EX-99.1 2 c03943exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(ANCESTRY.COM LOGO)
ANCESTRY.COM INC. REPORTS 2010 SECOND QUARTER
– Ancestry.com Subscriber Growth of 32% Year-Over-Year –
– Total Revenue Up 36% Year-Over-Year –
– Raises FY 2010 Outlook –
PROVO, Utah, July 29, 2010 – Ancestry.com Inc. (Nasdaq: ACOM), the world’s largest online family history resource, today reported financial results for the quarter ended June 30, 2010.
“Greater than anticipated subscriber additions drove impressive performance in the quarter and boosted our revenue and EBITDA expectations for the full year,” said Tim Sullivan, Chief Executive Officer of Ancestry.com. “It’s particularly noteworthy that retention rates and customer behavior trends are remaining consistent despite the rapid subscriber growth in the first half of 2010. As we move forward, we will continue our focus on building awareness of the family history category, improving the customer experience and adding important content collections to Ancestry.com.”

Ancestry.com Web Sites Highlights
    Subscribers totaled 1,311,000 as of June 30, 2010, a 32% increase over the end of Q2 2009 and an 8% increase over the end of Q1 2010.
    Gross Subscriber additions were 291,000 in Q2 2010, an 81% increase over Q2 2009 and a 4% increase over Q1 2010, driven by the continued success of marketing programs and the airing of Who Do You Think You Are? early in the quarter.
    Monthly Subscriber Churn1 increased to 4.3% in Q2 2010, compared to 3.8% in Q2 2009 and 3.3% in Q1 2010, as expected, reflecting the large number of new monthly subscribers added in the first half of 2010.
    Subscriber acquisition cost2 in Q2 2010 was $74.04, compared to $73.27 in Q2 2009 and $69.57 in Q1 2010.
    Average Monthly Revenue per Subscriber3 in Q2 2010 was $18.02, compared to $16.42 in Q2 2009 and $16.70 in Q1 2010.
Second Quarter 2010 Financial Highlights
    Total revenue for the second quarter of 2010 was $74.5 million, an increase of 36.4% over $54.6 million in the prior year period, driven by growth in our core Ancestry.com Web sites of 41.9%.
    Operating income for the second quarter of 2010 was $15.8 million, compared to $8.7 million in the prior year period.
    Adjusted EBITDA4 for the second quarter of 2010 was $25.3 million, compared to $18.4 million in the second quarter of 2009. Adjusted EBITDA margin for the second quarter of 2010 was 33.9%, compared to 33.8% in the second quarter of 2009.
 
     
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, the results are divided by three.
 
2   Subscriber acquisition cost is external marketing and advertising expense, divided by gross subscriber additions in the quarter.
 
3   Average monthly revenue per subscriber is total subscription revenues earned in the quarter from subscriptions to the Ancestry.com Web sites divided by the average number of subscribers in the quarter, divided by three. The average number of subscribers for the quarter is calculated by taking the average of the beginning and ending number of subscribers for the quarter.

 

 


 

    Net income was $8.5 million, or $0.18 per fully diluted share, for the second quarter of 2010 compared to $4.7 million, or $0.12 per fully diluted share, in the second quarter of 2009.
    Free cash flow5 totaled $14.4 million in the second quarter of 2010 compared to $6.7 million in the prior year period.
    Balance sheet As of June 30, 2010, cash, cash equivalents, and short-term investments were $134.0 million and total debt was $76.2 million.
Recent Business Highlights
    The Company closed the acquisition of Genline.se, the leading Swedish family history Web site. At closing, Genline had more than 17,000 paying members with access to 26 million pages of digitized Swedish church records spanning more than 400 years from the 17th to the 20th century.  
    NBC announced its renewal of Who Do You Think You Are? for a second season, which is currently expected to air in the first quarter of 2011.
    Season 1 of Who Do You Think You Are? is currently expected to air in re-runs starting on August 13, 2010.
    The Company added several new important content collections, including US Land Ownership Atlases from 1860-1920 and the UK Waterloo Medal Roll from 1815.
Business Outlook
The Company’s financial and operating expectations for the third quarter and full year 2010 are as follows:
Third Quarter 2010
    Revenue in the range of $75.0 to $77.0 million
    Adjusted EBITDA in the range of $24.0 to $26.0 million
    Ending subscribers of approximately 1,345,000
Full Year 2010
    Revenue in the range of $290 to $295 million (increased from the previously expected range of $275 to $280 million)
    Adjusted EBITDA in the range of $93 to $97 million (increased from the previously expected range of $90 to $95 million)
    Ending subscribers in the range of 1,360,000 to 1,370,000 (increased from the previously expected range of 1,280,000 to 1,300,000)
 
     
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.
 
