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– Second Quarter Revenues $169.4 million, Up 8.5% Year-Over-Year; Up 10.2% on Constant Currency Basis –
– Second Quarter Adjusted EBITDA $67.3 million, Up 16.1% Year-Over-Year1 –
PROVO, Utah, July 22, 2015 (GLOBE NEWSWIRE) -- Ancestry.com LLC (the "Company"), the world's largest online family history resource, reported financial results today for the second quarter ended June 30, 2015.
"Our business is performing well at nearly every level, highlighted in the second quarter by improving revenue growth and continued strong Adjusted EBITDA growth," said Tim Sullivan, Chief Executive Officer of the Company. "We are seeing continued momentum both in our Ancestry subscriber business and growth at AncestryDNA, which hit the one million DNA customer milestone earlier this month. This quarter Ancestry also released a major upgrade to its core website that transforms how customers view, arrange, and share the details of their ancestors' lives, helping them weave together a richer, more complete picture of the events, places, and eras that shaped the people who led to them. Product improvements and new content are important growth drivers for our business for new and existing subscribers alike, and the new features and experience on Ancestry, combined with exciting new content releases on tap, position us well for the future."
Second Quarter 2015 Financial Highlights
1 Adjusted EBITDA for the three months ended June 30, 2015 increased 21.5% year-over-year.Excluding the impact of one-time expenses of $2.6 million of professional service fees related to litigation for the three months ended June 30, 2014,adjusted EBITDA increased 16.1% in the second quarter of 2015.
2 Adjusted EBITDA is defined as net income (loss) plus interest expense, net; other (income) expense, net; income tax expense (benefit); and non-cash charges, including depreciation, amortization and stock-based compensation expense.
3 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.
4 This amount does not include $390.2 million in senior unsecured PIK notes issued by our parent company, Ancestry.com Holdings LLC. While not required, Ancestry.com LLC has made and intends to pay future distributions or loans to its parent related to the PIK Notes.
Ancestry Business Updates
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 (844) 831-3026 (domestic toll-free) or (315) 625-6887 (international) approximately ten minutes prior to the start time.
Use of Non-GAAP Measures
The Company believes that 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. In the case of adjusted EBITDA, net income (loss) is adjusted for 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, net income (loss) and net cash provided by operating activities, or other financial measures prepared in accordance with GAAP. A reconciliation to net income (loss), the GAAP equivalent of these non-GAAP measures is contained in tabular form on the attached unaudited summary financial statements.
The Company uses 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; and in communications with its operating committee concerning its financial performance. The Company also uses adjusted EBITDA as a factor when determining the incentive compensation pool.
Ancestry.com is the world's largest online family history resource with more than 2 million paying subscribers across all its websites. More than 16 billion records have been added, and users have created more than 70 million family trees to the core Ancestry websites, including its flagship site www.ancestry.com and its affiliated international websites. Ancestry.com offers a suite of online family history brands, including Archives.com, Fold3.com, Newspapers.com, as well as the AncestryDNA product, sold by its subsidiary, Ancestry.com DNA, LLC, and the new AncestryHealth product, offered by its subsidiary AncestryHealth.com, LLC, all of which, along with its core Ancestry websites, are designed to empower people to discover, preserve and share their family history.
This press release contains forward-looking statements that 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 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, future earnings, financial and operating performance, its leadership position and its opportunities and prospects for growth, including growth in revenues, adjusted EBITDA and number of subscribers. 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. In particular, such risks and uncertainties include the Company's continued ability to attract and retain subscribers; continued service outages or a significant disruption in service on its websites; its continued ability to acquire content and make it available online; and its ability to add tools and features and provide value to satisfy customer demand. Information concerning these and 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 Quarterly Report on Form 10-Q for the period ended March 31, 2015, which was filed with the Securities and Exchange Commission on May 1, 2015, 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.
