Investor Presentation October 2013

Transcription

1 Investor Presentation October 2013

2 Safe harbor statement This presentation contains certain financial information, projections, and other forward looking statements prepared by Ancestry.com LLC (the Company ) that involve risks and uncertainties. While management believes its assumptions to be reasonable, there can be no assurance that the projected results will be achieved and there is a substantial likelihood that the actual results of the Company's operations will differ materially from the projections. These projections are included herein solely to give the reader information concerning management s current estimates of the scope of future opportunities based on certain assumptions. The projected financial information has not been prepared, reviewed or compiled by any firm of accountants and may differ materially from actual future events and results. We present Non-GAAP Revenues, Adjusted EBITDA and Free Cash Flow as non-u.s. GAAP financial measures in various places throughout this presentation. We believe Non-GAAP Revenues, Adjusted EBITDA and Free Cash Flow are useful to investors as supplemental measures to evaluate the overall operating performance of our business. Non-GAAP Revenues, Adjusted EBITDA and Free Cash Flow are financial data that are not calculated in accordance with U.S. GAAP. We prepare Non-GAAP Revenues, Adjusted EBITDA and Free Cash Flow to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate these adjustments and the reasons we consider them appropriate, as well as the material limitations on non-u.s. GAAP measures. Reconciliations of these non-u.s. GAAP financial measures to the most nearly comparable U.S. GAAP financial measures can be found on the Company s website. Our combined results for the year ended December 31, 2012 represent the addition of our predecessor financials for the period from January 1, 2012 to December 28, 2012 and our successor financials for the period from December 29, 2012 to December 31, This combination does not comply with U.S. GAAP or with the rules for pro forma presentation, but is presented as we believe the presentation is useful to the reader for comparison with the prior periods. 2

3 Ancestry.com key highlights Mission to help everyone discover, preserve and share their family history We created the category and we continue to innovate A great business Large market opportunity with a focused core growth plan Culture that celebrates smart operational execution Multiple incremental growth opportunities 3

4 Company highlights LTM 6/30/2013 Ending Subscribers Revenues (1) Adjusted EBITDA ( 000s) 2,715 ($ in millions) $533 ($ in millions) $207 $488 $179 2,016 $400 $145 1, ,395 1,066 $123 $140 $151 $166 $198 $225 $301 $22 $24 $30 $43 $63 $72 $ Ancestry.com Archives, Fold3, Newspapers.com /30/2013 Recessionary Period LTM 6/30/2013 Recognized leader in an established, sizeable and growing market Proprietary content asset with growing network effects Market leading technology platform enabling compelling user experience Growing base of long-tenured, predictable subscribers (1) 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. The reconciliation to GAAP revenue can be found on the company s website 4

5 Howard Hochhauser 5

6 Sign on flow 6

7 Wizard experience 7

8 Documents reveal amazing stories

9 The product experience 9

10 Redesigned ios mobile app Extends core user experience More than 9 million downloads 10

11 We have a strong, differentiated value proposition Content Over 12 billion records acquired and indexed Hundreds of global content partnerships Census data, vital records, newspapers Community Technology Specialized family history search Document digitization and indexing Hints algorithm to assist users Collaboration graph Brand Community 11 Category-defining brand Making family history mainstream Now part of the popular culture +$100 million annual media spend Approximately 2.7 million paying subscribers (1) 50 million family trees, 5 billion tree nodes Collaborative family tree construction Sharing on social networks and a tremendous competitive moat (1) Includes Ancestry, Archives, Fold3.com and Newspapers.com subscribers

12 FamilySearch collaboration FamilySearch is the other major player in family history space Non-profit with massive collection of global archive content aggregated over more than 70 years FamilySearch and Ancestry have agreed a groundbreaking collaboration Agreements signed August 2013 Domain and content expertise of FamilySearch combined with capital investment and technology of Ancestry make this partnership a natural fit FamilySearch content will be made available to Ancestry subscribers 700 million new records from 61 countries will be made available on the Ancestry sites in 2014 Over the next few years more than 1.5 billion new family history records could be digitized, indexed and made available through the partnership Facilitates major program of investment in international content As much as $60 million will be invested in indexing FamilySearch records over the next 5 years Exclusive collections accelerate growth in key markets including Germany, Mexico, Poland, Italy and Brazil Greatly enhances global relevance of core Ancestry service 12

