Q2 Total Revenue $119 Million, Up 18% Year-Over-Year
Raises Full-Year Revenue and Earnings Guidance
PROVO, Utah, July 25, 2012 (GLOBE NEWSWIRE) -- Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family history resource, reported today financial results for the second quarter ended June 30, 2012.
"Ancestry.com delivered outstanding results in the second quarter, with all key metrics outperforming our expectations," said Tim Sullivan, Chief Executive Officer. "Highlights include surpassing the two million subscriber milestone; commencing the digitization and indexing of the 1940 U.S. census data, around which we have built a great package of features and tools; and a successful launch of our DNA offering, where the initial response has been terrific. We believe we are positioned for a great second half of 2012, both financially and through the continued investment and good progress we are making across our key product initiatives."
Ancestry.com Web Sites Highlights
- Subscribers totaled approximately 2,005,000 as of June 30, 2012, a 20% increase over the end of the second quarter of 2011 and a 7% increase from the end of the first quarter of 2012.
- Gross subscriber additions were 361,000 in the second quarter of 2012, compared to 322,000 in the second quarter of 2011 and 390,000 in the first quarter of 2012.
- Monthly churn1 was 3.4% in the second quarter of 2012, compared to 4.6% in the second quarter of 2011 and 3.6% in the first quarter of 2012.
- Subscriber acquisition cost2 in the second quarter of 2012 was $81.49, compared to $81.23 in the second quarter of 2011 and $88.11 in the first quarter of 2012.
- Average monthly revenue per subscriber3 in the second quarter of 2012 was $18.84, compared to $18.88 in the second quarter of 2011 and $18.49 in the first quarter of 2012.
Second Quarter 2012 Financial Highlights
- Total revenue for the second quarter of 2012 was $119.1 million, an increase of 18% over $101.3 million in the second quarter of 2011.
- Operating income for the second quarter of 2012 was $29.4 million, compared to $26.5 million in the second quarter of 2011.
- Adjusted EBITDA4 for the second quarter of 2012 was $42.9 million, compared to $38.4 million in the second quarter of 2011. Adjusted EBITDA margin for the second quarter of 2012 was 36.0%, compared to 37.9% in the second quarter of 2011.
- Net income was $20.0 million, or $0.44 per fully diluted share, for the second quarter of 2012 compared to $16.6 million, or $0.33 per fully diluted share, in the second quarter of 2011.
- Free cash flow5 totaled $16.3 million for the second quarter of 2012 compared to $27.1 million for the second quarter of 2011.
- Cash and cash equivalents totaled $69.6 million as of June 30, 2012.
Recent Business Highlights
- The Company surpassed the 2 million subscriber milestone.
- The Company launched AncestryDNA May 3, 2012 providing Ancestry subscribers the ability to genetically understand their ethnicity, find recent common ancestors, and communicate with genetic cousins.
- The Company initiated the roll out of the 1940 US Census, processed 3.2 million images and over 130 million records.
-
The Company ended the quarter with approximately 10.4 billion records; new collections included:
-- 1940 Census state index roll out of 11 states and as of today a total of 26 states
-- Almost 13 million records of the UK National Probate Calendar –the only comprehensive English and Welsh probates (wills) collection
-- Completed the publication of the entire 1911 England & Wales census, making more than 36 million records searchable
-- 14 million UK Land Tax records
-- Assembled the Titanic Anniversary Collection; bringing together archives from the US, UK, and Canada, including passenger lists, crew lists, gravestone inscriptions, and photographs for the first time - The Company continued making refinements and improvements to its "hinting" capability, which allowed subscribers persistent hinting across the site header and menu bar, and created a hints widget within specific content collections.
- The Company allowed Google search engines to crawl the 1940 census driving natural searches and qualified traffic to the Ancestry site.
- The Company continued development on its Facebook app by launching a beta version allowing subscribers to add living family members and Facebook photos to their Ancestry trees.
Business Outlook
The Company's financial and operating expectations for the third quarter and full year 2012 are as follows:
Third Quarter 2012
- Revenue in the range of $122.0 to $125.0 million
- Adjusted EBITDA excluding DNA investment6 of $49.3 to $51.8 million
- DNA investment of $2.5 to $3 million
- Adjusted EBITDA in the range of $46.5 to $49.0 million
- Ending subscribers in the range of 2,000,000 to 2,020,000
Full Year 2012
- Revenue in the range of $473.0 to $480.0 million
- Adjusted EBITDA excluding DNA investment6 of $181.5 to $186.5 million
- DNA investment of $10 to $13 million
- Adjusted EBITDA in the range of $170.0 to $175.0 million
- Ending subscribers of approximately 2,000,000 to 2,020,000
Conference Call & Webcast
Ancestry.com will host a conference call with analysts and investors today at 3:00 p.m. MT (5:00 p.m. ET). An accompanying slide presentation and a live webcast of the conference call will be available at the investor relations section of the Ancestry.com Web site, http://ir.ancestry.com/ under Events and Presentations. Participants can also access the conference call by dialing 719-325-2214 approximately ten minutes prior to the start time.
