Release Details

NEW YORK, July 28, 2020 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) (the "Company"), a leading global technology company offering a creative platform for high-quality content, tools and services, today announced financial results for the second quarter ended June 30, 2020.

Commenting on the Company's performance, Stan Pavlovsky, the Company's Chief Executive Officer, said, "Shutterstock delivered a strong second quarter characterized by revenue that surpassed our expectations. Our margin expansion initiatives have begun to take hold, which has resulted in record adjusted EBITDA for the quarter. I am impressed by the resiliency of our business and our ability to deliver strong performance in the current operating environment. Based on a higher level of confidence we have in our business outlook, we are accelerating several targeted investments in our platform solutions offering and marketing and brand building to support growth in our subscriptions products.

Jarrod Yahes, the Company's Chief Financial Officer, said, "As our business evolves towards a primarily subscription-based model, we are now disclosing additional key operating metrics to the investor community. We expect the increase in subscriber revenues to result in greater operating leverage and allow us to consistently deliver incremental margin expansion over a sustained period of time. In order to highlight our market opportunity and business model, we have made a new interactive investor relations microsite available to investors this quarter."

Second Quarter 2020 highlights compared to Second Quarter 2019:

        Key Operating Metrics

• Subscribers increased 29%, to 223,000.
• Subscriber revenue increased 8% to $62.7 million.
• Average revenue per customer, increased 0.2% to $326.
• Paid downloads decreased 6% to 44.0 million.
• Revenue per download increased by $0.17 to $3.61.
• Image collection expanded 21% to approximately 340 million images.
• Footage collection expanded 27% to approximately 19 million clips.

        Financial Highlights

• Revenue decreased 2% to $159.2 million. On a constant currency basis, revenue decreased 1%.
• Income from operations increased by $19.5 million to $22.5 million.
• Net income increased by $15.7 million to $19.0 million.
• Adjusted EBITDA increased by $11.9 million to $37.0 million.
• Diluted EPS increased by $0.44 to $0.53 per share.

SHUTTERSTOCK INVESTOR RELATIONS MICRO SITE

Accessible at content.shutterstock.com/investor-report/index.html

SECOND QUARTER RESULTS

Revenue

Second quarter revenue of $159.2 million decreased $2.5 million or 2% as compared to 2019. Revenue generated through our E-commerce sales channel increased 1% as compared to the second quarter of 2019, to $98.2 million, and represented 62% of total revenue in the second quarter of 2020. Revenue from our Enterprise sales channel decreased 6% as compared to the second quarter of 2019, to $61.1 million, and represented 38% of second quarter revenue in 2020.

On a constant currency basis, revenue decreased 1% in the second quarter of 2020 as compared to the second quarter of 2019. On a constant currency basis, E-commerce revenue increased by 2.0% in the second quarter of 2020, as compared to the second quarter of 2019. On a constant currency basis, Enterprise revenue decreased by approximately 5% in the second quarter of 2020, as compared to the second quarter of 2019.

Net income and Income per diluted share

Net income of $19.0 million, increased $15.7 million as compared to $3.3 million for the second quarter in 2019. Net income per diluted share was $0.53, as compared to $0.09 for the same period in 2019. This increase is primarily due to our margin expansion initiatives which have resulted in lower operating expenses in the second quarter of 2020.

Adjusted net income per diluted share was $0.62 as compared to $0.33 for the second quarter of 2019, a increase of $0.29 per diluted share.

Adjusted EBITDA

Adjusted EBITDA of $37.0 million for the second quarter of 2020 increased $11.9 million, or 48%, as compared to the second quarter of 2019, driven primarily by lower operating expenses resulting from our margin expansion. The adjusted EBITDA margin increased to 23.3% from 15.5% in the second quarter of 2019.

