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Shutterstock Reports Fourth Quarter and Full Year 2012 Financial Results
Submitted by admin on 2/21/2013 @ 1:05 PM
Companies mentioned in this article:
Shutterstock, Inc.
NEW 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 Metrics
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------- --------------------------------
2012 2011 2012 2011
---- ---- ---- ----
(in millions, except revenue per download) (in millions, except revenue per download)
Number of paid downloads 21.4 16.2 76.0 58.6
Revenue per download $2.30 $2.14 $2.23 $2.05
Images in collection (end of period) 23.3 17.4 23.3 17.4
Revenue
Revenue 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 Income
Net 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 EBITDA
Adjusted 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.
Cash
The 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 Outlook
The Company's current financial and operating expectations for the first quarter of 2013 and full year 2013 are as follows:
First Quarter 2013
-- Revenue 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 2013
-- We 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 Information
The 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 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 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 Metrics
12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12 9/30/12 12/31/12
-------- ------- ------- ------- -------- ------- ------- ------- --------
Number of paid downloads 12.5 13.3 14.4 14.8 16.2 17.6 18.3 18.7 21.4
Revenue per download $1.91 $1.92 $2.01 $2.10 $2.14 $2.13 $2.22 $2.26 $2.30
Images in collection (end of period) 13.3 14.4 15.3 16.2 17.4 18.8 20.2 21.7 23.3
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 Twelve Months
Ended December Ended December
31, 31,
2012 2011 2012 2011
---- ---- ---- ----
Cost of revenue $219 $ - $219 $ -
Sales and marketing 783 - 783 -
Product development 1,696 - 1,696 -
General and administrative 4,860 732 7,687 2,122
Total $7,558 $732 $10,385 $2,122
====== ==== ======= ======
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 Twelve Months
Ended December Ended December
31, 31,
2012 2011 2012 2011
---- ---- ---- ----
Cost of revenue $8 $8 $32 $32
General and administrative 48 53 213 212
Total $56 $61 $245 $244
=== === ==== ====
Included in the accompanying financial results are expenses related to depreciation, as follows (in thousands):
Three Months Twelve Months
Ended December Ended December
31, 31,
2012 2011 2012 2011
---- ---- ---- ----
Cost of revenue $411 $218 $1,394 $627
General and administrative 284 210 1,001 649
Total $695 $428 $2,395 $1,276
==== ==== ====== ======
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 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 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 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, 2012 December 31, 2011
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $102,096 $14,097
Credit card receivables 1,373 964
Accounts receivable, net 1,738 647
Prepaid expenses and other current assets 2,008 1,554
Deferred tax assets 18,760 644
Due from related party - 168
--- ---
Total current assets 125,975 18,074
Property and equipment, net 5,255 3,844
Intangibles, net 1,040 1,029
Goodwill 1,423 1,423
Deferred tax assets 13,239 58
Other assets 182 427
---
Total assets $147,114 $24,855
========
LIABILITIES, REDEEMABLE PREFERRED MEMBERS' INTEREST AND
STOCKHOLDERS' EQUITY/MEMBERS' DEFICIT
Current liabilities:
Accounts payable $2,606 $1,838
Accrued expenses 15,606 10,875
Contributor royalties payable 6,984 5,261
Deferred revenue 37,934 28,451
Term loan debt 6,000 -
Other liabilities 161 85
--- ---
Total current liabilities 69,291 46,510
Other non-current liabilities 889 2,548
---
Total liabilities 70,180 49,058
------
Commitment and contingencies
Redeemable preferred members' interest - 33,725
Stockholders' equity/members' deficit:
Common members' interest - 5,699
Common stock, $0.01 par value; 200,000 shares
authorized and 335 -
33,513 shares outstanding as of December 31, 2012; no
shares
were authorized and outstanding as of December 31,
2011
Additional paid-in capital 48,282 -
Retained earnings/accumulated deficit 28,317 (63,627)
------ -------
Total stockholders' equity/members' deficit 76,934 (57,928)
------
Total liabilities, redeemable preferred members'
interest, and $147,114 $24,855
stockholders' equity/members' deficit
===
Shutterstock, Inc.
