EX-99.1 2 c96530exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
EXHIBIT 99.1
ANCESTRY.COM INC. REPORTS STRONG GROWTH FOR 2009
— Total Revenue Up 14% for Full Year 2009 —
— Revenue Increase Driven by 17% Revenue Growth in Ancestry.com Web Sites —
— Q4 2009 Adjusted EBITDA Increased 38% —
— FY09 GAAP EPS $0.51, Compared to First Call at $0.36 and Up From $0.06 in FY08 —
PROVO, Utah, February 18, 2010 — Ancestry.com Inc. (Nasdaq: ACOM), the world’s largest online family history resource, today reported financial results for the fourth quarter and full year ended December 31, 2009.
“Our strong financial results capped a year of great milestones for Ancestry.com,” said Tim Sullivan, Chief Executive Officer, Ancestry.com. “We surpassed 1 million subscribers to our flagship service; generated record revenue and net income; expanded our margins; and successfully completed our initial public offering. The outlook for continued subscriber growth in 2010 appears healthy across all markets, supported by accelerated investments in product enhancements and continued investments in content, as well as increased visibility of both our company and the family history research category via such television programs as NBC’s Who Do You Think You Are?, slated to air in March.”
Ancestry.com Web Sites Highlights
  •   Subscribers totaled 1,066,000 as of December 31, 2009, a 17% increase over 2008.
  •   Subscriber additions were 165,000 in Q4 2009, a 15% increase over Q4 2008.
  •   Monthly Subscriber Churn1 decreased to 3.6% in Q4 2009 compared to 4.0% in Q4 2008 and flat with 3.6% in Q3 2009.
  •   Subscriber acquisition cost2 in Q4 2009 was $85.21, compared to $79.26 in Q4 2008 and $70.55 in Q3 2009, reflecting investments in new television commercials for both our domestic and international markets.
  •   Average Monthly Revenue per Subscriber3 in Q4 2009 was $16.67, compared to $16.45 in Q4 2008 and $16.48 in Q3 2009.
Fourth Quarter and Full Year 2009 Financial Highlights
Total revenue for the fourth quarter of 2009 was $60.1 million, an increase of 14.6% over $52.4 million in the prior year period, led by growth in our core Ancestry.com Web sites of 17.4%. For the full year 2009, total revenue was $224.9 million, up 13.8% over the full year 2008. Had average exchange rates remained the same in both periods, our reported revenues would have been approximately 3% higher for the quarter and 4% higher for the full year.
Operating income for the fourth quarter of 2009 was $8.8 million, compared to $0.8 million in the prior year period. For the full year 2009, operating income was $32.0 million, compared to $15.7 million in 2008.
Adjusted EBITDA4 for the fourth quarter of 2009 was $18.7 million, compared to $13.6 million in the fourth quarter of 2008. Adjusted EBITDA margin for the fourth quarter of 2009 was 31.1%, compared to 25.9% in the fourth quarter of 2008. The increase in adjusted EBITDA reflects the operating leverage inherent in our business model. For the full year 2009, adjusted EBITDA was $71.6 million, compared to $62.6 million in 2008. Adjusted EBITDA margin for the full year 2009 was 31.8%, up from 31.7% for the full year 2008. Adjusted EBITDA includes an expense related to a legal settlement in the third quarter of 2009 of $2.3 million.
Net income was $9.1 million, or $0.20 per fully diluted share, for the fourth quarter of 2009 compared to a net loss of $(1.1) million, or $(0.03) per fully diluted share, in the fourth quarter of 2008. For the full year 2009, net income was $21.3 million, or $0.51 per fully diluted share, compared to $2.4 million, or $0.06 per fully diluted share, in 2008.
Income taxes The Company recorded a tax benefit in the fourth quarter of 2009 of $5.2 million related to the use of net operating losses, resulting in a net benefit of $1.6 million in the fourth quarter.
 
     
1   Monthly churn is a measure representing the number of subscribers that cancel in the quarter divided by the sum of beginning subscribers and subscriber additions during the quarter. To arrive at monthly churn, we divide the results by three.
 
2   Subscriber acquisition cost is external marketing and advertising expense, divided by total subscriber additions in the period.
 
3   Average monthly revenue per subscriber is total subscription revenues earned in the period from subscriptions to the Ancestry.com Web sites divided by the average number of subscribers in the period, divided by the number of months in the period. The average number of subscribers for the period is calculated by taking the average of the beginning and ending number of subscribers for the period.
 
4   Adjusted EBITDA is defined as net income (loss) plus net interest (income) expense; income tax expense; non-cash charges including depreciation, amortization, impairment of intangible assets and stock-based compensation expense; and other (income) expense.