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|Cash and cash equivalents||$ 108,087||$ 108,494|
|Accounts receivable, net of allowances of $969 and $540 at June 30, 2015 and December 31, 2014, respectively||11,874||11,241|
|Current deferred income taxes||1,375||5,277|
|Prepaid expenses and other current assets||12,563||11,643|
|Total current assets||137,417||185,741|
|Property and equipment, net||39,842||37,106|
|Content databases, net||283,322||282,815|
|Intangible assets, net||214,127||269,054|
|Total assets||$ 1,636,600||$ 1,726,174|
|LIABILITIES AND MEMBER'S INTERESTS|
|Accounts payable||$ 18,597||$ 11,515|
|Current portion of long-term debt||29,033||46,537|
|Total current liabilities||232,473||299,177|
|Long-term debt, net||791,455||799,403|
|Deferred income taxes||90,026||115,461|
|Other long-term liabilities||26,321||16,406|
|Commitments and contingencies|
|Total member's interests||496,325||495,727|
|Total liabilities and member's interests||$ 1,636,600||$ 1,726,174|
|CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)|
Three Months Ended
Six Months Ended
|Subscription revenues||$ 145,408||$ 137,961||$ 287,125||$ 275,155|
|Product and other revenues||24,016||18,091||46,896||34,543|
|Costs of revenues:|
|Cost of subscription revenues||25,584||23,895||51,279||47,263|
|Cost of product and other revenues||13,882||10,615||28,148||21,928|
|Total cost of revenues||39,466||34,510||79,427||69,191|
|Technology and development||24,282||24,236||47,725||48,801|
|Marketing and advertising||41,203||40,986||84,380||86,191|
|General and administrative||12,427||15,341||23,882||29,555|
|Amortization of acquired intangible assets||27,464||37,001||54,927||74,052|
|Total operating expenses||105,376||117,564||210,914||238,599|
|Income from operations||24,582||3,978||43,680||1,908|
|Interest expense, net||(16,622)||(17,759)||(33,830)||(35,150)|
|Other income (expense), net||190||306||(73)||325|
|Income (loss) before income taxes||8,150||(13,475)||9,777||(32,917)|
|Income tax benefit||5,512||5,866||6,679||22,931|
|Net income (loss)||$ 13,662||$ (7,609)||$ 16,456||$ (9,986)|
|Comprehensive income (loss)||$ 13,662||$ (7,609)||$ 16,456||$ (9,986)|
Three Months Ended
Six Months Ended
|Reconciliation of adjusted EBITDA and free cash flow to net income (loss):|
|Net income (loss)||$ 13,662||$ (7,609)||$ 16,456||$ (9,986)|
|Interest expense, net||16,622||17,759||33,830||35,150|
|Other (income) expense, net||(190)||(306)||73||(325)|
|Income tax benefit||(5,512)||(5,866)||(6,679)||(22,931)|
|Stock-based compensation expense||1,876||2,018||3,801||3,824|
|Adjusted EBITDA||$ 67,300||$ 55,396||$ 128,991||$ 104,368|
|Capitalization of content databases||(9,140)||(11,533)||(16,540)||(19,519)|
|Purchases of property and equipment||(2,292)||(8,483)||(6,444)||(12,978)|
|Cash paid for interest||(22,824)||(23,424)||(29,253)||(30,346)|
|Cash received (paid) for income taxes||(12,600)||(1,711)||(12,805)||886|
|Free cash flow(2)||$ 20,444||$ 10,245||$ 63,949||$ 42,411|
|(1) Net loss and therefore adjusted EBITDA and free cash flow for the three and six months ended June 30, 2014 include $2.6 million and $3.5 million, respectively, of professional service fees related to litigation and costs associated with the return of capital transaction declared in February 2014 by our Parent.|
|(2) Free cash flow for the three and six months ended June 30, 2015 does not include $18.7 million and $29.1 million, respectively, of payments to our parent company, Ancestry.com Holdings LLC, related to both accumulated interest on the PIK notes and a $10.0 million note receivable issued to our parent company related to the repurchase of a portion of the PIK Notes in March 2015. Free cash flow for the three and six months ended June 30, 2014 does not include an $18.4 million return-of-capital distribution paid to our parent company to pay accumulated interest on its PIK Notes.|
|Total Subscribers and Net Subscriber Additions|
|Three Months Ended|
|Net subscriber additions||1||104||(52)|
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