Consolidated Statements of Operations
(In thousands, except for share and per share information)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Revenue $49,157 $34,728 $169,616 $120,271
Operating expenses:
Cost of revenue 18,794 12,975 64,676 45,504
Sales and marketing 12,022 9,600 45,107 31,929
Product development 5,675 2,711 16,330 9,777
General and administrative 9,709 3,335 21,651 10,171
Total operating expenses 46,200 28,621 147,764 97,381
------ ------ ------- ------
Income from operations 2,957 6,107 21,852 22,890
Other (expense)/income, net (49) 2 (47) 10
Income before income taxes 2,908 6,109 21,805 22,900
(Benefit)/provision for income taxes (26,111) 321 (25,738) 1,036
------- --- ------- -----
Net income $29,019 $5,788 $47,543 $21,864
Less:
Preferred interest distributed 2,950 956 9,000 7,144
Preferred interest accretion - - - 4,058
Undistributed (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 $13,354
Net income (loss) per basic share available to common shareholders/members:
Distributed $0.27 $0.14 $1.14 $1.03
Undistributed 0.61 0.07 0.65 (0.39)
Basic $0.88 $0.21 $1.79 $0.64
===== ===== ===== =====
Net income (loss) per diluted share available to common shareholders/members:
Distributed $0.27 $0.14 $1.13 $1.03
Undistributed 0.61 0.07 0.66 (0.39)
---- ---- ---- -----
Diluted $0.88 $0.21 $1.79 $0.64
===== ===== ===== =====
Weighted average shares outstanding:
Basic 32,497,727 20,849,242 23,785,299 20,849,242
Diluted 32,681,570 20,849,242 23,833,223 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 Twelve Months Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Net income $29,019 $5,788 $47,543 $21,864
Add/(less):
(a) Depreciation and amortization 751 489 2,640 1,520
(b) Non-cash equity based
compensation 7,558 732 10,385 2,122
(c) Interest (income)/expense, net 49 (2) 47 (10)
(d) Provision (benefit) for income
taxes (26,111) 321 (25,738) 1,036
--------
Adjusted EBITDA (1) $11,266 $7,328 $34,877 $26,532
======= ====== ======= =======
Adjusted EBITDA per diluted common share $0.34 $0.35 $1.46 $1.27
===== ===== ===== =====
Adjusted EBITDA per diluted common share (2) $0.34 $0.26 $1.46 $0.94
===== ===== ===== =====
Weighted average shares 32,681,570 20,849,242 23,833,223 20,849,242
Adjusted weighted average shares (2) 32,681,570 28,338,280 23,833,223 28,338,280
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Net 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
compensation 7,558 732 10,385 2,122
(c) Non-cash equity based
compensation tax benefit (1,136) (14) (1,136) (41)
Non-GAAP net income $6,630 $6,506 $27,981 $23,945
====== ====== ======= =======
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Net cash provided by operating activities $12,646 $10,083 $45,534 $39,547
Interest income/(expense), net (49) 2 (47) 10
Capital expenditures (601) (675) (4,062) (3,442)
Free cash flow $12,094 $9,406 $41,519 $36,095
======= ====== ======= =======
Adjusted EBITDA $11,266 $7,328 $34,877 $26,532
Add/(less):
(a) Changes in operating assets and
liabilities 6,131 2,761 15,899 13,492
(b) Provision for income taxes 26,111 (321) 25,738 (1,036)
(c) Deferred income taxes (31,049) 17 (31,300) 253
(d) Provision for doubtful accounts/chargeback reserve 195 296 326 296
(e) Other (income)/expense, net (49) 2 (47) 10
(f) Amortization of financing fees 41 - 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.