 

 

 

Stock-based compensation was $1.2 million for the fourth quarter of 2009, flat with the prior year period. For the full year 2009, stock-based compensation was $5.5 million, compared to $4.7 million in the full year 2008.
Free cash flow5 totaled $29.6 million in 2009 compared to $31.7 million in the prior year, with higher adjusted EBITDA offset by an increase in cash paid for income taxes.
Balance sheet As of December 31, 2009, cash, cash equivalents, and short-term investments were $100.3 million and total debt was $100.0 million.
Business Outlook
The Company’s financial and operating expectations for the first quarter and full year 2010 are as follows:
First Quarter 2010
  •   Revenue in the range of $61.0 to $62.0 million
  •   Adjusted EBITDA in the range of $15.5 to $16.0 million
  •   Ending subscribers of approximately 1,135,000
Full Year 2010
  •   Revenue in the range of $250 to $255 million
  •   Adjusted EBITDA in the range of $83 to $85 million
  •   Ending subscribers in the range of 1,200,000 to 1,225,000
Conference Call & Webcast
Ancestry.com will host a conference call with analysts and investors today at 3:00 p.m. MT (5:00 p.m. ET). A live webcast of the conference call will be available at the investor relations section of the Ancestry.com Web site, http://ir.ancestry.com/. Participants can also access the conference call by dialing 800-967-7187 (within the United States), or 719-457-2658 (international callers) approximately ten minutes prior to the start time.
A replay of the call will be available approximately two hours after the call has ended and will be available through Wednesday, February 24, 2010. To access the replay, dial 888-203-1112 (within the United States), or 719-457-0820 (international callers) and enter the replay passcode 5594199. The webcast replay will also be available for 12 months on the investor relations section of the Ancestry.com Web site, http://ir.ancestry.com/, under Events and Presentations.
Use of Non-GAAP Measures
Management believes that adjusted EBITDA and free cash flow are useful measures of operating performance because they exclude items that we do not consider indicative of our core performance. In the case of adjusted EBITDA, we adjust net income for such things as interest, taxes, stock based compensation and certain non-cash and non-recurring items. Free cash flow subtracts from adjusted EBITDA the capitalization of content database costs, capital expenditures and cash paid for income taxes and interest expense. However, these non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income and net cash provided by operating activities, or other financial measures prepared in accordance with GAAP. A reconciliation to the GAAP equivalents of these non-GAAP measures is contained in tabular form on the attached unaudited financial statements.
Our management uses adjusted EBITDA and is increasingly using free cash flow as measures of operating performance; as factors when determining management’s incentive compensation; for planning purposes, including the preparation of our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies; and in communications with our board of directors concerning our financial performance.
About Ancestry.com
Ancestry.com Inc. (Nasdaq: ACOM), the world’s largest online family history resource, has digitized and put online over four billion records over the past 13 years. Ancestry users have created over 13 million family trees containing nearly 1.4 billion profiles. Ancestry.com has local Web sites directed at nine countries, including its flagship Web site at http://www.ancestry.com.
 
     
5   Free Cash Flow subtracts from adjusted EBITDA capitalization of content database costs, capital expenditures and cash paid for income taxes and interest expense.

 

 

 

Forward-looking Statements
This press release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated in these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.
Factors that could materially affect actual results, levels of activity, performance or achievements, and our ability to execute on our business strategy include those listed under the caption “Risk Factors” of the Ancestry.com Prospectus dated November 4, 2009.
We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.
Ancestry.com Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31, 2008     December 31, 2009     December 31, 2008     December 31, 2009  
Revenues:
                                
Subscription revenues
   $ 47,775     $ 55,201     $ 181,391     $ 207,707  
Product and other revenues
     4,658       4,908       16,200       17,195  
 
                        
Total revenues
     52,433       60,109       197,591       224,902  
Costs of revenues:
                                
Cost of subscription revenues
     10,488       10,428       38,187       40,183  
Cost of product and other revenues
     2,135       1,927       5,427       6,140  
 
                        
Total cost of revenues
     12,623       12,355       43,614       46,323  
 
                        
Gross profit
     39,810       47,754       153,977       178,579  
Operating expenses:
                                
Technology and development
     9,501       9,546       33,206       36,236  
Marketing and advertising
     15,707       17,399       52,341       61,625  
General and administrative
     7,896       7,971       28,931       32,540  
Amortization of acquired intangible assets
     5,947       4,052       23,779       16,217  
 
                        
Total operating expenses
     39,051       38,968       138,257       146,618  
 
                        
Income (loss) from operations
     759       8,786       15,720       31,961  
Interest expense
     (3,028 )     (1,355 )     (12,355 )     (6,139 )
Interest income
     240       46       872       792  
Other income (expense), net
     10       7       (8 )     21  
 
                        
Income (loss) before income taxes
     (2,019 )     7,484       4,229       26,635  
Income tax (expense) benefit
     903       1,587       (1,845 )     (5,340 )
 
                        
Net income (loss)
   $ (1,116 )   $ 9,071     $ 2,384     $ 21,295  
 
                        
 
