UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| FORM | | ||||
| CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
| Date of Report (Date of earliest event reported): | |||||
| (Exact name of registrant as specified in its charter) | |||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices, including zip code)
(646 ) 710-3417
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, 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:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||
| Emerging growth company | |||||
| ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ||||
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On October 26, 2021, Shutterstock, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal period ended September 30, 2021. A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated herein by reference. In addition, a copy of the presentation slides which will be referenced on the Company’s earnings call at 8:30 a.m. Eastern Time on Tuesday, October 26, 2021 is furnished as Exhibit 99.2 to this current report and incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 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 7.01 | Regulation FD Disclosure. | ||||
The information provided above in “Item 2.02 Results of Operations and Financial Condition” is incorporated by reference in this Item 7.01.
| Item 9.01 | Financial Statements and Exhibits. | ||||
(d) Exhibits.
99.1Press release entitled “Shutterstock Reports Third Quarter 2021 Financial Results” dated October 26, 2021
99.2Presentation slides referenced on the earnings call held by Shutterstock, Inc. on October 26, 2021
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
EXHIBIT INDEX
| Exhibit No. | Exhibit Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||
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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.
| SHUTTERSTOCK, INC. | ||||||||
| Dated: October 26, 2021 | By: | /s/ Jarrod Yahes | ||||||
| Jarrod Yahes | ||||||||
| Chief Financial Officer | ||||||||
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EXHIBIT 99.1
Shutterstock Reports Third Quarter 2021 Financial Results
Raises 2021 Full Year Guidance
New York, NY - October 26, 2021 - Shutterstock, Inc. (NYSE: SSTK) (the “Company”), a leading global creative platform offering full-service solutions, high-quality content, and applications for brands, businesses and media companies, today announced financial results for the third quarter ended September 30, 2021.
Commenting on the Company’s performance, Stan Pavlovsky, the Company’s Chief Executive Officer, said, “In the third quarter, Shutterstock experienced strong revenue growth bolstered by continued momentum in our Enterprise channel. I am also pleased to announce today the launch of FLEX 25, our first multi-asset eCommerce subscription product.
“With the acquisition of PicMonkey, we have made significant progress towards our strategy of incorporating easy-to-use design and editing tools into our creative platform. Our platform, Creative Flow, brings together a suite of applications powered by creative insights designed to enhance creativity, encourage collaboration and allows customers – from small businesses to global enterprises – to create with confidence.”
Third Quarter 2021 highlights compared to Third Quarter 2020:
Financial Highlights
•Revenue increased 18% to $194.4 million. On a constant currency basis, revenue increased 17%.
•Income from operations decreased 24% to $22.2 million.
•Net income decreased 29% to $16.0 million.
•Adjusted EBITDA decreased 6% to $44.4 million.
•Diluted EPS decreased by 31% to $0.43 per share.
•Adjusted net income per diluted share decreased by 13% to $0.70 per share.
Key Operating Metrics
•Subscribers increased 32% to 336,000.
•Subscriber revenue increased 21% to $81.5 million.
•Average revenue per customer, increased 10% to $361.
•Paid downloads increased 2% to 44.3 million.
•Revenue per download increased 11% to $4.20.
•Image collection of approximately 390 million images.
•Footage collection of approximately 23 million clips.
SHUTTERSTOCK INVESTOR RELATIONS MICRO SITE
Accessible at content.shutterstock.com/investor-report/index.html.
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THIRD QUARTER RESULTS
Revenue
Third quarter revenue of $194.4 million increased $29.2 million or 18% as compared to the third quarter of 2020. Revenue generated through our E-commerce sales channel increased 18% as compared to the third quarter of 2020, to $121.7 million, and represented 63% of total revenue in the third quarter of 2021. E-commerce revenue growth was driven by higher subscriber revenue and also benefited from our acquisitions of TurboSquid and PicMonkey, which were completed on February 1, 2021 and September 3, 2021, respectively. Revenue from our Enterprise sales channel increased 17% as compared to the third quarter of 2020, to $72.7 million, and represented 37% of third quarter revenue in 2021. Enterprise revenue growth was driven by billings momentum over the last several quarters, supported by sales execution, and the introduction of new subscription products such as SMB Flex.
On a constant currency basis, revenue increased 17% in the third quarter of 2021 as compared to the third quarter of 2020. On a constant currency basis, E-commerce revenue increased by 18% in the third quarter of 2021, as compared to the third quarter of 2020. On a constant currency basis, Enterprise revenue increased by 15% in the third quarter of 2021, as compared to the third quarter of 2020.
Net income and net income per diluted share
Net income of $16.0 million decreased $6.6 million as compared to $22.6 million for the third quarter in 2020. Net income per diluted share was $0.43, as compared to $0.62 for the same period in 2020. This decrease is due primarily to growth in our operating expenses, driven by increased investment in marketing initiatives including increased performance marketing and brand spending, increased sales commissions and expenditures required to acquire and integrate our third quarter acquisitions. Our higher operating expenses were partially offset by increased revenue.
