Provo, UT - Ancestry.com LLC (the “Company”), the largest provider of family history and personal DNA testing, reported financial results today for the third quarter ended September 30, 2015.
“Our third quarter results benefited from strong business fundamentals and good execution, highlighted by double-digit year-over-year growth in revenue, adjusted EBITDA and free cash flow,” said Tim Sullivan, Chief Executive Officer of Ancestry.com. “Our subscriber base remains healthy, engagement trends are solid following our staged roll-out of the New Ancestry website and customer experience, and AncestryDNA is now the world's largest consumer genomics database with sales in the quarter doubling relative to last year. We are poised to deliver outstanding performance in 2015, and the strategic investments we’ve made in the business position Ancestry for attractive new opportunities in 2016 and beyond.”
Third Quarter 2015 Financial Highlights
Total revenues for the third quarter of 2015 were $171.5 million compared to $154.7 million in the third quarter of 2014 driven by growth in revenues from AncestryDNA and the core Ancestry websites. On a constant currency basis, third quarter 2015 total revenues would have increased 13.1% year-over-year.
Net loss for the third quarter of 2015 was $(0.6) million compared to a net loss of $(1.2) million in the third quarter of 2014.
Adjusted EBITDA for the third quarter of 2015 was $67.4 million compared to $55.9 million in the third quarter of 2014. Adjusted EBITDA for the three months ended September 30, 2015 included $1.5 million of professional services fees related to litigation and costs associated with a return-of-capital distribution declared in August 2015 to our parent. Adjusted EBITDA for the three months ended September 30, 2014 included $0.8 million of professional service fees related to litigation.
Free cash flow totaled $44.2 million for the third quarter of 2015, compared to $31.0 million for the third quarter of 2014.
Cash and cash equivalents totaled $114.1 million as of September 30, 2015.
Obligations under long-term debt totaled $1.0 billion as of September 30, 2015.
Ancestry Business Updates
Subscribers – Subscribers of Ancestry websites totaled approximately 2,243,000 as of September 30, 2015, up slightly compared to June 30, 2015 and up 6% compared to September 30, 2014.
Product – Ancestry continues to make progress on the roll-out of a broad redesign of its core website. The new website features, capabilities, and site enhancements reinvent the ways Ancestry members create and showcase their family story.
Content – The Company added more than 400 million new records in the third quarter of 2015 to its collection of more than 16 billion records. During the quarter, the Company launched its U.S. Probate and Wills collection, comprising 170 million records dating to 1668 and spanning all 50 states and more than 100 million Americans. Additionally, Newspapers.com, an Ancestry business unit, announced a collaboration with Gannett to digitally archive more than 80 U.S. newspapers. Other significant new collections added in the third quarter included:
- U.S. Social Security Applications and Claims Index, 1936-2007 - U.K. City, Town and Village Photos, 1857-2005 - U.K. Apprentices Indentured in Merchant Navy, 1824-1910 - Germany collections totaling 60 million new records
AncestryDNA – AncestryDNA kit sales approximately doubled compared with the prior-year third quarter. AncestryDNA also released new product functionality to help customers determine if their cousin matches come from their paternal or maternal lines.
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 is the largest provider of family history and personal DNA testing, harnessing the information found in family trees, historical records, genetics and health history to help people gain a new level of understanding about their lives. Ancestry has more than 2 million paying subscribers across its family history websites and approximately 1.2 million DNA samples in the AncestryDNA database. Since 1996, more than 16 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.