Shutterstock Reports Fourth Quarter and Full Year 2012 Financial Results

-- Fourth quarter revenue increases 42% from prior year

-- Full year revenue increases 41% from prior year

-- Adjusted EBITDA of $11.3 million in fourth quarter

-- Quarterly image downloads reach record of 21.4 million

-- Collection exceeds 23 million images and video clips

-- Number of active customer accounts surpasses 750,000

Feb 21, 2013, 16:05 ET from Shutterstock, Inc.

NEW YORK, Feb. 21, 2013 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) a leading global provider of commercial digital imagery, today announced financial results for the fourth quarter and full year ended December 31, 2012.  

(Logo: http://photos.prnewswire.com/prnh/20120514/NY06418LOGO )

"Our fourth quarter results capped a very strong year for Shutterstock," said Founder and CEO Jon Oringer. "We are very pleased with our progress on product innovation, global market penetration and financial performance over the course of 2012."

Operating Metrics

Three Months Ended December 31, 

Twelve Months Ended December 31, 

2012

2011

2012

2011

(in millions, except revenue per download)

(in millions, except revenue per download)

Number of paid downloads

21.4

16.2

76.0

58.6

Revenue per download

$                          2.30

$                          2.14

$                          2.23

$                          2.05

Images in collection (end of period)

23.3

17.4

23.3

17.4

Revenue

Revenue for the fourth quarter was $49.2 million, a 42% increase from the fourth quarter of 2011.  Revenue for the full year was $169.6 million, a 41% increase from 2011. 

Net Income

Net income for the fourth quarter of 2012 was $29.0 million as compared to $5.8 million in the fourth quarter of 2011. Net income available to common shareholders/members for the fourth quarter of 2012 was $28.7 million or $0.88 per share on a fully diluted basis as compared to $4.3 million or $0.21 per share on a fully diluted basis in the fourth quarter of 2011.

Net income for the full year 2012 was $47.5 million as compared to $21.9 million in 2011.  Net income available to shareholders/common members for the full year was $42.6 million or $1.79 per share on a fully diluted basis as compared to $13.4 million or $0.64 per share on a fully diluted basis in 2011.

Both net income and net income available to common shareholders/members for the fourth quarter and the full year include a one-time tax benefit of $28.8 million related to the Company's reorganization from an LLC to a C-corporation on October 5, 2012.

Non-GAAP net income for the fourth quarter of 2012 was $6.6 million as compared to $6.5 million in the fourth quarter of 2011. Non-GAAP net income for the full year of 2012 was $28.0 million as compared to $23.9 million in 2011.

Non-GAAP net income excludes a one-time tax benefit related to the Company's reorganization from an LLC to a C-corporation on October 5, 2012, non-cash equity based compensation expense and the tax benefit for deductible non-cash equity based compensation. 

Adjusted EBITDA

Adjusted EBITDA for the fourth quarter of 2012 was $11.3 million as compared to $7.3 million in the fourth quarter of 2011.  Adjusted EBITDA for the full year 2012 was $34.9 million as compared to $26.5 million in 2011.

Cash

The Company's cash balance was $102.1 million at December 31, 2012 as compared to $14.1 million as of December 31, 2011.  The Company also had short-term debt of $6.0 million and no long-term debt as of December 31, 2012.  The Company generated $12.6 million of cash from operations in the fourth quarter of 2012 and $45.5 million of cash from operations in the full year 2012. 

Also, during the fourth quarter, the Company incurred planned capital expenditures related primarily to the purchase of computer servers and networking equipment, and to a lesser extent leasehold improvements and patent acquisitions, resulting in a cash outlay of approximately $0.6 million. Cash outlays in this category for the full year of 2012 totaled $4.1 million.

Free cash flow for the fourth quarter of 2012 was $12.1 million as compared to $9.4 million in the fourth quarter of 2011.  Free cash flow for the full year of 2012 was $41.5 million as compared to $36.1 million in 2011.

On October 16, 2012, the Company completed an initial public offering that resulted in net proceeds to the Company of $81.8 million after deducting underwriting discounts and commissions. 