Adjusted net income per diluted share was $0.70 as compared to $0.80 for the third quarter of 2020, a decrease of $0.10 per diluted share.
Adjusted EBITDA
Adjusted EBITDA of $44.4 million for the third quarter of 2021 decreased by $3.0 million, or 6%, as compared to the third quarter of 2020, due primarily to higher operating expenses, partially offset by increased revenue. The adjusted EBITDA margin decreased to 22.8% from 28.7% in the third quarter of 2020.
THIRD QUARTER LIQUIDITY
Our cash and cash equivalents decreased by $110.5 million to $300.6 million at September 30, 2021, as compared with $411.0 million as of June 30, 2021. This decrease was driven by $151.4 million used in investing activities and $12.7 million used in financing activities, partially offset by $54.6 million of net cash provided by our operating activities.
Net cash provided by our operating activities was driven by our operating income, in addition to changes in the timing of payments pertaining to operating expenses. Cash used in investing activities primarily consists of $109.6 million cash used in the acquisition of PicMonkey, $31.4 million related to the acquisitions of Pattern89, Inc., Datasine Limited and assets from Shotzr, Inc., and $10.3 million related to capital expenditures and content acquisition. Cash used in financing activities consists primarily of $7.7 million related to the payment of the quarterly cash dividend, $4.2 million for the repurchase of common stock under our share repurchase program, and $1.0 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards.
Free cash flow was $44.3 million for the third quarter of 2021, a decrease of $12.7 million from the third quarter of 2020. This change was primarily driven by lower cash flows from operating activities.
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QUARTERLY CASH DIVIDEND
During the three and nine months ended September 30, 2021, the Company declared and paid cash dividends of $0.21 and $0.63 per common share, respectively, or $7.7 million and $23.0 million, respectively.
On October 18, 2021, the Board of Directors declared a dividend of $0.21 per share of outstanding common stock, payable on December 16, 2021 to stockholders of record at the close of business on December 2, 2021.
KEY OPERATING METRICS
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Subscribers (end of period)(1) | 336,000 | 255,000 | 336,000 | 255,000 | ||||||||||||||||||||||
Subscriber revenue (in millions)(2) | $ | 81.5 | $ | 67.6 | $ | 236.1 | $ | 194.2 | ||||||||||||||||||
Average revenue per customer (last twelve months)(3) | $ | 361 | $ | 328 | $ | 361 | $ | 328 | ||||||||||||||||||
Paid downloads (in millions)(4) | 44.3 | 43.4 | 135.0 | 134.2 | ||||||||||||||||||||||
Revenue per download(5) | $4.20 | $3.79 | $4.11 | $3.60 | ||||||||||||||||||||||
Content in our collection (end of period, in millions)(6): | ||||||||||||||||||||||||||
| Images | 390 | 350 | 390 | 350 | ||||||||||||||||||||||
| Footage clips | 23 | 20 | 23 | 20 | ||||||||||||||||||||||
_______________________________________________________________________________________________________________________
(1) Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period excluding customers from our acquisitions of TurboSquid and PicMonkey.
(2) Subscriber revenue is defined as the revenue generated from subscribers during the period excluding revenues from our acquisitions of TurboSquid and PicMonkey.
(3) Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers, excluding revenues from our recent acquisitions of TurboSquid and PicMonkey. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period, excluding customers from our recent acquisitions of TurboSquid and PicMonkey.
(4) Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to custom content, downloads of content that are offered to customers for no charge, including our free image of the week and downloads associated with our computer vision offering.
(5) Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from custom content, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering.
(6) Represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library on shutterstock.com at the end of the period. This collection metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, custom content and certain content that may be licensed for editorial use only.
2021 GUIDANCE UPDATE
The Company’s revised expectations for the full year 2021 are as follows:
•Revenue of $765 million to $770 million, representing annual growth of 14.75% to 15.5%, an increase from the previous guidance of $740 million to $750 million.
•Adjusted EBITDA of between $185 million to $191 million, an increase from the previous guidance of $175 million to $180 million.
•Adjusted net income per diluted share of between $3.18 to $3.29, an increase from the previous guidance of $2.80 to $2.95 per diluted share.
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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 EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), 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, interest income and expense and income taxes; adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue; adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets and the estimated tax impact of such adjustments; adjusted net income per diluted common share as adjusted net income divided by weighted average diluted shares; 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; billings as revenue adjusted for the change in deferred revenue, excluding deferred revenue acquired through business combinations; and free cash flow as cash provided by operating activities, adjusted for capital expenditures, content acquisition, and, with respect to the year ended December 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 only 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), 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, adjusted net income and adjusted net income per diluted share 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 (expressed as a percentage) 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, 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. We do not provide a reconciliation of
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adjusted EBITDA guidance to net income guidance or a reconciliation of adjusted net income per diluted share guidance to net income per diluted share guidance, because we are unable to calculate with reasonable certainty the impact of potential future transactions, including, but not limited to, capital structure transactions, restructuring, acquisitions, divestitures or other events and asset impairments, without unreasonable effort. These amounts depend on various factors and could have a material impact on net income and net income per diluted share, but may be excluded from adjusted EBITDA and adjusted net income per diluted share. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
EARNINGS TELECONFERENCE INFORMATION
The Company will discuss its third quarter and full year financial results during a teleconference today, October 26, 2021, 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# 9774218. 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 November 2, 2021 in the U.S. at (855) 859-2056 or outside the U.S. at (404) 537-3406 with the conference ID# 9774218.
