternative financing on acceptable terms, the lenders or noteholders could initiate a bankruptcy proceeding or, in the case of our New Credit Facilities, proceed against any assets that serve as collateral to secure such debt.

We will require a significant amount of cash to service our debt, and our ability to generate cash depends on many factors beyond our control.

Our ability to satisfy our debt obligations will primarily depend upon our future operating performance and decisions we make with regards to operating our business. As a result, prevailing economic conditions and financial, business and other factors, many of which are beyond our control, will affect our ability to make these payments to satisfy our debt obligations.

56

If we do not generate cash flows from operations sufficient to pay our debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at that time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. For example, as a part of the restructuring of our term loans in August 2015, the interest rates under our New Credit Facilities increased . The terms of existing or future debt instruments may restrict us from adopting some of these alternatives, which in turn could exacerbate the effects of any failure to generate sufficient cash flow to satisfy our debt service obligations. In addition, any failure to make payments of interest and principal on our outstanding debt on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional debt on acceptable terms and may materially adversely affect the price of the Notes. Furthermore, there currently is not a well-established secondary market for our assets. The lack of a secondary market may make the sale of our assets challenging, and the sale of assets should not be viewed as a significant source of funding.

Our inability to generate sufficient cash flow to satisfy our debt service obligations or to refinance our obligations on commercially reasonable terms or at all, would have a material adverse effect on our business, financial condition and results of operations and may restrict our current and future operations, particularly our ability to respond to business changes or to take certain actions, as well as on our ability to satisfy our obligations.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Certain of our borrowings, primarily borrowings under our New Credit Facilities, will be at variable rates of interest and expose us to interest rate risk. As such, our cash flows are sensitive to movements in interest rates. There are many economic factors outside our control that have in the past, and may in the future, impact rates of interest, including publicly announced indices that underlie the interest obligations related to a certain portion of our debt. The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. Factors that impact interest rates include domestic or international governmental monetary policies, inflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our cash flows would decrease. Such increases in interest rates could have a material adverse effect on our financial condition and results of operations.

The Notes are not secured by our assets, which means the lenders under any of our secured debt, including our New Credit Facilities, will have priority over holders of the Notes to the extent of the value of the assets securing that debt.

The Notes and the related guarantees are unsecured. This means they are effectively subordinated in right of payment to all of our and the guarantors’ secured debt, including our New Credit Facilities, to the extent of the value of the assets securing that debt. Loans under our New Credit Facilities are secured by substantially all of our and the guarantors’ assets (subject to certain exceptions). As of September 30, 2015, we had approximately $735.0 million outstanding under the New Term Loan and $80.0 million of availability under the Revolving Facility. Furthermore, the indenture governing the Notes allows us to incur additional secured debt. See Note 4 in our Condensed Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility” for a further description of the terms of the New Credit Facilities.

If we become insolvent or are liquidated, or if payment under our New Credit Facilities or any other secured debt is accelerated, the lenders under our New Credit Facilities and holders of other secured debt will be entitled to exercise the remedies available to secured lenders under applicable law (in addition to any remedies that may be available under documents pertaining to our New Credit Facilities or other senior debt). For example, the secured lenders could foreclose upon and sell assets in which they have been granted a security interest to the exclusion of the holders of the Notes, even if an event of default exists under the indenture governing the Notes at that time. Any funds generated by the sale of those assets would be used first to pay amounts owing under secured debt, and any remaining funds, whether from those assets or any unsecured assets, may be insufficient to pay obligations owing under the Notes.

57

The Notes are structurally subordinated to the debt and other liabilities of our non-guarantor subsidiaries, including certain of our foreign subsidiaries.