5   Free cash flow subtracts from adjusted EBITDA capitalization of content database costs, capital expenditures and cash paid for income taxes and interest expense.

 

 


 

Conference Call & Webcast
Ancestry.com will host a conference call with analysts and investors today at 3:00 p.m. MT (5:00 p.m. ET). An accompanying slide presentation and a live webcast of the conference call will be available at the investor relations section of the Ancestry.com Web site, http://ir.ancestry.com/. Participants can also access the conference call by dialing 888-668-1643 (within the United States), or 913-312-6688 (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 Friday, August 6, 2010. To access the replay, dial 888-203-1112 (within the United States), or 719-457-0820 (international callers) and enter the replay passcode 7549001. 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 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; 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. We also use adjusted EBITDA and have used free cash flow as factors when determining management’s incentive compensation.
About Ancestry.com
Ancestry.com Inc. (Nasdaq: ACOM) is the world’s largest online family history resource, with more than one million paying subscribers. More than 5 billion records have been added to the site in the past 13 years. Ancestry users have created more than 18 million family trees containing over 1.8 billion profiles. Ancestry.com has local Web sites directed at nine countries, including its flagship Web site at www.ancestry.com.

 

 


 

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 “appears,” “may,” “designed,” “expect,” “intend,” “focus,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “should,” “continue” or “work” or the negative of these terms or other comparable terminology. These statements include statements describing our subscriber base, our activities to enhance subscribers’ experience, our business outlook and our opportunities and prospects for growth. 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 an inability to continue to add subscribers through our marketing programs or integrations or inability to add subscribers at a cost that would support or increase margins, increase in churn, inability to provide additional products or services to allow for increases in per subscriber revenues, inability to acquire attractive additional content and other “Risk Factors” described from time to time in our filings with the Securities and Exchange Commission.
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.
Consolidated Balance Sheets
(in thousands)
                 
    June 30,     December 31,  
    2010     2009  
    (unaudited)              
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 103,417     $ 66,941  
Restricted cash
    2,351       2,181  
Short-term investments
    30,535       33,331  
Accounts receivable, net
    4,925       5,860  
Income tax receivable
    473       2,017  
Deferred income taxes
    9,176       8,797  
Prepaid expenses and other current assets
    3,510       5,380  
 
           
Total current assets
    154,387       124,507  
Property and equipment, net
    17,454       19,430  
Content database costs, net
    51,130       49,650  
Intangible assets, net
    34,126       41,484  
Goodwill
    285,206       285,466  
Other assets
    2,142       2,811  
 
           
Total assets
  $ 544,445     $ 523,348  
 
           
Liabilities and stockholders’ equity
               
Current liabilities:
               
Accounts payable
  $ 9,339     $ 6,877  
Accrued expenses
    21,019       18,850  
Escrow liability
    1,883       1,763  
Deferred revenues
    88,799       69,711  
Current portion of long-term debt
    10,395       28,416  
 
           
Total current liabilities
    131,435       125,617  
Long-term debt, less current portion
    65,835       71,609  
Deferred income taxes
    27,859       30,117  
Other long-term liabilities
    1,115       1,115  
 
           
Total liabilities
    226,244       228,458  
Commitments and contingencies
               
Stockholders’ equity:
               
Common stock
    43       42  
Additional paid-in capital
    283,290       272,513  
Accumulated other comprehensive income (loss)
    7       (41 )
Retained earnings
    34,861       22,376  
 
           
Total stockholders’ equity
    318,201       294,890  
 
           
Total liabilities and stockholders’ equity
  $ 544,445     $ 523,348  
 
           

 

 


 

Ancestry.com Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
                                 
    3 Months Ended     6 Months Ended  
    June 30, 2010     June 30, 2009     June 30, 2010     June 30, 2009  
    (unaudited)     (unaudited)  
Revenues:
                               