Additional investor information can be accessed at http://investor.shutterstock.com.
ABOUT SHUTTERSTOCK
Shutterstock, Inc. (NYSE: SSTK), is a leading global creative platform offering full-service solutions, high-quality content, and applications for brands, businesses and media companies. Directly and through its group subsidiaries, Shutterstock’s comprehensive collection includes high-quality licensed photographs, vectors, illustrations, videos, 3D models and music. Working with its growing community of over 1.9 million contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 390 million images and more than 23 million video clips available.
Headquartered in New York City, Shutterstock has offices around the world and customers in more than 150 countries. The Company also owns PicMonkey, a leading online graphic design and image editing platform; Offset, a high-end image collection; Shutterstock Studios, an end-to-end custom creative shop; PremiumBeat, a curated royalty-free music library; Shutterstock Editorial, a premier source of editorial images and videos for the world’s media; TurboSquid, a leading 3D content marketplace; Amper Music, an AI-driven music platform; and Bigstock, a value-oriented stock media offering.
For more information, please visit www.shutterstock.com and follow Shutterstock on Twitter and on Facebook.
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FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, particularly in the discussion under the caption “2021 Guidance Update.” All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding guidance, industry prospects, future business, future results of operations or financial condition, future dividends, our ability to consummate acquisitions and integrate the businesses we have acquired or may acquire into our existing operations, new or planned features, products or services, management strategies, our competitive position and the COVID-19 pandemic. You can identify forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “predict,” “project,” “seek,” “potential,” “opportunities” and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, those discussed under the caption “Risk Factors” in our most recently filed Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on February 11, 2021 (our “2020 Form 10-K”), and in our consolidated financial statements, related notes, and the other information appearing elsewhere in the 2020 Form 10-K, our Quarterly Report on Form 10-Q filed with the SEC on October 26, 2021, and our other filings with the SEC. Given these risks and uncertainties, you should not place undue reliance on any forward-looking statements. The forward-looking statements contained in this press release are made only as of the date hereof, and Shutterstock does not intend, and, except as required by law, we undertake no obligation to update any forward-looking statements contained herein after the date of this press release to reflect actual results or future events or circumstances.
| Investor Relations Contact | Press Contact | ||||
| Chris Suh | Aimée Leabon | ||||
| ir@shutterstock.com | press@shutterstock.com | ||||
| 646-257-4825 | 917-563-4991 | ||||
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Shutterstock, Inc.
Consolidated Statements of Operations
(In thousands, except for per share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Revenue | $ | 194,439 | $ | 165,227 | $ | 567,632 | $ | 485,742 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Cost of revenue | 69,634 | 60,331 | 199,223 | 193,265 | ||||||||||||||||||||||
| Sales and marketing | 54,456 | 36,655 | 142,273 | 114,872 | ||||||||||||||||||||||
| Product development | 13,565 | 10,617 | 36,289 | 36,171 | ||||||||||||||||||||||
| General and administrative | 34,615 | 28,277 | 96,335 | 83,761 | ||||||||||||||||||||||
| Total operating expenses | 172,270 | 135,880 | 474,120 | 428,069 | ||||||||||||||||||||||
| Income from operations | 22,169 | 29,347 | 93,512 | 57,673 | ||||||||||||||||||||||
| Other (expense) / income, net | (1,749) | (1,168) | (2,888) | (506) | ||||||||||||||||||||||
| Income before income taxes | 20,420 | 28,179 | 90,624 | 57,167 | ||||||||||||||||||||||
| Provision for income taxes | 4,391 | 5,597 | 15,627 | 11,280 | ||||||||||||||||||||||
| Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 | ||||||||||||||||||
| Earnings per share | ||||||||||||||||||||||||||
| Basic | $ | 0.44 | $ | 0.63 | $ | 2.05 | $ | 1.28 | ||||||||||||||||||
| Diluted | $ | 0.43 | $ | 0.62 | $ | 2.01 | $ | 1.27 | ||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||
| Basic | 36,622 | 35,962 | 36,510 | 35,713 | ||||||||||||||||||||||
| Diluted | 37,417 | 36,494 | 37,285 | 36,095 | ||||||||||||||||||||||
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Shutterstock, Inc.
