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Ancestry.com Inc. Reports 2011 Financial Results

(February 15, 2012)


Ancestry.com Subscriber Growth of 22% Year-Over-Year



2011 Total Revenue $400 million, Up 33% Year-Over-Year



PROVO, Utah, Feb. 15, 2012 (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, 2011.


"Our fourth quarter represented a strong end to a very productive 2011 for Ancestry.com, a year in which we generated $400 million in revenues, $145 million in adjusted EBITDA and greater than 20% growth in our subscriber base," said Tim Sullivan, Chief Executive Officer of Ancestry.com. "We believe we are making great strides on building out our product, and we are particularly excited about some of the innovations we expect to deliver in 2012 as we continue working to enrich the family history experience for our subscribers."




Ancestry.com Web Sites Highlights




  • Subscribers totaled 1,703,000 as of December 31, 2011, a 22% increase over the end of 2010 and up slightly from the third quarter of 2011.


  • Gross subscriber additions were 220,000 in the fourth quarter of 2011, compared to 203,000 in the fourth quarter of 2010 and 274,000 in the third quarter of 2011.


  • Monthly churn1 was 3.8% in the fourth quarter of 2011, compared to 3.9% in the fourth quarter of 2010 and 4.2% in the third quarter of 2011.


  • Subscriber acquisition cost2 in the fourth quarter of 2011 was $107.88, compared to $96.87 in the fourth quarter of 2010 and $93.64 in the third quarter of 2011.


  • Average monthly revenue per subscriber3 in the fourth quarter of 2011 was $18.38, compared to $17.78 in the fourth quarter of 2010 and $18.68 in the third quarter of 2011.



Fourth Quarter and Full Year 2011 Financial Highlights




  • Total revenue for the fourth quarter of 2011 was $104.2 million, an increase of 26% over $82.7 million in the fourth quarter of 2010, driven by growth in our core Ancestry.com Web sites revenues of 27%. For the full year 2011, total revenue was $399.7 million, an increase of 32.8% over the full year 2010, with Ancestry.com Web site revenue growth of 34%.


  • Operating income for the fourth quarter of 2011 was $27.6 million, compared to $17.9 million in the fourth quarter of 2010. For the full year 2011, operating income was $95.5 million compared to $60.6 million for the full year 2010.


  • Adjusted EBITDA4 for the fourth quarter of 2011 was $40.7 million, compared to $29.7 million in the fourth quarter of 2010. Adjusted EBITDA margin for the fourth quarter of 2011 was 39.0%, compared to 35.9% in the fourth quarter of 2010. For the full year 2011, adjusted EBITDA was $144.8 million, compared to $101.0 million for the full year 2010. Adjusted EBITDA margin for the full year 2011 was 36.2%, up from 33.6% for the full year 2010.


  • Net income was $18.3 million, or $0.40 per fully diluted share, for the fourth quarter of 2011 compared to $12.6 million, or $0.25 per fully diluted share, in the fourth quarter of 2010. For the full year 2011, net income was $62.9 million, or $1.29 per fully diluted share, compared to $36.8 million, or $0.76 per fully diluted share, for the full year 2010.


  • Free cash flow5 totaled $106.4 million for the full year 2011 compared to $60.4 million for the full year 2010.


  • Cash and cash equivalents totaled $49.0 million as of December 31, 2011.



Recent Business Highlights




  • Partnered with NBC for the third season of the Who Do You Think You Are? television series, which premiered on February 3, 2012.


  • Added over 600 million records from more than 380 content collections during 2011. Collections of note include:





  • World Memory Project, which includes information from four museum collections on more than 30,000 victims of the Holocaust and Nazi persecution (in partnership with the US Holocaust Memorial Museum)


  • UK parish records for Warwickshire and Dorset


  • 50 million U.S. vital records from over 20 states


  • Australian Electoral Rolls with over 35 million records


  • German Navy books from World War I


  • UK Silver War Badge Records, 1914-1920


  • 60 million U.S. World War II records including Young Men's Draft Cards and Navy Muster Rolls


  • 25 million Irish vital records including civil registration, baptism, marriage and burial records


  • 1930 Mexico National Census, the most comprehensive Mexican census publically available





  • Launched Ancestry.com's first mobile app for Android devices, available for free, which allows users to view and edit existing family trees, build new family trees from scratch, and view historical records that have been attached on Ancestry.com – anytime, anywhere.


