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Ancestry.com LLC Reports Fourth Quarter and Full Year 2015 Financial Results

– 2015 Revenues $683.1 million, Up 10.3% Year-Over-Year –

– 2015 Adjusted EBITDA $263.0 million, Up 16.7% Year-Over-Year(1)

– Subscriber base grows by approximately 150,000 in 2015 –

– AncestryDNA sells approximately one million DNA kits in 2015;
DNA kit sales more than double in Q4 year-over-year–

PROVO, Utah, Feb. 17, 2016 (GLOBE NEWSWIRE) -- Ancestry.com LLC (the “Company”), the largest provider of family history and personal DNA testing, reported financial results today for the fourth quarter and full year ended December 31, 2015.

“Ancestry delivered a milestone year in 2015, including outstanding financial performance and key strategic achievements across the company,” said Tim Sullivan, President and Chief Executive Officer of Ancestry.com. “Our performance was highlighted by strong, profitable growth throughout the year, featuring double-digit increases in revenue and adjusted EBITDA. On the strategic front, we delivered a greatly enhanced customer experience, launched major new content collections, grew AncestryDNA into the largest consumer genomic database and progressed on important growth initiatives internationally and in our emerging businesses. We’re off to a great start in 2016, a year in which we will be focused on continuing to diversify and expand the growth profile of the company, executing well in our core businesses and investing in our future.”

Fourth Quarter and Full Year 2015 Financial Highlights

  • Total revenues for the fourth quarter 2015 were $177.6 million. Revenues increased 14.5% from $155.2 million in the fourth quarter of 2014, driven by growth in revenues from AncestryDNA and the Company’s core Ancestry websites. On a constant currency basis, total revenue would have increased 16.7% in the fourth quarter. For the full year 2015, total revenues were $683.1 million, with an increase in revenues of 10.3% from $619.5 million for the full year of 2014. On a constant currency basis, total revenues for 2015 would have increased 12.0% year-over-year.

  • Net income (loss) for the fourth quarter of 2015 was $13.5 million compared to a net loss of $(7.5) million in the fourth quarter of 2014. For the full year 2015, net income was $29.4 million compared to a net loss of $(18.7) million for the full year of 2014.

  • Adjusted EBITDA(1), (2) for the fourth quarter of 2015 was $62.2 million, compared to $54.6 million in the fourth quarter of 2014. For the full year 2015, adjusted EBITDA was $258.6 million, compared to $214.8 million for the full year 2014.

  • Free cash flow(3) totaled $16.7 million for the fourth quarter of 2015, compared to $20.2 million for the fourth quarter of 2014. For the full year 2015, free cash flow totaled $124.8 million compared to $93.7 million for the full year 2014.

  • Cash and cash equivalents totaled $128.2 million as of December 31, 2015.

  • Obligations under long-term debt(4) totaled $1.0 billion as of December 31, 2015.

______________________________

(1) Adjusted EBITDA for the year ended December 31, 2015 increased 16.7%, year-over-year, excluding the impact of one-time expenses to $263.0 million. Adjusted EBITDA for the three and twelve months ended December 31, 2015 includes $2.4 million and $4.4 million, respectively, of professional service fees related primarily to litigation, reimbursement for certain legal and accounting costs incurred by one of our Sponsors and costs associated with a return-of-capital distribution declared in August 2015 to our parent company, Ancestry.com Holdings LLC. For the three and twelve months ended December 31, 2014, adjusted EBITDA includes $6.3 million and $10.6 million, respectively, of accrued interest paid on restricted cash held pending resolution of the shareholder appraisal litigation, professional service fees related to litigation and costs associated with the return-of-capital distribution paid in February 2014 by our parent company.

(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

  • Subscribers – Subscribers of Ancestry websites totaled approximately 2,264,000 as of December 31, 2015, compared to 2,115,000 as of December 31, 2014.

  • Content - The Company added over 1.7 billion new records during 2015. New collections added in the fourth quarter included:

    • Mexico Civil Registration records - over 200 million records

    • US, School Yearbooks, 1880-2012 - over 63 million records

    • US, City Directories, 1822-1989 - updated with over 40 million new records

    • 4 million new international records from the U.K., Germany and Romania

  • AncestryDNA - AncestryDNA sold approximately one million kits in 2015 and now has a database with DNA samples from 1.5 million people.

  • New Offerings - Ancestry Academy, New Ancestor Discoveries and a beta launch of Ancestry Health were introduced in 2015.

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.

About Ancestry

Ancestry is the largest provider of family history and personal DNA testing, harnessing the information found in family trees, historical records and genetics to help people gain a new level of understanding about their lives. Ancestry has more than 2.2 million paying subscribers across its core Ancestry websites and approximately 1.5 million DNA samples in the AncestryDNA database. Since 1996, more than 17 billion records have been added, and users have created more than 70 million family trees on the Ancestry flagship site and its affiliated international websites. Ancestry offers a suite of family history products including Archives, Fold3, Newspapers.com and AncestryDNA sold by its subsidiary, Ancestry.com DNA, LLC, and the AncestryHealth product, offered by its subsidiary AncestryHealth.com, LLC.

Forward-Looking Statements

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 September 30, 2015, which was filed with the Securities and Exchange Commission on October 30, 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.