      
Net income per common share
                                
Basic
   $ (0.03 )   $ 0.22     $ 0.06     $ 0.55  
 
                        
Diluted
   $ (0.03 )   $ 0.20     $ 0.06     $ 0.51  
 
                        
Weighted average common shares outstanding
                                
Basic
     38,199       40,857       38,113       38,930  
 
                        
Diluted
     38,757       45,458       38,529       41,533  
 
                        
 
                                
Reconciliation of adjusted EBITDA and free cash flow to net income (loss):
                                
Net income (loss)
   $ (1,116 )   $ 9,071     $ 2,384     $ 21,295  
Interest expense, net
     2,788       1,309       11,483       5,347  
Income tax (benefit) expense
     (903 )     (1,587 )     1,845       5,340  
Depreciation expense
     2,579       2,844       10,732       10,936  
Amortization expense
     7,607       5,868       30,046       23,214  
Stock-based compensation
     1,163       1,209       4,672       5,474  
Other (income) expense, net
     (10 )     (7 )     8       (21 )
Impairment of intangible assets
     1,475       —       1,475       —  
 
                        
Adjusted EBITDA
   $ 13,583     $ 18,707     $ 62,645     $ 71,585  
 
                        
Capitalization of content database costs
     (2,582 )     (3,543 )     (8,965 )     (9,398 )
Purchase of property and equipment
     (4,263 )     (5,796 )     (11,621 )     (13,362 )
Cash paid for interest
     (2,862 )     (1,116 )     (10,068 )     (7,740 )
Cash paid for income taxes
     (182 )     (2,487 )     (279 )     (11,472 )
 
                        
Free cash flow
   $ 3,694     $ 5,765     $ 31,712     $ 29,613  
 
                        

 

 

 

Ancestry.com Inc.
Unaudited Consolidated Balance Sheets
(in thousands)
                 
    December 31,  
    2008     2009  
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 40,121     $ 66,941  
Restricted cash
     6,572       2,181  
Short-term investments
     —       33,331  
Accounts receivable, net
     5,155       5,860  
Income tax receivable
     3,089       2,017  
Deferred income taxes
     7,582       8,797  
Prepaid expenses and other current assets
     3,674       5,380  
 
            
Total current assets
     66,193       124,507  
Property and equipment, net
     17,004       19,430  
Content database costs, net
     47,244       49,650  
Intangible assets, net
     57,701       41,484  
Goodwill
     285,466       285,466  
Other assets
     4,367       2,811  
 
            
Total assets
   $ 477,975     $ 523,348  
 
            
Liabilities and stockholders’ equity
                
Current liabilities:
                
Accounts payable
   $ 4,827     $ 6,877  
Accrued expenses
     19,536       18,850  
Escrow liability
     5,682       1,763  
Deferred revenues
     61,178       69,711  
Current portion of long-term debt
     21,457       28,416  
 
            
Total current liabilities
     112,680       125,617  
Long-term debt, less current portion
     111,543       71,609  
Deferred income taxes
     33,710       30,117  
Other long-term liabilities
     254       1,115  
 
            
Total liabilities
     258,187       228,458  
 
            
Commitments and contingencies
                
Stockholders’ equity:
                
Common Stock
     38       42  
Additional paid-in capital
     218,669       272,513  
Accumulated other comprehensive income (loss)
     —       (41 )
Retained earnings
     1,081       22,376  
 
            
Total stockholders’ equity
     219,788       294,890  
 
            
Total liabilities and stockholders’ equity
   $ 477,975     $ 523,348  
 
            

 

 

 

Ancestry.com Inc.
Other Data
                                         
    Three Months Ended  
    December 31, 2008     March 31, 2009     June 30, 2009     September 30, 2009     December 31, 2009  
Total subscribers
     913,683       959,411       990,959       1,028,180       1,066,123  
Subscriber additions
     143,769       188,561       160,394       159,795       165,241  
Monthly churn
     4.0 %     4.3 %     3.8 %     3.6 %     3.6 %
Subscriber acquisition cost
   $ 79.26     $ 62.23     $ 73.27     $ 70.55     $ 85.21  
Average monthly revenue per subscriber
   $ 16.45     $ 16.46     $ 16.42     $ 16.48     $ 16.67  
                 
    Twelve Months Ended  
    December 31, 2008     December 31, 2009  
Total subscribers
     913,683       1,066,123  
Subscriber additions
     556,045       673,991  
Monthly churn
     4.0 %     3.8 %
Subscriber acquisition cost
   $ 71.99     $ 72.46  
Average monthly revenue per subscriber
   $ 16.09     $ 16.55  
ACOM-C
For more information:
     
Investors:
  Media:
Brainerd Communicators, Inc.
  Brainerd Communicators, Inc.
Corey Kinger
  Ray Yeung / Nancy Zakhary
(212) 986-6667
  (212) 986-6667
investorrelations@ancestry.com
  yeung@braincomm.com / nancy@braincomm.com