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Press release from PR Newswire

Shutterstock Reports First Quarter 2013 Financial Results

Wednesday, May 08, 2013

Shutterstock Reports First Quarter 2013 Financial Results

16:05 EDT Wednesday, May 08, 2013

- Quarterly revenue increases 36% from prior year period to $51.1 million
- Adjusted EBITDA increases 136% to $11.8 million
- Quarterly image downloads increase 27% to 22.3 million
- Revenue per image download increases 8% to $2.29
- Collection exceeds 25 million images and tops 1 million video clips

NEW YORK, May 8, 2013 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial digital imagery, today announced financial results for the first quarter ended March 31, 2013.  

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

"Our first quarter results were very strong, with 36% revenue growth and an expanding profit margin," said Founder and CEO Jon Oringer. "More importantly, we continue to see more customers choosing Shutterstock for image and footage licensing, while our image and video footage library and contributor base continue to significantly expand."

Operating Metrics  

Three Months Ended March 31,

2013

2012

(in millions, except revenue per download)

Number of paid downloads

22.3

17.6

Revenue per download

$                   2.29

$                   2.13

Images in collection (end of period)

25.1

18.8

Revenue

Revenue for the first quarter was $51.1 million, a 36% increase from the first quarter of 2012.   

Net Income

Net income for the first quarter of 2013 increased by 50% to $5.6 million as compared to $3.7 million in the first quarter of 2012. Net income available to common stockholders/members for the first quarter of 2013 was $5.5 million or $0.16 per share on a fully diluted basis as compared to $2.8 million or $0.13 per share on a fully diluted basis in the first quarter of 2012.

Non-GAAP net income for the first quarter of 2013 grew 46% to $6.1 million or $0.18 per share on a fully diluted basis as compared to $4.4 million or $0.15 per share on a fully diluted basis in the first 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 first quarter of 2013 was $11.8 million, a 136% increase as compared to $5.0 million in the first quarter of 2012. 

Cash

The Company's cash balance was $107.0 million as of March 31, 2013 as compared to $102.1 million as of December 31, 2012.  The Company had no bank debt as of March 31, 2013.  The Company generated $13.8 million of cash from operations in the first quarter of 2013 and paid down short-term debt of $6.0 million during the quarter.

Also during the first 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 $1.1 million. Cash outlays in this category for the first quarter of 2012 totaled $1.3 million.

Free cash flow for the first quarter of 2013 grew 49% to $12.7 million as compared to $8.5 million in the first quarter of 2012. 

Financial Outlook

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

Second Quarter 2013

  • Revenue of $53 - $55 million
  • Adjusted EBITDA of $10.8 - $11.8 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 $221 - $226 million
  • We are increasing our expectations for adjusted EBITDA to $46 - $48 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 first quarter 2013 financial results during a teleconference today, May 8, 2013, at 5:00 PM ET.  The conference call can be accessed at (866) 318-8620 or (617) 399-5139 (outside the US), conference ID# 226 933 89.  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# 850 744 42. The telephone replay will be available from 7:00 PM ET May 8 through May 22, 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

3/31/11

6/30/11

9/30/11

12/31/11

3/31/12

6/30/12

9/30/12

12/31/12

3/31/13

(in millions, except revenue per download)

Number of paid downloads

13.3

14.4

14.8

16.2

17.6

18.3

18.7

21.4

22.3

Revenue per download

$        1.92

$        2.01

$        2.10

$        2.14

$        2.13

$        2.22

$        2.26

$        2.30

$        2.29

Images in collections (end of period)

14.4

15.3

16.2

17.4

18.8

20.2

21.7

23.3

25.1

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 March 31,

2013

2012

Cost of revenue

$                 55

$                   -

Sales and marketing

203

-

Product development

255

-

General and administrative

503

664

   Total

$            1,016

$               664

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 March 31,

2013

2012

Cost of revenue

$                   8

$                   8

General and administrative

48

52

   Total

$                 56

$                 60

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

Three Months Ended March 31,

2013

2012

Cost of revenue

$               410

$               245

General and administrative

313

223

   Total

$               723

$               468

 

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 25 million images currently available, the Company recently surpassed 300 million image downloads. Shutterstock also owns Bigstock, a value-oriented stock agency.