ANCESTRY.COM LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
2015
December 31,
2014
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$128,157 $108,494
Restricted cash2,412 49,086
Accounts receivable, net of allowances of $997 and $540 at December 31, 2015 and December 31, 2014, respectively 13,624 11,241
Prepaid expenses12,228 9,830
Other current assets6,288 1,813
Total current assets162,709 180,464
Property and equipment, net54,795 37,106
Content databases, net282,281 282,815
Intangible assets, net159,736 269,054
Goodwill948,283 948,283
Other assets13,956 3,175
Total assets$1,621,760 $1,720,897
LIABILITIES AND MEMBER’S INTERESTS
Current liabilities:
Accounts payable$13,120 $11,515
Accrued expenses50,459 47,029
Acquisition-related liabilities2,412 49,086
Deferred revenues171,822 145,010
Current portion of long-term debt, net7,087 46,537
Total current liabilities244,900 299,177
Long-term debt, net989,256 799,403
Deferred income taxes59,809 110,184
Other long-term liabilities46,877 16,406
Total liabilities1,340,842 1,225,170
Commitments and contingencies
Member’s interests:
Member’s interests422,603 666,830
Accumulated deficit(141,685) (171,103)
Total member’s interests280,918 495,727
Total liabilities and member’s interests$1,621,760 $1,720,897


ANCESTRY.COM LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Three months ended
December 31,
Year ended
December 31,
2015 2014 2015 2014
(unaudited) (unaudited)
Revenues:
Subscription revenues$149,396 $139,693 $584,075 $553,810
Service and other revenues28,214 15,469 99,030 65,734
Total revenues177,610 155,162 683,105 619,544
Costs of revenues:
Cost of subscription revenues26,419 24,556 103,051 95,899
Cost of service and other revenues17,255 10,730 60,668 43,654
Total cost of revenues43,674 35,286 163,719 139,553
Gross profit133,936 119,876 519,386 479,991
Operating expenses:
Technology and development24,971 21,677 97,105 94,221
Marketing and advertising46,461 40,195 171,094 168,536
General and administrative16,365 18,489 54,427 60,971
Amortization of acquired intangible assets 27,017 36,636 109,318 147,681
Total operating expenses114,814 116,997 431,944 471,409
Income from operations19,122 2,879 87,442 8,582
Interest expense, net(18,874) (17,298) (81,056) (69,680)
Other expense, net(105) (512) (334) (368)
Income (loss) before income taxes143 (14,931) 6,052 (61,466)
Income tax benefit13,369 7,416 23,366 42,738
Net income (loss)$13,512 $(7,515) $29,418 $(18,728)



ANCESTRY.COM LLC
(in thousands)
Three months ended December 31, Year ended December 31,
2015 2014 2015 2014
(unaudited) (unaudited)
Reconciliation of adjusted EBITDA and free cash flow to net income (loss): (1)
Net income (loss)$13,512 $(7,515) $29,418 $(18,728)
Interest expense, net18,874 17,298 81,056 69,680
Other expense, net105 512 334 368
Income tax benefit(13,369) (7,416) (23,366) (42,738)
Depreciation5,306 5,636 21,823 21,498
Amortization35,816 44,095 141,647 176,755
Stock-based compensation expense1,968 2,008 7,683 8,004
Adjusted EBITDA$62,212 $54,618 $258,595 $214,839
Capitalization of content databases(7,899) (8,358) (32,514) (37,566)
Purchases of property and equipment(5,169) (2,712) (15,117) (21,821)
Cash paid for interest (2)(26,028) (23,227) (62,831) (60,450)
Cash paid for income taxes(6,462) (107) (23,333) (1,334)
Free cash flow$16,654 $20,214 $124,800 $93,668

Footnotes:

(1) Net loss and therefore adjusted EBITDA and free cash flow for the three and twelve months ended December 31, 2015 include $2.4 million and $4.4 million, respectively, of professional service fees related primarily to litigation, reimbursement for certain legal and accounting costs incurred by one of our Sponsors and costs associated with a return-of-capital distribution declared in August 2015 to our parent company, Ancestry.com Holdings LLC. For the three and twelve months ended December 31, 2014, net loss and therefore adjusted EBITDA and free cash flow include $6.3 million and $10.6 million, respectively, of accrued interest paid on restricted cash held pending resolution of the shareholder appraisal litigation, professional service fees related to litigation and costs associated with the return-of-capital distribution paid in February 2014 by our parent company.

(2) Cash paid for interest for the three and twelve months ended December 31, 2015 does not include $19.3 million and $38.4 million, respectively, payments made to our parent related to the interest obligations on its senior unsecured PIK notes. Cash for paid for interest for three and twelve months ended December 31, 2014 does not include $19.2 million and $37.6 million, respectively, of payments made to our parent related to the interest obligations on its senior unsecured PIK notes.


ANCESTRY.COM LLC
Total Subscribers and Net Subscriber Additions
(in thousands)
Year ended December 31,
2015 2014
(unaudited)
Total subscribers2,264 2,115
Net subscriber additions 149 (25)

Contact: Melissa Garrett mgarrett@ancestry.com (801) 705-7105

Source:Ancestry.com Inc.