13 We re a global business today and expanding 29% of Ancestry subscribers outside the U.S. New market opportunities starting with Germany United States United Kingdom Australia Total Population: ~314MM # of Households: ~120MM # of Current Subscribers: ~1.5MM Penetration of Households: ~1.2% Canada Total Population: ~63MM # of Households: ~28MM # of Current Subscribers: ~339K Penetration of Households: ~1.1% Sweden Total Population: ~23MM # of Households: ~8MM # of Current Subscribers: ~123K Penetration of Households: ~1.2% Growth Opportunities Total Population # of Households Brazil ~199MM ~58MM Russia ~144MM ~56MM Total Population: ~35MM # of Households: ~13MM # of Current Subscribers: ~85K Penetration of Households: ~0.5% Total Population: ~10MM # of Households: ~5MM # of Current Subscribers: ~20K Penetration of Households: ~0.4% Mexico Germany Ireland ~121MM ~82MM ~5MM ~30MM ~41MM ~2MM Source: World Bank (2012 Population), Euromonitor International (2012 Number of Households) Note: Number of Ancestry.com subscribers as of 2Q 13 13

14 Our total addressable market ( TAM ) is sizable In the U.S., our TAM is estimated to be 83 million people According to a market research study in Jan 2013 by Millward Brown Optimor Our U.S. TAM is estimated to be ~40x the number of our current U.S. subscribers US TAM from MBO Study (in MM) Addressable Market (US): 83 Million High -Tech Detectives Story Tellers 83.0MM 2.1 (1) Self- Discoverers Expert Researchers Total Market: 120 Million Subscribers to Ancestry Websites in the U.S. Total Addressable Market in the U.S. (1) Includes 1.5MM US Ancestry subscribers and 0.6MM Archives, Fold3 and Newspapers.com subscribers 14

15 How strong a competitive position? A clear category leader with tremendous brand awareness US Monthly Unique Visitors (# of Monthly Unique Visitors in millions) % Unaided Brand Awareness % 50% 25% 38% 33% 25% 33% 67% 56% 58% 57% 35% 0 0% MyHeritage Ancestry owned websites Source: comscore US data as of July 2013 Notes: MyHeritage acquired Geni in November 2012 *Other websites had less than 2% unaided brand awareness Source: Ipsos study; 20 minute online survey conducted be Ipsos asking sample set the question: Are you aware of any organizations, websites, or software that you can use to research and learn about your family history?" 15

16 Find A Grave is valuable content 110mm records and growing 1.7mm added per month We ve indexed 43mm Find A Grave records 8 th most successful database in terms of success events 2.7% of all content discoveries in Q4 (trees are separate) 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Records Added / Year Find A Grave Content on Ancestry.com Pageviews Searches Events 16

17 Our subscribers behave consistently across cohorts Over time, the survival rates of our subscribers have been relatively steady (1) After 1 year from original subscription date, typically 38-48% of subscribers remain Recent performance has been consistent with long-term trends Time from Original Subscription Typical Survival Rate 50% 40% 30% 20% 2,500 2,000 1,500 1,000 T+1 year ~38-48% 10% 500 T+2 years ~27-36% T+3 years ~26-32% T+4 years ~26-28% 0% (2) Sub Inventory (right axis) Year 1 Year 2 Year 3 Year 4 (1) The survival rates shown above show the percentage of GSAs (+ Winbacks) remaining after year 1, year 2, etc. tracked by initial GSA cohort (2) Ancestry.com subscribers excluding Archives subscribers 17

18 High lifetime revenue remains steady ($) (000s) $400 2,500 $350 $300 $335 $340 $330 $336 $322 $327 $333 $336 $338 $334 $340 $337 $335 $330 $322 $307 $304 $305 $307 $312 $312 $318 $321 $314 $310 $294 2,000 $250 $200 $150 1,500 1,000 $100 $50 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q (1) Actual Projected Subscriber Inventory (2) (1) LTR values are estimated using the most recent renewal trends along with current pricing (2) Ancestry.com subscribers excluding Archives subscribers 18

19 Financial Overview

20 Our track record of consistent performance continues /30/ LTM 6/30/ LTM 6/30/ years of subscriber, revenues and Adjusted EBITDA growth Consistent growth through recessionary cycles Ending Subscribers Revenues (1) Adjusted EBITDA ( 000s) 2,715 ($ in millions) $533 ($ in millions) $207 $488 $ ,016 1,703 1,395 1,066 $123 $140 $151 $166 $198 $225 $301 $400 $22 $24 $30 $43 $63 $72 $101 $145 Ancestry.com Archives, Fold3, Newspapers.com Recessionary Period (1) 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. The reconciliation to GAAP revenue can be found on the company s website 20