Financial Outlook

The Company's current financial and operating expectations for the first quarter of 2013 and full year 2013 are as follows:

First Quarter 2013

  • Revenue of $48.5 - $50.5 million
  • Adjusted EBITDA of $9.0 - $10.0 million
  • Non-cash equity-based compensation expense of approximately $2 million
  • An effective tax rate of approximately 40%

Full Year 2013

  • We are increasing our expectations for revenue to $213 - $219 million
  • We are increasing our expectations for adjusted EBITDA to $44.0 - $46.5 million
  • Non-cash equity-based compensation expense of approximately $8 million
  • An effective tax rate of approximately 40%
  • Capital expenditures related to network servers and technology of approximately $5 million
  • Capital expenditures for leasehold improvements related to a headquarters office expansion/relocation of approximately $6 million

Earnings Teleconference Information

The Company will discuss its fourth quarter and full year 2012 financial results during a teleconference today, February 21, 2013, at 5:00 PM ET.  The conference call can be accessed at (888) 396-2298 or (617) 847-8708 (outside the US), conference ID# 220 161 30.  The call will also be broadcast simultaneously at http://investor.shutterstock.com.

Following completion of the call, a recorded replay of the webcast will be available on Shutterstock's website.  To listen to the telephone replay, call toll-free (888) 286-8010 or (617) 801-6888 (outside the US), conference ID# 854 040 29. The telephone replay will be available from 7:00 PM ET February 21 through March 7, 2013.  Additional investor information can be accessed at http://shutterstock.com.            

Non-GAAP Financial Measures

Shutterstock considers adjusted EBITDA, non-GAAP net income, and free cash flow to be important financial indicators of the Company's operational strength and the performance of its business. Shutterstock defines adjusted EBITDA as earnings adjusted for interest income/(expense), income taxes, depreciation, amortization and non-cash equity based compensation; non-GAAP net income is net income excluding a one-time tax benefit due to a reorganization to a corporation, non-cash equity based compensation and the tax benefit for deductible non-cash equity based compensation; and free cash flow as cash provided by (used in) operating activities adjusted for capital expenditures and interest income/(expense). These figures are non-GAAP financial measures and should be considered in addition to results prepared in accordance with generally accepted accounting principles (GAAP), and should not be considered as a substitute for, or superior to, GAAP results. In addition, adjusted EBITDA, non-GAAP net income, and free cash flow should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.

A reconciliation of the differences between adjusted EBITDA, non-GAAP net income, and free cash flow, and the most comparable financial measure calculated and presented in accordance with GAAP, is presented under the heading "Reconciliation of Non-GAAP Financial Information to GAAP" immediately following the  Consolidated Statements of Cash Flows included below.

Historical Operating Metrics

12/31/10

3/31/11

6/30/11

9/30/11

12/31/11

3/31/12

6/30/12

9/30/12

12/31/12

Number of paid downloads

12.5

13.3

14.4

14.8

16.2

17.6

18.3

18.7

21.4

Revenue per download

$        1.91

$        1.92

$        2.01

$        2.10

$        2.14

$        2.13

$        2.22

$        2.26

$        2.30

Images in collection (end of period)

13.3

14.4

15.3

16.2

17.4

18.8

20.2

21.7

23.3

Non-Cash Equity Based Compensation

Included in the accompanying financial results are expenses related to non-cash equity based compensation, as follows (in thousands):

Three Months Ended December 31,

Twelve Months Ended December 31, 

2012

2011

2012

2011

Cost of revenue

$            219

$                -

$            219

$                -

Sales and marketing

783

-

783

-

Product development

1,696

-

1,696

-

General and administrative

4,860

732

7,687

2,122

   Total

$         7,558

$            732

$       10,385

$         2,122

Amortization of Intangible Assets and Depreciation

Included in the accompanying financial results are expenses related to the amortization of intangible assets, as follows (in thousands):

Three Months Ended December 31,

Twelve Months Ended December 31, 

2012

2011

2012

2011

Cost of revenue

$                  8

$              8

$               32

$              32

General and administrative

48

53

213

212

   Total

$                 56

$            61

$             245

$            244

Included in the accompanying financial results are expenses related to depreciation, as follows (in thousands):

Three Months Ended December 31,

Twelve Months Ended December 31, 

2012

2011

2012

2011

Cost of revenue

$               411

$          218

$          1,394

$            627

General and administrative

284

210

1,001

649

   Total

$               695

$          428

$          2,395

$          1,276

About Shutterstock

Shutterstock is a leading global provider of high-quality licensed photographs, vectors, illustrations and videos to businesses, marketing agencies and media organizations around the world. Headquartered in New York City, Shutterstock works closely with its growing contributor community of photographers, videographers, illustrators and designers to curate a global marketplace for royalty-free imagery. Shutterstock adds tens of thousands of rights-cleared images each week, and with more than 23 million images currently available, the Company recently surpassed 250 million image downloads. Shutterstock also owns Bigstock, a value-oriented stock media agency.

