Shutterstock Reports Fourth Quarter And Full Year 2015 Financial Results

Feb 24, 2016, 07:02 ET from Shutterstock, Inc.

NEW YORK, Feb. 24, 2016 /PRNewswire/ --

Full Year 2015 Highlights:

  • Revenue increased 30% to $425.1 million
  • Adjusted EBITDA increased 19% to $84.7 million
  • Non-GAAP Net Income per diluted share increased 14% to $1.22
  • Repurchased $15.6 million of stock in the fourth quarter
  • Paid downloads increased 17% and revenue per download increased 10%
  • Image collection expanded 53% to 71.4 million images and video collection expanded 61% to 3.7 million video clips
  • Acquired PremiumBeat and Rex Features in January 2015

Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial imagery and music, today announced financial results for the fourth quarter and full year ended December 31, 2015.

Founder and CEO Jon Oringer said "2015 was another year of sustained operating momentum and strong financial growth as Shutterstock continued to focus on providing the highest quality content and an unmatched user experience to our expanding customer base.  We significantly increased our traditional image and video libraries while diversifying our product offering to include extensive music and editorial content, further meeting the evolving needs of our diverse users.  We continued to innovate, building on our industry leading search capabilities and introducing new workflow tools to increase engagement with our customers. In 2016, we once again expect to deliver strong financial results as we invest in new technology solutions and expanded product offerings that will enable us to drive long-term value."

FULL YEAR RESULTS

Revenue

Full year revenue of $425.1 million increased $97.2 million or 30% as compared to the full year 2014, primarily due to a 17% increase in the number of paid downloads, mainly due to new customers, as well as from a 10% increase in revenue per download driven by growth in both on-demand offerings and enterprise sales.  Current year results also included contributions from PremiumBeat and Rex Features, which were acquired during the first quarter of 2015.  Excluding contributions from these acquired businesses and the impact of foreign currency, total Company revenue growth was approximately 27% in 2015.

Adjusted EBITDA

Adjusted EBITDA of $84.7 million increased $13.6 million or 19% as compared to the full year 2014 as the 30% revenue growth was partially offset by an increase in operating expenses primarily from higher royalty costs associated with the increase in paid downloads.  Additionally, 2015 included higher personnel and marketing expenses to support growth, severance costs associated with executive management and operating costs from businesses acquired during the first quarter of 2015.  Excluding the contributions from these businesses, as well as severance costs associated with executive management and the impact of foreign currency, Adjusted EBITDA growth was approximately 31% in 2015 as compared to 2014.  Adjusted EBITDA is defined as net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.

Net Income

Net income available to common stockholders of $19.6 million ($0.54 per diluted share) for the full year decreased 11% as compared with $22.0 million ($0.61 per diluted share) a year ago as the improved operating performance was partially offset by an increase in non-cash equity-based compensation expense, changes in the fair value of contingent consideration, amortization of acquisition related intangible assets and an unrealized non-cash loss associated with foreign currency movements.

Non-GAAP net income, which excludes the after tax impact of non-cash equity-based compensation, changes in fair value of contingent consideration related to acquisitions, and amortization of acquisition related intangible assets, was $44.2 million ($1.22 per diluted share) for the full year, an increase of 14% as compared to $38.6 million ($1.07 per diluted share) in 2014.

FOURTH QUARTER RESULTS

Revenue

Fourth quarter revenue of $116.0 million increased $24.8 million or 27% as compared to the fourth quarter of 2014, primarily due to a 19% increase in the number of paid downloads, mainly due to new customers, as well as from a 7% increase in revenue per download driven by growth in both on-demand offerings and enterprise sales.  Fourth quarter results also included contributions from PremiumBeat and Rex Features, which were acquired during the first quarter of 2015.  Excluding contributions from these acquired businesses and the impact of foreign currency, total Company revenue growth was approximately 24% in the fourth quarter.

Adjusted EBITDA

Adjusted EBITDA of $25.6 million increased $3.1 million or 14% as compared to the fourth quarter of 2014 as the 27% revenue growth was partially offset by an increase in operating expenses primarily from higher royalty costs associated with the increase in paid downloads.  Additionally, the fourth quarter of 2015 included higher personnel and marketing expenses to support growth, severance costs associated with executive management and operating costs from businesses acquired during the first quarter of 2015.  Excluding the contributions from these businesses, as well as severance costs associated with executive management and the impact of foreign currency, Adjusted EBITDA growth was approximately 25% in the fourth quarter as compared to the fourth quarter of 2014.  Adjusted EBITDA is defined as net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.