Consolidated Balance Sheets
(In thousands, except par value amount)
(unaudited)
| September 30, 2021 | December 31, 2020 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 300,579 | $ | 428,574 | ||||||||||
Accounts receivable, net of allowance of $2,463 and $4,942 | 45,323 | 43,846 | ||||||||||||
| Prepaid expenses and other current assets | 29,774 | 16,650 | ||||||||||||
| Total current assets | 375,676 | 489,070 | ||||||||||||
| Property and equipment, net | 48,866 | 50,906 | ||||||||||||
| Right-of-use assets | 36,194 | 39,552 | ||||||||||||
| Intangibles assets, net | 130,196 | 25,765 | ||||||||||||
| Goodwill | 219,822 | 89,413 | ||||||||||||
| Deferred tax assets, net | 8,721 | 13,566 | ||||||||||||
| Other assets | 21,702 | 21,372 | ||||||||||||
| Total assets | $ | 841,177 | $ | 729,644 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 5,118 | $ | 2,442 | ||||||||||
| Accrued expenses | 95,043 | 67,909 | ||||||||||||
| Contributor royalties payable | 29,516 | 26,336 | ||||||||||||
| Deferred revenue | 171,131 | 149,843 | ||||||||||||
| Other liabilities | 14,646 | 10,399 | ||||||||||||
| Total current liabilities | 315,454 | 256,929 | ||||||||||||
| Deferred tax liability, net | 3,193 | — | ||||||||||||
| Lease liabilities | 38,209 | 41,620 | ||||||||||||
| Other non-current liabilities | 9,425 | 9,170 | ||||||||||||
| Total liabilities | 366,281 | 307,719 | ||||||||||||
| Commitment and contingencies | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
| Common stock, $0.01 par value; 200,000 shares authorized; 39,191 and 38,803 shares issued and 36,591 and 36,245 shares outstanding as of September 30, 2021 and December 31, 2020, respectively | 392 | 389 | ||||||||||||
| Treasury stock, at cost; 2,600 and 2,558 shares as of September 30, 2021 and December 31, 2020, respectively | (104,885) | (100,027) | ||||||||||||
| Additional paid-in capital | 368,320 | 360,939 | ||||||||||||
| Accumulated other comprehensive loss | (9,233) | (7,681) | ||||||||||||
| Retained earnings | 220,302 | 168,305 | ||||||||||||
| Total stockholders’ equity | 474,896 | 421,925 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 841,177 | $ | 729,644 | ||||||||||
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Shutterstock, Inc.
Consolidated Statements of Cash Flows
(In thousands, except par value amount)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||||||||
| Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 | ||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||||
| Depreciation and amortization | 13,488 | 9,750 | 33,731 | 31,120 | ||||||||||||||||||||||
| Deferred taxes | (1,362) | (899) | 420 | (206) | ||||||||||||||||||||||
| Non-cash equity-based compensation | 8,743 | 8,285 | 26,639 | 17,681 | ||||||||||||||||||||||
| Bad debt expense | (31) | 500 | 182 | 1,586 | ||||||||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||||||||
| Accounts receivable | 4,428 | 144 | (1,628) | (3,135) | ||||||||||||||||||||||
| Prepaid expenses and other current and non-current assets | (5,577) | 7,135 | (11,469) | 7,184 | ||||||||||||||||||||||
| Accounts payable and other current and non-current liabilities | 18,280 | 9,342 | 24,639 | 5,297 | ||||||||||||||||||||||
| Long-term incentives related to acquisitions | — | — | — | (7,759) | ||||||||||||||||||||||
| Contributor royalties payable | (550) | 657 | 1,200 | (183) | ||||||||||||||||||||||
| Deferred revenue | 1,194 | 6,386 | 13,147 | 2,753 | ||||||||||||||||||||||
| Net cash provided by operating activities | $ | 54,642 | $ | 63,882 | $ | 161,858 | $ | 100,225 | ||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||||||||||||
| Capital expenditures | (5,830) | (6,311) | (21,167) | (20,277) | ||||||||||||||||||||||
Business combination, net of cash acquired | (109,607) | — | (181,772) | — | ||||||||||||||||||||||
Asset acquisitions | (31,440) | — | (31,440) | — | ||||||||||||||||||||||
| Acquisition of content | (4,494) | (530) | (7,890) | (2,107) | ||||||||||||||||||||||
| Security deposit (payment) / release | (73) | 191 | (138) | 296 | ||||||||||||||||||||||
| Net cash used in investing activities | $ | (151,444) | $ | (6,650) | $ | (242,407) | $ | (22,088) | ||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||||||||||
Net proceeds from issuance of common stock | — | 23,153 | — | 23,153 | ||||||||||||||||||||||
| Purchase of treasury shares | (4,171) | — | (4,171) | — | ||||||||||||||||||||||
| Proceeds from exercise of stock options | 217 | — | 2,018 | 629 | ||||||||||||||||||||||
| Cash paid related to settlement of employee taxes related to RSU vesting | (1,044) | (425) | (21,273) | (3,861) | ||||||||||||||||||||||
| Payment of cash dividend | (7,683) | (6,149) | (23,000) | (18,247) | ||||||||||||||||||||||
Net cash (used in) / provided by financing activities | $ | (12,681) | $ | 16,579 | $ | (46,426) | $ | 1,674 | ||||||||||||||||||
| Effect of foreign exchange rate changes on cash | (984) | (1,841) | (1,020) | (2,558) | ||||||||||||||||||||||
| Net (decrease) / increase in cash, cash equivalents and restricted cash | (110,467) | 71,970 | (127,995) | 77,253 | ||||||||||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 411,046 | 311,157 | 428,574 | 305,874 | ||||||||||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 300,579 | $ | 383,127 | $ | 300,579 | $ | 383,127 | ||||||||||||||||||
| Supplemental Disclosure of Cash Information: | ||||||||||||||||||||||||||
| Cash paid for income taxes | $ | 5,316 | $ | 1,840 | $ | 14,811 | $ | 2,767 | ||||||||||||||||||
9
Shutterstock, Inc.