  • Released the upgraded version of the Ancestry.com Mobile app for the iPhone, iPad and iPod touch. Available for free at the iTunes App Store, the updated app introduced hints to historical records and in-app purchasing, allowing non-Ancestry.com subscribers to view and purchase historical records. Ancestry.com Mobile apps were downloaded approximately 1.8 million times in 2011 and 2.7 million times since inception.


  • Released Ancestry.com Family Tree Maker® 2012 with TreeSync capabilities for PCs and Macs, which enables users to easily sync their desktop trees and their trees online at Ancestry.com to share with invited guests, engage with the broader community and continue their research.


  • Beta launched the Ancestry.com Facebook application, which helps new users start building their family tree via connected family members on Facebook.



Business Outlook



The Company's financial and operating expectations for the first quarter and full year 2012 are as follows:



First Quarter 2012




  • Revenue in the range of $106 to $108 million


  • Adjusted EBITDA excluding DNA investment6 of $29.5 to $31.5 million


  • DNA investment of $2 to $3 million


  • Adjusted EBITDA in the range of $27 to $29 million


  • Ending subscribers in the range of 1,825,000 to 1,835,000



Full Year 2012




  • Revenue in the range of $455 to $470 million


  • Adjusted EBITDA excluding DNA investment6 of $167.5 to $177.5 million


  • DNA investment of $10 to 15 million


  • Adjusted EBITDA in the range of $155 to $165 million


  • Ending subscribers of approximately 1,915,000 to 1,950,000



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 888-806-6221 (within the United States), or 913-312-0374 (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 22, 2012. To access the replay, dial 888-203-1112 (within the United States), or 719-457-0820 (international callers) and enter the replay passcode 8868044. 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 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.



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 more than 1.7 million paying subscribers. More than 8 billion records have been added to the site in the past 15 years. Ancestry users have created more than 31 million family trees containing over 4 billion profiles. In addition to its flagship site www.ancestry.com, Ancestry.com offers several localized Web sites designed to empower people to discover, preserve and share their family history.



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 and deliver product innovations, 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; our 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 our DNA service; the adverse impact of competitive product announcements; failure of the third season of Who Do You Think You Are? to yield results comparable to the earlier seasons; 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, 2011, 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 website 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 associated with the Ancestry website, divided by gross subscriber additions to the Ancestry website 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 certain non-recurring (income) expense.

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)

 

 

 

 

 

December 31,

2011

 

December 31,

2010

Assets

(unaudited)

 

 

 Current assets:

 

 

 

 Cash and cash equivalents

 $ 48,998

 

 $ 65,519

 Restricted cash

 1,702

 

 2,476

 Accounts receivable, net

 7,599

 

 6,990

 Income tax receivable

 1,763

 

 8,094

 Deferred income taxes

 4,823

 

 3,873

 Prepaid expenses and other current assets

 7,945

 

 9,243

 Total current assets

72,830

 

 96,195

 Property and equipment, net

 21,701

 

 21,252

 Content databases, net

 76,646

 

 65,418

 Intangible assets, net

 17,594

 

 34,281

 Goodwill

 302,422

 

 303,374

 Other assets

 2,656

 

 1,666

 Total assets

 $ 493,849

 

 $ 522,186

Liabilities and stockholders' equity

 

 

 

 Current liabilities:

 

 

 

 Accounts payable

 $ 9,817

 

 $ 9,451

 Accrued expenses

 34,725

 

 36,978

 Deferred revenues

 108,654

 

 89,301

 Debt

 10,000

 

 -- 

 Total current liabilities

163,196

 

135,730

 Deferred income taxes

 14,925

 

 20,571

 Other long-term liabilities

 5,219

 

 2,018

 Total liabilities

183,340

 

158,319

Commitments and contingencies

 

 

 

 Stockholders' equity:

 

 

 

 Common stock

 48

 

 45

 Additional paid-in capital

 374,948

 

 328,957

 Treasury stock

 (162,168)

 

 -- 

 Accumulated other comprehensive income

 564

 

 643

 Retained earnings

 97,117

 

 34,222

 Total stockholders' equity

310,509

 

363,867

 Total liabilities and stockholders' equity

 $ 493,849

 

 $ 522,186











































































































































































































































































































































 

 

 

 

 

 

 

 

 

 

Ancestry.com Inc.

