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Ancestry.com LLC Reports Q2 2013 Financial Results

Ancestry.com LLC Reports Q2 2013 Financial Results

           – Ancestry.com Subscriber Growth of 5% Year-Over-Year –
         – Q2 Non-GAAP Revenues $138 million, Up 16% Year-Over-Year –
               – Adjusted EBITDA Growth of 26% Year-Over-Year –

PROVO, Utah, July 30, 2013 (GLOBE NEWSWIRE) -- Ancestry.com LLC, the world's
largest online family history resource, reported financial results today for
the second quarter ended June 30, 2013.

"Ancestry.com performed solidly in the second quarter, and through the first
half of 2013 we have seen steady subscriber increases and strong growth in
non-GAAP revenue and adjusted EBITDA," said Tim Sullivan, Chief Executive
Officer of Ancestry.com. "These first half results have enabled us to de-lever
our balance sheet more quickly than we had anticipated, while maintaining our
commitment to healthy levels of investment. We remain focused on delivering
unique content and user experiences through new features and advancements in
our sharing, mobile and DNA capabilities."

Second Quarter 2013 Financial Highlights

  *Total revenue for the second quarter of 2013 was $131.9 million.
    
  *Non-GAAP revenue^1 for the second quarter of 2013 totaled $137.7 million,
    an increase of 15.6% over $119.1 million in the second quarter of 2012,
    driven by growth in our core Ancestry.com branded websites revenues,
    Archives.com revenues and AncestryDNA revenues.
    
  *Adjusted EBITDA^2 for the second quarter of 2013 was $54.2 million,
    compared to $42.9 million in the second quarter of 2012. The adjusted
    EBITDA margin of non-GAAP revenues for the second quarter of 2013 was
    39.4%, compared to 36.0% in the second quarter of 2012.
    
  *Net income (loss) for the second quarter 2013 was a loss of $(21.3)
    million, compared to net income of $20.0 million in the second quarter of
    2012. The loss was primarily due to the non-cash amortization of acquired
    intangible assets of $46.3 million, due to the December 2012 transaction.
    
  *Free cash flow^3 totaled $12.1 million for the second quarter of 2013
    compared to $16.3 million for the second quarter of 2012.
    
  *Cash and cash equivalents totaled $32.6 million as of June 30, 2013.
    
  *Obligations under long-term debt totaled $930.8 million as of June 30,
    2013.

Recent Business Highlights

  *Total subscribers across all websites, including Ancestry.com,
    Archives.com, Fold3.com and Newspapers.com, were approximately 2,715,000
    as of June 30, 2013.
  *Subscribers of Ancestry.com branded websites totaled approximately
    2,112,000 as of June 30, 2013, a 5.3% increase over the end of the second
    quarter of 2012 and up slightly from the end of the first quarter of 2013.
  *Launch of StoryView product experience that enables users to create a
    highly sharable narrative around a person in their family tree.
  *Launch of the Shoebox by Ancestry.com mobile app that empowers members to
    easily scan and upload photos and documents to the site using their mobile
    phones.
  *The Company added more than 100 million records during the quarter. New
    collections added in Q2 included:

    *National Archives and Records Administration records spanning 1812
      Pensions to the Mexican Civil War – 450,000 records
    *Surrey, England Parish records, 1538-1987 – 2.6 million records
    *Puerto Rico Social and Population Schedule records, 1935-1936 – 1.7
      million records
    *Canadian Pre-Confederation Military collections – 1.9 million records

^1 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 merger
transaction.

^2 Adjusted EBITDA is defined as net income (loss) plus non-cash adjustments
to revenue from purchase accounting, interest expense, net; other (income)
expense, net; income tax expense (benefit); non-cash charges including
depreciation, amortization, impairment of intangible assets and stock-based
compensation expense.

^3 Free cash flow subtracts from adjusted EBITDA capitalization of content
databases, purchases of property and equipment and cash received (paid) for
income taxes and interest.

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) 325-2362
approximately ten minutes prior to the start time.

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 merger transaction. In the case of
adjusted EBITDA, net income (loss) is adjusted for such expenses as non-cash
adjustments to revenue from purchase accounting, interest expense, net; other
(income) expense, net; income tax expense (benefit); and non-cash charges
including depreciation, amortization and stock-based compensation expense.
Free cash flow subtracts from adjusted EBITDA the capitalization of content
databases, purchases of property and equipment and cash received (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 (loss) 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 is the world's largest online family history resource with
approximately 2.7 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 50 million family trees containing more than 5 billion
profiles. In addition to its flagship sitewww.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.

