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Ancestry.com Inc. Reports 2010 Financial Results

(February 24, 2011)


– Ancestry.com Subscriber Growth of 31% Year-Over-Year –



– 2010 Total Revenue Up 34% Year-Over-Year –



– Provides FY 2011 Outlook –


PROVO, Utah, Feb. 24, 2011 (GLOBE NEWSWIRE) -- Ancestry.com Inc. (Nasdaq:ACOM), the world's largest online family history resource, today reported financial results for the quarter and full year ended December 31, 2010.




"2010 was a productive and very successful year for Ancestry.com. We drove substantial gains in our subscriber base both domestically and internationally, delivered strong financial results and executed on our plan to position the Company for long-term growth," said Tim Sullivan, Chief Executive Officer of Ancestry.com. "Highlights included investments in our product and our talent base, the completion of three complementary acquisitions, and our highly successful partnership with NBC in bringing Who Do You Think You Are? to the U.S. The hard work will continue in 2011, but we believe these achievements give us a solid foundation for growth in the coming year and beyond."



Ancestry.com Web Sites Highlights




  • Subscribers totaled 1,395,000 as of December 31, 2010, a 31% increase over the end of 2009 and up modestly since the end of the third quarter of 2010.


  • Gross subscriber additions were 203,000 in the fourth quarter of 2010, compared to 165,000 in the fourth quarter of 2009 and 252,000 in the third quarter of 2010.


  • Monthly churn[1] was 3.9% in the fourth quarter of 2010, compared to 3.6% in the fourth quarter of 2009 and 4.0% in the third quarter of 2010.


  • Subscriber acquisition cost[2] in the fourth quarter of 2010 was $96.87, compared to $85.21 in the fourth quarter of 2009 and $81.58 in the third quarter of 2010.


  • Average monthly revenue per subscriber[3] in the fourth quarter of 2010 was $17.78, compared to $16.67 in the fourth quarter of 2009 and $17.75 in the third quarter of 2010.



Fourth Quarter and Full Year 2010 Financial Highlights




  • Total revenue for the fourth quarter of 2010 was $82.7 million, an increase of 37.6% over $60.1 million in the fourth quarter of 2009, driven by growth in our core Ancestry.com Web sites revenues of 41.1%. For the full year 2010, total revenue was $300.9 million, an increase of 33.8% over the full year 2009, with Ancestry.com Web site revenue growth of 37.7%.


  • Operating income for the fourth quarter of 2010 was $17.9 million, compared to $8.8 million in the fourth quarter of 2009. For the full year 2010, operating income was $60.6 million compared to $32.0 million for the full year 2009.


  • Adjusted EBITDA[4] for the fourth quarter of 2010 was $29.7 million, compared to $18.7 million in the fourth quarter of 2009. Adjusted EBITDA margin for the fourth quarter of 2010 was 35.9%, compared to 31.1% in the fourth quarter of 2009. For the full year 2010, adjusted EBITDA was $101.0 million, compared to $71.6 million for the full year 2009. Adjusted EBITDA margin for the full year 2010 was 33.6%, up from 31.8% for the full year 2009.


  • Net income was $12.6 million, or $0.25 per fully diluted share, for the fourth quarter of 2010 compared to $9.1 million, or $0.20 per fully diluted share, in the fourth quarter of 2009. For the full year 2010, net income was $36.8 million, or $0.76 per fully diluted share, compared to $21.3 million, or $0.51 per fully diluted share, for the full year 2009. The fourth quarter of 2010 included expenses of $1.0 million ($0.02 per share) associated with the November 10, 2010 secondary offering.


  • Free cash flow[5] totaled $60.4 million for the full year 2010 compared to $29.6 million for the full year 2009.


  • Cash, cash equivalents, and short-term investments totaled $65.5 million as of December 31, 2010.



Recent Business Highlights




  • Partnered with NBC for the second season of the Who Do You Think You Are? television series, which premiered on February 4, 2011.


  • Added several new important content collections, including U.S. Military cadet applications, U.S. Penitentiary records, and early London parish registers spanning nearly 300 years.


  • Released new iPad app, available for free at the iTunes App Store, allowing consumers a new way to share and update family trees, old photos and records.