Certain of our existing or future foreign subsidiaries do not guarantee the Notes, and only Ancestry.com LLC and all its direct and indirect existing and future restricted subsidiaries (except excluded subsidiaries) that guarantee any indebtedness of Ancestry.com Inc. or any guarantor, or incur indebtedness under a credit facility, in each case, subject to certain exceptions, guarantee the Notes. This means the Notes are structurally subordinated to the debt and other liabilities of these non-guarantor subsidiaries. As of September 30, 2015, our non-guarantor subsidiaries had no debt outstanding (excluding intercompany debt). Our non-guarantor subsidiaries may, in the future, incur substantial additional liabilities, including debt. Furthermore, we may, under certain circumstances described in the indenture governing the Notes, designate subsidiaries to be unrestricted subsidiaries, and any subsidiary that is designated as unrestricted will not guarantee the Notes. In the event of our non-guarantor subsidiaries’ bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding, the assets of those non-guarantor subsidiaries will not be available to pay obligations on the Notes until after all of the liabilities (including trade payables) of those non-guarantor subsidiaries have been paid in full.

We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the Notes.

Upon the occurrence of certain change of control events, we will be required to offer to repurchase all of the Notes. A change of control would also give the holders of the Notes the right to require us to repurchase those Notes. Our New Credit Facilities provides that certain change of control events (including a change of control as defined in the indenture governing the Notes) constitute a default. Any future credit agreement or other debt agreement would likely contain similar provisions. If we experience a change of control that triggers a default under our New Credit Facilities, we could seek a waiver of that default or seek to refinance those facilities. In the event we do not obtain a waiver or complete a refinancing, the default could result in amounts outstanding under those facilities being declared immediately due and payable. In the event we experience a change of control that requires us to repurchase the Notes, we may not have sufficient financial resources to satisfy all of our obligations under our New Credit Facilities and the Notes. A failure to make a required change of control offer or to pay a change of control purchase price when due would result in a default under the indenture governing the Notes.

In addition, the change of control and other covenants in the indenture governing the Notes do not cover all corporate reorganizations, mergers or similar transactions and may not provide holders with protection in a transaction, including one that would substantially increase our leverage.

The ability of holders of the Notes to require us to repurchase the Notes as a result of a disposition of “substantially all” of our assets or a change in the composition of our Operating Committee is uncertain.

The definition of change of control in the indenture governing the Notes includes the sale, assignment, lease, conveyance or other disposition of “substantially all” of our and our subsidiaries’ assets, taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase. Accordingly, the ability of a holder of the Notes to require us to repurchase such Notes as a result of a sale, assignment, lease, conveyance or other disposition of less than all of our and our subsidiaries’ assets, taken as a whole, to another person or group is uncertain. In addition, a recent Delaware Chancery Court decision raised questions about the enforceability of provisions that are similar to those in the indenture governing the Notes, related to the triggering of a change of control as a result of a change in the composition of a board of directors or similar governing body. Accordingly, the ability of a holder of Notes to require us to repurchase Notes as a result of a change in the composition of the members of our Operating Committee is uncertain.

Federal and state statutes allow courts, under specific circumstances, to void guarantees of the Notes. In such event, holders of Notes would be structurally subordinated to creditors of the issuer of the voided guarantee.

Federal and state statutes allow courts, under specific circumstances, to void guarantees, subordinate claims under the guarantees to the guarantor’s other debt or take other action detrimental to holders of the guarantees of the Notes. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, the guarantees made by the guarantors could be voided or subordinated to other debt if, among other things:

• any guarantor issued the guarantee to delay, hinder or defraud present or future creditors; or

• any guarantor received less than reasonably equivalent value or fair consideration for issuing such guarantee and, at the time it issued its guarantee, any guarantor:

• was insolvent or rendered insolvent by reason of such incurrence;

58

• was engaged in a business or transaction for which such guarantor’s remaining unencumbered assets constituted unreasonably small capital;

• intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature; or

• was a defendant in an action for money damages, or had a judgment for money damages docketed against it if, in either case, after final judgment, the judgment is unsatisfied.

Among other things, a legal challenge of a guarantee on fraudulent conveyance grounds may focus on the benefits, if any, realized by the guarantor as a result of our issuance of the Notes. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if, at the time it incurred the debt,

• the sum of its debts is greater than the fair value of all of its assets;

• the present fair saleable value of its assets was less than the amount that would be required in order to pay its probable liability on its existing debts and liabilities, including contingent liabilities, as they become absolute and mature; or

• it could not pay or is generally not paying its debts as they become due.