Reconciliation of Non-GAAP Financial Information to GAAP
(In thousands, except per share information)
(unaudited)
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow are not financial measures prepared in accordance with United States generally accepted accounting principles (GAAP). Such non-GAAP financial measures should not be construed as alternatives to any other measures of performance determined in accordance with GAAP. Investors are cautioned 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.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 | ||||||||||||||||||
| Add / (less) Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Depreciation and amortization | 13,488 | 9,750 | 33,731 | 31,120 | ||||||||||||||||||||||
| Non-cash equity-based compensation | 8,743 | 8,285 | 26,639 | 17,681 | ||||||||||||||||||||||
Other adjustments, net (1) | 1,749 | 1,168 | 2,888 | 506 | ||||||||||||||||||||||
| Provision for income taxes | 4,391 | 5,597 | 15,627 | 11,280 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 44,400 | $ | 47,382 | $ | 153,882 | $ | 106,474 | ||||||||||||||||||
| Adjusted EBITDA margin | 22.8 | % | 28.7 | % | 27.1 | % | 21.9 | % | ||||||||||||||||||
____________________________________________________________________________________________________________________
(1)Other adjustments, net includes foreign currency transaction gains and losses, and interest income and expense.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 | ||||||||||||||||||
| Add / (less) Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Non-cash equity-based compensation | 8,743 | 8,285 | 26,639 | 17,681 | ||||||||||||||||||||||
Tax effect of non-cash equity-based compensation (2) | (2,055) | (1,947) | (6,260) | (4,155) | ||||||||||||||||||||||
| Acquisition-related amortization expense | 4,754 | 531 | 7,253 | 1,613 | ||||||||||||||||||||||
Tax effect of acquisition-related amortization expense (2) | (1,117) | (125) | (1,704) | (379) | ||||||||||||||||||||||
| Adjusted net income | $ | 26,354 | $ | 29,326 | $ | 100,925 | $ | 60,647 | ||||||||||||||||||
| Net income per diluted share | $ | 0.43 | $ | 0.62 | $ | 2.01 | $ | 1.27 | ||||||||||||||||||
| Adjusted net income per diluted share | $ | 0.70 | $ | 0.80 | $ | 2.71 | $ | 1.68 | ||||||||||||||||||
| Weighted average diluted shares | 37,417 | 36,494 | 37,285 | 36,095 | ||||||||||||||||||||||
____________________________________________________________________________________________________________________
(2)Statutory tax rates are used to calculate the tax effect of the adjustments.
10
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Total Revenues | $ | 194,439 | $ | 165,227 | $ | 567,632 | $ | 485,742 | ||||||||||||||||||
| Revenue growth | 18 | % | 4 | % | 17 | % | — | % | ||||||||||||||||||
| Revenue growth on a constant currency basis | 17 | % | 3 | % | 15 | % | 1 | % | ||||||||||||||||||
| E-commerce revenues | $ | 121,707 | $ | 102,816 | $ | 360,822 | $ | 300,716 | ||||||||||||||||||
| Revenue growth: E-commerce | 18 | % | 7 | % | 20 | % | 3 | % | ||||||||||||||||||
| Revenue growth: E-commerce on a constant currency basis | 18 | % | 6 | % | 18 | % | 3 | % | ||||||||||||||||||
| Enterprise revenues | $ | 72,732 | $ | 62,411 | $ | 206,810 | $ | 185,026 | ||||||||||||||||||
| Revenue growth: Enterprise | 17 | % | (1) | % | 12 | % | (4) | % | ||||||||||||||||||
| Revenue growth: Enterprise on a constant currency basis | 15 | % | (1) | % | 9 | % | (4) | % | ||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 54,642 | $ | 63,882 | $ | 161,858 | $ | 100,225 | ||||||||||||||||||
| Capital expenditures | (5,830) | (6,311) | (21,167) | (20,277) | ||||||||||||||||||||||
| Content acquisition | (4,494) | (530) | (7,890) | (2,107) | ||||||||||||||||||||||
Payments associated with long-term incentives related to acquisitions | — | — | — | 7,759 | ||||||||||||||||||||||
| Free cash flow | $ | 44,318 | $ | 57,041 | $ | 132,801 | $ | 85,600 | ||||||||||||||||||
11
Shutterstock, Inc.