For more information, please visit http://www.shutterstock.com, and follow Shutterstock on Twitter and 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 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 discussed in the section entitled "Risk Factors" in the Company's latest Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2013 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)

March 31, 2013

December 31, 2012

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$                         107,013

$                         102,096

Credit card receivables

2,218

1,373

Accounts receivable, net

2,618

1,738

Prepaid expenses and other current assets

2,095

2,008

Deferred tax assets

20,801

18,760

Total current assets

134,745

125,975

Property and equipment, net

5,660

5,255

Intangibles assets, net

984

1,040

Goodwill

1,423

1,423

Deferred tax assets

12,890

13,239

Restricted cash

2,008

182

Total assets

$                         157,710

$                         147,114

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                             2,792

$                             2,606

Accrued expenses

14,370

15,606

Contributor royalties payable

7,986

6,984

Income taxes payable

4,626

-

Deferred revenue

43,336

37,934

Term loan facility

-

6,000

Other liabilities

181

161

Total current liabilities

73,291

69,291

Other non-current liabilities

871

889

Total liabilities

74,162

70,180

Commitment and contingencies

Stockholders' equity:

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

33,517 and 33,513 shares outstanding as of March 31, 2013

and December 31, 2012, respectively

335

335

Additional paid-in capital

49,331

48,282

Retained earnings

33,882

28,317

Total stockholders' equity

83,548

76,934

Total liabilities and stockholders' equity

$                         157,710

$                         147,114

 

Shutterstock, Inc.

Consolidated Statements of Operations

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

(Unaudited)

Three Months Ended

March 31,

2013

2012

Revenue

$                        51,117

$                        37,574

Operating expenses:

Cost of revenue

19,821

14,389

Sales and marketing

11,978

12,240

Product development

4,555

3,419

General and administrative

4,780

3,732

Total operating expenses

41,134

33,780

Income from operations

9,983

3,794

Other (expense)/income, net

(12)

3

Income before income taxes

9,971

3,797

Provision for income taxes

4,406

86

Net income

$                          5,565

$                          3,711

Less:

Preferred interest distributed

-

2,100

Undistributed earnings (loss) to participating stockholder/members

19

(1,172)

Net income available to common stockholders/members

$                          5,546

$                          2,783

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

Distributed

$                                 -

$                            0.30

Undistributed

0.17

(0.17)

Basic

$                            0.17

$                            0.13

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

Distributed

$                                 -

$                            0.30

Undistributed

0.16

(0.17)

Diluted

$                            0.16

$                            0.13

Weighted average shares outstanding:

Basic

33,398,797

20,849,242

Diluted

33,851,843

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

March 31,

2013

2012

Net income 

$                             5,565

$                             3,711

Add/(less):

(a)

Depreciation and amortization

779

528

(b)

Non-cash equity-based compensation

1,016

664

(c)

Interest expense/(income), net

12

(3)

(d)

Provision for income taxes

4,406

86

Adjusted EBITDA (1)

$                           11,778

$                             4,986

Adjusted EBITDA per basic common share 

$                               0.35

$                               0.24

Adjusted EBITDA per diluted common share (2)

$                               0.35

$                               0.18

Weighted average basic shares 

33,398,797

20,849,242

Weighted average diluted shares (2) 

33,851,843

28,338,280

Three Months Ended

March 31,

2013

2012

Net income

$                             5,565

$                             3,711

(a)

Non-cash equity-based compensation

1,016

664

(b)

Non-cash equity-based compensation tax benefit

(449)

(13)

Non-GAAP net income

$                             6,132

$                             4,362

Non-GAAP net income per basic common share 

$                               0.18

$                               0.21

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

$                               0.18

$                               0.15

Weighted average basic shares 

33,398,797

20,849,242

Weighted average diluted shares (2) 

33,851,843

28,338,280

Three Months Ended

March 31,

2013

2012

Net cash provided by operating activities

$                           13,790

$                             9,815

Interest (expense)/income, net

(12)

3

Capital expenditures

(1,127)

(1,313)

Free cash flow

$                           12,675

$                             8,499

Adjusted EBITDA

$                           11,778

$                             4,986

Add/(less):

(a)

Changes in operating assets and liabilities

7,893

4,959

(b)

Provision for income taxes

(4,406)

(86)

(c)

Deferred income taxes

(1,692)

(97)

(d)

Provision for doubtful accounts/chargeback reserve

104

50

(e)

Interest expense/(income), net

(12)

3

(f)

Amortization of financing fees

125

-

Net cash provided by operating activities

$                           13,790

$                             9,815

(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 months ended March 31, 2012 gives effect to our reorganization from a New York limited liability company to a Delaware corporation and includes incremental shares for profit interest awards and preferred shares that are excluded from the weighted average basic shares.

                                                                                                        

SOURCE Shutterstock, Inc.

For further information: Meagan Kirkpatrick, Shutterstock, Inc., mkirkpatrick@shutterstock.com; or Denise Garcia, ICR, denise.garcia@icrinc.com

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