LIQUIDITY

Our cash and cash equivalents increased by $7.9 million to $311.2 million at June 30, 2020, as compared with $303.3 million at December 31, 2019. This increase was driven by $36.3 million of net cash provided by our operating activities, partially offset by $15.4 million used in investing activities and $14.9 million used in financing activities. Net cash provided by our operating activities was impacted by a one-time $7.8 million payment related to long-term incentives made in conjunction with our 2017 acquisition of Flashstock Technology, Inc. ("Flashstock"), in addition to unfavorable impacts due to changes in the timing of payments pertaining to operating expenses. Cash used in investing activities primarily consists of $14.0 million related to capital expenditures. Cash used in financing activities includes $12.1 million related to the payment of the quarterly cash dividend.

Free cash flow was $28.6 million for 2020, a decrease of $3.2 million from 2019. This change was primarily driven by lower cash flows from operating activities. Free cash flow for the six months ended June 30, 2020 is presented excluding a nonrecurring payment of $7.8 million with respect to long-term incentives related to our 2017 acquisition of Flashstock.

QUARTERLY CASH DIVIDEND

We declared and paid cash dividends of $0.34 per common share, or $12.1 million during the six months ended June 30, 2020.

On July 20, 2020, the Board of Directors declared a dividend of $0.17 per share of outstanding common stock, payable on September 17, 2020 to stockholders of record at the close of business on September 3, 2020.

KEY OPERATING METRICS

NON-GAAP FINANCIAL MEASURES

To supplement Shutterstock's consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, Shutterstock's management considers certain financial measures that are not prepared in accordance with GAAP, collectively referred to as non-GAAP financial measures, including adjusted EBITDA, adjusted net income, revenue growth (including by distribution channel) on a constant currency basis, adjusted EBITDA margin, billings and free cash flow.

Shutterstock defines adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, foreign currency transaction gains and losses, expenses related to long-term incentives and contingent consideration related to acquisitions, interest income and expense and income taxes; adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets, expenses related to long-term incentives and contingent consideration related to acquisitions and the estimated tax impact of such adjustments; revenue growth (including by distribution channel) on a constant currency basis as the increase in current period revenues over prior period revenues, utilizing fixed exchange rates for translating foreign currency revenues for all periods in the comparison; adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue; billings as revenue adjusted for the change in deferred revenue during the period; and free cash flow as cash provided by operating activities, adjusted for capital expenditures, content acquisition, and, with respect to the three months ended March 31, 2020, a payment associated with long-term incentives related to our 2017 acquisition of Flashstock. These figures have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. Shutterstock cautions investors that non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

Shutterstock's management believes that adjusted EBITDA, adjusted net income, revenue growth (including by distribution channel) on a constant currency basis, adjusted EBITDA margin, billings and free cash flow are useful to investors because these measures enable investors to analyze Shutterstock's operating results on the same basis as that used by management. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin and adjusted net income provide useful information to investors about the performance of the Company's overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to Shutterstock's underlying operating performance; and revenue growth (including by distribution channel) on a constant currency basis provides useful information to investors by eliminating the effect of foreign currency fluctuations that are not directly attributable to Shutterstock's operating performance. Management also believes that providing these non-GAAP financial measures enhances the comparability for investors in assessing Shutterstock's financial reporting. Shutterstock's management believes that free cash flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in property and equipment to support the Company's ongoing business operations and after excluding the impact of nonrecurring payments associated with long-term incentives related to our 2017 acquisition of Flashstock, and provides them with the same measures that management uses as the basis for making resource allocation decisions.

Shutterstock's management also uses the non-GAAP financial measures adjusted EBITDA, adjusted net income, revenue growth (including by distribution channel) on a constant currency basis, adjusted EBITDA margin, billings and free cash flow, in conjunction with GAAP financial measures, as an integral part of managing the business and to, among other things: (i) monitor and evaluate the performance of Shutterstock's business operations, financial performance and overall liquidity; (ii) facilitate management's internal comparisons of the historical operating performance of its business operations; (iii) facilitate management's external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of Shutterstock's management team and, together with other operational objectives, as a measure in evaluating employee compensation and bonuses; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.

