DNAprint Genomics (DNAG)

[mingwan0]

What are the most popular hobbies in the US?

http://www.courierpress.com/ecp/community/article/0,1626,ECP_737_2590933,00.html

"The study of genealogy and family history is now the second most popular hobby (after gardening) in the United States..."

http://www.senate.gov/~hatch/index.cfm?Fuseaction=Services.Genealogy&IsTextOnly=True

"Experts say that in the United States, genealogy is now the second most popular hobby next to gardening. It is believed that more that 80 million Americans are currently actively searching for more information about their ancestors."

That's a big number. You can now roughly estimate the total size of the Ancestry market (excluding DNA Witness) by making some simplistic assumptions. The size (over time) will be the number of tests completed multiplied by the price per test (ignoring subsequent generations). I give my estimates below. If you disagree use your own numbers and/or your own methodology.

The number of tests can be arrived at by taking a percentage of the 80 million, as not everybody will want to use it. However. some people will order the test for multiple family members as we have seen in practice. Assuming that the latter is a relatively small percentage of the total and that only 1% of people interested in genealogy order the test. That's still 800,000 tests.

The price per test for Ancestry 2.5 is $219. Ancestry 2.0 was cheaper but the original price plus the upgrade is more expensive. Let's say for the sake of argument that the average price for all the tests over a period of time is $180.

So the total market over time is 800,000 x 180 = $144 million.

Over what period of time is this money received? Let's ignore discounted cash flows and the like and suppose that we will incur this revenue over a 70 year period. That's still just over $2 million per year.

We made $565,000 from Ancestry during the first nine months of 2003. How much would be make in the full year? If we pro-rata the nine month earnings you would say $734,000. However, we reasonably expect that there will be higher volume of orders in the last three months so it could be more than this. It looks like a minimum of some 4,600 tests will be included in 2003 figures ($734,000 divided by $158 per test). What would the typical gross revenue be in a typical year? How many tests are implied in a typical year? To achieve the revenues postulated above we would need sales volume of some 11,400 tests per year.

Don't forget this is assuming only 1% of the market and includes the US only. It seems to me that on a reasonable guess basis Ancestry on its own could make a significant contribution towards operating costs.