Net Income

Net income available to common stockholders of $6.9 million ($0.19 per diluted share) for the fourth quarter decreased slightly as compared with $7.0 million ($0.20 per diluted share) in the fourth quarter a year ago as the improved operating performance and a decrease in non-cash equity-based compensation expense was more than offset by changes in the fair value of contingent consideration and amortization of acquisition related intangible assets.

Non-GAAP net income, which excludes the after tax impact of non-cash equity-based compensation, changes in fair value of contingent consideration related to acquisitions, and amortization of acquisition related intangible assets, was $13.8 million ($0.38 per diluted share) for the fourth quarter, an increase of 8% as compared to $12.8 million ($0.36 per diluted share) in the fourth quarter of 2014.

LIQUIDITY

The Company's cash, cash equivalents and short term investments totaled $288.4 million at December 31, 2015 as compared to $288.3 million at December 31, 2014, primarily reflecting the $85.3 million of cash generated from operations, which was partially offset by cash paid for acquisitions of approximately $65.0 million and cash used to repurchase shares of approximately $15.6 million.  The Company generated $25.9 million of cash from operations in the fourth quarter of 2015, as compared to $23.4 million in the fourth quarter of 2014.

Free cash flow was $68.3 million for the full year, an increase of $4.2 million from 2014, as the improved operating performance and lower spending on capital expenditures and content acquisitions were partially offset by working capital fluctuations.  Free cash flow was $21.0 million for the fourth quarter, a decrease of $0.4 million from the fourth quarter of 2014, as the improved operating performance was more than offset by increased capital expenditures and content acquisitions as well as working capital fluctuations.  Free cash flow is defined as cash provided by operating activities adjusted for capital expenditures and content acquisition.

STOCK REPURCHASE PROGRAM

During the fourth quarter, the Company repurchased approximately 460,000 shares of its stock, pursuant to its existing $100 million stock repurchase program, at an average price per share of $34.01 for a total of $15.6 million.  Under the stock repurchase program, management is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements. The timing and amount of any shares repurchased will be determined by the Company's management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time.

OPERATING METRICS



Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014



(in millions, except revenue per download)

Number of paid downloads


39.8



33.5



147.2



125.9


Revenue per download (1)


$

2.86



$

2.68



$

2.84



$

2.58


Images in our collection (end of period) (2)


71.4



46.8



71.4



46.8





(1)  Revenue per download metric excludes the impact of revenue not associated with content downloads.

(2)  Images are photographs, vectors and illustrations available on shutterstock.com at the end of the period. We exclude content that is not uploaded directly to our site but is available to our customers through an application program interface and certain images that may be licensed for editorial use only.

FINANCIAL OUTLOOK

The Company's current expectations for the full year 2016 are as follows:

Full Year 2016

  • Revenue of $495 - $510 million (17% - 20% growth)
  • Adjusted EBITDA of $95 - $100 million (12% - 18% growth)
  • Non-cash equity-based compensation expense of approximately $35 million
  • Capital expenditures of approximately $25 million

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 net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation; non-GAAP net income as net income excluding the after tax impact of non-cash equity-based compensation, the amortization of acquisition related intangible assets and changes in the fair value of contingent consideration related to acquisitions; and free cash flow as cash provided by/(used in) operating activities adjusted for capital expenditures and content acquisition. These figures have not been calculated in accordance with United States generally accepted accounting principles (GAAP) and should be considered in addition to results prepared in accordance with 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 Balance Sheets.

EARNINGS TELECONFERENCE INFORMATION

The Company will discuss its fourth quarter financial results during a teleconference today, February 24, 2016, at 8:30 AM ET.  The conference call can be accessed in the U.S. at (877) 306-0077 or outside the U.S. at (678) 562-4243 with the conference ID# 24579053.  A live audio webcast of the call will also be available simultaneously at http://investor.shutterstock.com.

Following completion of the call, a recorded replay of the webcast will be available in the investor relations section of Shutterstock's website. A telephone replay of the call will also be available until March 2, 2016 in the U.S. at (855) 859-2056 or outside the U.S. at (404) 537-3406 with the conference ID# 24579053.

Additional investor information can be accessed at http://investor.shutterstock.com.

ABOUT SHUTTERSTOCK

Shutterstock, Inc. (NYSE:  SSTK) is a leading global provider of high-quality licensed photographs, vectors, illustrations, videos and music to businesses, marketing agencies and media organizations around the world. Working with its growing community of over 100,000 contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 70 million images and nearly 4 million video clips available.

Headquartered in New York City, with offices in Amsterdam, Berlin, Chicago, Dallas, Denver, London, Los Angeles, Montreal, Paris, San Francisco and Silicon Valley, Shutterstock has customers in more than 150 countries. The Company also owns Bigstock, a value-oriented stock media agency; Offset, a high-end image collection; PremiumBeat a curated royalty-free music library; Rex Features, a premier source of editorial images for the world's media; and WebDAM, a cloud-based digital asset management service for businesses.

