Ancestry.com LLC Reports Fourth Quarter and Full Year 2012 Financial Results

Thu Mar 28, 2013 4:17pm EDT

* Reuters is not responsible for the content in this press release.

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130328:nGNXUXLMBa

Ancestry.com Subscriber Growth of 18% Year-Over-Year

Q4 Total Revenue $131.1 million, Up 26% Year-Over-Year

PROVO, Utah, March 28, 2013 (GLOBE NEWSWIRE) -- Ancestry.com LLC reported financial results for
the fourth quarter and full year1 ended December 31, 2012.

"We are pleased with our fourth quarter performance, as well as a successful and eventful 2012.
Including Archives.com, which we acquired in 2012, we finished the year with 2.5 million
subscribers across all of our family history websites," said Tim Sullivan, Chief Executive Officer
of Ancestry.com. "We added significant valuable new content, continued to drive awareness of our
brand through smart and efficient marketing, enhanced our user experience through key investments
in product and technology, strengthened our mobile offerings, and launched our exciting new
AncestryDNA service. As we move forward under our new ownership structure, we expect to continue
to invest in new content, new product experiences, and new markets with a continued focus on
making family history easier and more accessible for more people around the world."

Howard Hochhauser, Chief Financial and Chief Operating Officer, added, "In addition to our strong
Q4 performance, we anticipate that our first quarter of 2013 will show a cash balance of
approximately $70 million at March 31. This cash position combined with our anticipated first
quarter adjusted EBITDA growth is expected to result in Ancestry.com reporting a debt-to-adjusted
EBITDA ratio of approximately 4.8x, which would be nearly a full turn of improvement since our
financing."

Fourth Quarter and Full Year 2012 Financial Highlights

*

Total revenue

for the fourth quarter of 2012 was $131.1 million, an increase of 25.8% over $104.2 million in the
fourth quarter of 2011, driven by growth in our core Ancestry.com branded websites revenues. For
the full year 2012, total revenue was $487.1 million, an increase of 21.9% over the full year
2011, which was also driven by Ancestry.com website revenue growth.
 
*

Non-GAAP revenue

2 for the fourth quarter and full year of 2012 was $131.7 million and $487.6 million,
respectively.
 
*

Adjusted EBITDA

3 for the fourth quarter of 2012 was $50.1 million, compared to $40.7 million in the fourth
quarter of 2011. Adjusted EBITDA margin for the fourth quarter of 2012 was 38.2%, compared to
39.0% in the fourth quarter of 2011. For the full year 2012, adjusted EBITDA was $178.8 million,
compared to $144.8 million for the full year 2011. Adjusted EBITDA margin for the full year 2012
was 36.7%, compared to 36.2% for the full year 2011.
 
*

Net income (loss)

for the fourth quarter 2012 was a loss of $(60.3) million for the fourth quarter of 2012 compared
to net income of $18.3 million in the fourth quarter of 2011. For the full year 2012, net loss was
$(1.9) million compared to net income of $62.9 million for the full year 2011.
 
*

Free cash flow

4 totaled $106.0 million for the full year 2012 compared to $106.4 million for the full year 2011.
 
*

Cash and cash equivalents

totaled $35.7 million as of December 31, 2012.
 
*

Obligations under long-term debt

totaled $970.0 million as of December 31, 2012.

     


1 Fourth quarter and full year 2012 results reflect the combined periods preceding and succeeding
the acquisition of Ancestry.com Inc. by a company controlled by Permira funds and co-investors.
The transaction was consummated on December 28, 2012.

2 Non-GAAP revenues are defined as the revenues that would have been recognized, except for the
write-down of deferred revenue to fair value as a result of the application of purchase accounting
for the transaction. Non-GAAP revenues is calculated as total revenues plus the effects of
non-cash adjustments to revenue from purchase accounting. 

3 Adjusted EBITDA is defined as net income (loss) plus non-cash purchase accounting adjustments to
revenue, interest and other (income) expense, net; income tax expense (benefit); non-cash charges
including depreciation, amortization, impairment of intangible assets and stock-based compensation
expense; and expenses associated with the transaction.

4 Free cash flow subtracts from adjusted EBITDA capitalization of content databases, purchases of
capital and equipment and cash paid for income taxes and interest.

