- 2013 Total Non-GAAP Revenue $561.5 million, Up 15% Year-Over-Year - - 2013 Adjusted EBITDA $211.6 million, Up 18% Year-Over-Year -
PROVO, Utah, Feb. 20, 2014 (GLOBE NEWSWIRE) -- Ancestry.com LLC reported financial results for the fourth quarter and full year ended December 31, 2013. Financial performance for the periods was consistent with the preliminary results reported by the Company on January 29, 2014.
"2013 was a successful year for Ancestry.com. We delivered strong financial performance highlighted by improved profit margins and growth in cash flows," said Tim Sullivan, Chief Executive Officer of Ancestry.com. "We have a busy 2014 planned as we position the company to capitalize on its long-term growth opportunities. Key areas of activity and investment include areas such as product development initiatives; international expansion; our exclusive agreement with FamilySearch; and the continued growth of our popular AncestryDNA product, among others. We enjoy a solid foundation from which to pursue these initiatives, with a total subscriber base of more than 2.7 million across all websites and a profitable and healthy business model." Fourth Quarter and Full Year 2013 Financial Highlights1 Recent Business Highlights 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"). 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 expense, net; other (income) expense; income tax expense (benefit); non-cash charges including depreciation, amortization, 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 property and equipment and cash received (paid) for income taxes and interest. 5 This amount does not include $400.0 million in senior unsecured PIK notes issued by our parent company, Ancestry.com Holdings LLC as of the date of this release. While not required, Ancestry.com LLC intends to make dividends to our parent in order to fund cash interest payments of these notes. 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 revenues are 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 adjustments to revenue from purchase accounting, interest expense, net; other (income) expense, net; income tax expense (benefit); non-cash charges including depreciation, amortization 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 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, total revenues, 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; 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 12 billion records have been added to the Ancestry.com sites and users have created more than 55 million family trees containing more than 5 billion profiles. In addition to its flagship site www.ancestry.com, the company operates several global Ancestry international websites along with a suite of online family history brands, including Archives.com, Fold3.com, Newspapers.com, and offers the AncestryDNA product, sold by its subsidiary, Ancestry.com DNA, LLC, all of which are 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, future earnings, growth outlook and financial and operating performance, 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; continued service outages or a significant disruption in service on its websites; 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; its intention to pay dividends to its parent; the availability of cash and credit; the adverse impact of competitive product announcements; failure to achieve anticipated revenues, adjusted EBITDA 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 Exhibit 99.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2014, 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.
-- West Yorkshire, England, Electoral Registers, 1840-1962 - 22.6 million records
-- Surrey, England, Electoral Registers, 1918-1945 - 10.5 million records
-- Ireland Census, 1901 & 1911 - 8.7 million records
-- Netherlands Death Records, 1779-2013 - 3.5 million records
-- Texas Birth and Death Certificates, 1903-1982 - 6.9 million records
-- U.S. School Catalogs, 1756-1935 - 5.3 million records