There is no way to predict with certainty what standards a court would apply to determine whether a guarantor was solvent at the relevant time. It is possible that a court could view the issuance of guarantees as a fraudulent conveyance. To the extent that a guarantee were to be voided as a fraudulent conveyance or were to be held unenforceable for any other reason, holders of the Notes would cease to have any claim in respect of the guarantor and would be creditors solely of ours and of the guarantors whose guarantees had not been avoided or held unenforceable. In this event, the claims of the holders of the Notes against the issuer of an invalid guarantee would be subject to the prior payment in full of all other liabilities of the guarantor thereunder. After providing for all prior claims, there may not be sufficient assets to satisfy the claims of the holders of the Notes relating to the voided guarantees. Although each guarantee entered into by a guarantor will contain a provision intended to limit that guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, this provision may not be effective to protect those guarantees from being voided under fraudulent transfer law, or may reduce that guarantor’s obligation to an amount that effectively makes its guarantee worthless. In a Florida bankruptcy case, this kind of provision was found to be unenforceable and, as a result, the subsidiary guarantees in that case were found to be fraudulent conveyances. We do not know if that case will be followed if there is litigation on this point under the indenture for the Notes. However, if it is followed, the risk that the guarantees will be found to be fraudulent conveyances will be significantly increased.

We are owned and controlled by funds advised by Permira, and the funds’ interests as equity holders may conflict with the interests of note holders.

We are indirectly controlled by funds advised by Permira, who have the ability to control our policies and operations. The interests of the funds may not in all cases be aligned with the interests of note holders. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our equity holders might conflict with the interests of note holders. In addition, our equity holders may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even when those transactions involve risks to holders of the Notes. Furthermore, funds advised by Permira may in the future own businesses that directly or indirectly compete with us. Funds advised by Permira also may pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.

A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may impair our ability to obtain future borrowings at similar costs and reduce our access to capital.

The Notes currently have a non-investment grade rating. In the future, any ratings agency may lower a given rating, if that rating agency judges that our business, the economic environment or other future circumstances so warrant, and a ratings downgrade would likely materially adversely affect the price of the Notes. A ratings agency may also decide to withdraw its rating of the Notes entirely, which would impede their liquidity and materially adversely affect their price.

59

During any period in which the Notes are rated investment grade, certain covenants contained in the indenture will not be applicable; however, there is no assurance that the Notes will be rated investment grade.

The indenture governing the Notes provides that certain covenants will not apply to us during any period in which the Notes are rated investment grade from each of Standard & Poor’s and Moody’s and no default has otherwise occurred and is continuing under the indenture. The covenants that would be suspended include, among others, limitations on our restricted subsidiaries’ ability to pay dividends, incur indebtedness, sell certain assets and enter into certain other transactions. Any actions that we take while these covenants are not in force will be permitted even if the Notes are subsequently downgraded below investment grade and such covenants are subsequently reinstated. Investors should be aware that the Notes may never become rated investment grade and we do not expect the Notes to become investment grade. If they do become rated investment grade, the Notes may not maintain those ratings.

The Notes are only guaranteed by entities that also guarantee our New Credit Facilities. Therefore, certain current and future subsidiaries of Ancestry.com LLC that are considered controlled foreign corporations and certain other subsidiaries that are not required to guarantee the New Credit Facilities will not provide guarantees of the New Credit Facilities and will not guarantee the Notes.

Certain current and future U.S. and non-U.S. indirect subsidiaries of Ancestry.com LLC are considered to be controlled foreign corporations. These subsidiaries will not provide guarantees of the New Credit Facilities and, therefore, will not provide guarantees of the Notes. Furthermore, certain other of our subsidiaries will not be required to provide guarantees of the New Credit Facilities and, unless they guarantee other indebtedness of ours or the guarantors, will not guarantee the Notes.

A substantial portion of our assets are owned, and a substantial portion of our revenue is generated, by guarantors organized outside the United States. Foreign laws applicable to such guarantors might not be as favorable to note holders as analogous United States federal and state laws.

