Why Ancestry.com's Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online family history expert Ancestry.com (NAS: ACOM) were flying high today, gaining as much as 19% in intraday trading after the company reported first-quarter results.
So what: The high-level numbers looked good for the first quarter of 2012. Ancestry.com's total revenue for the quarter was $109 million, up 19% from last year. The growth was driven by a 16% year-over-year jump in subscribers and a slight uptick in revenue per member. Earnings per share clocked in at $0.30, which was well ahead of the $0.23 that Wall Street analysts were expecting.
Now what: A big part of the excitement over the quarter is the fact that the trend in the business looks good compared to a disappointing fourth quarter. As compared to the prior quarter, subscribers were up, monthly churn was down, subscriber acquisition costs were down, and average monthly revenue per subscriber was up. As to whether the trend will continue, that remains to be seen. The business has had its ups and downs -- even in the space of just the past year -- so investors will want to keep an eye on whether it's able to build on this positive period in the next quarter.
Meanwhile, Ancestry.com also announced that it's boosting its heft by spending $100 million to acquire competitor Archives.com.
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