sstk-20240331
0001549346FALSE12/312024Q100015493462024-01-012024-03-3100015493462024-04-26xbrli:shares00015493462024-03-31iso4217:USD00015493462023-12-31iso4217:USDxbrli:shares00015493462023-01-012023-03-310001549346us-gaap:CommonStockMember2023-12-310001549346us-gaap:TreasuryStockCommonMember2023-12-310001549346us-gaap:AdditionalPaidInCapitalMember2023-12-310001549346us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001549346us-gaap:RetainedEarningsMember2023-12-310001549346us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001549346us-gaap:CommonStockMember2024-01-012024-03-310001549346us-gaap:RetainedEarningsMember2024-01-012024-03-310001549346us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001549346us-gaap:CommonStockMember2024-03-310001549346us-gaap:TreasuryStockCommonMember2024-03-310001549346us-gaap:AdditionalPaidInCapitalMember2024-03-310001549346us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001549346us-gaap:RetainedEarningsMember2024-03-310001549346us-gaap:CommonStockMember2022-12-310001549346us-gaap:TreasuryStockCommonMember2022-12-310001549346us-gaap:AdditionalPaidInCapitalMember2022-12-310001549346us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001549346us-gaap:RetainedEarningsMember2022-12-3100015493462022-12-310001549346us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001549346us-gaap:CommonStockMember2023-01-012023-03-310001549346us-gaap:RetainedEarningsMember2023-01-012023-03-310001549346us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001549346us-gaap:CommonStockMember2023-03-310001549346us-gaap:TreasuryStockCommonMember2023-03-310001549346us-gaap:AdditionalPaidInCapitalMember2023-03-310001549346us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001549346us-gaap:RetainedEarningsMember2023-03-3100015493462023-03-310001549346us-gaap:AccountsReceivableMember2024-03-310001549346us-gaap:OtherAssetsMember2024-03-310001549346us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembersstk:OneCustomerMember2024-01-012024-03-31xbrli:pure0001549346sstk:TwoCustomersMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-12-310001549346sstk:ZcoolNetworkTechnologyLimitedMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberus-gaap:ConvertiblePreferredStockMember2018-01-012018-12-310001549346sstk:MeituInc.Member2024-03-270001549346sstk:MeituInc.Member2024-03-272024-03-270001549346us-gaap:FairValueInputsLevel1Member2024-03-310001549346sstk:BackgridUSAInc.AndBackgridLondonLTDMember2024-02-012024-02-010001549346sstk:BackgridUSAInc.AndBackgridLondonLTDMemberus-gaap:TradeNamesMember2024-02-012024-02-010001549346sstk:BackgridUSAInc.AndBackgridLondonLTDMemberus-gaap:DevelopedTechnologyRightsMember2024-02-012024-02-010001549346sstk:BackgridUSAInc.AndBackgridLondonLTDMember2024-02-010001549346us-gaap:TrademarksMembersstk:BackgridUSAInc.AndBackgridLondonLTDMember2024-02-010001549346sstk:BackgridUSAInc.AndBackgridLondonLTDMemberus-gaap:DevelopedTechnologyRightsMember2024-02-010001549346sstk:GiphyIncMember2023-06-232023-06-230001549346sstk:GiphyIncMembersstk:MandatedPaymentsConsiderationRecurringMember2023-06-232023-06-230001549346sstk:GiphyIncMembersstk:MandatedPaymentsConsiderationNonrecurringMember2023-06-232023-06-230001549346sstk:GiphyIncMembersstk:OtherDeferredConsiderationMember2023-06-232023-06-230001549346sstk:GiphyIncMembersstk:PrecombinationServiceConsiderationMember2023-06-232023-06-230001549346sstk:GiphyIncMember2023-06-230001549346sstk:GiphyIncMemberus-gaap:DevelopedTechnologyRightsMember2023-06-232023-06-230001549346sstk:GiphyIncMemberus-gaap:TradeNamesMember2023-06-232023-06-230001549346sstk:GiphyIncMemberus-gaap:TrademarksMember2023-06-230001549346sstk:GiphyIncMemberus-gaap:DevelopedTechnologyRightsMember2023-06-230001549346sstk:GiphyIncMember2023-07-012023-09-300001549346sstk:GiphyIncMember2023-10-012023-12-310001549346sstk:GiphyIncMemberus-gaap:GeneralAndAdministrativeExpenseMember2023-06-232023-06-230001549346sstk:GiphyIncMember2024-03-310001549346sstk:ComputerEquipmentAndSoftwareMember2024-03-310001549346sstk:ComputerEquipmentAndSoftwareMember2023-12-310001549346us-gaap:FurnitureAndFixturesMember2024-03-310001549346us-gaap:FurnitureAndFixturesMember2023-12-310001549346us-gaap:LeaseholdImprovementsMember2024-03-310001549346us-gaap:LeaseholdImprovementsMember2023-12-310001549346sstk:PropertyAndEquipmentMember2024-01-012024-03-310001549346sstk:PropertyAndEquipmentMember2023-01-012023-03-310001549346us-gaap:CostOfSalesMember2024-01-012024-03-310001549346us-gaap:CostOfSalesMember2023-01-012023-03-310001549346us-gaap:SellingGeneralAndAdministrativeExpensesMember2024-01-012024-03-310001549346us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-03-310001549346us-gaap:CustomerRelationshipsMember2024-03-310001549346us-gaap:CustomerRelationshipsMember2023-12-310001549346us-gaap:TradeNamesMember2024-03-310001549346us-gaap:TradeNamesMember2023-12-310001549346us-gaap:DevelopedTechnologyRightsMember2024-03-310001549346us-gaap:DevelopedTechnologyRightsMember2023-12-310001549346us-gaap:MediaContentMember2024-03-310001549346us-gaap:MediaContentMember2023-12-310001549346us-gaap:PatentsMember2024-03-310001549346us-gaap:PatentsMember2023-12-310001549346us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-060001549346srt:MinimumMemberus-gaap:BaseRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346us-gaap:BaseRateMembersrt:MaximumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346srt:MinimumMemberus-gaap:LineOfCreditMembersstk:SecuredOvernightFinancingRateSOFRMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346srt:MaximumMemberus-gaap:LineOfCreditMembersstk:SecuredOvernightFinancingRateSOFRMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346srt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346srt:MaximumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-062022-05-060001549346us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-12-310001549346us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-03-310001549346us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-01-012024-03-310001549346us-gaap:CommonStockMember2023-06-300001549346us-gaap:CommonStockMember2024-01-012024-03-310001549346us-gaap:SubsequentEventMember2024-04-222024-04-220001549346us-gaap:SellingAndMarketingExpenseMember2024-01-012024-03-310001549346us-gaap:SellingAndMarketingExpenseMember2023-01-012023-03-310001549346us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-03-310001549346us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001549346us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-03-310001549346us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310001549346us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001549346us-gaap:EmployeeStockOptionMember2024-03-310001549346us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001549346us-gaap:RestrictedStockUnitsRSUMember2024-03-310001549346us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001549346us-gaap:RestrictedStockUnitsRSUMemberus-gaap:SubsequentEventMember2024-04-012024-04-01sstk:channel0001549346sstk:ECommerceMember2024-01-012024-03-310001549346sstk:ECommerceMember2023-01-012023-03-310001549346sstk:EnterpriseMember2024-01-012024-03-310001549346sstk:EnterpriseMember2023-01-012023-03-3100015493462024-04-012024-03-310001549346srt:NorthAmericaMember2024-01-012024-03-310001549346srt:NorthAmericaMember2023-01-012023-03-310001549346srt:EuropeMember2024-01-012024-03-310001549346srt:EuropeMember2023-01-012023-03-310001549346sstk:AllRegionsOfTheWorldExceptNorthAmericaAndEuropeMember2024-01-012024-03-310001549346sstk:AllRegionsOfTheWorldExceptNorthAmericaAndEuropeMember2023-01-012023-03-310001549346us-gaap:GeographicConcentrationRiskMembercountry:USus-gaap:SalesRevenueNetMember2024-01-012024-03-310001549346us-gaap:GeographicConcentrationRiskMembercountry:USus-gaap:SalesRevenueNetMember2023-01-012023-03-310001549346srt:NorthAmericaMember2024-03-310001549346srt:NorthAmericaMember2023-12-310001549346srt:EuropeMember2024-03-310001549346srt:EuropeMember2023-12-310001549346sstk:AllRegionsOfTheWorldExceptNorthAmericaAndEuropeMember2024-03-310001549346sstk:AllRegionsOfTheWorldExceptNorthAmericaAndEuropeMember2023-12-310001549346us-gaap:GeographicConcentrationRiskMembersstk:LongLivedTangibleAsstesMembercountry:US2024-01-012024-03-310001549346us-gaap:GeographicConcentrationRiskMembersstk:LongLivedTangibleAsstesMembercountry:US2023-01-012023-12-310001549346country:IEus-gaap:GeographicConcentrationRiskMembersstk:LongLivedTangibleAsstesMember2024-01-012024-03-310001549346country:IEus-gaap:GeographicConcentrationRiskMembersstk:LongLivedTangibleAsstesMember2023-01-012023-12-310001549346us-gaap:IndemnificationGuaranteeMember2024-03-310001549346sstk:EnvatoMemberus-gaap:SubsequentEventMember2024-04-012024-04-010001549346us-gaap:SeniorNotesMemberus-gaap:SubsequentEventMember2024-05-010001549346us-gaap:LineOfCreditMemberus-gaap:SubsequentEventMemberus-gaap:RevolvingCreditFacilityMember2024-05-01
Table of Contents                            
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________________________________________________________________ 
FORM 10-Q
 ___________________________________________________________________________________________________ 
(Mark One)
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended March 31, 2024
or
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number: 001-35669
 _____________________________________________________________________
SHUTTERSTOCK, INC.
(Exact name of registrant as specified in its charter)
 ________________________________________________________
Delaware80-0812659
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
350 Fifth Avenue, 20th Floor
New York, NY 10118
(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)
 ______________________________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareSSTKNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes    No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer 
Non-accelerated filerSmaller reporting company 
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of April 26, 2024, 35,843,326 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