A substantial portion of our assets are owned by non-U.S. guarantors. As a result of their jurisdiction of organization, laws other than United States federal and state law may apply to such entities in connection with, among other things, their liquidation or dissolution and the validity and enforceability of their guarantees of the Notes. We can give no assurance of which jurisdiction’s insolvency law will be applied in the event of the bankruptcy or insolvency of a foreign guarantor of the Notes. The procedural and substantive provisions of foreign insolvency laws are different from and, in certain jurisdictions, may be less favorable to holders of the Notes than comparable provisions of U.S. insolvency law. Further, pursuant to foreign insolvency law, a foreign guarantor’s liability under its guarantee may rank junior to certain debts entitled to priority under applicable law, which would not be entitled to a similar priority under U.S. insolvency law. Such debts could include, among others, amounts owed to foreign governments, amounts owed to employees such as wages, salary and holiday remuneration, amounts owed in respect of pension scheme contributions, social security contributions or contracts of insurance, and payments pursuant to applicable workers’ compensation laws. As a result, there can be no assurance that, in the event of a liquidation or insolvency of a foreign guarantor of the Notes, note holders will be able to realize upon the guarantee of such foreign guarantor to the same extent as if such foreign guarantor was organized under the laws of a U.S. jurisdiction. The laws of such foreign jurisdictions might also be applied to hold the guarantee of a foreign guarantor void and unenforceable in connection with a liquidation or otherwise. Such foreign laws may also be used to hold a payment made under a guarantee to be void and refundable. Accordingly, the guarantee of a foreign guarantor could be held void and unenforceable under applicable foreign law in a situation in which, if foreign law did not apply, the same guarantee would be enforceable under applicable U.S. federal and state law. The guarantees of the foreign guarantors may also be held void under certain foreign laws if it is determined that the company issuing the guarantee does not receive sufficient commercial benefit for doing so. If there is insufficient commercial benefit, the beneficiary of the guarantee may not be able to rely on the authority of the directors of that company to grant the guarantee, and accordingly a court may set aside the guarantee at the request of, among others, the company’s shareholders or a liquidator. Although we believe that the guarantee of each foreign guarantor is enforceable and that each guarantor has received sufficient commercial benefit from issuing its guarantee, we cannot assure you that a foreign court would agree with our conclusion and not hold such guarantee to be void under applicable foreign law.

60

Ancestry.com Inc. (the "Issuer") is a holding company, and its ability to make any required payment on the Notes is dependent on the operations of, and the distribution of funds from, its and Ancestry.com LLC's (the "Parent") subsidiaries.

The Issuer’s and Parent’s subsidiaries conduct substantially all of our operations and own all of our operating assets. Therefore, the Issuer depends on dividends and other distributions from its and Parent’s subsidiaries to generate the funds necessary to meet its obligations, including its required obligations under the Notes. Moreover, each of our subsidiaries is a legally distinct entity and, other than those of our subsidiaries that are guarantors of the Notes, have no obligation to pay amounts due pursuant to the Notes or to make any of their funds or other assets available for these payments. Although the indenture governing the Notes limits the ability of the restricted subsidiaries to enter into consensual restrictions on their ability to pay dividends and make other payments, these limitations have a number of significant qualifications and exceptions, including provisions contained in the indenture governing the Notes and the New Credit Facilities that restrict the ability of the restricted subsidiaries to make dividends and distributions or otherwise transfer any of their assets to the Issuer.

The Notes may trade at a discount from par.

The Notes may trade at a discount from their initial offering price due to a number of potential factors, including not only our financial condition, performance and prospects, but also many that are not directly related to us, such as a lack of liquidity in trading of the Notes, prevailing interest rates, the market for similar securities, general economic conditions and prospects for companies in our industry generally. In addition, the liquidity of the trading market in the Notes and the market prices quoted for the Notes may be materially adversely affected by changes in the overall market for high-yield securities.