Reconciliations of the differences between adjusted EBITDA, adjusted net income, billings, free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, are presented under the headings "Reconciliation of Non-GAAP Financial Information to GAAP" and "Supplemental Financial Data" immediately following the Consolidated Balance Sheets.

EARNINGS TELECONFERENCE INFORMATION

The Company will discuss its second quarter and full year financial results during a teleconference today, July 28, 2020, at 8:30 AM ET. The conference call can be accessed in the U.S. at (844) 634-1442 or outside the U.S. at (615) 247-0239 with the conference ID# 2957776. A live audio webcast of the call will also be available simultaneously at http://investor.shutterstock.com.

Following completion of the call, a recorded replay of the webcast will be available in the investor relations section of Shutterstock's website. A telephone replay of the call will also be available until August 5, 2020 in the U.S. at (855) 859-2056 or outside the U.S. at (404) 537-3406 with the conference ID# 2957776.

Additional investor information can be accessed at http://investor.shutterstock.com.

ABOUT SHUTTERSTOCK

Shutterstock, Inc. (NYSE: SSTK), directly and through its group subsidiaries, is a leading global provider of high-quality licensed photographs, vectors, illustrations, videos and music to businesses, marketing agencies and media organizations around the world. Working with its growing community of over 1 million contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 340 million images and more than 19 million footage clips available.

Headquartered in New York City, Shutterstock has offices around the world and customers in more than 150 countries. The Company also owns Bigstock, a value-oriented stock media offering; Shutterstock Custom, a custom content creation platform; Offset, a high-end image collection; PremiumBeat, a curated royalty-free music library; and Shutterstock Editorial, a premier source of editorial images for the world's media.

For more information, please visit www.shutterstock.com and follow Shutterstock on Twitter and on Facebook.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to, statements regarding management's future business, future results of operations or financial condition, new or planned features, products or services, management strategies, Shutterstock's expectations regarding financial outlook and future growth and profitability and statements regarding anticipated improvements in operations. You can identify forward-looking statements by words such as "may," "will," "would," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "plan" and other similar expressions. However, not all forward-looking statements contain these words. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors including risks related to any changes to or the effects on liabilities, financial condition, future capital expenditures, revenue, expenses, net income or loss, synergies and future prospects; our inability to continue to attract and retain customers and contributors to our online marketplace for creative content; competitive factors; our inability to innovate technologically or develop, market and offer new products and services; costs related to litigation or infringement claims, indemnification claims and the inability to prevent misuse of our content; our inability to increase market awareness of Shutterstock and our products and services; our inability to effectively manage our growth; our inability to grow at historic growth rates or at all; technological interruptions that impair access to our websites; assertions by third parties of infringement of intellectual property rights by Shutterstock, our inability to effectively manage risks associated with operating internationally; our exposure to foreign exchange rate risk; our inability to address risks associated with sales to large corporate customers; government regulation of the internet; increasing regulation related to the handling of personal data; actions by governments to restrict access to our products and services; our inability to effectively expand our operations into new products, services and technologies; our inability to protect the confidential information of customers; increased tax liabilities associated with our worldwide operations, including our exposure to withholding, sales and transaction tax liabilities; the effect of the Tax Cuts and Jobs Act of 2017; public health crises including the COVID-19 pandemic; general economic and political conditions worldwide, including disruption and volatility caused by COVID-19 and any resulting economic recession; our inability to successfully integrate acquisitions and the associated technology and achieve operational efficiencies; and other factors and risks discussed under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other documents that we may file from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, Shutterstock's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. The forward-looking statements contained in this press release are made only as of this date and Shutterstock assumes no obligation to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Shutterstock, Inc.

Media Contact: Niamh Hughes, 917-563-4991, press@shutterstock.com; Investor Contact: Chris Suh, 646-257-4825, ir@shutterstock.com