Recent Business Highlights

* Subscribers of Ancestry.com websites totaled approximately 2,016,000 as of December 31, 2012, an
18.4% increase over the end of the fourth quarter of 2011 and a 0.2% decrease from the end of the
third quarter of 2012.
* Ancestry.com was successfully acquired by a company controlled by the Permira funds and
co-investors on December 28, 2012 for approximately $1.5 billion.
* The Company ended the year with approximately 11.4 billion records, having added more than 1.6
billion new institutional records in 2012. New collections added in Q4 included:

* Canada Voters Lists - more than 88 million records
* US Naturalizations from RI, OK, GA, FL, AK - more than 800,000 records
* UK Electoral Rolls - more than 32 million records from London and Birmingham
* Veteran's Affairs Burial Ledgers - 550,000 records
* UK Revised New Series OS maps - detailed historical mapping for England, Wales, Scotland and
Ireland
* 1940 Census Expanded Fielded Index - Added 13 new fields to each record, plus supplemental
sampled questions. Now the most comprehensive 1940 census index available online.

* The Ancestry Android app was named by Google as one of the top 12 apps of 2012. Ancestry mobile
app was a winner of the 2013 Appy Awards, which honors the best apps in a diverse range of
categories.
* In less than one year of launch, AncestryDNA now has a database of more than 120,000 DNA
samples, delivering more than 2 million fourth cousin DNA matches. DNA matches are also now hinted
to Ancestry.com members as part of the Shaky Leaf hinting feature on the site.
* The Company launched Newspapers.com, a powerful and affordable new website designed to offer a
historically rich collection of more than 1,000 U.S. newspapers dating from the late 1700s into
the early 2000s.

Conference Call & Webcast

Ancestry.com will host a conference call today at 3:00 p.m. MT (5:00 p.m. ET). Participants can
access the conference call by dialing (719) 325-2463 approximately ten minutes prior to the start
time.

Financial Statements

For access to Ancestry.com's 2012 annual report please call or email Investor Relations at (801)
705-7942 or ir@ancestry.com
http://www.globenewswire.com/newsroom/ctr?d=10026772&l=15&a=ir%40ancestry.com&u=mailto%3Air%40ancestry.com
.

Use of Non-GAAP Measures

The Company believes that non-GAAP revenues, 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. Non-GAAP revenue is calculated by adding the effects of
non-cash adjustments to revenue from purchase accounting for the transaction. In the case of
adjusted EBITDA, net income (loss) is adjusted for such expenses as non-cash purchase accounting
adjustments to revenue, interest and other (income) expense, net; income tax expense (benefit);
non-cash charges including depreciation, amortization, impairment of intangible assets and
stock-based compensation expense; and expenses associated with the transaction. 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, revenue, 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 non-GAAP revenues, 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 operating committee concerning its financial performance. The
Company also uses non-GAAP revenues and adjusted EBITDA as factors when determining the incentive
compensation pool.

About Ancestry.com

Ancestry.com Inc. is the world's largest online family history resource with approximately 2.5
million paying subscribers across all its websites. More than 11 billion records have been added
to the Ancestry.com sites and users have created more than 45 million family trees containing more
than 4 billion profiles. In addition to its flagship site www.ancestry.com
http://www.globenewswire.com/newsroom/ctr?d=10026772&l=20&a=www.ancestry.com&u=http%3A%2F%2Fwww.ancestry.com
, the company operates several Ancestry international websites along with a suite of online family
history brands including Archives.com, Fold3.com and Newspapers.com, all 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
http://www.globenewswire.com/newsroom/ctr?d=10026772&l=21&u=http%3A%2F%2Fwww.globenewswire.com%2Fnewsroom%2Fprs%2F%3Fpkgid%3D13617


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 substantial debt obligations as a result of the acquisition of the Company by a
company controlled by the Permira funds and co-investors; the availability of cash and credit; the
adverse impact of competitive product announcements; 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.

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 LLC                                                                                                                                                                  
 
CONSOLIDATED BALANCE SHEETS                                                                                                                                                      
 (in thousands, except par value data                                                                                                                                              
                                                                                                                                                                                 
