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Ancestry.com Taps Into a Deep-Rooted Passion

Posted on Tuesday, Apr 10th 2012

According to a survey by Harris Interactive, 87% of American adults are interested in learning about their family histories. Researchers have also notices that the majority of genealogy website users are women aged 45 or older. Further, a Bank of America report found that of the 9 million Internet users who identified genealogy as their core passion or hobby, 7.5 million were 45 years or older. Genealogy companies in the country are targeting that demographic, which in the U.S. includes more than 120 million people.

Ancestry.com’s Financials
Ancestry.com (Nasdaq:ACOM) is a genealogy services provider that has seen both revenues and subscriber base grow over the last year. Revenue for the fourth quarter last year grew 26% over the year to $104.2 million. Revenues for the year grew 33% to $399.7 million.

Adjusted EBITDA for the quarter grew 37% over the year to $40.7 million. For the year, adjusted EBITDA grew 43% to $144.8 million. Net income for the quarter of $0.40 per share was also higher than previous year’s $0.25 per share. For the full year EPS grew from $0.76 to $1.29.

The market was looking for revenues of $104.1 million for the quarter and earnings of $0.34 per share.

As of December 2011, subscribers grew 22% over the year to 1.7 million. The company reported a gross subscriber addition of 220,000, compared with 203,000 subscribers added a year ago. Monthly churn has also been dropping, from 3.9% a year ago and 4.2% a quarter ago to 3.8%. Average monthly revenue per subscriber during the quarter, however, fell from $18.68 a year ago to $18.38.

For the current quarter, Ancestry projected revenues of $106 million-$108 million with EBITDA of $27 million-$29 million. The Street was expecting revenues of $108.9 million. Ancestry projects to end the quarter with a subscriber base of 1.825 million-1.835 million. They expect to end the current year with revenues of $455 million-$470 million, with EBITDA of $155 million-$165 million and a subscriber base of 1.915 million-1.95 million. The market was projecting fiscal 2012 revenues of $464.3 million.

Ancestry.com’s Mobile Growth
During the last year, Ancestry.com has focused on expanding their mobile device presence. They launched their first mobile app for Android-based devices. The free app lets users view and edit existing family trees, build new family trees, and view historical records attached on Ancestry.com.

They also upgraded their iPhone, iPad, and iPod touch app with features such as hints introduced to historical records and in-app purchasing that lets non-Ancestry.com subscribers view and purchase historical records. Their free mobile apps have seen 2.7 million downloads since they were launched. Last year alone, the app was downloaded 1.8 million times.

In addition, Ancestry has also expanded their social networking tools and released a beta version of their Facebook application. The application lets users build their family tree through Facebook family connections.

Ancestry.com Expands with DNA Services
Ancestry.com is also investing heavily in developing their DNA service offering. For the current year, they plan to invest $10 million-$15 million in developing this service. Ancestry claims that through the service, subscribers will be able to connect with their distant cousins.

Their stock is trading at $23.11 with a market capitalization of $990.54 million. It touched a high of $45.79 in April 2011.

 

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