2014

Shutterstock Reports Second Quarter 2013 Financial Results - Quarterly revenue increases 40% from prior year period to $56.8 million

- Adjusted EBITDA increases 61% to $13.4 million

- Quarterly image downloads increase 33% to 24.3 million

- Revenue per download increases 5% to $2.33

- Collection currently exceeds 29 million images and video clips

- Language offerings grow to 20 with addition of Thai and Korean

NEW YORK, Aug. 7, 2013 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial digital imagery, today announced financial results for the second quarter ended June 30, 2013.  

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

"We delivered strong results in the second quarter, with 40% revenue growth driven by both new customer additions and expanding usage," said Founder and CEO Jon Oringer. "We also made good progress solidifying our global footprint, adding both Thai and Korean to our 18 existing language offerings."

Operating Metrics

 


Three Months Ended June 30, 


Six Months Ended June 30, 


2013


2012


2013


2012


(in millions, except revenue per download)


(in millions, except revenue per download)

Number of paid downloads

24.3


18.3


46.7


35.9

Revenue per download

$                   2.33


$                   2.22


$                   2.31


$                   2.18

Images in collection (end of period)

27.3


20.2


27.3


20.2









Revenue

Revenue for the second quarter was $56.8 million, a 40% increase from the second quarter of 2012.  

Net Income

Net income for the second quarter of 2013 increased 13% to $6.9 million as compared to $6.1 million in the second quarter of 2012. Net income in the second quarter of 2012 was not subject to federal and state income tax, as the Company was operating as a limited liability company prior to its reorganization to a Delaware corporation in October 2012, while the current quarter's net income is taxed at the federal and state income tax levels.

Net income available to common stockholders/members for the second quarter of 2013 was $6.8 million or $0.20 per share on a fully diluted basis as compared to $4.6 million or $0.22 per share on a fully diluted basis in the second quarter of 2012.

Non-GAAP net income for the second quarter of 2013 was $7.8 million or $0.23 per share on a fully diluted basis as compared to $7.5 million or $0.27 per share on a fully diluted basis in the second quarter of 2012. Non-GAAP net income excludes the after tax impact of non-cash equity-based compensation expense. 

Adjusted EBITDA

Adjusted EBITDA for the second quarter of 2013 was $13.4 million, a 61% increase as compared to $8.3 million in the second quarter of 2012. 

Cash

The Company's cash balance was $112.8 million as of June 30, 2013 as compared to $102.1 million as of December 31, 2012. The Company had no bank debt as of June 30, 2013. The Company generated $4.0 million of cash from operations in the second quarter of 2013.

Also during the second 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, resulting in a cash outlay of approximately $1.9 million. Cash outlays in this category for the second quarter of 2012 totaled $1.4 million.

Free cash flow for the second quarter of 2013 was $2.1 million as compared to $7.7 million in the second quarter of 2012. The decrease in free cash flow was caused primarily by the income tax impacts of the Company's reorganization to a Delaware corporation in October 2012.

Financial Outlook

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

Third Quarter 2013

  • Revenue of $56 - $57 million
  • Adjusted EBITDA of $11.0 - $12.0 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 $227 - $229 million
  • We are increasing our expectations for adjusted EBITDA to $48 - $50 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 non-recurring leasehold improvements related to headquarters office relocation of approximately $10 million

Earnings Teleconference Information

The Company will discuss its second quarter 2013 financial results during a teleconference today, August 7, 2013, at 5:00 PM ET. The conference call can be accessed at (866) 515-2911 or (617) 399-5125 (outside the US), conference ID# 814 376 47. 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# 409 267 26. The telephone replay will be available from 7:00 PM ET August 7 through August 21, 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 net income adjusted for interest income/(expense), income taxes, depreciation, amortization and non-cash equity-based compensation; non-GAAP net income as net income excluding the after tax impact of 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

 


6/30/11

9/30/11

12/31/11

3/31/12

6/30/12

9/30/12

12/31/12

3/31/13(1)

6/30/13


(in millions, except revenue per download)


Number of paid downloads

14.4

14.8

16.2

17.6

18.3

18.7

21.4

22.4

24.3

Revenue per download

$        2.01

$        2.10

$        2.14

$         2.13

$        2.22

$        2.26

$         2.30

$        2.28

$        2.33

Images in collections (end of period)

15.3

16.2

17.4

18.8

20.2

21.7

23.3

25.1

27.3











(1) During the second quarter of fiscal year 2013, the Company identified an understatement of the number of paid downloads in the first quarter of 2013 by 0.1 million. As a result, the Company has updated the revenue per download for the first quarter of fiscal year 2013 from $2.29 to $2.28. This did not impact the consolidated financial statements for the first quarter of 2013.