                                                                                                                                     Successor             Predecessor           
                                                                                                                                     December 31,          December 31,          
                                                                                                                                     2012                  2011                  
 ASSETS                                                                                                                                                                          
 Current assets:                                                                                                                                                                 
 Cash and cash equivalents                                                                                                           $ 35,651              $ 48,998              
 Restricted cash                                                                                                                     83,863                1,702                 
 Accounts receivable, net of allowances of $661 and $527 at December 31, 2012 and 2011, respectively                                 11,089                7,599                 
 Income tax receivable                                                                                                               41,799                1,763                 
 Deferred income taxes                                                                                                               -                     4,823                 
 Prepaid expenses and other current assets                                                                                           9,816                 7,945                 
 Total current assets                                                                                                                182,218               72,830                
 Property and equipment, net                                                                                                         27,813                21,701                
 Content databases, net                                                                                                              270,984               76,646                
 Intangible assets, net                                                                                                              600,628               17,594                
 Goodwill                                                                                                                            945,619               302,422               
 Other assets                                                                                                                        50,192                2,656                 
 Total assets                                                                                                                        $ 2,077,454           $ 493,849             
                                                                                                                                                                                 
 LIABILITIES AND MEMBER'S INTERESTS/STOCKHOLDERS' EQUITY                                                                                                                           
                                                                                                                                                                                 
 Current liabilities:                                                                                                                                                            
 Accounts payable                                                                                                                    $ 11,432              $ 9,817               
 Accrued expenses                                                                                                                    62,120                33,428                
 Acquisition-related liabilities                                                                                                     83,863                1,297                 
 Deferred revenues                                                                                                                   116,953               108,654               
 Current deferred income taxes                                                                                                       2,021                 -                     
 Current portion of long-term debt                                                                                                   6,432                 10,000                
 Total current liabilities                                                                                                           282,821               163,196               
 Long-term debt, net                                                                                                                 936,797               -                     
 Deferred income taxes                                                                                                               235,167               14,925                
 Other long-term liabilities                                                                                                         13,323                5,219                 
 Total liabilities                                                                                                                   1,468,108             183,340               
 Commitments and contingencies                                                                                                                                                   
 Member's interests/Stockholders' equity:                                                                                                                                        
 Member's interests                                                                                                                  682,021                                     
 Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding                                                              -                     
 Common stock, $0.001 par value; 175,000 shares authorized; 47,898 shares issued and 42,793 shares outstanding at December 31, 2011                        48                    
 Additional paid-in capital                                                                                                                                374,948               
 Treasury stock, at cost; 5,105 shares at December 31, 2011                                                                                                (162,168)             
 Accumulated other comprehensive income                                                                                              -                     564                   
 Retained earnings (deficit)                                                                                                         (72,675)              97,117                
 Total member's interests/stockholders' equity                                                                                       609,346               310,509               
 Total liabilities and member's interests/stockholders' equity                                                                       $ 2,077,454           $ 493,849             
                                                                                                                                                                                 
 See accompanying notes to consolidated financial statements                                                                                                                           
                                                                                                                                                                                 
                                                                                                                                                                                 
                                                                                                                                                                                 


 ANCESTRY.COM LLC                                                                                                
                                                                                                                 
 CONSOLIDATED STATEMENTS OF OPERATIONS                                                                           
 (in thousands)                                                                                                  
                                                                                                             
                                             Successor         Predecessor                                     
                                             Period from       Period from       Year Ended December 31,      
                                             Dec. 29, 2012     Jan. 1, 2012                                  
                                             to Dec. 31, 2012  to Dec. 28, 2012  2011          2010          
                                                                                                             
 Revenues:                                                                                                   
 Subscription revenues                       $ 3,194           $ 451,744         $ 377,364     $ 281,670     
 Product and other revenues                  264               31,883            22,297        19,261        
 Total revenues                              3,458             483,627           399,661       300,931       
 Costs of revenues:                                                                                          
 Cost of subscription revenues               664               66,741            58,292        46,409        
 Cost of product and other revenues          159               19,162            8,216         5,698         
 Total cost of revenues                      823               85,903            66,508        52,107        
 Gross profit                                2,635             397,724           333,153       248,824       
 Operating expenses:                                                                                         
 Technology and development                  642               77,512            58,245        42,296        
 Marketing and advertising                   1,145             138,073           122,997       94,573        
 General and administrative                  381               45,995            39,734        35,390        
 Amortization of acquired intangible assets  1,472             16,551            16,711        15,959        
 Transaction-related expenses                102,264           7,104             -             -             
 Total operating expenses                    105,904           285,235           237,687       188,218       
 Income (loss) from operations               (103,269)         112,489           95,466        60,606        
 Interest and other expense, net             (730)             (323)             (1,226)       (4,258)       
 Income (loss) before income taxes           (103,999)         112,166           94,240        56,348        
 Income tax (expense) benefit                31,324            (41,377)          (31,345)      (19,503)      
 Net income (loss)                           $ (72,675)        $ 70,789          $ 62,895      $ 36,845      
                                                                                                             