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

SAFE HARBOR PROVISION

Statements in this press release regarding management's future expectations, predictions, beliefs, goals, intentions, plans, prospects or strategies, including statements regarding Shutterstock's future financial and operating performance on both a GAAP and non-GAAP basis and statements regarding Shutterstock's ability to drive long-term value, may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors including risks related to any unforeseen changes to or the effects on liabilities, financial condition, future capital expenditures, revenue, expenses, net income or loss, synergies and future prospects; our inability to continue to attract and retain customers and contributors to our online marketplace for commercial digital imagery and music; a decrease in repeat customer purchases or in content contributed to our online marketplace; our inability to successfully operate in a new and rapidly changing market and to evaluate our future prospects; competitive factors; assertions by third parties of infringement or other violations of intellectual property rights by Shutterstock; our inability to increase market awareness of Shutterstock and our services; our inability to effectively manage our growth: failure to respond to technological changes or upgrade Shutterstock's website and technology systems; Shutterstock's inability to increase the percentage of its revenues that come from larger companies; our inability to continue expansion into international markets and the additional risks associated with operating internationally, including fluctuations in currency exchange rates; general economic conditions worldwide; our ability to successfully integrate acquisitions and the associated technology and achieve operational efficiencies; and other factors and risks discussed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other documents that may be filed by Shutterstock from time to time with the Securities and Exchange Commission.  As a result of such risks, uncertainties and factors, Shutterstock's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. Shutterstock is providing the information in this press release as of this date and assumes no obligation to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

 


Shutterstock, Inc.

Consolidated Statements of Operations

(In thousands, except for per share data)

(unaudited)








Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014










Revenue


$

116,002



$

91,226



$

425,149



$

327,971











Operating expenses:









Cost of revenue


47,944



35,603



174,526



130,022


Sales and marketing


26,709



21,235



106,636



82,125


Product development


9,622



11,379



41,322



38,301


General and administrative


16,698



10,671



61,647



38,487


Total operating expenses


100,973



78,888



384,131



288,935


Income from operations


15,029



12,338



41,018



39,036


Other expense, net


(3,360)



(532)



(6,746)



(859)


Income before income taxes


11,669



11,806



34,272



38,177


Provision for income taxes


4,800



4,773



14,720



16,088


Net income


$

6,869



$

7,033



$

19,552



$

22,089


Less:









Undistributed earnings to participating stockholder




12



2



42


Net income available to common stockholders


$

6,869



$

7,021



$

19,550



$

22,047




















Net income per common share available to common stockholders:









Basic


$

0.19



$

0.20



$

0.54



$

0.63


Diluted


$

0.19



$

0.20



$

0.54



$

0.61











Weighted average common shares outstanding:









Basic


35,975



35,452



35,880



35,235


Diluted


36,468



36,001



36,319



35,913


 


Shutterstock, Inc.

Consolidated Balance Sheets

(In thousands, except par value amount)

(unaudited)








December 31, 2015


December 31, 2014






ASSETS





Current assets:





Cash and cash equivalents


$

241,304



$

233,453


Short-term investments


47,078



54,844


Credit card receivables


2,811



2,451


Accounts receivable, net


25,653



15,251


Prepaid expenses and other current assets


11,713



12,141


Deferred tax assets, net


7,116



5,390


Total current assets


335,675



323,530


Property and equipment, net


32,094



26,744


Intangibles assets, net


29,781



4,934


Goodwill


50,934



10,186


Deferred tax assets, net


18,691



16,484


Other assets


1,946



1,899


Total assets


$

469,121



$

383,777


LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

6,816



$

5,334


Accrued expenses


30,696



24,982


Contributor royalties payable


17,822



11,933


Income taxes payable


953



91


Deferred revenue


98,239



75,789


Other liabilities


6,258



2,198


Total current liabilities


160,784



120,327


Deferred tax liability, net


3,778




Other non-current liabilities


15,994



12,017


Total liabilities


180,556



132,344


Commitment and contingencies





Stockholders' equity:





Common stock, $0.01 par value; 200,000 shares authorized; 36,146 and 35,603 shares issued and 35,686 and 35,603 shares outstanding as of December 31, 2015 and December 31, 2014, respectively


361



356


Treasury stock, at cost; 460 shares as of December 31, 2015


(15,635)




Additional paid-in capital


213,851



174,821


Accumulated other comprehensive loss


(6,449)



(629)


Retained earnings


96,437



76,885


Total stockholders' equity


288,565



251,433


Total liabilities and stockholders' equity


$

469,121



$

383,777


 