21 Consistent reliable performance Strong revenue and subscriber growth Significant revenue visibility into expected revenues Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q % $22 +38% $23 Revenues (1) ($ in millions) $79 $83 $91 +42% $27 $57 $60 $64 +36% $27 +30% $24 +25% $21 +20% $18 $101 $103 $104 $109 $74 $79 $83 $91 +18% $18 +25% $25 +27% $28 Q1 13 Q % $26 +16% $19 $119 $128 $132 $135 $138 $101 $103 $104 $109 $119 Ancestry.com Ending Subscribers ( 000s) Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q % % 329 1,377 1,395 1,028 1, % % % % 308 1,615 1,672 1,701 1,703 1,395 1,212 1,311 1, % % % % 313 Q1 13 Q % % 107 2,005 2,020 2,016 2,096 2,112 1,870 1,615 1,701 1,870 2,005 1,672 1,703 Adj. EBITDA ($ in millions) Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q % $11 +59% $11 +51% $9 $29 $30 $26 $18 $19 $17 +52% $13 +38% $11 +37% $11 $38 $40 $41 $25 $29 $30 +25% $6 $32 $26 $43 12% $5 28% $11 +30% $12 $51 $53 $38 $40 $41 Q1 13 Q % $17 $49 $32 +26% $11 $54 $43 Quarter Actuals Prior Year Quarter Actuals (1) 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. The reconciliation to GAAP revenue can be found on the company s website 21

22 Resulting in 2 quarters of LTM revenue and EBITDA growth LTM Revenue (1) ($ in millions) Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 LTM Adjusted EBITDA ($ in millions) Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 (1) 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. The reconciliation to GAAP revenue can be found on the company s website 22

23 High free cash flow conversion ($000 s) Q LTM Adj. EBITDA, as reported 100, , , ,459 Less: Taxes 11,128 3,683 27,156 (12,099) Less: Content Capex 13,874 20,408 23,538 19,532 Less: Facilities and Technology Capex 12,968 13,895 20,776 23,849 Pre-Interest Expense FCF 60, , , ,704 % Margin (1) 21% 27% 22% 33% (1) Calculated as a percentage of non-gaap revenues. 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. The reconciliation to GAAP revenue can be found on the company s website 23

24 Historical capital expenditures We have invested in future growth through capitalized content expenses (1) and fixed asset capital expenditures (2) ($ in millions) $50 14% $44 $45 15% $40 10% 10% $34 $21 12% $30 $20 $10 $23 $11 $12 $21 $23 $12 $13 $9 $9 9% 9% $27 $14 $13 $20 $14 9% $24 9% 6% 3% $ E (1) (2) (3) Capitalized Content Expense Fixed Asset CapEx CapEx % of Rev 0% (1) Capitalization of content database costs (2) Purchase of property and equipment (3) 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. The reconciliation to GAAP revenue can be found on the company s website 24

25 Pro forma capitalization (1) Further Adjusted EBITDA for LTM 6/30/2013 incorporates adjustments to the reported EBITDA as shown on the Further Adjusted EBITDA reconciliation table on page 25 25

26 Further Adjusted EBITDA reconciliation $MM Notes LTM 9/30/12 LTM 12/31/12 LTM 6/30/13 Adjusted EBITDA as Reported $169.4 $178.8 $207.5 M&A Related Costs (a) Non-recurring expenses (b) Other non-cash items (c) (0.8) (1.2) (2.0) Exit activities (d) Payment to Sponsors (e) 0.8 Total Adjustments $3.6 $3.3 $5.4 Further Adjusted EBITDA $173.0 $182.1 $

27 Growth drivers Content Foundational agreement between FamilySearch and Ancestry.com to digitize over 1.5 billion new records, expected starting in 2014 Agreement accelerates growth in Germany, Mexico, Poland, Brazil and Italy Product Launch of Story View product experience, creating a shareable and highly engaging story about your family Continued traction on mobile, with over 9 million downloads and a steady 4.5 star rating AncestryDNA creates a comprehensive family history experience through an ethnicity analysis and cousin matches Marketing Strong success of Who Do You Think You Are? now airing on TLC Consistent focus on marketing efficiency International Continued steady revenue and EBITDA performance across established markets Expansion of German Team and continued success in content agreements 27

28