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. Information concerning additional factors that
could cause events or results to differ materially from those projected in the
forward-looking statements is contained under the caption "Risk Factors" in
our Registration Statement on Form S-4 and in discussions in other of our
Securities and Exchange Commission 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 LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                          
                                                          
                                            June 30, 2013 December 31, 2012
ASSETS                                       (unaudited)    
Current assets:                                            
Cash and cash equivalents                    $32,645       $35,651
Restricted cash                              60,170        83,863
Accounts receivable, net of allowances of
$539 and $661 at June 30, 2013 and December  10,800        11,089
31, 2012, respectively
Income tax receivable                        28,817        41,799
Deferred income taxes                        7,067         --
Prepaid expenses and other current assets    8,977         9,816
Total current assets                         148,476       182,218
Property and equipment, net                  33,175        27,813
Content database costs, net                  266,587       270,984
Intangible assets, net                       507,946       600,628
Goodwill                                     944,267       945,619
Other assets                                 42,760        50,192
Total assets                                 $1,943,211    $2,077,454
                                                          
                                                          
LIABILITIES AND MEMBER'S INTERESTS                         
Current liabilities:                                       
Accounts payable                             $13,157       $11,432
Accrued expenses                             34,388        62,120
Acquisition-related liabilities              60,170        83,863
Deferred revenues                            139,416       116,953
Current deferred income taxes                --           2,021
Current portion of long-term debt            34,105        6,432
Total current liabilities                    281,236       282,821
Long-term debt, net                          875,860       936,797
Deferred income taxes                        207,720       235,167
Other long-term liabilities                  6,005         13,323
Total liabilities                            1,370,821     1,468,108
                                                          
Commitments and contingencies                              
Member's interests                           687,772       682,021
Accumulated deficit                          (115,382)     (72,675)
Total member's interests                     572,390       609,346
Total liabilities and member's interests     $1,943,211    $2,077,454



ANCESTRY.COM LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
                                                            
                    Successor  Predecessor    Successor  Predecessor
                    Three Months Ended            Six Months Ended
                    June 30,    June 30, 2012  June 30,    June 30,
                     2013                         2013        2012
                    (unaudited)
Revenues:                                                    
Subscription         $122,708     $113,037         $236,482     $215,633
revenues
Product and other    9,240        6,041            18,988       11,981
revenues
Total revenues       131,948      119,078          255,470      227,614
Costs of revenues:                                           
Cost of subscription 21,661       16,403           43,404       32,697
revenues
Cost of product and  5,937        3,584            11,668       6,369
other revenues
Total cost of        27,598       19,987           55,072       39,066
revenues
Gross profit         104,350      99,091           200,398      188,548
Operating expenses:                                          
Technology and       21,418       18,778           41,935       35,405
development
Marketing and        34,364       34,944           71,322       74,493
advertising
General and          13,456       12,733           25,275       23,375
administrative
Amortization of
acquired intangible  46,296       3,224            92,682       5,785
assets
Total operating      115,534      69,679           231,214      139,058
expenses
Income (loss) from   (11,184)     29,412           (30,816)     49,490
operations
Interest expense,    (29,492)     (128)            (51,500)     (294)
net
Other income         (161)        74               (712)        279
(expense), net
Income (loss) before (40,837)     29,358           (83,028)     49,475
income taxes
Income tax benefit   19,557       (9,381)          40,321       (15,951)
(expense)
Net income (loss)    $(21,280)    $19,977          $(42,707)    $33,524
                                                            
Comprehensive income $(21,280)    $19,578          $(42,707)    $33,391
(loss)
                                                            
                                                            
                                                            
                    Successor  Predecessor    Successor  Predecessor
                    Three Months Ended            Six Months Ended
                    June 30,     June 30,        June 30,    June 30,
                    2013         2012             2013         2012
                    (Unaudited)
Reconciliation of
adjusted EBITDA and
free cash flow to                                            
net income (loss)
(in thousands):
Net income (loss)    $(21,280)    $19,977          $(42,707)    $33,524
Non-cash revenue     5,750        --             17,249       --
adjustment
Interest expense,    29,492       128              51,500       294
net
Other income         161          (74)             712          (279)
(expense), net
Income tax expense   (19,557)     9,381            (40,321)     15,951
(benefit)
Depreciation         4,055        3,606            7,828        7,153
Amortization         52,862       5,811            105,755      10,922
Stock-based          2,740        4,056            3,186        7,003
compensation expense
Adjusted EBITDA      $54,223      $42,885          $103,202     $74,568
Capitalization of
content database     (3,919)      (7,538)          (8,672)      (12,678)
costs
Purchase of property (9,667)      (5,024)          (13,190)     (10,117)
and equipment
Cash paid for        (25,524)     (83)             (37,305)     (200)
interest
Cash received (paid) (3,037)      (13,904)         18,731       (20,524)
for income taxes
Free cash flow       $12,076      $16,336          $62,766      $31,049
                                                            
                                                            
                    Successor  Predecessor    Successor  Predecessor
                    Three Months Ended          Six Months Ended
                    June 30,    June 30,        June 30,    June 30,
                    2013         2012             2013         2012
Reconciliation of
non-GAAP revenues to (Unaudited)
total revenues (in
thousands):
Total revenues       $131,948     $119,078         $255,470     $227,614
Non-cash revenue     5,750        --             17,249       --
adjustment (1)
Non-GAAP revenues    $137,698     $119,078         $272,719     $227,614
                                                            
                                                            
(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 merger
transaction.


ANCESTRY.COM LLC
Total Subscribers and Net Subscriber Additions
(in thousands)
                                          
                                          
                        Three Months Ended
                        June 30, March 31, June 30,
                        2013     2013       2012
Total subscribers        2,112    2,096      2,005
Net subscriber additions 16       80         136

CONTACT: Media:
         Heather Erickson
         (801) 705-7104
         herickson@ancestry.com
        
         Investors:
         Mike Houston
         (801) 705-7942
         mhouston@ancestry.com

Ancestry.com, Inc.
 
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