Ancestry.com acquired for $1.6 Billion – What ??

The Global Economy

 

Poring through the financial news this Monday morning, something caught my eye. www.ancestry.com (ACOM) was being acquired by a European private equity firm for $1.6 Billion. Wow – ancestry.com for 1.6B ?? That seemed like an awfully large number for what (in my opinion at least) was a very interesting website but used purely for “academic knowledge” or recreational purposes. And if they got acquired for $1.6B, what were their revenues or profits ? I could not even imagine what kind of a business model or revenue model they had, and how on earth they managed to get acquired for such a large sum. This prompted me to go digging into their financial statements (they are a public company), and boy, was I surprised with what I found. They have built a truly fascinating business, gone to great lengths to access and index public records of the last 200 years from various governments, and done so much more. And what surprised me even more is their revenue model, their numbers and the amount of public interest in this topic. You learn something every day !!

 

These are the impressive numbers of a company that other than your occasional TV advertisements, largely flies under the radar of most people. Highlights listed below, but you can get more details from the attached graphics of their public filings.

 

 

 

 

 

 

 

– Over 2M people are paid subscribers to ACOM. They pay on average about $18/month for their subscription

 

– Over 360,000 people were new subscribers just in the last quarter, 20% increase from last year

 

– Their annual revenues are in the range of $460 to $500 M

 

– EBITDA of $170M and Net Profits of about $80M. This gives them an earnings multiple of 20 for the sale price of $1.6B – reasonable, for such a profitable and growing business

 

 

Who knew !!  Some of the company’s non-financial achievements are equally impressive below. Question – did you think or believe Ancestry.com was such a nice business – please post your thoughts.

 

 

 

 

3 Comments

  • Mary T

    Reply Reply October 23, 2012

    This is amazing,would not have known. But i don’t understand why you think a 20 multiple is reasonable

    • Hari Swaminathan

      Reply Reply October 26, 2012

      Hi Mary, not sure if you mean 20 multiple in general or specifically for ACOM ? As a general case, Internet based products and services have a multiple between 15 and 40. There are of course companies outside this range also. And ACOM was paid a 30% premium on its share price, so its real multiple is somewhere around 15. This is a very reasonable multiple for such a nice business, based on acquisitions in this space.

      • challe

        Reply Reply November 23, 2012

        Nice post. It is a great company.

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