 

Shutterstock, Inc.
Reconciliation of Non-GAAP Financial Information to GAAP
(In thousands, per share information)
(Unaudited)


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 December 31,


Year Ended December 31,



2015


2014


2015


2014










Net income


$

6,869



$

7,033



$

19,552



$

22,089


Add:









(a)  Depreciation and amortization


4,478



2,160



14,841



7,917


(b)  Write-off of property and equipment








367


(c)  Non-cash equity-based compensation


6,089



8,040



28,860



23,768


(d)  Other expense, net


3,360



532



6,746



859


(e)  Provision for income taxes


4,800



4,773



14,720



16,088


Adjusted EBITDA (1)


$

25,596



$

22,538



$

84,719



$

71,088


Adjusted EBITDA per diluted common share


$

0.70



$

0.63



$

2.33



$

1.98











Weighted average diluted shares


36,468



36,001



36,319



35,913






Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014

Net income


$

6,869



$

7,033



$

19,552



$

22,089


Add (net of tax effect):









(a)  Non-cash equity-based compensation


4,060



5,487



18,712



15,960


(b)  Acquisition related amortization expense


767



105



2,864



347


(c)  Change in fair value of contingent consideration


2,140



131



3,053



200


Non-GAAP net income


$

13,836



$

12,756



$

44,181



$

38,596


Non-GAAP net income per diluted common share


$

0.38



$

0.35



$

1.22



$

1.07











Weighted average diluted shares


36,468



36,001



36,319



35,913






Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014

Net cash provided by operating activities


$

25,882



$

23,360



$

85,331



$

82,859


Capital expenditures and content acquisition


(4,919)



(2,006)



(16,984)



(18,671)


Free cash flow


$

20,963



$

21,354



$

68,347



$

64,188











Adjusted EBITDA


$

25,596



$

22,538



$

84,719



$

71,088


Add/(less):









(a)  Changes in operating assets and liabilities


3,310



9,552



20,880



45,752


(b)  Provision for income taxes


(4,800)



(4,773)



(14,720)



(16,088)


(c)  Deferred income taxes


(253)



(716)



(4,840)



(4,897)


(d)  Tax benefit from exercise/vesting of equity awards


56



(2,913)



(1,685)



(13,137)


(e)  Provision for doubtful accounts/chargeback/sales refund reserves


2,003



114



2,953



800


(f)   Other expense, net


(3,360)



(532)



(6,746)



(859)


(g)  Change in fair value of contingent consideration


3,330



90



4,770



200


Net cash provided by operating activities


$

25,882



$

23,360



$

85,331



$

82,859





(1)  Earnings/(loss) before other income/(expense), income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.

 

 

SHUTTERSTOCK, INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited; in thousands)


Non-Cash Equity-Based Compensation


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




Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014

Cost of revenue


$

452



$

330



$

1,896



$

1,283


Sales and marketing


410



1,223



4,520



3,912


Product development


1,702



3,068



7,565



7,597


General and administrative


3,525



3,419



14,879



10,976


Total


$

6,089



$

8,040



$

28,860



$

23,768



Amortization of Intangible Assets and Depreciation of Property and Equipment


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




Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014

Cost of revenue


$

418



$

23



$

1,488



$

99


General and administrative


852



143



3,257



452


Total


$

1,270



$

166



$

4,745



$

551



Included in the accompanying financial results are expenses related to the depreciation of property and equipment, as follows:




Three Months Ended December 31,


Year Ended December 31,



2015


2014


2015


2014

Cost of revenue


$

1,906



$

1,144



$

5,666



$

4,282


General and administrative


1,302



850



4,430



3,084


Total


$

3,208



$

1,994



$

10,096



$

7,366




Historical Operating Metrics




12/31/13


3/31/14


6/30/14


9/30/14


12/31/14


3/31/15


6/30/15


9/30/15


12/31/15



(in millions, except revenue per download)

Number of paid downloads


28.0



29.7



31.5



31.2



33.5



33.4



35.9



38.1



39.8


Revenue per download (1)


$

2.43



$

2.45



$

2.52



$

2.65



$

2.68



$

2.87



$

2.85



$

2.76



$

2.86


Images in collection (end of period) (2)


32.2



35.4



38.8



42.7



46.8



51.6



57.2



63.7



71.4



(1)  Revenue per download metric excludes the impact of revenue not associated with content downloads.

(2) Images are photographs, vectors and illustrations available on shutterstock.com at the end of the period. We exclude content that is not uploaded directly to our site but is available to our customers through an application program interface and certain images that may be licensed for editorial use only.

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SOURCE Shutterstock, Inc.



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