2014

Shutterstock Reports Third Quarter 2012 Financial Results -- Quarterly image downloads reach record of 18.7 million

-- Collection exceeds 21 million images and video clips

-- Third quarter revenue increased 36% from prior year

-- Adjusted EBITDA of $10.3 million

NEW YORK, Nov. 15, 2012 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) a leading global provider of commercial digital imagery, today announced financial results for the third quarter ended September 30, 2012.

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

"We are very pleased with our operating results in the third quarter and for 2012 to date," said CEO Jon Oringer. "We continue to see strong growth in both volume and revenue across all geographies and all of our product offerings."

Operating Metrics


Three Months Ended September 30, 


2012


2011


(in millions, except revenue per download)

Number of paid downloads

18.7


14.8

Revenue per download

$    2.26


$    2.10

Images in collection (end of period)

21.7


16.2





 

Revenue

Revenue for the third quarter was $42.3 million, a 36% increase from the third quarter of 2011.  The Company experienced growth in all product lines and in all major global territories.

Net Income

GAAP net income for the third quarter of 2012 was $8.7 million as compared to $5.7 million in the third quarter of 2011. GAAP net income available to common members for the third quarter of 2012 was $6.6 million or $0.31 per share as compared to $4.3 million or $0.20 per share in the third quarter of 2011.

Non-GAAP net income for the third quarter of 2012 was $9.4 million as compared to $6.3 million in the third quarter of 2011. Non-GAAP net income excludes the after tax impact of non-cash equity based compensation expense.

Adjusted EBITDA

Adjusted EBITDA for the third quarter of 2012 was $10.3 million, as compared to $6.9 million in the third quarter of 2011. 

Cash

The Company's cash balance was $28.8 million at September 30, 2012 as compared to $14.1 million as of December 31, 2011.  The Company also had short-term debt of $12.0 million and no long-term debt as of September 30, 2012.  The Company generated $14.0 million of cash from operations in the third quarter of 2012 and $32.9 million of cash from operations in the first nine months of 2012. 

Also, during the third 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 $0.6 million.   Cash outlays in this category for the first nine months of 2012 totaled $3.5 million.

Free cash flow for the third quarter of 2012 was $13.4 million as compared to $8.3 million in the third quarter of 2011.

On October 16, 2012, the Company completed its 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 fourth quarter of 2012, full year 2012 and full year 2013 are as follows:

Fourth Quarter 2012

  • Revenue of $44 - $45 million
  • Adjusted EBITDA of $9.0 - $9.5 million
  • Non-cash equity-based compensation expense of approximately $8 million
  • Effective and cash tax rate of 43%
  • Fully diluted adjusted weighted average share count of approximately 34 million

Full Year 2012

  • Revenue of $164 - $166 million
  • Adjusted EBITDA of $32.5 - $33.0 million
  • Fully diluted adjusted weighted average share count of approximately 32 million

Other Full Year 2012 Assumptions

  • Amortization of intangibles of approximately $0.3 million
  • Depreciation of approximately $2.5 million
  • Non-cash equity-based compensation expense of approximately $11 million
  • Capital expenditures of approximately $5.0 million

Full Year 2013

  • We are increasing our expectations for revenue to $204 - $208 million
  • We are increasing our expectations for adjusted EBITDA to $44 - $45 million
  • Fully diluted share count of approximately 35.5 million
  • 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 third quarter 2012 financial results during a teleconference today, November 15, 2012, at 5:00 PM ET.  To participate, please call 800-706-7749 or 617-614-3474. Please use the conference ID:  3816 7173.

For recorded conference replay starting at 6:00 p.m. ET on November 15, 2012 until November 29, 2012 please call 888-286-8010 or 617-801-6888. Please use the conference ID:  3780 8719.                    

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 as net income excluding the after tax impact of non-cash equity based compensation expense; 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 Operations included below.