For more information, please visit http://www.shutterstock.com, and follow Shutterstock on Twitter or on Facebook.

Safe Harbor Provision

The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding the Company's expectations, predictions, beliefs, hopes, intentions or strategies regarding the future.  Forward looking statements include statements regarding the Company's business strategy, timing of, and plans for, the introduction of new products and enhancements, future sales, market growth and direction, competition, market share, revenue growth, operating margins and profitability.  All forward looking statements included in this document are based upon information available to the Company as of the date hereof.  Actual events or results could differ materially from those contained in the Company's current projections or forward-looking statements. It is routine for internal projections and expectations to change as the quarter progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change prior to the end of the quarter. Although these expectations may change, the Company assumes no obligation to update any such forward looking statement, whether as a result of new information, future developments or otherwise.  Factors that could cause or contribute to such differences include the Company's inability to continue to attract customers and contributors to its online marketplace for commercial digital imagery; a decrease in repeat customer purchases; a reduction in customer spending; a decrease in contributor participation in the Company's marketplace; the Company's inability to evaluate its future prospects; competitive factors; the Company's inability to prevent the misuse of its imagery; assertions by third parties of infringement or other violations of intellectual property rights by the Company; the Company's inability to increase market awareness of the Company and its services; the Company's inability to increase the percentage of its revenues that come from larger companies; the Company's inability to effectively manage its growth; the Company's inability to continue expansion into international markets; failure to respond to technological changes or upgrade the Company's website and technology systems; failure to adequately protect the Company's intellectual property; general economic conditions worldwide; and other factors and risks discussed in the section entitled "Risk Factors" in the Company's latest Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 20, 2012 and other reports filed by the Company from time to time with the Securities and Exchange Commission.  Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

Shutterstock, Inc.

Consolidated Balance Sheets

(In thousands, except par value amount)

(Unaudited)

December 31, 2012

December 31, 2011

ASSETS

Current assets:

Cash and cash equivalents

$                          102,096

$                          14,097

Credit card receivables

1,373

964

Accounts receivable, net

1,738

647

Prepaid expenses and other current assets

2,008

1,554

Deferred tax assets

18,760

644

Due from related party

-

168

Total current assets

125,975

18,074

Property and equipment, net

5,255

3,844

Intangibles, net

1,040

1,029

Goodwill

1,423

1,423

Deferred tax assets

13,239

58

Other assets

182

427

Total assets

$                          147,114

$                          24,855

LIABILITIES, REDEEMABLE PREFERRED MEMBERS' INTEREST AND

STOCKHOLDERS' EQUITY/MEMBERS' DEFICIT

Current liabilities:

Accounts payable

$                             2,606

$                            1,838

Accrued expenses

15,606

10,875

Contributor royalties payable

6,984

5,261

Deferred revenue

37,934

28,451

Term loan debt

6,000

-

Other liabilities

161

85

Total current liabilities

69,291

46,510

Other non-current liabilities

889

2,548

Total liabilities

70,180

49,058

Commitment and contingencies

Redeemable preferred members' interest

-

33,725

Stockholders' equity/members' deficit:

Common members' interest 

-

5,699

Common stock, $0.01 par value; 200,000 shares authorized and

33,513 shares outstanding as of December 31, 2012; no shares

were authorized and outstanding as of December 31, 2011

335

-

Additional paid-in capital

48,282

-

Retained earnings/accumulated deficit

28,317

(63,627)

Total stockholders' equity/members' deficit

76,934

(57,928)

Total liabilities, redeemable preferred members' interest, and

stockholders' equity/members' deficit

$                          147,114

$                          24,855

 

Shutterstock, Inc.