-- Associated Press Card Index, 1905-2001 - 2.6 million recordsANCESTRY.COM LLC CONSOLIDATED BALANCE SHEETS (in thousands)
December 31, December 31,
2013 2012
(unaudited) ASSETS
Current assets:
Cash and cash equivalents
$ 86,554
$ 35,651
Restricted cash
60,740
83,863
Accounts receivable, net of allowances of $605 and $661 at December 31, 2013 and December 31, 2012, respectively
11,382
11,089
Income tax receivable
3,285
41,799
Current deferred income taxes
20,350
--
Prepaid expenses and other current assets
11,530
9,816
Total current assets
193,841
182,218
Property and equipment, net
37,613
27,813
Content databases, net
272,758
270,984
Intangible assets, net
416,735
600,628
Goodwill
948,283
945,619
Other assets
35,512
50,192
Total assets
$ 1,904,742
$ 2,077,454
LIABILITIES AND MEMBER'S INTERESTS
Current liabilities:
Accounts payable
$ 12,575
$ 11,432
Accrued expenses
51,923
62,120
Acquisition-related liabilities
60,640
83,863
Deferred revenues
137,864
116,953
Current deferred income taxes
--
2,021
Current portion of long-term debt
36,760
6,432
Total current liabilities
299,762
282,821
Long-term debt, net
869,620
936,797
Deferred income taxes
185,553
235,167
Other long-term liabilities
9,110
13,323
Total liabilities
1,364,045
1,468,108
Commitments and contingencies
Member's interests
693,072
682,021
Accumulated deficit
(152,375)
(72,675)
Total member's interests
540,697
609,346
Total liabilities and member's interests
$ 1,904,742
$ 2,077,454
ANCESTRY.COM LLC CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands)
Successor Predecessor(1)
Year ended Period from Period from
December 31, Dec. 29, 2012 to Jan. 1, 2012 to
2013(2) Dec. 31, 2012 Dec. 28, 2012
(unaudited)
Revenues:
Subscription revenues
$ 499,557
$ 3,194
$ 451,744
Product and other revenues
40,834
264
31,883
Total revenues
540,391
3,458
483,627
Costs of revenues:
Cost of subscription revenues
91,118
664
66,741
Cost of product and other revenues
24,324
159
19,162
Total cost of revenues
115,442
823
85,903
Gross profit
424,949
2,635
397,724
Operating expenses:
Technology and development
85,723
642
77,512
Marketing and advertising
145,103
1,145
138,073
General and administrative
55,691
381
45,995
Amortization of acquired intangible assets
185,193
1,472
16,551
Transaction-related expenses(4)
--
102,264
7,104
Total operating expenses
471,710
105,904
285,235
Income (loss) from operations
(46,761)
(103,269)
112,489
Interest expense, net
(97,837)
(730)
(1,065)
Other income (expense), net
(655)
--
742
Income (loss) before income taxes
(145,253)
(103,999)
112,166
Income tax benefit (expense)
65,553
31,324
(41,377)
Net income (loss)
$ (79,700)
$ (72,675)
$ 70,789
ANCESTRY.COM LLC CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands)
Successor Predecessor(1)
Three Months
Ended Period from Period from
December 31, Dec. 29, 2012 to Oct. 1, 2012 to
2013(5) Dec. 31, 2012 Dec. 28, 2012
(unaudited) (unaudited)
Revenues:
Subscription revenues
$ 133,556
$ 3,194
$ 117,179
Product and other revenues
11,430
264
10,479
Total revenues
144,986
3,458
127,658
Costs of revenues:
Cost of subscription revenues
24,400
664
17,268
Cost of product and other revenues
7,238
159
6,474
Total cost of revenues
31,638
823
23,742
Gross profit
113,348
2,635
103,916
Operating expenses:
Technology and development
21,825
642
22,220
Marketing and advertising
37,231
1,145
32,770
General and administrative
16,182
381
11,390
Amortization of acquired intangible assets
46,161
1,472
6,189
Transaction-related expenses(4)
--
102,264
4,226
Total operating expenses
121,399
105,904
76,795
Income (loss) from operations
(8,051)
(103,269)
27,121
Interest expense, net
(27,268)
(730)
(391)
Other income (expense), net
(221)
--
(19)
Income (loss) before income taxes
(35,540)
(103,999)
26,711
Income tax benefit (expense)
12,193
31,324
(14,346)
Net income (loss)
$ (23,347)
$ (72,675)
$ 12,365
ANCESTRY.COM LLC
Successor Predecessor(1)
Year ended Period from Period from
December 31, Dec. 29, 2012 to Jan. 1, 2012 to
2013(2) Dec. 31, 2012 Dec. 28, 2012
(unaudited) Reconciliation of adjusted EBITDA and free cash flow to net income (loss)
(in thousands):