Historical Operating Metrics


Three Months Ended


9/30/10

12/31/10

3/31/11

6/30/11

9/30/11

12/31/11

3/31/12

6/30/12

9/30/12


(in millions, except revenue per download)

Number of paid downloads

11.1

12.5

13.3

14.4

14.8

16.2

17.6

18.3

18.7

Revenue per download

$    1.89

$    1.91

$    1.92

$    2.01

$    2.10

$    2.14

$    2.13

$    2.22

$    2.26

Images in our library (end of period)

12.3

13.3

14.4

15.3

16.2

17.4

18.8

20.2

21.7











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
September 30,


Nine Months Ended
September 30,


2012


2011


2012


2011

Cost of revenue

$                  8


$               8


$                 24


$               24

General and administrative

55


53


163


159

   Total

$                63


$             61


$               187


$             183









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


Three Months Ended
September 30,


Nine Months Ended
September 30,


2012


2011


2012


2011

Cost of revenue

$               401


$           168


$               984


$             411

General and administrative

264


181


717


439

   Total

$               665


$           349


$             1,701


$             850









Adjusted Weighted Average Shares Reconciliation

The following table presents a reconciliation of weighted average shares to adjusted weighted average shares. The adjusted shares give effect to our reorganization from a New York limited liability company to a Delaware corporation on October 5, 2012. The adjusted weighted average shares measure is similar to the expected weighted average shares measure post-reorganization and its sole purpose is for use in calculating adjusted EBITDA per share:


Three Months Ended September 30,


Nine Months Ended September 30, 


2012


2011


2012


2011

Weighted average shares

20,882,191


21,380,178


20,957,222


21,678,381

Incremental shares representing conversion of profits interest awards 

541,305


571,749


545,893


589,979

Preferred interest shares

6,960,730


7,126,726


6,985,741


7,226,127

Adjusted weighted average shares

28,384,226


29,078,653


28,488,855


29,494,487









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 21 million images currently available, the Company recently surpassed 250 million image downloads. Shutterstock also owns Bigstock, a value-oriented stock agency that offers both credit and simple Pay As You Go purchase options.

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 Company's Final Prospectus dated October 10, 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 Images LLC

Consolidated Balance Sheets

(In Thousands)















September 30, 2012


December 31, 2011


(Unaudited)



ASSETS




Current assets:





Cash and cash equivalents

$                  28,793


$                 14,097


Credit card receivables

2,100


964


Accounts receivable, net

1,377


647


Prepaid expenses and other current assets

5,151


1,554


Deferred tax assets

807


644


Due from related party

-


168

Total current assets

38,228


18,074





Property and equipment, net

5,402


3,844

Intangibles, net

1,045


1,029

Goodwill

1,423


1,423

Deferred tax assets

146


58

Other assets

427


427

Total assets

$                  46,671


$                 24,855





LIABILITIES, REDEEMABLE PREFERRED MEMBERS' INTEREST AND MEMBERS' DEFICIT




Current liabilities:





Accounts payable

$                    2,325


$                   1,838


Accrued expenses

13,728


10,875


Contributor royalties payable

6,734


5,261


Deferred revenue

36,214


28,451


Term loan debt

12,000




Other liabilities

95


85

Total current liabilities

71,096


46,510





Other non-current liabilities

5,454


2,548

Total liabilities

76,550


49,058





Commitment and contingencies








Redeemable preferred members' interest

27,675


33,725

Members' deficit:





Common members' interest 

5,699


5,699


Accumulated deficit

(63,253)


(63,627)

Total members' deficit

(57,554)


(57,928)

Total liabilities, redeemable preferred members' interest, and members' deficit

$                  46,671


$                 24,855





 

Shutterstock Images LLC

Consolidated Statements of Operations

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

Unaudited










Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011









Revenue

$          42,260


$         31,156


$         120,459


$           85,543









Operating expenses:









Cost of revenue

16,208


11,373


46,312


32,529


Sales and marketing

9,633


8,493


32,760


22,329


Product development

3,992


2,811


11,062


7,066


General and administrative

3,536


2,539


11,430


6,836

Total operating expenses

33,369


25,216


101,564


68,760

Income from operations

8,891


5,940


18,895


16,783

Other income / (expense), net

(3)


1


2


8

Income before income taxes

8,888


5,941


18,897


16,791

Provision for income taxes

146


253


374


715

Net income

$            8,742


$           5,688


$           18,523


$           16,076

Less:









Preferred interest distributed

2,263


1,313


6,050


6,188


Preferred interest discount accretion

-


-


-


4,058


Undistributed earnings (loss) to participating members

(77)


109


(1,419)


(3,183)

Net income available to common members

$            6,556


$           4,266


$           13,892


$            9,013









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







  Distributed

$             0.32


$            0.18


$              0.87


$              0.86

  Undistributed

(0.01)


0.02


(0.20)


(0.44)

  Basic

$             0.31


$            0.20


$              0.67


$              0.42









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







  Distributed

$             0.32


$            0.18


$              0.87


$              0.86

  Undistributed

(0.01)