Consolidated Statements of Operations

(In thousands, except for share and per share information)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Revenue

$             49,157

$             34,728

$            169,616

$            120,271

Operating expenses:

Cost of revenue

18,794

12,975

64,676

45,504

Sales and marketing

12,022

9,600

45,107

31,929

Product development

5,675

2,711

16,330

9,777

General and administrative

9,709

3,335

21,651

10,171

Total operating expenses

46,200

28,621

147,764

97,381

Income from operations

2,957

6,107

21,852

22,890

Other (expense)/income, net

(49)

2

(47)

10

Income before income taxes

2,908

6,109

21,805

22,900

(Benefit)/provision for income taxes

(26,111)

321

(25,738)

1,036

Net income

$             29,019

$               5,788

$             47,543

$             21,864

Less:

Preferred interest distributed

2,950

956

9,000

7,144

Preferred interest accretion

-

-

-

4,058

Undistributed (loss) earnings to participating shareholder/members

(2,667)

491

(4,086)

(2,692)

Net income available to common shareholders/members

$             28,736

$               4,341

$             42,629

$             13,354

Net income (loss) per basic share available to common shareholders/members:

Distributed

$                 0.27

$                 0.14

$                 1.14

$                 1.03

Undistributed

0.61

0.07

0.65

(0.39)

Basic

$                 0.88

$                 0.21

$                 1.79

$                 0.64

Net income (loss) per diluted share available to common shareholders/members:

Distributed

$                 0.27

$                 0.14

$                 1.13

$                 1.03

Undistributed

0.61

0.07

0.66

(0.39)

Diluted

$                 0.88

$                 0.21

$                 1.79

$                 0.64

Weighted average shares outstanding:

Basic

32,497,727

20,849,242

23,785,299

20,849,242

Diluted

32,681,570

20,849,242

23,833,223

20,849,242

Shutterstock, Inc.

Reconciliation of Non-GAAP Financial Information to GAAP

(In thousands, except for share and per share information)

(Unaudited)

Unaudited Supplemental Data

The following information is not a financial measure under generally accepted accounting principles (GAAP). In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with GAAP, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing and financing activities as there may be significant factors or trends that it fails to address. We present this financial information because we believe that it is helpful to some investors as one measure of our operations. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our results with our results from other reporting periods and with the results of other companies.

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Net income 

$         29,019

$           5,788

$         47,543

$         21,864

Add/(less):

(a)

Depreciation and amortization

751

489

2,640

1,520

(b)

Non-cash equity based compensation

7,558

732

10,385

2,122

(c)

Interest (income)/expense, net

49

(2)

47

(10)

(d)

Provision (benefit) for income taxes

(26,111)

321

(25,738)

1,036

Adjusted EBITDA (1)

$         11,266

$           7,328

$         34,877

$         26,532

Adjusted EBITDA per diluted common share 

$             0.34

$             0.35

$             1.46

$             1.27

Adjusted EBITDA per diluted common share (2)

$             0.34

$             0.26

$             1.46

$             0.94

Weighted average shares 

32,681,570

20,849,242

23,833,223

20,849,242

Adjusted weighted average shares (2) 

32,681,570

28,338,280

23,833,223

28,338,280

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Net income

$         29,019

$           5,788

$         47,543

$         21,864

(a)

One-time tax benefit due to reorganization to a corporation

(28,811)

-

(28,811)

-

(b)

Non-cash equity based compensation

7,558

732

10,385

2,122

(c)

Non-cash equity based compensation tax benefit

(1,136)

(14)

(1,136)

(41)

Non-GAAP net income

$           6,630

$           6,506

$         27,981

$         23,945

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Net cash provided by operating activities

$         12,646

$         10,083

$         45,534

$         39,547

Interest income/(expense), net

(49)

2

(47)

10

Capital expenditures

(601)

(675)

(4,062)

(3,442)

Free cash flow

$         12,094

$           9,406

$         41,519

$         36,095

Adjusted EBITDA

$         11,266

$           7,328

$         34,877

$         26,532

Add/(less):

(a)

Changes in operating assets and liabilities

6,131

2,761

15,899

13,492

(b)

Provision for income taxes

26,111

(321)

25,738

(1,036)

(c)

Deferred income taxes

(31,049)

17

(31,300)

253

(d)

Provision for doubtful accounts/chargeback reserve

195

296

326

296

(e)

Other (income)/expense, net

(49)

2

(47)

10

(f)

Amortization of financing fees

41

-

41

-

Net cash provided by operating activities

$         12,646

$         10,083

$         45,534

$         39,547

(1)  Earnings/(loss) before interest income/(expense), income taxes, depreciation, amortization, non-cash equity based 

       compensation and other non-cash charges.

(2) The adjusted shares give effect to our reorganization from a New York limited company to a Delaware corporation and includes  

     incremental shares for profit interest awards and preferred shares that are excluded from the weighted average shares.

 

 

SOURCE Shutterstock, Inc.



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