[Editor's Note: the following information was taken from the Ancestry.com Investor Relations website. In the past year since its debut as a public company, Ancestry's stock has risen and it has demonstrated strong growth in subscription memberships as well as revenue and profit.]
Ancestry.com Inc. Reports 2010 Third Quarter
Ancestry.com Subscriber Growth of 34% Year-Over-Year
Total Revenue Up 39% Year-Over-Year
Raises FY 2010 Outlook
PROVO, Utah, Oct. 28, 2010 (GLOBE NEWSWIRE) — Ancestry.com Inc. (Nasdaq:ACOM), the world’s largest online family history resource, today reported financial results for the quarter ended September 30, 2010.
“Solid execution of our marketing initiatives and ongoing advancements in our core service offering are supporting the continued strength in subscriber gains that we’ve seen throughout the year both domestically and internationally, and we are again increasing our outlook for 2010,” said Tim Sullivan, Chief Executive Officer of Ancestry.com. “Our rapid growth is enabling us to continue investing in marketing, product improvement and talent, all of which are central to our growth strategy, and we are doing so without sacrificing delivery of outstanding financial performance.”
Ancestry.com Web Sites Highlights
- Subscribers totaled 1,377,000 at the end of the third quarter of 2010, a 34% increase over the end of the third quarter of 2009 and a 5% increase over the end of the second quarter of 2010. The reported total subscribers and other subscriber related metrics do not include customers of Genline.se, which was acquired on July 15, 2010.
- Gross Subscriber additions were 252,000 in the third quarter of 2010, a 58% increase over the third quarter of 2009 and a 13% decline from the second quarter of 2010, reflecting the continued success of marketing programs in the quarter and the difficult sequential comparison due to strong subscriber additions from the airing of Who Do You Think You Are? early in the second quarter.
- Monthly Subscriber Churn(1) was 4.0% in the third quarter of 2010, compared to 3.6% in the third quarter of 2009 and 4.3% in the second quarter of 2010, due to the mix of monthly and annual subscribers and strong renewal rates in the quarter.
- Subscriber acquisition cost(2) in the third quarter of 2010 was $81.58, compared to $70.55 in the third quarter of 2009 and $74.04 in the second quarter of 2010.
- Average Monthly Revenue per Subscriber(3) in the third quarter of 2010 was $17.75, compared to $16.48 in the third quarter of 2009 and $18.02 in the second quarter of 2010.
Third Quarter 2010 Financial Highlights
- Total revenue for the third quarter of 2010 was $79.3 million, an increase of 39.2% over $57.0 million in the prior year period, driven by growth in our core Ancestry.com Web sites revenues of 43.4%.
- Operating income for the third quarter of 2010 was $19.3 million, compared to $7.9 million in the prior year period.
- Adjusted EBITDA(4) for the third quarter of 2010 was $29.0 million, compared to $17.9 million in the third quarter of 2009. Adjusted EBITDA margin for the third quarter of 2010 was 36.6%, compared to 31.5% in the third quarter of 2009.
- Interest expense was $2.2 million for the third quarter of 2010, including a one-time, non-cash charge of $1.3 million related to the termination of the company’s term loan on September 9, 2010. As a result of paying off the loan in full, the company has no outstanding debt. During the quarter, the company put in place a $100.0 million revolving credit facility.
- Net income was $11.8 million, or $0.24 per fully diluted share, for the third quarter of 2010 compared to $4.0 million, or $0.10 per fully diluted share, in the third quarter of 2009.
- Free cash flow(5) totaled $20.1 million in the third quarter of 2010 compared to $9.1 million in the prior year period.
- Cash, cash equivalents, and short-term investments totaled $80.1 million as of September 30, 2010.
(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.
Recent Business Highlights
- Acquired iArchives, Inc. and its branded Web site, Footnote.com, a leading American History Web site. The acquisition provides Ancestry.com with a complementary consumer brand, expanded content offerings, and enhanced digitization and image-viewing technologies.
- Released Ancestry.com Family Tree Maker® 2011, an improved version of the world’s No. 1 selling family history software.
- Extended the relationship with NBC for the second season of the Who Do You Think You Are? television series.
- Acquired leading professional genealogy research firm, ProGenealogists, Inc., which specializes in genealogical, forensic and family history research.
- Added several new important content collections, including U.S. Births and Marriages Collections and the English and Welsh National Probate Calendar from 1861 to 1941.
The Company’s financial and operating expectations for the fourth quarter and full year 2010 are as follows:
Fourth Quarter 2010
- Revenue in the range of $80.0 to $82.0 million
- Adjusted EBITDA in the range of $28.0 to $30.0 million
- Ending subscribers of approximately 1,380,000
Full Year 2010
- Revenue in the range of $298 to $300 million (increased from the previously expected range of $290 to $295 million)
- Adjusted EBITDA in the range of $99 to $101 million (increased from the previously expected range of $93 to $97 million)
- Ending subscribers of approximately 1,380,000 (increased from the previously expected range of 1,360,000 to 1,370,000)
Disclosure: please see Disclosure Statements for more information on my material connection with Ancestry.com and other genealogy vendors.
©2010, copyright Thomas MacEntee