Subscription revenues
  $ 70,544     $ 50,719     $ 130,104     $ 99,903  
Product and other revenues
    3,916       3,854       8,777       7,903  
 
                       
Total revenues
    74,460       54,573       138,881       107,806  
Costs of revenues:
                               
Cost of subscription revenues
    11,228       9,966       22,729       19,722  
Cost of product and other revenues
    1,280       1,310       2,774       2,824  
 
                       
Total cost of revenues
    12,508       11,276       25,503       22,546  
 
                       
Gross profit
    61,952       43,297       113,378       85,260  
Operating expenses:
                               
Technology and development
    9,992       8,692       19,919       17,548  
Marketing and advertising
    24,490       15,065       46,936       29,986  
General and administrative
    8,032       6,777       15,774       14,340  
Amortization of acquired intangible assets
    3,679       4,055       7,358       8,113  
 
                       
Total operating expenses
    46,193       34,589       89,987       69,987  
 
                       
Income from operations
    15,759       8,708       23,391       15,273  
Interest expense
    (1,493 )     (1,515 )     (2,709 )     (3,356 )
Interest income
    76       567       139       698  
Other income (expense), net
    (12 )     2       (3 )     10  
 
                       
Income before income taxes
    14,330       7,762       20,818       12,625  
Income tax expense
    (5,807 )     (3,082 )     (8,333 )     (4,442 )
 
                       
Net income
  $ 8,523     $ 4,680     $ 12,485     $ 8,183  
 
                       
 
                               
Net income per common share
                               
Basic
  $ 0.20     $ 0.12     $ 0.29     $ 0.21  
 
                       
Diluted
  $ 0.18     $ 0.12     $ 0.26     $ 0.21  
 
                       
Weighted average common shares outstanding
                               
Basic
    42,764       38,287       42,612       38,257  
 
                       
Diluted
    48,015       40,159       47,754       39,625  
 
                       
 
                               
Reconciliation of adjusted EBITDA and free cash flow to net income:
Net Income
  $ 8,523     $ 4,680     $ 12,485     $ 8,183  
Interest expense, net
    1,417       948       2,570       2,658  
Income tax expense
    5,807       3,082       8,333       4,442  
Depreciation expense
    2,740       2,687       5,604       5,330  
Amortization expense
    5,509       5,771       11,022       11,541  
Stock-based compensation
    1,262       1,277       2,266       2,803  
Other income (expense), net
    12       (2 )     3       (10 )
 
                       
Adjusted EBITDA
  $ 25,270     $ 18,443     $ 42,283     $ 34,947  
 
                       
Capitalization of content database costs
    (2,349 )     (1,886 )     (5,141 )     (3,672 )
Purchase of property and equipment
    (2,221 )     (3,546 )     (3,628 )     (6,151 )
Cash paid for interest
    (476 )     (1,388 )     (1,477 )     (5,416 )
Cash paid for income taxes
    (5,778 )     (4,919 )     (6,181 )     (4,956 )
 
                       
Free cash flow
  $ 14,446     $ 6,704     $ 25,856     $ 14,752  
 
                       

 

 


 

Ancestry.com Inc.
Other Data
                                                 
    June 30, 2010     March 31, 2010     December 31, 2009     September 30, 2009     June 30, 2009     March 31, 2009  
Total Subscribers
    1,310,562       1,211,978       1,066,123       1,028,180       990,959       959,411  
Subscriber additions
    290,589       279,100       165,241       159,795       160,394       188,561  
Monthly churn
    4.3 %     3.3 %     3.6 %     3.6 %     3.8 %     4.3 %
Subscriber acquisition cost
  $ 74.04     $ 69.57     $ 85.21     $ 70.55     $ 73.27     $ 62.23  
Average monthly revenue per subscriber
  $ 18.02     $ 16.70     $ 16.67     $ 16.48     $ 16.42     $ 16.46  
     
For more information:
   
 
   
Investors:
  Media:
 
   
Brainerd Communicators, Inc.
  Brainerd Communicators, Inc.
Corey Kinger
  Ray Yeung / Jo Anne Barrameda
(212) 986-6667
  (212) 986-6667
investorrelations@ancestry.com
  yeung@braincomm.com / barrameda@braincomm.com