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Press release from PR Newswire

Shutterstock Reports Fourth Quarter and Full Year 2012 Financial Results

Thursday, February 21, 2013

Shutterstock Reports Fourth Quarter and Full Year 2012 Financial Results16:05 EST Thursday, February 21, 2013-- Fourth quarter revenue increases 42% from prior year -- Full year revenue increases 41% from prior year -- Adjusted EBITDA of $11.3 million in fourth quarter -- Quarterly image downloads reach record of 21.4 million -- Collection exceeds 23 million images and video clips -- Number of active customer accounts surpasses 750,000NEW YORK, Feb. 21, 2013 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) a leading global provider of commercial digital imagery, today announced financial results for the fourth quarter and full year ended December 31, 2012.   (Logo: http://photos.prnewswire.com/prnh/20120514/NY06418LOGO )"Our fourth quarter results capped a very strong year for Shutterstock," said Founder and CEO Jon Oringer. "We are very pleased with our progress on product innovation, global market penetration and financial performance over the course of 2012." Operating MetricsThree Months Ended December 31, Twelve Months Ended December 31, 2012201120122011(in millions, except revenue per download)(in millions, except revenue per download)Number of paid downloads21.416.276.058.6Revenue per download$                          2.30$                          2.14$                          2.23$                          2.05Images in collection (end of period)23.317.423.317.4RevenueRevenue 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 IncomeNet 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 EBITDAAdjusted 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.CashThe 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 OutlookThe Company's current financial and operating expectations for the first quarter of 2013 and full year 2013 are as follows:First Quarter 2013Revenue 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 2013We 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 InformationThe 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 MeasuresShutterstock 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 Metrics12/31/103/31/116/30/119/30/1112/31/113/31/126/30/129/30/1212/31/12Number of paid downloads12.513.314.414.816.217.618.318.721.4Revenue per download$        1.91$        1.92$        2.01$        2.10$        2.14$        2.13$        2.22$        2.26$        2.30Images in collection (end of period)13.314.415.316.217.418.820.221.723.3Non-Cash Equity Based CompensationIncluded 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, 2012201120122011Cost of revenue$            219$                -$            219$                -Sales and marketing783-783-Product development1,696-1,696-General and administrative4,8607327,6872,122   Total$         7,558$            732$       10,385$         2,122Amortization of Intangible Assets and DepreciationIncluded 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, 2012201120122011Cost of revenue$                  8$              8$               32$              32General and administrative4853213212   Total$                 56$            61$             245$            244Included in the accompanying financial results are expenses related to depreciation, as follows (in thousands):Three Months Ended December 31,Twelve Months Ended December 31, 2012201120122011Cost of revenue$               411$          218$          1,394$            627General and administrative2842101,001649   Total$               695$          428$          2,395$          1,276About ShutterstockShutterstock 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 ProvisionThe 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, 2012December 31, 2011ASSETSCurrent assets:Cash and cash equivalents$                          102,096$                          14,097Credit card receivables1,373964Accounts receivable, net1,738647Prepaid expenses and other current assets2,0081,554Deferred tax assets18,760644Due from related party-168Total current assets125,97518,074Property and equipment, net5,2553,844Intangibles, net1,0401,029Goodwill1,4231,423Deferred tax assets13,23958Other assets182427Total assets$                          147,114$                          24,855LIABILITIES, REDEEMABLE PREFERRED MEMBERS' INTEREST AND STOCKHOLDERS' EQUITY/MEMBERS' DEFICITCurrent liabilities:Accounts payable$                             2,606$                            1,838Accrued expenses15,60610,875Contributor royalties payable6,9845,261Deferred revenue37,93428,451Term loan debt6,000-Other liabilities16185Total current