Ancestry.com Rocks Earnings; Bigger Gains Ahead?

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Ancestry.com is back up on reports the company is shopping itself to a private equity firm. This move makes tons of sense, as there's a lot of potential in the company to continue to drive its tremendous subscription service and boost the all-important average revenue per user. So, looking at the first quarter, we see a 20% growth in subscriptions, which is not a big surprise. The company had pre-announced hitting 2 million subscribers, and this number might rise in the future.

Better yet, the test of a great subscription model is being able to test out new strategies, and I did like seeing that Ancestry has increased subscriber lifetime value 10% with some longer-term packaging. The company mentioned 27% of subscriptions are month-to-month, while that number was 33% a year ago.

The company launched its DNA initiative in May, which is still in the testing stage. Eric thinks either that, or another high-end service like it, could be huge for the company both in terms of retention and possibly opening up higher-end subscriptions.

Finally, the company continued to grow international revenue faster than U.S. revenue, with non-U.K. revenues growing at 22% year over year. The company sounded a bit vague on new marketing measures and effectiveness following the cancellation of its hit tie-in with Who Do You Think You Are. But I think that concern isn't enough to derail their overall trajectory.  At the end of the day, this company will likely be good buyout bait and a win for investors. 

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Austin Smith and Eric Bleeker have no positions in the stocks mentioned above. The Motley Fool owns shares of Ancestry.com. Motley Fool newsletter services recommend Ancestry.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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