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Best idea Ancestry.com (NASDAQ:ACOM) reported fantastic first-quarter results Wednesday, blowing by consensus estimates on both the top- and bottom-line. Adjusted EBITDA and subscriber growth numbers also came in better than expectations. We are reiterating our $41 per share fair value estimate on the company and expect the firm to catch a bid tomorrow on its better-than-expected outlook, recent roll-up of competitor Archives.com, commentary regarding the high probability of NBC extending its top-viewing TV show Who Do You Think You Are?, and excitement around the marketing initiatives for a searchable database of the US Federal 1940 Census, the biggest catalyst for genealogical research in the past decade.

The company's subscribers grew an impressive 16% during the period and 10% sequentially. Total revenue jumped 19%, with core Ancestry.com websites revenue increasing 22% (above the highest estimate the Street). We were quite pleased with the growth and believe the performance should help to mitigate concerns about the "genealogy category," in general, and future subscriber expansion at Ancestry.com, specifically. Ending subscribers for the first quarter totaled 1.87 million, and management expects this number to swell to as much as 1.98 million at the end of the second quarter, nearly 6% sequential growth!

We believe management is conservative in its subscriber guidance for the remainder of the year, as all commentary on the call spoke to continued subscriber outperformance, in our opinion. We'd look for ending subscribers to be well over 2 million by the end of the year (management is looking for 1.985 million), and we'd point to some of the unique marketing initiatives that management highlighted on the call (a state-by-state e-mail marketing program of the 1940 census) and the tremendous ongoing interest by new users looking to find relatives in the 1940 US Census. As it relates to other internals, gross subscriber additions were solid, monthly churn was held in check (3.6% versus 3.7% in the year-over-year period and 3.8% in the previous sequential quarter), and subscriber acquisition costs came in lower than management's expectations.

Looking forward, we think low-20% revenue expansion should be expected during 2012, and management's guidance for 17.6% top-line growth on the high end should be viewed as somewhat conservative (this quarterly beat highlights the team's conservatism). Not only did the firm post 19% growth in its first quarter, but the period excludes any positive impact from the release of the 1940 US Federal Census. As we look into 2013, Ancestry.com will have integrated its new purchase of Archives.com, and investors should look for total subscribers to surpass the mid-2 million mark (there are currently about 380,000 Archives.com subscribers that can be upsold). We're big fans of this positive cash-flow acquisition and think it further solidifies Ancestry.com's position in the domestic market, increasing not only the stickiness of existing subscribers but also bolstering the company's pricing power, which it has yet to really flex given the value of its searchable database. The integration of Archives.com will also have a significant and positive impact on Ancestry.com's long-term competitive position.

And finally, we're big fans of the company's newly-announced $100 million share buyback program, which will be value-creating on the basis of the relationship between our fair value and the company's current lower stock price - this buyback program represents 8.7% of current shares outstanding. Combined with more than 30% of the float short, there is some impressive buying power out there.

<< View our 16-page Equity Report on Ancestry.com (ACOM)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Valuentum employees may have long or option positions in the firms mentioned in this article.