Financial Information

8-K
SHUTTERSTOCK, INC. filed this Form 8-K on 08/07/2013
Entire Document
 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 7, 2013

 


 

Shutterstock, Inc.

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-35669

 

80-0812659

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

60 Broad Street, 30th Floor

New York, NY 10004

(Address of principal executive offices, including zip code)

 

(646) 419-4452

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02 Results of Operations and Financial Condition

 

On August 7, 2013, Shutterstock, Inc. issued a press release announcing its financial results for the fiscal quarter ended June 30, 2013.  A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated herein by reference.

 

The information furnished on this Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits.

 

Exhibit No.

 

Exhibit Description

 

 

 

99.1

 

Press Release dated August 7, 2013

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: August 7, 2013

 

 

SHUTTERSTOCK, INC.

 

 

 

 

 

By:

/s/ Timothy E. Bixby

 

 

Timothy E. Bixby

 

 

Chief Financial Officer

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Exhibit Description

 

 

 

99.1

 

Press Release dated August 7, 2013

 

4


Exhibit 99.1

 

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, NY — August 7, 2013 — Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial digital imagery, today announced financial results for the second quarter ended June 30, 2013.

 

“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.

 



 

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