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 June 30,


Six Months Ended June 30,


2013


2012


2013


2012

Cost of revenue

$               110


$                   -


$               165


$                   -

Sales and marketing

304


-


507


-

Product development

329


-


584


-

General and administrative

811


1,493


1,314


2,157

   Total

$            1,554


$            1,493


$            2,570


$            2,157









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 June 30,


Six Months Ended June 30,


2013


2012


2013


2012

Cost of revenue

$                   7


$                   8


$                 15


$                 15

General and administrative

48


56


97


109

   Total

$                 55


$                 64


$               112


$               124

















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

 


Three Months Ended June 30,


Six Months Ended June 30,


2013


2012


2013


2012

Cost of revenue

$               542


$               338


$               952


$               583

General and administrative

348


230


661


453

   Total

$               890


$               568


$            1,613


$            1,036

















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. 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 25 million images and video clips currently available, the Company recently surpassed 300 million image downloads. Shutterstock also owns Bigstock, a value-oriented stock media agency; Offset, a high-end image collection; and Skillfeed, an online marketplace for learning. Shutterstock is headquartered in New York City.

For more information, please visit http://www.shutterstock.com, and follow Shutterstock on Twitter and 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 or in content contributed to our online marketplace; the Company's inability to successfully operate in a new and rapidly changing market and 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 effectively manage its growth; the Company's inability to increase the percentage of its revenues that come from larger companies; the Company's inability to continue expansion into international markets; various income tax and other tax liabilities; 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 detailed in reports and documents we file 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 per share data)



(unaudited)


















June 30, 2013


December 31, 2012












ASSETS








Current assets:







Cash and cash equivalents

$                  112,803


$                  102,096




Credit card receivables

2,442


1,373




Accounts receivable, net

4,435


1,738




Prepaid expenses and other current assets

6,598


2,008




Deferred tax assets, net

22,340


18,760



Total current assets

148,618


125,975



Property and equipment, net

6,778


5,255



Intangibles assets, net

928


1,040



Goodwill


1,423


1,423



Deferred tax assets, net

12,786


13,239



Restricted cash

2,015


182



Total assets

$                  172,548


$                  147,114












LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:







Accounts payable

$                      3,213


$                      2,606




Accrued expenses

16,857


15,606




Contributor royalties payable

8,142


6,984




Deferred revenue

46,736


37,934




Term loan facility

-


6,000




Other liabilities

158


161



Total current liabilities

75,106


69,291



Other non-current liabilities

1,840


889



Total liabilities

76,946


70,180













Commitment and contingencies






Stockholders' equity:







Common stock, $0.01 par value; 200,000 shares authorized; 33,692 and 33,513 shares outstanding as of June 30, 2013 and December 31, 2012, respectively

337


335




Additional paid-in capital

54,520


48,282




Retained earnings

40,745


28,317



Total stockholders' equity

95,602


76,934



Total liabilities and stockholders' equity

$                  172,548


$                  147,114












 

Shutterstock, Inc.