Supplemental Financial Data
(unaudited)
Historical Operating Metrics
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | |||||||||||||||||||||||||||||||||||||||||||
Subscribers (end of period, in thousands) (1) | 336 | 321 | 306 | 281 | 255 | 223 | 209 | 194 | ||||||||||||||||||||||||||||||||||||||||||
Subscriber revenue (in millions) (2) | $ | 81.5 | $ | 78.1 | $ | 76.5 | $ | 71.1 | $ | 67.6 | $ | 62.7 | $ | 63.9 | $ | 60.5 | ||||||||||||||||||||||||||||||||||
Average revenue per customer (last twelve months) (3) | $ | 361 | $ | 356 | $ | 342 | $ | 333 | $ | 328 | $ | 326 | $ | 329 | $ | 330 | ||||||||||||||||||||||||||||||||||
Paid downloads (in millions) (4) | 44.3 | 44.9 | 45.8 | 45.8 | 43.4 | 44.0 | 46.8 | 47.7 | ||||||||||||||||||||||||||||||||||||||||||
Revenue per download (5) | $ | 4.20 | $ | 4.17 | $ | 3.96 | $ | 3.91 | $ | 3.79 | $ | 3.61 | $ | 3.42 | $ | 3.44 | ||||||||||||||||||||||||||||||||||
Content in our collection (end of period, in millions): (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Images | 390 | 380 | 370 | 360 | 350 | 340 | 330 | 314 | ||||||||||||||||||||||||||||||||||||||||||
| Footage clips | 23 | 22 | 21 | 21 | 20 | 19 | 18 | 17 | ||||||||||||||||||||||||||||||||||||||||||
Revenue by Sales Channel and Billings(8)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | |||||||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| E-commerce revenue | $ | 121.7 | $ | 120.7 | $ | 118.4 | $ | 111.8 | $ | 102.8 | $ | 98.2 | $ | 99.7 | $ | 100.9 | ||||||||||||||||||||||||||||||||||
| Enterprise revenue | 72.7 | 69.2 | 64.9 | 69.1 | 62.4 | 61.1 | 61.5 | 65.5 | ||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 194.4 | $ | 189.9 | $ | 183.3 | $ | 180.9 | $ | 165.2 | $ | 159.2 | $ | 161.3 | $ | 166.4 | ||||||||||||||||||||||||||||||||||
Change in total deferred revenue(7) | $ | 0.7 | $ | 8.3 | $ | 3.8 | $ | 5.2 | $ | 6.4 | $ | (0.7) | $ | (3.0) | $ | 4.4 | ||||||||||||||||||||||||||||||||||
| Total billings | $ | 195.1 | $ | 198.2 | $ | 187.1 | $ | 186.1 | $ | 171.7 | $ | 158.6 | $ | 158.2 | $ | 170.8 | ||||||||||||||||||||||||||||||||||
_______________________________________________________________________________________________________________________
(1)Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period excluding customers from our acquisitions of TurboSquid and PicMonkey.
(2)Subscriber revenue is defined as the revenue generated from subscribers during the period excluding revenues from our acquisitions of TurboSquid and PicMonkey.
(3)Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers, excluding revenues from our recent acquisitions of TurboSquid and PicMonkey. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period, excluding customers from our recent acquisitions of TurboSquid and PicMonkey.
(4)Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to custom content, downloads of content that are offered to customers for no charge, including our free image of the week and downloads associated with our computer vision offering.
(5)Revenue per download is defined as the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from custom content, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering.
(6)Represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library on shutterstock.com at the end of the period. This collection metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, custom content and certain content that may be licensed for editorial use only.
(7)Change in total deferred revenue excludes deferred revenue acquired through business combinations.
(8)Certain amounts in the table may not foot due to rounding.