A replay of the call will be available approximately two hours after the call has ended and will be available through Wednesday, August 1, 2012. To access the replay, dial 719-457-0820 and enter the replay passcode 4191216. The webcast replay will also be available for 12 months on the investor relations section of the Ancestry.com Web site, http://ir.ancestry.com/, under Events and Presentations.
Use of Non-GAAP Measures
The Company believes that adjusted EBITDA and free cash flow are useful measures of operating performance because they exclude items that the Company does not consider indicative of its core performance. In the case of adjusted EBITDA, net income is adjusted for such expenses as interest, income taxes, stock-based compensation and certain non-cash and non-recurring items. Free cash flow subtracts from adjusted EBITDA the capitalization of content databases, purchases of property and equipment and cash paid for income taxes and interest. However, these non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income and net cash provided by operating activities, or other financial measures prepared in accordance with GAAP. A reconciliation to the GAAP equivalents of these non-GAAP measures is contained in tabular form on the attached unaudited summary financial statements.
The Company uses adjusted EBITDA and free cash flow as measures of operating performance; for planning purposes, including the preparation of the annual operating budget; to allocate resources to enhance the financial performance of its business; to evaluate the effectiveness of its business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of its results with those of other companies; and in communications with its board of directors concerning its financial performance. The Company also uses adjusted EBITDA and has used free cash flow as factors when determining the incentive compensation pool.
About Ancestry.com
Ancestry.com Inc. (Nasdaq:ACOM) is the world's largest online family history resource, with approximately 2 million paying subscribers. More than 10 billion records have been added to the site in the past 15 years. Ancestry users have created more than 38 million family trees containing approximately more than 4 billion profiles. In addition to its flagship site, Ancestry.com offers several localized Web sites designed to empower people to discover, preserve and share their family history.
The Ancestry.com, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13617
Forward-looking Statements
This press release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause the Company's actual results, levels of activity, performance, or achievements to be materially different from those anticipated in these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "appears," "may," "designed," "expect," "intend," "focus," "seek," "anticipate," "believe," "estimate," "predict," "potential," "should," "continue" or "work" or the negative of these terms or other comparable terminology. These statements include statements describing the Company's subscriber base, its reach, its activities to enhance subscribers' experience and deliver product innovations and enhancements, improved features and tools, its activities to develop and promote its products (including DNA services), its business outlook, its leadership position and its opportunities and prospects for growth, including growth in revenues, adjusted EBITDA and number of subscribers. These forward-looking statements are based on information available to the Company as of the date of this press release. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond the Company's control. In particular, such risks and uncertainties include the Company's continued ability to attract and retain subscribers; its continued ability to acquire content and make it available online; its ability to add tools and features and provide value to satisfy customer demand; difficulties encountered in integrating acquired businesses and retaining customers; the timing and amount of investments in the Company's DNA service; market conditions; the Company's common stock price; the availability of cash and credit; the adverse impact of competitive product announcements; NBC's failure to renew Who Do You Think You Are?; failure to achieve anticipated revenues and operating performance; changes in overall economic conditions; the loss of key employees; competitors' actions; pricing and gross margin pressures; inability to control costs and expenses; and significant litigation.
Information concerning additional factors that could cause results to differ materially from those projected in the forward-looking statements is contained under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, and in discussions in other of our SEC filings.
These forward-looking statements should not be relied upon as representing our views as of any subsequent date and we assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.
--------------------------------------------------
1 Monthly churn is a measure representing the number of subscribers to the Ancestry.com Web sites that cancel in the quarter divided by the sum of beginning subscribers and gross subscriber additions during the quarter. To arrive at monthly churn, the results are divided by three.
2 Subscriber acquisition cost is external marketing and advertising expense associated with the Ancestry.com Web sites, divided by gross subscriber additions to the Ancestry.com Web sites in the quarter.
3 Average monthly revenue per subscriber is total subscription revenues earned in the quarter from subscriptions to the Ancestry.com Web sites divided by the average number of subscribers in the quarter, divided by three. The average number of subscribers for the quarter is calculated by taking the average of the beginning and ending number of subscribers for the quarter.
4 Adjusted EBITDA is defined as net income plus other expense, net; income tax expense; non-cash charges including depreciation, amortization, impairment of intangible assets and stock-based compensation expense; and certain non-recurring (income) expenses.
5 Free cash flow subtracts from adjusted EBITDA capitalization of content databases, purchases of capital and equipment and cash paid for income taxes and interest.