Consolidated Statements of Operations

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

(unaudited)




















Three Months Ended


Six Months Ended







June 30,


June 30,







2013


2012


2013


2012














Revenue




$      56,809


$      40,625


$    107,926


$      78,199














Operating expenses:










Cost of revenue


21,768


15,436


41,589


29,825


Sales and marketing


13,314


11,093


25,292


23,333


Product development


5,060


3,441


9,615


6,860


General and administrative


5,734


4,444


10,514


8,177

Total operating expenses


45,876


34,414


87,010


68,195

Income from operations


10,933


6,211


20,916


10,004

Other income, net


20


2


8


5

Income before provision for income taxes


10,953


6,213


20,924


10,009

Provision for income taxes


4,090


141


8,496


227

Net income



$        6,863


$        6,072


$      12,428


$        9,782

Less:













Preferred interest distributed


-


1,688


-


3,788


Undistributed earnings (loss) to participating stockholder/members

22


(170)


41


(1,342)

Net income available to common stockholders/members


$        6,841


$        4,554


$      12,387


$        7,336














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







Distributed



$              -


$          0.24


$              -


$          0.54

Undistributed


0.20


(0.02)


0.37


(0.19)

Basic




$          0.20


$          0.22


$          0.37


$          0.35














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







Distributed



$              -


$          0.24


$              -


$          0.54

Undistributed


0.20


(0.02)


0.37


(0.19)

Diluted




$          0.20


$          0.22


$          0.37


$          0.35














Weighted average shares outstanding:










Basic




33,471,679


20,849,242


33,435,439


20,849,242


Diluted



34,040,934


20,849,242


33,903,898


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


Six Months Ended






June 30,


June 30,






2013


2012


2013


2012













Net income 


$        6,863


$        6,072


$      12,428


$        9,782


Add/(less):









(a)

Depreciation and amortization

945


632


1,725


1,160


(b)

Non-cash equity based compensation

1,554


1,493


2,570


2,157


(c)

Interest expense/(income), net

(20)


(2)


(8)


(5)


(d)

Provision for income taxes

4,090


141


8,496


227

Adjusted EBITDA (1)

$      13,432


$        8,336


$      25,211


$      13,321

Adjusted EBITDA per basic common share 

$          0.40


$          0.40


$          0.75


$          0.64

Adjusted EBITDA per diluted common share (2)

$          0.39


$          0.29


$          0.74


$          0.47













Weighted average basic shares 

33,471,679


20,849,242


33,435,439


20,849,242

Weighted average diluted shares (2) 

34,040,934


28,338,280


33,903,898


28,338,280


















Three Months Ended


Six Months Ended






June 30,


June 30,






2013


2012


2013


2012

Net income


$        6,863


$        6,072


$      12,428


$        9,782


(a)

Non-cash equity based compensation

1,554


1,493


2,570


2,157


(b)

Non-cash equity based compensation tax benefit

(580)


(29)


(1,044)


(41)

Non-GAAP net income

$        7,837


$        7,536


$      13,954


$      11,898

Non-GAAP net income per basic common share 

$          0.23


$          0.36


$          0.42


$          0.57

Non-GAAP net income per diluted common share (2)

$          0.23


$          0.27


$          0.41


$          0.42













Weighted average basic shares 

33,471,679


20,849,242


33,435,439


20,849,242

Weighted average diluted shares (2) 

34,040,934


28,338,280


33,903,898


28,338,280


















Three Months Ended


Six Months Ended






June 30,


June 30,






2013


2012


2013


2012

Net cash provided by operating activities

$        4,024


$        9,107


$      17,814


$      18,922


Interest (expense)/income, net

20


2


8


5


Capital expenditures

(1,859)


(1,358)


(2,986)


(2,671)

Free cash flow

$        2,145


$        7,747


$      14,820


$      16,246













Adjusted EBITDA

$      13,432


$        8,336


$      25,211


$      13,321


Add/(less):









(a)

Changes in operating assets and liabilities

(3,054)


968


4,838


5,928


(b)

Provision for income taxes

(4,090)


(141)


(8,496)


(227)


(c)

Deferred income taxes

(1,435)


(58)


(3,127)


(155)


(d)

Excess tax benefit from exercise of stock options

(1,009)


-


(1,009)


-


(e)

Provision for doubtful accounts/chargeback reserve



160


-


264


50


(f)

Interest (expense)/income, net

20


2


8


5


(g)

Amortization of financing fees

-


-


125


-

Net cash provided by operating activities

$        4,024


$        9,107


$      17,814


$      18,922













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

       non-cash charges.








(2) The weighted average diluted shares for the three and six months ended June 30, 2012 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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