Consolidated Statements of Income

(in thousands, except per share data)

 

 

 

 

 

 

Three Months Ended

Year Ended

 

December 31, 2011

December 31, 2010

December 31, 2011

December 31, 2010

Revenues:

(unaudited)

(unaudited)

Subscription revenues

 $ 97,381

 $ 77,327

 $ 377,364

 $ 281,670

Product and other revenues

 6,843

 5,408

 22,297

 19,261

Total revenues

 104,224

 82,735

 399,661

 300,931

Costs of revenues:

 

 

 

 

Cost of subscription revenues

 15,002

 12,413

 58,292

 46,409

Cost of product and other revenues

 2,989

 1,769

 8,216

 5,698

Total cost of revenues

 17,991

 14,182

 66,508

 52,107

Gross profit

 86,233

 68,553

 333,153

 248,824

Operating expenses:

 

 

 

 

Technology and development

 15,562

 11,849

 58,245

 42,296

Marketing and advertising

 28,673

 23,512

 122,997

 94,573

General and administrative

 10,513

 10,475

 39,734

 35,390

Amortization of acquired intangible assets

 3,840

 4,810

 16,711

 15,959

Total operating expenses

 58,588

 50,646

 237,687

 188,218

Income from operations

 27,645

 17,907

 95,466

 60,606

Interest and other income (expense), net

 (297)

 (100)

 (1,226)

 (4,258)

Income before income taxes

 27,348

 17,807

 94,240

 56,348

Income tax expense

 (9,032)

 (5,256)

 (31,345)

 (19,503)

Net income

 $ 18,316

 $ 12,551

 $ 62,895

 $ 36,845

 

 

 

 

 

Net income per common share

 

 

 

 

Basic

 $ 0.42

 $ 0.28

 $ 1.41

 $ 0.85

Diluted

 $ 0.40

 $ 0.25

 $ 1.29

 $ 0.76

Weighted average common shares outstanding

 

 

 

 

Basic

 43,409

 45,125

 44,756

 43,592

Diluted

 46,325

 49,980

 48,665

 48,722

 

 

 

 

 

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

 

 

 

Net income

 $ 18,316

 $ 12,551

 $ 62,895

 $ 36,845

Interest and other expense, net

 297

 100

 1,226

 4,258

Income tax expense

 9,032

 5,256

 31,345

 19,503

Depreciation

 3,657

 3,418

 13,450

 11,773

Amortization

 6,254

 6,813

 25,916

 23,526

Stock-based compensation expense

 3,107

 1,528

 9,975

 5,069

Adjusted EBITDA

 $ 40,663

 $ 29,666

 $ 144,807

 $ 100,974

Capitalization of content databases

 (5,784)

 (5,340)

 (20,408)

 (13,874)

Purchases of property and equipment

 (4,904)

 (5,071)

 (13,895)

 (12,968)

Cash paid for interest

 (133)

 (117)

 (466)

 (2,645)

Cash paid for income taxes

 -- 

 (4,783)

 (3,683)

 (11,128)

Free cash flow

 $ 29,842

 $ 14,355

 $ 106,355

 $ 60,359



















































































 

 

 

 

 

 

 

 

 

 

 

 

Ancestry.com Inc.

Other Data

 

 

 

Three Months Ended

 

December 31, 2011

September 30, 2011

June 30, 2011

March 31, 2011

December 31, 2010

Total subscribers

 1,702,563

 1,701,322

 1,672,319

 1,615,169

 1,394,910

Gross subscriber additions

 219,886

 273,979

 321,687

 424,531

 202,509

Monthly churn

3.8%

4.2%

4.6%

3.7%

3.9%

Subscriber acquisition cost

$107.88

$93.64

$81.23

$69.56

$96.87

Average monthly revenue per subscriber

$18.38

$18.68

$18.88

$18.05

$17.78

CONTACT: Investors:
Ancestry.com Inc.
Deborah Crawford
(801) 705-7942
dcrawford@ancestry.com

Media:
Ancestry.com Inc.
Heather Erickson
(801) 705-7104
herickson@ancestry.com



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