1

Table of Contents                            
Shutterstock, Inc.
FORM 10-Q
Table of Contents 
For the Quarterly Period Ended March 31, 2024
 Page No.
 
 
 
 
 
 
 

2

Table of Contents                            
FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, particularly in the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 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, future stock performance, 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 and our competitive position. You can identify many forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expects,” “aims,” “anticipates,” “believes,” “estimates,” “intends,” “plans,” “predicts,” “projects,” “seeks,” “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. Such risks and uncertainties include, among others, our ability to continue to attract and retain customers of, and contributors to, our creative platform; competition in our industry; the effectiveness and efficiency of our marketing efforts; our ability to innovate technologically or develop, market and offer new products and services, or enhance existing technology and products and services; our ability to increase market awareness of our brand and our existing and new products and services; pricing pressure, and increased service, indemnification and working capital requirements; expansion of our operations into new products, services and technologies; the impact of worldwide economic, political and social conditions; social and ethical issues relating to the use of new and evolving technologies, such as AI; our ability to grow our revenues at historical rates; our ability to effectively expand, train, manage changes to and retain our sales force; our ability to effectively manage our growth; our ability to successfully make, integrate and maintain acquisitions and investments; risks related to our personnel; risks related to our use of independent contractors; the non-payment or late payment of amounts due to us and other payment-related risks; the potential impairment of our goodwill or intangible assets; the need to raise additional capital; risks related to our debt; our reliance on information technologies and systems and other risks related to our intellectual property and security vulnerabilities; our international operations and our continued expansion internationally; foreign exchange risk; risks related to regulatory and tax challenges;
our ability to continue to attract and retain customers of, and contributors to, our creative platform; competition in our industry; the effectiveness and efficiency of our marketing efforts; our ability to innovate technologically or develop, market and offer new products and services, or enhance existing technology and products and services; our ability to increase market awareness of our brand and our existing and new products and services; pricing pressure, and increased service, indemnification and working capital requirements; expansion of our operations into new products, services and technologies; the impact of worldwide economic, political and social conditions; social and ethical issues relating to the use of new and evolving technologies, such as AI; our ability to grow our revenues at historical rates; our ability to effectively expand, train, manage changes to and retain our sales force; our ability to effectively manage our growth; our ability to successfully make, integrate and maintain acquisitions and investments; risks related to our personnel; risks related to our use of independent contractors; the non-payment or late payment of amounts due to us and other payment-related risks; the potential impairment of our goodwill or intangible assets; the need to raise additional capital; risks related to our debt; our reliance on information technologies and systems and other risks related to our intellectual property and security vulnerabilities; our international operations and our continued expansion internationally; foreign exchange risk; risks related to regulatory and tax challenges; as well as those risks 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 26, 2024 (our “2023 Form 10-K”) and in our consolidated financial statements, related notes, and the other information appearing elsewhere in the 2023 Form 10-K, this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q are made only as of the date hereof, and we do 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 report to reflect actual results or future events or circumstances.

Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms “Shutterstock,” “the Company,” “we,” “our” and “us” refer to Shutterstock, Inc. and its subsidiaries. “Shutterstock,” “Shutterstock Editorial,” “Asset Assurance,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “TurboSquid,” “PicMonkey,” “Pattern89,” “Shotzr,” “Pond5,” “Splash News,” “Giphy,” “Shutterstock Studios,” “Shutterstock Editor,” “Shutterstock.AI,” “Creative Flow,” and “Backgrid” and their logos are registered trademarks and are the property of Shutterstock, Inc. or one of our subsidiaries. All other trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.
3

Table of Contents                            
PART I.     FINANCIAL INFORMATION
Item 1.        Financial Statements.
Shutterstock, Inc.
Consolidated Balance Sheets
(In thousands, except par value amount)
(unaudited)
March 31,December 31,
20242023
ASSETS
Current assets:
Cash and cash equivalents$71,811 $100,490 
Accounts receivable, net of allowance of $4,873 and $6,335
93,993 91,139 
Prepaid expenses and other current assets93,095 100,944 
Total current assets258,899 292,573 
Property and equipment, net63,430 64,300 
Right-of-use assets16,482 15,395 
Intangible assets, net174,868 184,396 
Goodwill402,787 383,325 
Deferred tax assets, net28,156 24,874 
Other assets83,881 71,152 
Total assets$1,028,503 $1,036,015 
LIABILITIES AND STOCKHOLDERSEQUITY
Current liabilities:
Accounts payable$9,373 $9,108 
Accrued expenses99,212 131,443 
Contributor royalties payable61,392 54,859 
Deferred revenue198,041 203,463 
Debt30,000 30,000 
Other current liabilities34,959 23,513 
Total current liabilities432,977 452,386 
Deferred tax liability, net3,795 4,182 
Lease liabilities28,745 29,404 
Other non-current liabilities21,711 22,949 
Total liabilities487,228 508,921 
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, $0.01 par value; 200,000 shares authorized; 40,013 and 39,982 shares issued and 35,603 and 35,572 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
399 399 
Treasury stock, at cost; 4,410 shares as of March 31, 2024 and December 31, 2023
(228,213)(228,213)
Additional paid-in capital434,416 424,229 
Accumulated other comprehensive loss(13,438)(11,974)
Retained earnings348,111 342,653 
Total stockholders’ equity541,275 527,094 
Total liabilities and stockholders’ equity$1,028,503 $1,036,015 
See Notes to Unaudited Consolidated Financial Statements.
4

Table of Contents                            
Shutterstock, Inc.
Consolidated Statements of Operations
(In thousands, except for per share data)
(unaudited)
 Three Months Ended
March 31,
 20242023
Revenue$214,315 $215,280 
Operating expenses:
Cost of revenue88,204 78,163 
Sales and marketing56,236 47,527 
Product development21,051 15,406 
General and administrative32,078 33,815 
Total operating expenses197,569 174,911 
Income from operations16,746 40,369 
Other income, net3,644 1,045 
Income before income taxes20,390 41,414 
Provision for income taxes4,269 8,571 
Net income$16,121 $32,843 
Earnings per share:
Basic$0.45 $0.92 
Diluted$0.45 $0.90 
Weighted average common shares outstanding:
Basic35,59135,856
Diluted36,06636,575
See Notes to Unaudited Consolidated Financial Statements.
5

Table of Contents                            
Shutterstock, Inc.
Consolidated Statements of Comprehensive Income
(In thousands)
(unaudited)
 Three Months Ended
March 31,
 20242023
Net income$16,121 $32,843 
Foreign currency translation (loss) / gain(1,464)1,419 
Other comprehensive (loss) / income(1,464)1,419 
Comprehensive income$14,657 $34,262 
 
See Notes to Unaudited Consolidated Financial Statements.
6

Table of Contents                            
Shutterstock, Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands)
(unaudited)
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Common StockTreasury Stock
Three Months Ended March 31, 2024SharesAmountSharesAmountTotal
Balance at December 31, 202339,982 $399 4,410 $(228,213)$424,229 $(11,974)$342,653 $527,094 
Equity-based compensation— — — — 11,150 — — 11,150 
Issuance of common stock in connection with employee stock option exercises and RSU vesting52  — —  — —  
Common shares withheld for settlement of taxes in connection with equity-based compensation(21)— — — (963)— — (963)
Cash dividends paid— — — — — — (10,663)(10,663)
Other comprehensive loss— — — — — (1,464)— (1,464)
Net income— — — — — — 16,121 16,121 
Balance at March 31, 202440,013 $399 4,410 $(228,213)$434,416 $(13,438)$348,111 $541,275 
Three Months Ended March 31, 2023
Balance at December 31, 202239,605 $396 3,776 $(200,008)$391,482 $(15,439)$271,051 $447,482 
Equity-based compensation— — — — 8,643 — — 8,643 
Issuance of common stock in connection with employee stock option exercises and RSU vesting144 1 — — 1 — — 2 
Common shares withheld for settlement of taxes in connection with equity-based compensation(59)(1)— — (4,192)— — (4,193)
Cash dividends paid— — — — — — (9,662)(9,662)
Other comprehensive income— — — — — 1,419 — 1,419 
Net income— — — — — — 32,843 32,843 
Balance at March 31, 202339,690 $396 3,776 $(200,008)$395,934 $(14,020)$294,232 $476,534 
See Notes to Unaudited Consolidated Financial Statements.
7

