Ancestry.com has a dominant share of the family history research market. In business for 20 years, the company has focused for the last 12 on making rich online content available to its subscribers. They already have over a million customers and offer a wide variety of solutions from document search to software and DNA testing.
They have over four billion records as well as user-generated content. Ancestry.com is also growing internationally with customers in the United Kingdom, Canada, Australia, Denmark, France and Italy. (E-tailing has changed the way consumers do nearly everything. Do you know how to pick the best retailer? Read Choosing The Winners In The Click-And-Mortar Game.)
Recession Proof Roots
The real story is the company's ability to grow, even during the recession. Revenue picked up 12.7% from 2004 to 2008 to $197.6 million. Genealogy research is a recession beater - who knew? One major benefit to the business is the ability to take free, public data, digitize and index it and make it available online. Other organizations are entering the market and some offer access to the same data free of charge.
While many online vendors rely heavily on advertising, Ancestry.com's main source of income is subscriptions. As far as current subscribers are concerned, they may ask themselves "with all the money I'm shelling out in fees, I may as well own the company."
Does Ancestry.com have what it takes to sustain growth and deliver for new stockholders? According to the Securities Exchange Commission filing, the company hopes to raise $75 million with the IPO. This will go a long way toward expanding and developing new offerings.
The initial financial data published with the SEC document indicates increasing revenues, a concerted effort to increase marketing and overall stable sustained growth. On the negative side there is a significant amount of debt to pay back.
As with any service organization, there are little or no hard assets. Even the content acquired for publication online is often public information that original owners can easily publish. Subscribers are often bombarded with multiple subscription requests and hunt for the most economical methods for conducting research.
The Bottom Line
Going public is a gutsy move for the company, but one likely to pay off as long as customers continue to research their roots. If there is room in your portfolio for a high grown investment you may be able to build your nest egg along with your family tree. (Shopping from the comfort of your couch has major benefits - and some unpleasant side effects. Check out Shopping Online: Convenience, Bargains And A Few Scams.)