  • Released Ancestry.com Family Tree Maker® 2011 for Mac on the Mac App Store.



Business Outlook



The Company's financial and operating expectations for the first quarter and full year 2011 are as follows:



First Quarter 2011




  • Revenue in the range of $86.0 to $88.0 million


  • Adjusted EBITDA in the range of $22.0 to $24.0 million


  • Ending subscribers of approximately 1,545,000



Full Year 2011




  • Revenue in the range of $370.0 to $375.0 million


  • Adjusted EBITDA in the range of $125.0 to $130.0 million


  • Ending subscribers of approximately 1,700,000 to 1,725,000



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/. Participants can also access the conference call by dialing 888-578-6632 (within the United States), or 719-325-2226 (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, March 4, 2011. To access the replay, dial 888-203-1112 (within the United States), or 719-457-0820 (international callers) and enter the replay passcode 1368993. 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 the incentive compensation pool.



About Ancestry.com



Ancestry.com Inc. (Nasdaq:ACOM) is the world's largest online family history resource, with nearly 1.4 million paying subscribers. More than 6 billion records have been added to the site in the past 14 years. Ancestry users have created more than 20 million family trees containing over 2 billion profiles. Ancestry.com has local Web sites directed at nine countries that help people discover, preserve and share their family history, 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 reach, our activities to enhance subscribers' experience, our activities to promote our products, our business outlook, our leadership position and our 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 us 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 our control. In particular, such risks and uncertainties include our continued ability to attract and retain subscribers; our continued ability to acquire content and make it available online; difficulties encountered in integrating acquired businesses and retaining customers; failure of our products to continue to meet customer demand; the adverse impact of competitive product announcements; failure of the second season of Who Do You Think You Are? to yield results comparable to the first season; 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 quarterly period ended September 30, 2010, 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.













































































































































































































Ancestry.com Inc.

Consolidated Balance Sheets

(in thousands)

 

December 31,

December 31,

 

2010

2009

Assets

(unaudited)

 

 Current assets:

 

 

 Cash and cash equivalents

 $ 65,519

 $ 66,941

 Restricted cash

 2,476

 2,181

 Short-term investments

 -- 

 33,331

 Accounts receivable, net

 6,990

 5,860

 Income tax receivable

 8,094

 2,017

 Deferred income taxes

 3,873

 8,797

 Prepaid expenses and other current assets

 9,243

 5,380

 Total current assets

96,195

 124,507

 Property and equipment, net

 21,252

 19,430

 Content database costs, net

 65,418

 49,650

 Intangible assets, net

 34,281

 41,484

 Goodwill

 303,374

 285,466

 Other assets

 1,666

 2,811

 Total assets

 $ 522,186

 $ 523,348

Liabilities and stockholders' equity

 

 

 Current liabilities:

 

 

 Accounts payable

 $ 9,451

 $ 6,877

 Accrued expenses

 30,785

 18,850

 Escrow liability

 6,193

 1,763

 Deferred revenues

 89,301

 69,711

 Current portion of long-term debt

 -- 

 28,416

 Total current liabilities

135,730

125,617

 Long-term debt, less current portion

 -- 

 71,609

 Deferred income taxes

 20,571

 30,117

 Other long-term liabilities

 2,018

 1,115

 Total liabilities

158,319

228,458

Commitments and contingencies

 

 

 Stockholders' equity:

 

 

 Common stock

 45

 42

 Additional paid-in capital

 328,957

 272,513

 Accumulated other comprehensive income (loss)

 643

 (41)

 Retained earnings

 34,222

 22,376

 Total stockholders' equity

363,867

294,890

Total liabilities and stockholders' equity

 $ 522,186

 $ 523,348






























































































































































































































































































































































 

Ancestry.com Inc.