Risks Related to Intellectual Property

If our intellectual property and technologies are not adequately protected to prevent use or appropriation by our competitors, the value of our brand and other intangible assets may be diminished, and our business may be materially affected.

Our future success and competitive position depend in part on our ability to protect our proprietary technologies and intellectual property. We rely and expect to continue to rely on a combination of confidentiality and license agreements with our employees, consultants and third parties with whom we have relationships, as well as on the protections afforded by trademark, copyright, patent and trade secret law, to protect our proprietary technologies and intellectual property. Because certain of our trademarks contain words or terms that have an arguably common usage, we may have difficulty registering them in certain jurisdictions. Although we possess intellectual property rights in some aspects of our digital content, search technology, software products and digitization and indexing processes, our digital content is not protected by any registered copyrights or other registered intellectual property or statutory rights. Rather, our digital content is protected by user agreements that limit access to and use of our data, as well as by certain proprietary and non-proprietary technology and software. However, compliance with the use restrictions is difficult to monitor, and any technology or software that we deploy to protect our digital content may prove to be inadequate for such purpose. In addition, our proprietary rights in our digital content databases may be more difficult to enforce than other forms of intellectual property rights.

There can be no assurance that the steps we take will be adequate to protect our technologies and intellectual property, that our patent and trademark applications will lead to issued patents and registered trademarks in all instances, that others will not develop or patent similar or superior technologies, products or services, or that our patents, trademarks and other intellectual property will not be challenged, invalidated or circumvented by others. Furthermore, the intellectual property laws of other countries at which our websites are or may in the future be directed, may not protect our products and intellectual property rights to the same extent as the laws of the United States. The legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in Internet-related industries are uncertain and still evolving, both in the United States and in other countries. In addition, third parties may knowingly or unknowingly infringe our patents, trademarks and other intellectual property rights, and litigation may be necessary to protect and enforce our intellectual property rights. Any such litigation could be very costly and could divert management attention and resources. If the protection of our technologies and intellectual property is inadequate to prevent use or appropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our subscription services and methods of operations. Any of these events would have a material adverse effect on our business, financial condition and results of operations.

We also expect that the more successful we are, the more likely it will become that competitors will try to develop products that are similar to ours, which may infringe on our proprietary rights. It may also be more likely that competitors will claim that our products and services infringe on their proprietary rights. If we are unable to protect our proprietary rights or if third parties independently develop or gain access to our or similar technologies, our business, revenues, reputation and competitive position could be harmed.

61

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information. Failure to protect our proprietary information could make it easier for third parties to compete with our products and harm our business.

A substantial amount of our tools and technologies are protected by trade secret laws. In order to protect our proprietary technologies and processes, we rely in part on security measures, as well as confidentiality agreements with our employees, licensees, independent contractors and other advisors. These measures and agreements may not effectively prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. We could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, others may independently discover our trade secrets and proprietary information, and in such cases, we could not assert any trade secret rights against such parties. Laws regarding trade secret rights in certain markets in which we operate may afford little or no protection to our trade secrets. The loss of trade secret protection could make it easier for third parties to compete with our products by copying functionality. In addition, any changes in or unexpected interpretations of the trade secret and other intellectual property laws in any country in which we operate may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could materially affect our business, revenues, reputation and competitive position.

Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our websites, content indexes, and marketing and advertising activities.

Trademark, copyright, patent and other intellectual property rights are important to us and other companies. Our intellectual property rights extend to our technologies, business processes and the content on our websites. We use intellectual property licensed from third parties in merchandising our products and marketing and advertising our services. From time to time, third parties may allege that we have violated their intellectual property rights. For example, we are currently in litigation with Genotek; refer to Item 1, Legal Proceedings, of Part II for further information. If there is a valid claim against us for infringement, misappropriation, misuse or other violation of third-party intellectual property rights, and we are unable to obtain sufficient rights or develop non-infringing intellectual property or otherwise alter our business practices on a timely basis, our business and competitive position may be adversely affected. Many companies are devoting significant resources to obtaining patents that could affect many aspects of our business. There are numerous patents that broadly claim means and methods of conducting business on the Internet. We have not exhaustively searched patents relevant to our technologies and business. If we are forced to defend ourselves against intellectual property infringement claims, whether they are with or without merit or are determined in our favor, we may face costly litigation, diversion of technical and management personnel, limitations on our ability to use our current websites or inability to market or provide our products or services. As a result of any such dispute, we may have to develop non-infringing technology, pay damages, enter into royalty or licensing agreements, cease providing certain products or services, adjust our merchandising or marketing and advertising activities or take other actions to resolve the claims. These actions, if required, may be costly or unavailable on terms acceptable to us. In addition, many of our co-branding, distribution and other partnering agreements require us to indemnify our partners for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling in such an action.