Table of Contents                            
Shutterstock, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 Three Months Ended
March 31,
 20242023
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income$16,121 $32,843 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization21,263 18,896 
Deferred taxes(3,854)(977)
Non-cash equity-based compensation11,150 8,643 
Bad debt expense(1,510)790 
Unrealized gain on investments(3,755) 
Changes in operating assets and liabilities:
Accounts receivable(736)19,168 
Prepaid expenses and other current and non-current assets(11,999)5,189 
Accounts payable and other current and non-current liabilities(20,182)(12,716)
Contributor royalties payable6,127 2,246 
Deferred revenue(4,325)(7,307)
Net cash provided by operating activities$8,300 $66,775 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(14,461)(12,380)
Business combination, net of cash acquired(19,474) 
Cash received related to Giphy Retention Compensation18,401  
Acquisition of content(994)(3,527)
Security deposit payment (30)
Net cash used in investing activities$(16,528)$(15,937)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 3 
Cash paid related to settlement of employee taxes related to RSU vesting(7,966)(11,008)
Payment of cash dividends(10,663)(9,662)
Repayment of credit facility (50,000)
Net cash used in financing activities$(18,629)$(70,667)
Effect of foreign exchange rate changes on cash(1,822)507 
Net decrease in cash and cash equivalents(28,679)(19,322)
Cash and cash equivalents, beginning of period100,490 115,154 
Cash and cash equivalents, end of period$71,811 $95,832 
Supplemental Disclosure of Cash Information:
Cash paid / (received) for income taxes $2,901 $(5,150)
Cash paid for interest509 428 
See Notes to Unaudited Consolidated Financial Statements.
8

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)




(1) Summary of Operations and Significant Accounting Policies
Summary of Operations
Shutterstock, Inc. (the “Company” or “Shutterstock”) is a leading global creative platform connecting brands and businesses to high quality content.
The Company’s platform brings together users and contributors of content by providing readily-searchable content that customers pay to license and by compensating contributors as their content is licensed. Contributors upload their content to the Company’s web properties in exchange for royalty payments based on customer download activity. Beyond content, customers also leverage the Company’s platform to assist with the entire creative process from ideation through creative execution.
Digital content licensed to customers for their creative needs includes images, footage, music, and 3D models (the Company’s “Content” offering). Content revenues represent the majority of the Company’s business and are supported by the Company’s searchable creative platform and driven by the Company’s large contributor network.
In addition, customers have needs that are beyond traditional content license products and services. These include (i) licenses to metadata associated with the Company’s images, footage, music tracks and 3D models through the Company’s data offering, (ii) distribution and advertising services from the Company’s Giphy business, which consists of GIFs (graphics interchange format visuals) that serve as a critical ingredient in text- and message- based conversations and in contextual advertising settings, (iii) specialized solutions for high-quality content matched with production tools and services through Shutterstock Studios and (iv) other tailored white-glove services (collectively, the Company’s “Data, Distribution, and Services” offerings).
The Company’s Content offering includes:
Images - consisting of photographs, vectors and illustrations. Images are typically used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and other similar uses.
Footage - consisting of video clips, premium footage filmed by industry experts and cinema grade video effects, available in HD and 4K formats. Footage is often integrated into websites, social media, marketing campaigns and cinematic productions.
Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage.
3 Dimensional (“3D”) Models - consisting of 3D models, used in a variety of industries such as advertising, media and video production, gaming, retail, education, design and architecture.
Generative AI Content - consisting of images generated from algorithms trained with high-quality, ethically sourced content. Customers can generate images by entering a description of their desired content into model prompts.
On February 1, 2024, the Company acquired Backgrid USA, Inc. and Backgrid London, Ltd. (collectively “Backgrid”). Backgrid supplies media organizations with real-time celebrity content. See Note 3 Acquisitions.
Basis of Presentation
The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements.
The interim Consolidated Balance Sheet as of March 31, 2024, and the Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three months ended March 31, 2024 and 2023, and the Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 are unaudited. The Consolidated Balance Sheet as of December 31, 2023, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. These unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include all normal recurring adjustments necessary to fairly state the Company’s financial position as of March 31, 2024, and
9

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



its consolidated results of operations, comprehensive income, stockholders’ equity and cash flows for the three months ended March 31, 2024 and 2023. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2024 or for any other future annual or interim period.
These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 26, 2024. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements. Actual results could differ from those estimates. Such estimates include, but are not limited to, the determination of the allowance for doubtful accounts, the volume of expected unused licenses for our subscription-based products, the assessment of recoverability of property and equipment, the fair value of acquired goodwill and intangible assets, the amount of non-cash equity-based compensation, the assessment of recoverability of deferred tax assets, the measurement of income tax and contingent non-income tax liabilities and the determination of the incremental borrowing rate used to calculate the lease liability.
Cash and Cash Equivalents
The Company’s cash and cash equivalents consist primarily of bank deposits.
Accounts Receivable and Allowance for Doubtful Accounts
The Company’s accounts receivable consists of customer obligations due under normal trade terms, carried at their face value less an allowance for doubtful accounts, if required. The Company determines its allowance for doubtful accounts and credit losses based on an evaluation of (i) the aging of its accounts receivable considering historical receivables loss rates, (ii) on a customer-by-customer basis, where appropriate, and (iii) the economic environments in which the Company operates.
For certain Data, Distribution, and Services transactions, the Company has $52.2 million of unbilled receivables of which $25.4 million are recorded in Accounts Receivable and $26.8 million are recorded in Other Assets, as of March 31, 2024.
During the three months ended March 31, 2024, the Company recorded bad debt recovery of $1.5 million. As of March 31, 2024 and December 31, 2023, the Company’s allowance for doubtful accounts was approximately $4.9 million and $6.3 million, respectively. The allowance for doubtful accounts is included as a reduction of accounts receivable on the Consolidated Balance Sheets.
The Company has certain customer arrangements that contain financing elements. Interest income earned from these financing receivables is recorded on the effective interest method and is included within interest income on the Consolidated Statements of Operations. As of March 31, 2024 and December 31, 2023, approximately $7.8 million and $16.0 million of financing receivables, respectively, were included in accounts receivable and other assets on the Consolidated Balance Sheets.
In addition, as of March 31, 2024, one customer accounted for approximately 18% of the accounts receivable balance and as of December 31, 2023, two customers accounted for a total of 29% of the accounts receivable balance.
Chargeback and Sales Refund Allowance
The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of March 31, 2024 and December 31, 2023, the Company’s combined allowance for chargebacks and sales refunds was $0.4 million, which was included as a component of other current liabilities on the Consolidated Balance Sheets.
Revenue Recognition
A significant portion of the Company’s revenue is earned from the license of content. Content licenses are generally purchased on a monthly or annual basis, whereby a customer pays for a predetermined quantity of content that may be
10