 See accompanying notes to consolidated financial statements                                                     
                                                                                                                 
                                                                                                                 


                                                                                   Successor         Predecessor       Combined          Predecessor                                    
                                                                                   Period from       Period from       Period from       Year Ended December 31,                        
                                                                                   Dec. 29, 2012     Jan. 1, 2012      Jan. 1, 2012                                                  
                                                                                   to Dec. 31, 2012  to Dec. 28, 2012  to Dec. 31, 2012  2011       2010       2009       2008       
                                                                                   (In thousands)                                                                                          
 Reconciliation of Non-GAAP revenues to total revenues                                                                                                                               
 Total revenues                                                                    $ 3,458           $ 483,627         $ 487,085         $ 399,661  $ 300,931  $ 224,902  $ 197,591  
 Non-cash revenue adjustment (1)                                                   550               -                 550               -          -          -          -          
 Non-GAAP revenues                                                                 $ 4,008           $ 483,627         $ 487,635         $ 399,661  $ 300,931  $ 224,902  $ 197,591  
                                                                                                                                                                                     
 (1)  Represents non-cash adjustments to revenue or the revenues that would have been recognized, except for the write-down of deferred revenue to fair value as a result of the application of purchase accounting for the Transaction. 
                                                                                                                                                                                     
                                                                                                                                                                                     
                                                                                                                                                                                     
                                                                                   Successor         Predecessor       Combined          Predecessor                                    
                                                                                   Period from       Period from       Period from       Year Ended December 31,                        
                                                                                   Dec. 29, 2012     Jan. 1, 2012      Jan. 1, 2012                                                  
                                                                                   to Dec. 31, 2012  to Dec. 28, 2012  to Dec. 31, 2012  2011       2010       2009       2008       
                                                                                   (In thousands)                                                                                          
 Reconciliation of adjusted EBITDA and free cash flow to net income (loss):                                                                                    
 Net income (loss)                                                                 $ (72,675)        $ 70,789          $ (1,886)         $ 62,895   $ 36,845   $ 21,295   $ 2,384    
 Non-cash revenue adjustment (1)                                                   550               -                 550               -          -          -          -          
 Interest and other expense, net                                                   730               323               1,053             1,226      4,258      5,326      11,491     
 Income tax expense (benefit)                                                      (31,324)          41,377            10,053            31,345     19,503     5,340      1,845      
 Depreciation                                                                      -                 14,699            14,699            13,450     11,773     10,936     10,732     
 Amortization                                                                      1,688             27,879            29,567            25,916     23,526     23,214     30,046     
 Stock-based compensation expense                                                  -                 15,421            15,421            9,975      5,069      5,474      4,672      
 Impairment of intangible assets and acquired in-process research and development  -                 -                 -                 -          -          -          1,475      
 Transaction-related expenses (2)                                                  102,264           7,104             109,368           -          -          -          -          
 Adjusted EBITDA                                                                   $ 1,233           $ 177,592         $ 178,825         $ 144,807  $ 100,974  $ 71,585   $ 62,645   
                                                                                                                                                                                     
 Capitalization of content databases                                               -                 (23,538)          (23,538)          (20,408)   (13,874)   (9,398)    (8,965)    
 Purchases of property and equipment                                               -                 (20,776)          (20,776)          (13,895)   (12,968)   (13,362)   (11,621)   
 Cash paid for interest                                                            -                 (1,368)           (1,368)           (466)      (2,645)    (7,740)    (10,068)   
 Cash paid for income taxes                                                        -                 (27,156)          (27,156)          (3,683)    (11,128)   (11,472)   (279)      
 Free cash flow                                                                    $ 1,233           $ 104,754         $ 105,987         $ 106,355  $ 60,359   $ 29,613   $ 31,712   
                                                                                                                                                                                     
 (1)  Represents non-cash adjustments to revenue or the revenues that would have been recognized, except for the write-down of deferred revenue to fair value as a result of the application of purchase accounting for the Transaction. 
 (2)  Transaction-related expenses for the period from December 29, 2012 to December 31, 2012 include $53.1 million of stock-based compensation expense due to the acceleration of vesting for outstanding Predecessor stock-based awards upon closing of the Transaction. See Note 10 in the Consolidated Financial Statements for further detail. 


CONTACT: Media:
         Heather Erickson
         herickson@ancestry.com
         (801) 705-7104
         
         Investors
         Ancestry.com Investor Relations
         ir@ancestry.com
         (801) 705-7942

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