12
Please remember this information is confidential. Third Quarter 2021 October 26, 2021
2 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding guidance, industry prospects, future business, future results of operations or financial condition, future dividends, our ability to consummate acquisitions and integrate the businesses we have acquired or may acquire into our existing operations, new or planned features, products or services, management strategies, our competitive position and the COVID-19 pandemic. You can identify forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “predict,” “project,” “seek,” “potential,” “opportunities” and other similar expressions and the negatives of such expressions. However, not all forward- looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained in this presentation. Such risks and uncertainties include, among others, those discussed under the caption “Risk Factors” in our most recently filed Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on February 11, 2021 (our “2020 Form 10-K”), and in our consolidated financial statements, related notes, and the other information appearing elsewhere in the 2020 Form 10-K, our Quarterly Report on Form 10-Q filed with the SEC on October 26, 2021, and our other filings with the SEC. Given these risks and uncertainties, you should not place undue reliance on any forward-looking statements. The forward-looking statements contained in this presentation are made only as of the date of our most recent public filings, and we do not intend, and, except as required by law, we undertake no obligation to update any such forward-looking statement after the date it is made to reflect actual results or future events or circumstances. The information contained in this presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities or the solicitation of any vote or approval. Any such offer or solicitation would be made only by means of a registration statement (including a prospectus) filed with the SEC, after such registration statement becomes effective. Forward-Looking Statements
3 To supplement our 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth on a constant currency basis (expressed as a percentage), billings and free cash flow. We define adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, foreign currency transaction gains and losses, interest income and expense and income taxes; adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue; adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets and the estimated tax impact of such adjustments; adjusted net income per diluted common share as adjusted net income divided by weighted average diluted shares; revenue growth on a constant currency basis (expressed as a percentage) 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; billings as revenue adjusted for the change in deferred revenue, excluding deferred revenue acquired through business combinations; and free cash flow as cash provided by operating activities, adjusted for capital expenditures, content acquisition, and, 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 Technology, Inc. ("Flashstock"). These figures have not been calculated in accordance with GAAP, should be considered only in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. We caution 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth on a constant currency basis (expressed as a percentage), billings and free cash flow are useful to investors because these measures enable our investors to analyze our operating results on the same basis as that used by management. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted share 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 on a constant currency basis (expressed as a percentage) 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth on a constant currency basis (expressed as a percentage), 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 EBITDA margin, adjusted net income, adjusted net income per diluted share, billings and free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, is presented immediately following the "Liquidity and Capital Allocation" slide. We do not provide a reconciliation of adjusted EBITDA guidance to net income guidance or a reconciliation of adjusted net income per diluted share guidance to net income per diluted share guidance, because we are unable to calculate with reasonable certainty the impact of potential future transactions, including, but not limited to, capital structure transactions, restructuring, acquisitions, divestitures or other events and asset impairments, without unreasonable effort. These amounts depend on various factors and could have a material impact on net income and net income per diluted share, but may be excluded from adjusted EBITDA and adjusted net income per diluted share. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Non-GAAP Financial Measures
4 Compared to Third Quarter 2020: • Revenue increased 18% to $194.4 million. ▪ On a constant currency basis, revenue increased 17%. • Net income decreased 29% to $16.0 million. • Adjusted EBITDA decreased 6% to $44.4 million. • Net income per diluted share decreased by 31% to $0.43. • Adjusted net income per diluted share decreased by 13% to $0.70. • Cash provided by operating activities of $54.6 million in Q3 2021 compared to $63.9 million in Q3 2020. • Free cash flow was $44.3 million in Q3 2021 compared to $57.0 million in Q3 2020. Third Quarter 2021 Financial Highlights
5 Compared to Third Quarter 2020: • Subscribers increased 32%, to 336,000. • Subscriber revenue increased 21%, to $81.5 million. • Average revenue per customer (LTM) increased 10% to $361. • Paid downloads increased 2% to 44.3 million. • Image library of approximately 390 million images. • Footage library of approximately 23 million footage clips. • More than 1.9 million contributors made their images, footage clips and music tracks available on Shutterstock’s platform, compared to over 1.5 million in the prior year. • More than 2.0 million customers contributed to revenue over the past 12 months, up from over 1.9 million last year. Third Quarter 2021 Operating Highlights
6 Liquidity Cash Flows: • Cash and cash equivalents decreased $110.5 million during the three months ended September 30, 2021 to $300.6 million. • For the three months ended September 30, 2021: ◦ Operating cash inflows were $54.6 million. ◦ Investing cash outflows were $151.4 million, primarily consisting of $109.6 million cash used in the acquisition of PicMonkey, $31.4 million related to the acquisitions of Pattern89, Inc., Datasine Limited and assets from Shotzr, Inc., and $10.3 million related to capital expenditures and content acquisition. ◦ Financing cash outflows were $12.7 million, which primarily consisted of $7.7 million from our quarterly dividend, $4.2 million for the repurchase of common stock under our share repurchase program and $1.0 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards. ◦ Free cash flows were $44.3 million.
7 Capital Allocation Quarterly Cash Dividend: • On October 18, 2021, the Board of Directors declared a dividend of $0.21 per share of outstanding common stock, payable on December 16, 2021 to stockholders of record at the close of business on December 2, 2021. Share Repurchase Program: • During the three months ended September 30, 2021, the Company repurchased approximately 41,900 shares of its common stock at an average per share cost of $115.95.
8 Consolidated Quarterly Financial Results 1. Other adjustments, net includes unrealized foreign currency transaction gains and losses and interest income and expense. ($ in thousands) Three Months Ended September 30, 2021 2020 % Change Inc. / (Dec.) Total revenues $ 194,439 $ 165,227 18 % Cost of revenue 69,634 60,331 15 % Sales and marketing 54,456 36,655 49 % Product development 13,565 10,617 28 % General and administrative 34,615 28,277 22 % Total operating expenses 172,270 135,880 27 % Income from operations 22,169 29,347 (24)% Other (expense) / income, net (1,749) (1,168) 50 % Income before income taxes 20,420 28,179 (28)% Provision for income taxes 4,391 5,597 (22)% Net Income $ 16,029 $ 22,582 (29)% Plus: Depreciation & amortization 13,488 9,750 38 % Plus: Non-cash equity-based compensation 8,743 8,285 6 % Plus: Other adjustments, net (1) 1,749 1,168 50 % Plus: Provision for income taxes 4,391 5,597 (22)% Adjusted EBITDA $ 44,400 $ 47,382 (6)% Adjusted EBITDA Margin 22.8 % 28.7 %
9 Adjusted Net Income (in thousands, except per share data) Three Months Ended September 30, 2021 2020 Net Income $ 16,029 $ 22,582 Add / (Less): Non-Cash Equity-Based Compensation 8,743 8,285 Acquisition-Related Intangible Amortization 4,754 531 Tax Effect of Adjustments1 (3,172) (2,072) Adjusted Net Income $ 26,354 $ 29,326 Diluted Shares Outstanding 37,417 36,494 Net Income Per Diluted Share $ 0.43 $ 0.62 Adjusted Net Income Per Diluted Share $ 0.70 $ 0.80 1 - Statutory tax rates are used to calculate the tax effect of the adjustments.