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. The Company also generates revenue from tools available through the Company’s platform.
For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative standalone selling price. The standalone selling price is determined based on the price at which the performance obligation is sold separately, or if not observable through past transactions, is estimated taking into account available information including internally approved pricing guidelines and pricing information of comparable products.
The Company recognizes revenue upon the satisfaction of performance obligations. The Company recognizes revenue on both its subscription-based and transaction-based products when content is downloaded by a customer, at which time the license is provided. In addition, the Company estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during the subscription period. The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products. For revenue associated with tools available through the Company’s platform, revenue is recognized on a straight-line basis over the subscription period. The Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less.
Collectability is probable at the time the electronic order or contract is entered. A significant portion of the Company’s customers purchase products by making electronic payments with a credit card at the time of the transaction. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences, is based on a credit evaluation for certain new customers and transaction history with existing customers. 
The Company recognizes revenue gross of contributor royalties because the Company is the principal in the transaction as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. The Company also licenses content to customers through third-party resellers. Third-party resellers sell the Company’s products directly to customers as the principal in those transactions. Accordingly, the Company recognizes revenue net of costs paid to resellers.
The Company also reports revenue net of return and chargeback allowances. These allowances are based off historical trends when available.

(2) Fair Value Measurements and Long-term Investments
Fair Value Measurements
The Company had no assets or liabilities requiring fair value hierarchy disclosures as of March 31, 2024 or December 31, 2023, except as noted below.
Other Fair Value Measurements
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. Debt consists of principal amounts outstanding under our credit facility, which approximates fair value as underlying interest rates are reset regularly based on current market rates and is classified as Level 2. The Company’s non-financial assets, which include long-lived assets, intangible assets and goodwill, are not required to be measured at fair value on a recurring basis. However, if the Company is required to evaluate a non-financial asset for impairment, whether due to certain triggering events or because annual impairment testing is required, a resulting asset impairment would require that the non-financial asset be recorded at fair value.

11

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



Long-term Investments
Investment in Meitu, Inc. (“Meitu”)
In 2018, the Company invested $15.0 million in convertible preferred shares issued by ZCool Technologies Limited (“ZCool”) (the “Preferred Shares”). ZCool’s primary business is the operation of an e-commerce platform in the People’s Republic of China (the “PRC”) whereby customers can pay to license content contributed by creative professionals. ZCool and its affiliates have been the exclusive distributor of Shutterstock content in China since 2014. The Company used the measurement alternative and the investment in ZCool was reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments.
On March 27, 2024, ZCool was acquired by Meitu, and the Company’s Preferred Shares in ZCool were exchanged for $18.4 million of Meitu common shares, resulting in an investment carrying value increase of $3.4 million, which is recorded in Other income, net in the Consolidated Statement of Operations. Meitu’s primary business is the provision of online advertising and other internet value added services in the PRC, and its common shares are publicly traded on the Main Board of The Stock Exchange of Hong Kong Limited. This investment will be recorded at fair value on a recurring basis, with changes in fair value being recorded in Other income, net in the Consolidated Statement of Operations. Its fair value level hierarchy and amount at March 31, 2024 are as follows:

As of March 31, 2024
Hierarchy Level:Fair Value
Level 1$18,755 
Other Long-Term Investment
As of March 31, 2024 and December 31, 2023, the Company also had a long-term investment in an equity security with no readily determinable fair value totaling $5.0 million. The Company uses the measurement alternative for fair value and the investment’s carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments.
Equity Contract
In connection with its Data, Distribution, and Services business, as part of the consideration for a customer data deal sale, the Company received a forward contract (the “Equity Contract”) for the right to receive a variable number of equity shares for a fixed value from the customer. The Company estimated the value of the Equity Contract to be $11.8 million, which is included in the overall customer contract transaction price. In addition, the Equity Contract is recorded in Other Assets in the Consolidated Balance Sheet and will be carried at cost and evaluated for impairment at each reporting date.

(3) Acquisitions
Backgrid
On February 1, 2024, the Company completed its acquisition of all of the outstanding shares of Backgrid USA, Inc. and Backgrid London LTD, (collectively, “Backgrid”), for approximately $20 million, subject to customary working capital adjustments. The total purchase price was paid with existing cash on hand. In connection with the acquisition, the Company incurred approximately $1.5 million of transaction costs in total, which are included in general and administrative expenses on the Consolidated Statements of Operations.
Backgrid supplies media organizations with real-time celebrity content. The Company believes this acquisition expands Shutterstock Editorial’s Newsroom offering of editorial images and footage across celebrity, red carpet and live-events.
The identifiable intangible assets, trademark and developed technology, have useful lives of approximately 10 years and 5 years, respectively. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes.
The Backgrid transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business has been included in the Company’s results of operations from the acquisition date. The fair value of consideration
12