0.02


(0.20)


(0.44)

  Diluted

$             0.31


$            0.20


$              0.67


$              0.42









Weighted average shares outstanding:









Basic

20,882,191


21,380,178


20,957,222


21,678,381


Diluted

20,882,191


21,380,178


20,957,222


21,678,381









 

Shutterstock Images LLC

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)






Nine Months Ended

September 31,


2012


2011



CASH FLOWS FROM OPERATING ACTIVITIES




Net income 

$18,523


$16,076

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization 

1,888


1,033

Deferred taxes 

(251)


236

Non-cash equity-based compensation 

2,827


1,390

Bad debt reserve 

131


-

Changes in operating assets and liabilities:




Credit card receivable 

(1,136)


(299)

Accounts receivable 

(861)


(349)

Prepaid expenses and other current and non-current assets 

(1,066)


(935)

Due from member 

168


(37)

Accounts payable and other liabilities 

3,429


3,229

Contributors payable 

1,473


1,212

Deferred revenue 

7,763


7,908

Net cash provided by operating activities 

$32,888


$29,464

CASH FLOWS FROM INVESTING ACTIVITIES




Capital expenditures 

(3,268)


(2,742)

Acquisition of patents 

(193)


(25)

Security deposit receipt 

38


-

Net cash used in investing activities 

$ (3,423)


$ (2,767)

CASH FLOWS FROM FINANCING ACTIVITIES




   Term loan facility 

12,000


-

Payment of term loan fee

(30)


-

Payment of deferred offering fees

(2,539)


-

Members' distributions 

(24,200)


(24,750)

Net cash used in financing activities 

(14,769)


(24,750)

Net increase in cash and cash equivalents 

$14,696


$  1,947

Cash and cash equivalents—Beginning 

14,097


6,544

Cash and cash equivalents—Ending 

$28,793


$  8,491

Supplemental Disclosure of Cash Information:




Cash paid for:




Income taxes 

$     300


$  1,226

Non-cash financing activities:




Preferred members' interest accretion 

$         -


$  4,058





 

Shutterstock Images LLC

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


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011

Net income in accordance with generally accepted accounting principles








$        8,742


$        5,688


$     18,523


$        16,076


Add/(less):









(a) Depreciation and amortization

728


410


1,888


1,033


(b) Non-cash equity based compensation

670


599


2,827


1,390


(c) Interest (income)/expense, net

3


(1)


(2)


(8)


(d) Provision for income taxes

146


253


374


715

Adjusted EBITDA (1)

$     10,289


$         6,949


$    23,610


$       19,206

Adjusted EBITDA per diluted common share 

$         0.49


$          0.33


$        1.13


$           0.89

Adjusted EBITDA per diluted common share (2)

$         0.36


$          0.24


$        0.83


$           0.65









Weighted average shares 

20,882,191


21,380,178


20,957,222


21,678,381

Adjusted weighted average shares (2) 

28,384,226


29,078,653


28,488,855


29,494,487










Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011

Net income

$       8,742


$       5,688


$     18,523


$       16,076


(a) Non-cash equity based compensation

670


599


2,827


1,390


(b) Adjustment for the tax impact of certain Non-GAAP adjustments 









(11)


(26)


(56)


(59)

Non-GAAP net income

$       9,401


$       6,261


$     21,294


$       17,407










Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011

Net cash provided by operating activities

$     13,966


$      9,517


$     32,888


$       29,464


Interest income/(expense), net

(3)


1


2


8


Capital expenditures

(597)


(1,213)


(3,461)


(2,767)

Free cash flow

$     13,372


$      8,303


$     29,425


$       26,689

















Adjusted EBITDA

$     10,289


$      6,949


$     23,610


$       19,206


Add/(less):









(a) Changes in operating assets and liabilities

3,841


2,746


9,770


10,729


(b) Provision for income taxes

(146)


(253)


(374)


(715)


(c) Deferred income taxes

(96)


74


(251)


236


(d) Provision for doubtful accounts

81


-


131


-


(e) Other (income)/expense, net

(3)


1


2


8

Net cash provided by operating activities

$     13,966


$      9,517


$     32,888


$       29,464









(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.


Media Contacts:

Meagan Kirkpatrick

Shutterstock, Inc.

mkirkpatrick@shutterstock.com

 

Denise Garcia

ICR
denise.garcia@icrinc.com

 

SOURCE Shutterstock, Inc.



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