Consolidated Statements of Income

(in thousands, except per share data)

 

 

 

 

 

 

Three Months Ended

Year Ended

 

December 31, 2010

December 31, 2009

December 31, 2010

December 31, 2009

Revenues:

(unaudited)

 (unaudited)

 

 

 Subscription revenues

 $ 77,327

 $ 55,201

 $ 281,670

 $ 207,707

 Product and other revenues

 5,408

 4,908

 19,261

 17,195

 Total revenues

 82,735

 60,109

 300,931

 224,902

Costs of revenues:

 

 

 

 

 Cost of subscription revenues

 12,413

 10,428

 46,409

 40,183

 Cost of product and other revenues

 1,769

 1,927

 5,698

 6,140

 Total cost of revenues

 14,182

 12,355

 52,107

 46,323

Gross profit

 68,553

 47,754

 248,824

 178,579

Operating expenses:

 

 

 

 

 Technology and development

 11,849

 9,546

 42,296

 36,236

 Marketing and advertising

 23,512

 17,399

 94,573

 61,625

 General and administrative

 10,475

 7,971

 35,390

 32,540

 Amortization of acquired intangible assets

 4,810

 4,052

 15,959

 16,217

 Total operating expenses

 50,646

 38,968

 188,218

 146,618

Income from operations

 17,907

 8,786

 60,606

 31,961

 Interest expense

 (187)

 (1,355)

 (5,083)

 (6,139)

 Interest income

 46

 46

 386

 792

 Other income, net

 41

 7

 439

 21

Income before income taxes

 17,807

 7,484

 56,348

 26,635

 Income tax expense

 (5,256)

 1,587

 (19,503)

 (5,340)

Net income

 $ 12,551

 $ 9,071

 $ 36,845

 $ 21,295

 

 

 

 

 

Net income per common share

 

 

 

 

Basic

 $ 0.28

 $ 0.22

 $ 0.85

 $ 0.55

Diluted

 $ 0.25

 $ 0.20

 $ 0.76

 $ 0.51

Weighted average common shares outstanding

 

 

 

 

 Basic 

 45,125

 40,857

 43,592

 38,930

 Diluted 

 49,980

 45,458

 48,722

 41,533

 

 

 

 

 

Reconciliation of adjusted EBITDA and free cash flow to net income:

 

 

 

Net Income

 $ 12,551

 $ 9,071

 $ 36,845

 $ 21,295

 Interest expense, net

 141

 1,309

 4,697

 5,347

 Income tax expense

 5,256

 (1,587)

 19,503

 5,340

 Depreciation expense 

 3,418

 2,844

 11,773

 10,936

 Amortization expense

 6,813

 5,868

 23,526

 23,214

 Stock-based compensation

 1,528

 1,209

 5,069

 5,474

 Other income, net

 (41)

 (7)

 (439)

 (21)

 

 

 

 

 

Adjusted EBITDA

 $ 29,666

 $ 18,707

 $ 100,974

 $ 71,585

 Capitalization of content database costs

 (5,340)

 (3,543)

 (13,874)

 (9,398)

 Purchase of property and equipment

 (5,071)

 (5,796)

 (12,968)

 (13,362)

 Cash paid for interest

 (117)

 (1,116)

 (2,645)

 (7,740)

 Cash paid for income taxes

 (4,783)

 (2,487)

 (11,128)

 (11,472)

Free cash flow

 $ 14,355

 $ 5,765

 $ 60,359

 $ 29,613










































































 

Ancestry.com Inc.

Other Data

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2010

September 30, 2010

June 30, 2010

March 31, 2010

December 31, 2009

Total Subscribers

 1,394,910

 1,376,974

 1,310,562

 1,211,978

 1,066,123

Gross subscriber additions

 202,509

 251,738

 290,589

 279,100

 165,241

Monthly churn

3.9%

4.0%

4.3%

3.3%

3.6%

Subscriber acquisition cost

 $ 96.87

 $ 81.58

 $ 74.04

 $ 69.57

 $ 85.21

Average monthly revenue per subscriber

 $ 17.78

 $ 17.75

 $ 18.02

 $ 16.70

 $ 16.67


 



[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.



 



[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.


CONTACT: Investors:
Ancestry.com Inc.
Ryan Ostler
(801) 705-7942
rostler@ancestry.com

Media:
Brainerd Communicators, Inc.
Ray Yeung / Jo Anne Barrameda
(212) 986-6667
yeung@braincomm.com / barrameda@braincomm.com

Page: 1


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