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



transferred in this business combination has been allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The identifiable intangible asset of this acquisition is being amortized on a straight-line basis. The fair value of the trademark and developed technology was determined using the excess earnings and relief-from-royalty methods.
The aggregate purchase price for these acquisitions has been allocated to the assets acquired and liabilities assumed as follows (in thousands):
Assets acquired and liabilities assumed:Backgrid
Cash and cash equivalents$1,718 
Accounts receivable732 
Other assets77 
Intangible assets:
Trade name300 
Developed technology900 
Intangible assets1,200 
Goodwill19,843 
Total assets acquired$23,570 
Contributor royalties payable(849)
Accrued expenses(1,302)
Deferred tax liability(271)
Total liabilities assumed(2,422)
Net assets acquired$21,148 
Giphy, Inc.
On May 22, 2023, the Company entered into a Stock Purchase Agreement with Meta Platforms, Inc. (“Meta”) dated May 22, 2023 (the “Purchase Agreement”). On June 23, 2023, the Company completed its acquisition of all of the outstanding shares of Giphy, Inc. (“Giphy”) from Meta. The consideration paid by the Company pursuant to the Purchase Agreement was $53 million in net cash, in addition to cash acquired, assumed debt and other working capital adjustments. The consideration was paid with existing cash on hand. Giphy is a New York-based company that operates a collection of GIFs and stickers that supplies casual conversational content. The Company believes its acquisition of Giphy extends Shutterstock’s audience touchpoints beyond primarily professional marketing and advertising use cases and expands into casual conversations.
In January 2023, the United Kingdom Competition and Markets Authority (the “CMA”) issued its final order requiring Meta to divest its ownership of Giphy, which Meta acquired in 2020. In connection with the closing of the acquisition, whose terms were preapproved by the CMA, the Company and Meta entered into a transitional services agreement (the “TSA”) pursuant to which Meta is responsible for certain costs related to retention of Giphy employees, including (i) recurring salary, bonus, and benefits through August 2024, which would be $35.6 million if all employees are retained through August 2024, and (ii) nonrecurring items, totaling $87.9 million, comprised of one-time employment inducement bonuses and the cash value of unvested Meta equity awards (collectively, the “Giphy Retention Compensation”) and certain costs related to technology and integration expenses, totaling $30 million to be paid in $1.25 million monthly installments through May 2025.

The Giphy Retention Compensation will be paid to the individuals for being employees of the Company subsequent to the completion of the acquisition. Accordingly, it was determined that the payments by the Company are for future service requirements and will be reflected as operating expenses, less any amounts earned by the employees prior to the acquisition, in the Company’s Statements of Operations as incurred. The Giphy Retention Compensation is reflected as a reduction of the purchase price and has been funded into an escrow account.
13

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



The Giphy purchase price was calculated as follows:
Purchase Price
Purchase price$53,000 
Cash acquired and other working capital adjustments4,750 
Cash paid on closing$57,750 
Fair value of Giphy Retention Compensation contingent consideration1
(98,723)
Fair value of consideration attributable to pre-combination service2
34,972 
Net purchase price$(6,001)
1 - This amount consists of $123.5 million of Giphy Retention Compensation, adjusted for $18.9 million of income tax obligations associated with the receipt of the Giphy Retention Compensation and $5.9 million for the time value of money.
2 - Relates to the cash value of replaced unvested Meta equity awards attributable to pre-combination services.
Upon closing of the acquisition, the Company also entered into an agreement with Meta whereby the Company will provide Meta with access to Giphy content that is displayed through an API for a period of two years. The Company determined that the API arrangement represents a transaction separate from the business combination and was priced below market. Therefore, the Company allocated $30 million of the purchase price to these services, which represents the step-up to fair market value. This amount has been recognized in deferred revenue and will be recognized as revenue over-time as the API is provided.
The identifiable intangible assets, which include developed technology and the trade name have weighted average useful lives of approximately 7 years and 15 years, respectively. The fair value of the developed technology was determined using the cost to recreate method, and the fair value of the trade name was determined using the relief-from-royalty method.
The Giphy transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business has been included in the Company’s results of operations from the acquisition date. The fair value of consideration transferred in this business combination has been allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the excess of the fair value of the net assets acquired over the net consideration received recorded as a bargain purchase gain. The identifiable intangible assets of these acquisitions are being amortized on a straight-line basis.
14

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



The aggregate purchase price for this acquisition has been allocated to the assets acquired and liabilities assumed as follows (in thousands):
Assets acquired and liabilities assumed:Giphy
Cash and cash equivalents$4,030 
Prepaid expenses and other current assets1,416 
Right of use assets1,243 
Intangible assets:
Trade name21,000 
Developed technology19,500 
Intangible assets40,500 
Deferred tax asset1,463 
Other assets1,647 
Total assets acquired$50,299 
Accounts payable, accrued expenses and other liabilities(4,949)
Lease liability(1,090)
Total liabilities assumed(6,039)
Net assets acquired$44,260 
Net purchase price(6,001)
Bargain purchase gain$50,261 
1 - During the three months ended September 30, 2023, the Company revised its preliminary allocation of the Giphy purchase price to the assets acquired and liabilities assumed by $9.9 million associated with additional information analyzed related to the deferred income tax balances. The measurement and allocation of the purchase price is preliminary and will be finalized within the allowable measurement period once the Company finalizes its assessment of fair value of intangible assets, income tax balances and other assets acquired and liabilities assumed.
2 - During the three months ended December 31, 2023, the Company revised its preliminary allocation of the Giphy purchase price to the assets acquired and liabilities assumed by $1.6 million associated with additional information analyzed related to the valuation of the Developed Technology asset. The measurement and allocation of the purchase price is preliminary and will be finalized within the allowable measurement period once the Company finalizes its assessment of fair value of intangible assets, income tax balances and other assets acquired and liabilities assumed.

The Company recognized a non-taxable bargain purchase gain of $50.3 million, representing the excess of the fair value of the net assets acquired in addition to the net consideration to be received from Meta. The bargain purchase gain is the result of the CMA’s regulatory order requiring Meta’s divestiture of Giphy and the Giphy Retention Compensation payments. In connection with the acquisition, the Company incurred approximately $3.0 million of transaction costs, which are included in general and administrative expenses on the Consolidated Statements of Operations.
As of March 31, 2024, Shutterstock’s receivable of $65.5 million, is against an escrow fully funded by Meta. $48.7 million and $16.8 million are included within Prepaid expenses and other current assets and Other assets, respectively, on the Consolidated Balance Sheet.