liabilities69,29146,510Other non-current liabilities8892,548Total liabilities70,18049,058Commitment and contingenciesRedeemable preferred members' interest-33,725Stockholders' equity/members' deficit:Common members' interest -5,699Common stock, $0.01 par value; 200,000 shares authorized and 33,513 shares outstanding as of December 31, 2012; no shares were authorized and outstanding as of December 31, 2011335-Additional paid-in capital48,282-Retained earnings/accumulated deficit28,317(63,627)Total stockholders' equity/members' deficit76,934(57,928)Total liabilities, redeemable preferred members' interest, and stockholders' equity/members' deficit$                          147,114$                          24,855 Shutterstock, Inc.Consolidated Statements of Operations(In thousands, except for share and per share information)(Unaudited)Three Months EndedTwelve Months EndedDecember 31,December 31,2012201120122011Revenue$             49,157$             34,728$            169,616$            120,271Operating expenses:Cost of revenue18,79412,97564,67645,504Sales and marketing12,0229,60045,10731,929Product development5,6752,71116,3309,777General and administrative9,7093,33521,65110,171Total operating expenses46,20028,621147,76497,381Income from operations2,9576,10721,85222,890Other (expense)/income, net(49)2(47)10Income before income taxes2,9086,10921,80522,900(Benefit)/provision for income taxes(26,111)321(25,738)1,036Net income$             29,019$               5,788$             47,543$             21,864Less:Preferred interest distributed2,9509569,0007,144Preferred interest accretion---4,058Undistributed (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$             13,354Net income (loss) per basic share available to common shareholders/members:Distributed$                 0.27$                 0.14$                 1.14$                 1.03Undistributed0.610.070.65(0.39)Basic$                 0.88$                 0.21$                 1.79$                 0.64Net income (loss) per diluted share available to common shareholders/members:Distributed$                 0.27$                 0.14$                 1.13$                 1.03Undistributed0.610.070.66(0.39)Diluted$                 0.88$                 0.21$                 1.79$                 0.64Weighted average shares outstanding:Basic32,497,72720,849,24223,785,29920,849,242Diluted32,681,57020,849,24223,833,22320,849,242Shutterstock, Inc.Reconciliation of Non-GAAP Financial Information to GAAP(In thousands, except for share and per share information)(Unaudited)Unaudited Supplemental DataThe 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 EndedTwelve Months EndedDecember 31,December 31,2012201120122011Net income $         29,019$           5,788$         47,543$         21,864Add/(less):(a)Depreciation and amortization7514892,6401,520(b)Non-cash equity based compensation7,55873210,3852,122(c)Interest (income)/expense, net49(2)47(10)(d)Provision (benefit) for income taxes(26,111)321(25,738)1,036Adjusted EBITDA (1)$         11,266$           7,328$         34,877$         26,532Adjusted EBITDA per diluted common share $             0.34$             0.35$             1.46$             1.27Adjusted EBITDA per diluted common share (2)$             0.34$             0.26$             1.46$             0.94Weighted average shares 32,681,57020,849,24223,833,22320,849,242Adjusted weighted average shares (2) 32,681,57028,338,28023,833,22328,338,280Three Months EndedTwelve Months EndedDecember 31,December 31,2012201120122011Net 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 compensation7,55873210,3852,122(c)Non-cash equity based compensation tax benefit(1,136)(14)(1,136)(41)Non-GAAP net income$           6,630$           6,506$         27,981$         23,945Three Months EndedTwelve Months EndedDecember 31,December 31,2012201120122011Net cash provided by operating activities$         12,646$         10,083$         45,534$         39,547Interest income/(expense), net(49)2(47)10Capital expenditures(601)(675)(4,062)(3,442)Free cash flow$         12,094$           9,406$         41,519$         36,095Adjusted EBITDA$         11,266$           7,328$         34,877$         26,532Add/(less):(a)Changes in operating assets and liabilities6,1312,76115,89913,492(b)Provision for income taxes26,111(321)25,738(1,036)(c)Deferred income taxes(31,049)17(31,300)253(d)Provision for doubtful accounts/chargeback reserve195296326296(e)Other (income)/expense, net(49)2(47)10(f)Amortization of financing fees41-41-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.For further information: Meagan Kirkpatrick, Shutterstock, Inc., +1-646-402-2854, mkirkpatrick@shutterstock.com; or Denise Garcia, ICR, denise.garcia@icrinc.com