Net income (loss)
$ (79,700)
$ (72,675)
$ 70,789
Non-cash revenue adjustment(3)
21,115
550
--
Interest expense, net
97,837
730
1,065
Other (income) expense, net
655
--
(742)
Income tax expense (benefit)
(65,553)
(31,324)
41,377
Depreciation
16,931
--
14,699
Amortization
211,974
1,688
27,879
Stock-based compensation expense
8,324
--
15,421
Transaction-related expenses(4)
--
102,264
7,104
Adjusted EBITDA
$ 211,583
$ 1,233
$ 177,592
Capitalization of content database costs
(22,239)
--
(23,538)
Purchase of property and equipment
(26,714)
--
(20,776)
Cash paid for interest
(70,311)
--
(1,368)
Cash received (paid) for income taxes
40,601
--
(27,156)
Free cash flow
$ 132,920
$ 1,233
$ 104,754
Successor Predecessor(1)
Year ended Period from Period from
December 31, Dec. 29, 2012 to Jan. 1, 2012 to
2013 Dec. 31, 2012 Dec. 28, 2012 Reconciliation of Non-GAAP revenues to total revenues (in thousands): (unaudited)
Total revenues
$ 540,391
$ 3,458
$ 483,627
Non-cash revenue adjustment(3)
21,115
550
--
Non-GAAP revenues
$ 561,506
$ 4,008
$ 483,627
ANCESTRY.COM LLC
Successor Predecessor(1)
Three Months
Ended Period from Period from
December 31, Dec. 29, 2012 to Oct. 1, 2012 to
2013(5) Dec. 31, 2012 Dec. 28, 2012
(unaudited) Reconciliation of adjusted EBITDA and free cash flow to net income (loss)
(in thousands):
Net income (loss)
$ (23,347)
$ (72,675)
$ 12,365
Non-cash revenue adjustment(3)
953
550
--
Interest expense, net
27,268
730
391
Other (income) expense, net
221
--
19
Income tax expense (benefit)
(12,193)
(31,324)
14,346
Depreciation
4,675
--
3,792
Amortization
53,141
1,688
9,403
Stock-based compensation expense
2,849
--
4,335
Transaction-related expenses(4)
--
102,264
4,226
Adjusted EBITDA
$ 53,567
$ 1,233
$ 48,877
Capitalization of content database costs
(7,507)
--
(4,572)
Purchase of property and equipment
(9,466)
--
(3,333)
Cash paid for interest
(24,666)
--
(831)
Cash received (paid) for income taxes
3,682
--
(95)
Free cash flow
$ 15,610
$ 1,233
$ 40,046
Successor Predecessor(1)
Three Months
Ended Period from Period from
December 31, Dec. 29, 2012 to Oct. 1, 2012 to
2013 Dec. 31, 2012 Dec. 28, 2012 (unaudited) Reconciliation of Non-GAAP revenues to total revenues (in thousands):
Total revenues
$ 144,986
$ 3,458
$ 127,658
Non-cash revenue adjustment(3)
953
550
--
Non-GAAP revenues
$ 145,939
$ 4,008
$ 127,658
Footnotes:
(1) We operated as the Predecessor until December 28, 2012 when a company controlled by the Permira funds and co-investors acquired the Predecessor. As a result, our fiscal year 2012 is divided into a Successor period from December 29, 2012 to December 31, 2012 and a Predecessor period from January 1, 2012 to December 28, 2012. Operational data presented for the Successor and Predecessor periods is not necessarily comparable due to the Transaction.
(2) Net loss and therefore adjusted EBITDA and free cash flow for the year ended December 31, 2013 include $5.6 million of professional services related to litigation, reorganizing our corporate structure, registering the existing senior Notes with the SEC, costs associated with the dividend declared in September 2013 by our Parent and costs related to the settlement of litigation.
(3) 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.
(4) 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.
(5) Net loss and therefore adjusted EBITDA and free cash flow for three months ended December 31, 2013 include $2.0 million of professional services related to litigation, reorganizing our corporate structure, registering the existing senior Notes with the SEC, costs associated with the dividend declared in September 2013 by our Parent and costs related to the settlement of litigation.
ANCESTRY.COM LLC Total Subscribers and Net Subscriber Additions (in thousands)
Year ended December 31,
2013 2012
Total subscribers
2,140
2,016
Net subscriber additions
124
313
CONTACT: Media:
Heather Erickson
herickson@ancestry.com
(801) 705-7104
Investors:
Mike Houston
mhouston@ancestry.com
(801) 705-7942
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