6 Assumes mid-point of planned DNA investment
| Ancestry.com Inc. | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
|
June 30, 2012 |
December 31, 2011 |
|
| Assets | (unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 69,615 | $ 48,998 |
| Restricted cash | 3,689 | 1,702 |
| Accounts receivable, net | 6,626 | 7,599 |
| Income tax receivable | 8,798 | 1,763 |
| Deferred income taxes | 4,823 | 4,823 |
| Prepaid expenses and other current assets | 7,965 | 7,945 |
| Total current assets | 101,516 | 72,830 |
| Property and equipment, net | 24,694 | 21,701 |
| Content databases, net | 84,199 | 76,646 |
| Intangible assets, net | 22,912 | 17,594 |
| Goodwill | 303,102 | 302,422 |
| Other assets | 4,638 | 2,656 |
| Total assets | $ 541,061 | $ 493,849 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 9,432 | $ 9,817 |
| Accrued expenses | 32,442 | 34,725 |
| Deferred revenues | 133,498 | 108,654 |
| Debt | -- | 10,000 |
| Total current liabilities | 175,372 | 163,196 |
| Deferred income taxes | 16,539 | 14,925 |
| Other long-term liabilities | 6,537 | 5,219 |
| Total liabilities | 198,448 | 183,340 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Common stock | 49 | 48 |
| Additional paid-in capital | 386,492 | 374,948 |
| Treasury stock | (175,000) | (162,168) |
| Accumulated other comprehensive income | 431 | 564 |
| Retained earnings | 130,641 | 97,117 |
| Total stockholders' equity | 342,613 | 310,509 |
| Total liabilities and stockholders' equity | $ 541,061 | $ 493,849 |
| Ancestry.com Inc. | ||||
| Consolidated Statements of Income | ||||
| (in thousands, except per share data) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |
| Revenues: | (unaudited) | (unaudited) | ||
| Subscription revenues | $ 113,037 | $ 96,707 | $ 215,633 | $ 181,890 |
| Product and other revenues | 6,041 | 4,601 | 11,981 | 10,446 |
| Total revenues | 119,078 | 101,308 | 227,614 | 192,336 |
| Costs of revenues: | ||||
| Cost of subscription revenues | 16,403 | 14,111 | 32,697 | 27,998 |
| Cost of product and other revenues | 3,584 | 1,841 | 6,369 | 3,669 |
| Total cost of revenues | 19,987 | 15,952 | 39,066 | 31,667 |
| Gross profit | 99,091 | 85,356 | 188,548 | 160,669 |
| Operating expenses: | ||||
| Technology and development | 18,778 | 14,242 | 35,405 | 27,910 |
| Marketing and advertising | 34,944 | 30,250 | 74,493 | 64,058 |
| General and administrative | 12,733 | 10,111 | 23,375 | 19,468 |
| Amortization of acquired intangible assets | 3,224 | 4,297 | 5,785 | 8,567 |
| Total operating expenses | 69,679 | 58,900 | 139,058 | 120,003 |
| Income from operations | 29,412 | 26,456 | 49,490 | 40,666 |
| Other expense, net | (54) | (429) | (15) | (536) |
| Income before income taxes | 29,358 | 26,027 | 49,475 | 40,130 |
| Income tax expense | (9,381) | (9,470) | (15,951) | (14,602) |
| Net income | $ 19,977 | $ 16,557 | $ 33,524 | $ 25,528 |
| Net income per common share | ||||
| Basic | $ 0.47 | $ 0.36 | $ 0.78 | $ 0.56 |
| Diluted | $ 0.44 | $ 0.33 | $ 0.74 | $ 0.51 |
| Weighted average common shares outstanding | ||||
| Basic | 42,758 | 45,596 | 42,766 | 45,484 |
| Diluted | 45,469 | 49,893 | 45,598 | 50,082 |
| Reconciliation of adjusted EBITDA and free cash flow to net income: | ||||
| Net income | $ 19,977 | $ 16,557 | $ 33,524 | $ 25,528 |
| Other expense, net | 54 | 429 | 15 | 536 |
| Income tax expense | 9,381 | 9,470 | 15,951 | 14,602 |
| Depreciation | 3,606 | 3,188 | 7,153 | 6,452 |
| Amortization | 5,811 | 6,576 | 10,922 | 12,982 |
| Stock-based compensation expense | 4,056 | 2,201 | 7,003 | 3,926 |
| Adjusted EBITDA | $ 42,885 | $ 38,421 | $ 74,568 | $ 64,026 |
| Capitalization of content databases | (7,538) | (4,204) | (12,678) | (9,951) |
| Purchases of property and equipment | (5,024) | (3,693) | (10,117) | (4,418) |
| Cash paid for interest | (83) | (111) | (200) | (226) |
| Cash paid for income taxes | (13,904) | (3,282) | (20,524) | (3,557) |
| Free cash flow | $ 16,336 | $ 27,131 | $ 31,049 | $ 45,874 |
| Ancestry.com Inc. | ||||||||||||
| Other Data | ||||||||||||
| Three Months Ended | ||||||||||||
| June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | |||||||
| Total subscribers | 2,005,409 | 1,869,571 | 1,702,563 | 1,701,322 | 1,672,319 | 1,615,169 | ||||||
| Gross subscriber additions | 360,685 | 389,928 | 219,886 | 273,979 | 321,687 | 424,531 | ||||||
| Monthly churn | 3.4% | 3.6% | 3.8% | 4.2% | 4.6% | 3.7% | ||||||
| Subscriber acquisition cost | $81.49 | $88.11 | $107.88 | $93.64 | $81.23 | $69.56 | ||||||
| Average monthly revenue per subscriber | $18.84 | $18.49 | $18.38 | $18.68 | $18.88 | $18.05 | ||||||