15

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



Pro-Forma Financial Information (unaudited)
The following unaudited pro forma consolidated financial information (in thousands) reflects the results of operations of the Company for the three months ended March 31, 2024 and 2023, respectively, as if the Backgrid acquisition had been completed on January 1, 2023, and as if the the Giphy acquisition had been completed on January 1, 2022, after giving effect to certain purchase accounting adjustments, primarily related to Giphy Retention Compensation - non-recurring, intangible assets and transaction costs. These pro forma results have been prepared for comparative purposes only and are based on estimates and assumptions that have been made solely for purposes of developing such pro forma information and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period.
Three Months Ended March 31,
20242023
Revenue
As Reported$214,315 $215,280 
Pro Forma215,259 224,066 
Income before income taxes
As Reported$20,390 $41,414 
Pro Forma23,030 28,764 

(4) Property and Equipment
Property and equipment is summarized as follows (in thousands):
 As of March 31, 2024As of December 31, 2023
Computer equipment and software$317,244 $308,473 
Furniture and fixtures10,823 10,829 
Leasehold improvements19,316 19,153 
Property and equipment347,383 338,455 
Less accumulated depreciation(283,953)(274,155)
Property and equipment, net$63,430 $64,300 
Depreciation and amortization expense related to property and equipment was $10.3 million and $9.1 million for the three months ended March 31, 2024 and 2023, respectively. Of these amounts, $9.9 million and $8.7 million are included in cost of revenue for the three months ended March 31, 2024 and 2023, respectively, and $0.4 million and $0.5 million are included in general and administrative expense for the three months ended March 31, 2024 and 2023, respectively.
Depreciation and amortization expense is included in cost of revenue and general and administrative expense in the Consolidated Statements of Operations based on the nature of the asset being depreciated.
Capitalized Internal-Use Software
The Company capitalized costs related to the development of internal-use software of $9.0 million and $10.3 million for the three months ended March 31, 2024 and 2023, respectively. Capitalized amounts are included as a component of property and equipment under computer equipment and software on the Consolidated Balance Sheets.
The portion of total depreciation expense related to capitalized internal-use software was $9.6 million and $8.4 million for the three months ended March 31, 2024 and 2023, respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue in the Consolidated Statements of Operations.
As of March 31, 2024 and December 31, 2023, the Company had capitalized internal-use software of $59.6 million and $60.3 million, respectively, net of accumulated depreciation, which was included in property and equipment, net.

16

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



(5) Goodwill and Intangible Assets
Goodwill
The Company’s goodwill balance is attributable to its Content reporting unit and is tested for impairment annually on October 1 or upon a triggering event. No triggering events were identified during the three months ended March 31, 2024.
The following table summarizes the changes in the carrying value of the Company’s goodwill balance during the three months ended March 31, 2024 (in thousands):
 Goodwill
Balance as of December 31, 2023$383,325 
Goodwill related to acquisitions$19,843 
Foreign currency translation adjustment(381)
Balance as of March 31, 2024$402,787 
Intangible Assets
Intangible assets, all of which are subject to amortization, consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):
 As of March 31, 2024As of December 31, 2023
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted
Average Life
(Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortizing intangible assets:   
Customer relationships$89,832 $(28,664)$61,168 12$90,350 $(26,982)$63,368 
Trade name38,142 (9,855)28,287 1237,937 (9,272)28,665 
Developed technology116,354 (67,737)48,617 5115,914 (61,376)54,538 
Contributor content66,590 (29,884)36,706 865,628 (27,897)37,731 
Patents259 (169)90 18259 (165)94 
Total$311,177 $(136,309)$174,868  $310,088 $(125,692)$184,396 
Amortization expense was $11.0 million and $9.8 million for the three months ended March 31, 2024 and 2023, respectively. Of these amounts, $10.0 million and $9.2 million are included in cost of revenue for the three months ended March 31, 2024 and 2023, respectively, and $1.0 million and $0.6 million are included in general and administrative expense for the three months ended March 31, 2024 and 2023, respectively.
The Company determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense is: $27.0 million for the remaining nine months of 2024, $27.5 million in 2025, $25.2 million in 2026, $19.0 million in 2027, $16.5 million in 2028, $15.3 million in 2029 and $44.3 million thereafter.

(6) Accrued Expenses 
Accrued expenses consisted of the following (in thousands):
As of March 31, 2024As of December 31, 2023
Compensation$44,268 $75,752 
Non-income taxes24,175 23,702 
Website hosting and marketing fees11,222 11,804 
Other expenses19,547 20,185 
Total accrued expenses$99,212 $131,443 
As of March 31, 2024, compensation-related accrued expenses included amounts due to Giphy employees for compensation earned pre-acquisition and severance costs associated with workforce optimizations. Approximately $1.8 million and $7.7 million of severance costs associated with workforce optimization is included within accrued expenses as of March 31, 2024 and December 31, 2023, respectively.
17

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)




(7) Debt
On May 6, 2022, the Company entered into a five-year $100 million unsecured revolving loan facility (the “Credit Facility”) with Bank of America, N.A., as Administrative Agent and other lenders. The Credit Facility includes a letter of credit sub-facility and a swingline facility and it also permits, subject to the satisfaction of certain conditions, up to $100 million of additional revolving loan commitments with the consent of the Administrative Agent.
At the Company’s option, revolving loans accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.125% to 0.500%, determined based on the Company’s consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.125% to 1.5%, determined based on the Company’s consolidated leverage ratio. The Company is also required to pay an unused commitment fee ranging from 0.150% to 0.225%, determined based on the Company’s consolidated leverage ratio. In connection with the execution of this agreement, the Company paid debt issuance costs of approximately $0.6 million.
As of March 31, 2024 and December 31, 2023, the Company had $30 million of outstanding borrowings under the Credit Facility. As of March 31, 2024, the Company had a remaining borrowing capacity of $67 million, net of standby letters of credit. For the three months ended March 31, 2024, the Company recognized interest expense of $0.6 million.
The Credit Facility contains financial covenants and requirements restricting certain of the Company’s activities, which are usual and customary for this type of credit facility. The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the Credit Facility. As of March 31, 2024, the Company was in compliance with these covenants.