In addition, as a publisher of online content, we face potential liability for negligence, copyright, patent or trademark infringement or other claims based on the nature and content of data and materials that we publish or distribute. These claims could arise with respect to both institutional and user-generated content. Litigation to defend these claims could be costly and any other liabilities we incur in connection with the claims may have a material adverse effect on our business, financial condition and results of operations.

62

If we are unable to protect our domain names, our reputation and brand could be affected adversely, which may negatively impact our ability to compete.

We have registered domain names for website destinations that we use in our business, such as Ancestry.com, Ancestry.co.uk, Archives.com and Fold3.com. However, if we are unable to maintain our rights in these domain names, our competitors could capitalize on our brand recognition by using these domain names for their own benefit. In addition, our competitors could capitalize on our brand recognition by using domain names similar to ours. Domain names similar to ours have been registered in the United States and elsewhere, and in many countries the top-level domain names “ancestry,” “archives” or “genealogy” are owned by other parties. Although we own the “ancestry.co.uk” domain name in the United Kingdom, we might not be able to, or may choose not to, acquire or maintain other country-specific versions of the “ancestry,” “archives” and “genealogy” domain names. Further, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights varies from jurisdiction to jurisdiction and is unclear in some jurisdictions. We may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of, our brand or our trademarks or service marks. Protecting and enforcing our rights in our domain names and determining the rights of others may require litigation, which could result in substantial costs and divert management attention. We may not prevail if any such litigation is initiated.

63

Item 6. Exhibits

Exhibit Number	Exhibit Description
4.1	Eighth Supplemental Indenture, dated as of August 28, 2015, among Ancestry.com Inc., Ancestry.com LLC, Ancestry Ireland Health LLC, Ancestry International Health Unlimited Company, and Wells Fargo Bank, NA, as trustee
10.1	Credit and Guarantee Agreement dated as of August 28, 2015, among Ancestry.com LLC, Ancestry U.S. Holdings Inc., Ancestry.com Inc., the Subsidiary Guarantors parties thereto, the several lenders parties thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on August 31, 2015).
10.2†	Fourth Amended and Restated Ancelux Topco S.C.A. Equity Incentive Plan
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 *	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

*	These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.
**	In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
†	Indicates a management contract or compensatory plan.

64

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Ancestry.com LLC
Dated: October 30, 2015	By:	/s/ Timothy Sullivan
		Timothy Sullivan
		President and Chief Executive Officer
Dated: October 30, 2015	By:	/s/ Howard Hochhauser
		Howard Hochhauser
		Chief Financial Officer

65

EXHIBIT INDEX

Exhibit Number	Exhibit Description
4.1	Eighth Supplemental Indenture, dated as of August 28, 2015, among Ancestry.com Inc., Ancestry.com LLC, Ancestry Ireland Health LLC, Ancestry International Health Unlimited Company, and Wells Fargo Bank, NA, as trustee
10.1	Credit and Guarantee Agreement dated as of August 28, 2015, among Ancestry.com LLC, Ancestry U.S. Holdings Inc., Ancestry.com Inc., the Subsidiary Guarantors parties thereto, the several lenders parties thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on August 31, 2015).
10.2†	Fourth Amended and Restated Ancelux Topco S.C.A. Equity Incentive Plan
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 *	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

*	These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.
**	In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
†	Indicates a management contract or compensatory plan.

66