10 Free Cash Flow ($ in thousands) Three Months Ended September 30, 2021 2020 Net Cash From Operations $ 54,642 $ 63,882 Less: Capital Expenditures (5,830) (6,311) Less: Content Acquisitions (4,494) (530) Free Cash Flow $ 44,318 $ 57,041
11 Revenue by Sales Channel and Billings ($ in thousands) For the three months ended 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 E-commerce Revenue $ 121,707 $ 120,715 $ 118,400 $ 111,805 $ 102,816 $ 98,164 $ 99,736 $ 100,902 Enterprise Revenue 72,732 69,197 64,881 69,139 62,411 61,066 61,549 65,469 Total Revenue $ 194,439 $ 189,912 $ 183,281 $ 180,944 $ 165,227 $ 159,230 $ 161,285 $ 166,371 Change in Total Deferred Revenue(1) 710 8,305 3,787 5,186 6,428 (654) (3,039) 4,411 Total Billings $ 195,149 $ 198,217 $ 187,068 $ 186,130 $ 171,655 $ 158,576 $ 158,246 $ 170,782 __________________________________________________________________________________________ 1. Change in total deferred revenue excludes deferred revenue acquired through business combinations.
12 _______________________________________________________________________________________________________________________ 1. Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period, excluding customers from our acquisitions of TurboSquid and PicMonkey. 2. Subscriber revenue is defined as the revenue generated from subscribers during the period, excluding revenues from our acquisitions of TurboSquid and PicMonkey. 3. Average revenue per customer is calculated by dividing total revenue for the trailing twelve month period by customers, excluding revenues from our recent acquisitions of TurboSquid and PicMonkey. We define customers as total active, paying customers that contributed to total revenue over the trailing twelve month period, excluding customers from our recent acquisitions of TurboSquid and PicMonkey. 4. Paid downloads is defined as the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to custom content, downloads of content that are offered to customers for no charge, including our free image of the week and downloads associated with our computer vision offering. 5. Revenue per download is defined as the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from custom content, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering. 6. Represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library on shutterstock.com at the end of the period. This collection metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, custom content and certain content that may be licensed for editorial use only. Key Operating Metrics 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Subscribers (in thousands) (1) 336 321 306 281 255 223 209 194 Subscriber revenue (in millions) (2) $ 81.5 $ 78.1 $ 76.5 $ 71.1 $ 67.6 $ 62.7 $ 63.9 $ 60.5 Average revenue per customer (LTM) (3) $ 361 $ 356 $ 342 $ 333 $ 328 $ 326 $ 329 $ 330 Paid downloads (in millions) (4) 44.3 44.9 45.8 45.8 43.4 44.0 46.8 47.7 Revenue per download (5) $ 4.20 $ 4.17 $ 3.96 $ 3.91 $ 3.79 $ 3.61 $ 3.42 $ 3.44 Content in our collection (in millions): (6) Images 390 380 370 360 350 340 330 314 Footage clips 23 22 21 21 20 19 18 17
13 Non-Cash Compensation and Depreciation and Amortization Depreciation and amortization expense is included within the Statements of Operations, as follows: ($ in thousands) Three Months Ended September 30, 2021 2020 Cost of revenue $ 11,322 $ 8,223 General and administrative 2,146 1,527 Total depreciation and amortization $ 13,468 $ 9,750 Non-cash equity-based compensation expense is included within the Statements of Operations, as follows: ($ in thousands) Three Months Ended September 30, 2021 2020 Cost of revenue $ (49) $ 125 Sales and Marketing 638 467 Product development 1,675 1,263 General and administrative 6,479 6,430 Total non-cash compensation $ 8,743 $ 8,285
14 2021 Guidance Previously Announced 2021 Guidance Revenue $765 - $770 million $740 - $750 million YOY Growth vs. 2020 14.75% to 15.5% 11% to 12.5% Adjusted EBITDA $185 - $191 million $175 - $180 million Adjusted Net Income per diluted share $3.18 to $3.29 $2.80 to $2.95 The Company's revised expectations for the full year 2021 are as follows: 2021 Guidance
Please remember this information is confidential. © 2021 Shutterstock, Inc. All rights reserved.