(8) Stockholders’ Equity and Equity-Based Compensation
Stockholders’ Equity
Common Stock
The Company issued approximately 31,000 and 85,000 shares of common stock during the three months ended March 31, 2024 and 2023, respectively, related to the exercise of stock options and the vesting of Restricted Stock Units.
Treasury Stock
In June 2023, the Company’s Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”), providing authorization to repurchase up to $100 million of its common stock.
The Company expects to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, the 2023 Share Repurchase Program is subject to the Company having available cash to fund repurchases. Under the 2023 Share Repurchase Program, share repurchase program, management is authorized to purchase shares of the Company’s common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
As of March 31, 2024, the Company has repurchased approximately 4.4 million shares of common stock under the 2023 Share Repurchase Program at an average per-share cost of $51.74. During the three months ended March 31, 2024, the Company did not repurchase any shares of common stock. As of March 31, 2024, the Company had $71.8 million of remaining authorization for purchases under the 2023 Share Repurchase Program.
Dividends
The Company declared and paid cash dividends of $0.30 and $0.27 per share of common stock, or $10.7 million and $9.7 million during the three months ended March 31, 2024 and 2023, respectively.
On April 22, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.30 per share of outstanding common stock payable on June 13, 2024 to stockholders of record at the close of business on May 30, 2024. Future declarations of dividends are subject to the final determination of the Board of Directors, and will depend on, among other things, the Company’s future financial condition, results of operations, capital requirements, capital expenditure requirements,
18

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors the Board of Directors may deem relevant.
Equity-Based Compensation
The Company recognizes stock-based compensation expense for all equity-based compensation awards, including employee Restricted Stock Units and Performance-based Restricted Stock Units (“PRSUs” and, collectively with Restricted Stock Units, “RSUs”) and stock options, based on the fair value of each award on the grant date. Awards granted prior to June 1, 2022 were granted under the Company’s Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”). At the Annual Meeting held on June 2, 2022, the Company’s stockholders approved the 2022 Omnibus Equity Incentive Plan (the “2022 Plan”). Awards granted subsequent to June 2, 2022 were granted under the 2022 Plan.
The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by financial statement line item included in the accompanying Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (in thousands): 
 Three Months Ended March 31,
 20242023
Cost of revenue$224 $184 
Sales and marketing2,011 604 
Product development2,285 2,448 
General and administrative6,630 5,407 
Total$11,150 $8,643 
For the three months ended March 31, 2024 and 2023, substantially all of the Company’s non-cash equity-based compensation expense related to RSUs.
Stock Option Awards
During the three months ended March 31, 2024, no options to purchase shares of its common stock were granted. As of March 31, 2024, there were approximately 299,000 options vested and exercisable with a weighted average exercise price of $34.14.
Restricted Stock Unit Awards
During the three months ended March 31, 2024, the Company had RSU grants, net of forfeitures, of approximately 71,000. As of March 31, 2024, there are approximately 1,958,000 non-vested RSUs outstanding with a weighted average grant-date fair value of $66.45. As of March 31, 2024, the total unrecognized non-cash equity-based compensation expense related to the non-vested RSUs was approximately $64.6 million, which is expected to be recognized through 2028.
During the three months ended March 31, 2024 and 2023, shares of common stock with an aggregate value of $1.0 million and $4.2 million were withheld upon vesting of RSUs and paid in connection with related remittance of employee withholding taxes to taxing authorities.
On April 1, 2024, the Company granted approximately 1,422,000 RSUs with a grant date fair value of $61 million.

(9) Revenue
The Company distributes its products through two primary offerings:
Content: The majority of the Company’s customers license image, video, music and 3D content for commercial purposes either directly through the Company’s self-service web properties or through the Company’s dedicated sales teams. Content customers have the flexibility to purchase subscription-based plans that are paid on a monthly or annual basis. Customers are also able to license content on a transactional basis. These customers generally license content under the Company’s standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs. Certain content customers also have unique content, licensing and workflow needs. These customers communicate with dedicated sales professionals, service and research teams which provide a number of tailored enhancements to their creative workflows including non-
19

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on the e-commerce platform.
Data, Distribution, and Services: The Company’s Data, Distribution, and Services offerings address customer demand for products and services that are beyond the stock image, footage music and 3D model licenses. These offerings include access to the Company’s metadata for machine learning and generative artificial intelligence model training and high-quality production and custom content at scale provided by Shutterstock Studios.
The Company’s revenues by product offering for the three months ended March 31, 2024 and 2023 are as follows (in thousands):
 Three Months Ended March 31,
 20242023
Content$173,830 $193,984 
Data, Distribution, and Services40,485 21,296 
Total Revenue$214,315 $215,280 
Deferred revenue reported on the balance sheet represents unfulfilled performance obligations for which the Company has either received payment or has outstanding receivables. The March 31, 2024 deferred revenue balance will be earned as content is downloaded or upon the expiration of subscription-based products, and nearly all is expected to be earned within the next twelve months. $82.7 million of total revenue recognized for the three months ended March 31, 2024 was reflected in deferred revenue as of December 31, 2023. In addition, as of March 31, 2024, the Company has approximately $60.1 million of contracted but unsatisfied performance obligations relating primarily to our data deal offerings, which are not included as a component of deferred revenue and that the Company expects to recognize over a five year period.

(10) Other Income, net
The following table presents a summary of the Company’s other income and expense activity included in the accompanying Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (in thousands):
 Three Months Ended March 31,
 20242023
Foreign currency (loss) / gain$(592)$1,111 
Interest expense(562)(231)
Interest income, unrealized gain on investments, and other4,798 165 
Total other income$3,644 $1,045 

(11) Income Taxes
The Company’s effective tax rates were 20.9% and 20.7% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, the net effect of discrete items increased the effective tax rate by 1.5%. Excluding these items, the Company’s effective tax rate would have been 19.4% for the three months ended March 31, 2024.
For the three months ended March 31, 2023, the net effect of discrete items increased the effective tax rate by 0.9%. Excluding these items, the Company’s effective tax rate would have been 19.8% for the three months ended March 31, 2023.
The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, in the applicable period.
During the three months ended March 31, 2024 and 2023, uncertain tax positions recorded by the Company were not material. To the extent the remaining uncertain tax positions are ultimately recognized, the Company’s effective tax rate may be impacted in future periods.
The Company recognizes interest expense and tax penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Operations. The Company’s accrual for interest and penalties related to unrecognized tax benefits was not material for the three months ended March 31, 2024 and 2023.
20

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



During the three months ended March 31, 2024, the Company had net cash taxes paid of $2.9 million and during the three months ended March 31, 2023, the Company had net cash taxes refunded of $5.2 million.

(12) Net Income Per Share
Basic net income per share is computed using the weighted average number of shares of common stock outstanding for the period, excluding unvested RSUs and stock options. Diluted net income per share is based upon the weighted average shares of common stock outstanding for the period plus dilutive potential shares of common stock, including unvested RSUs and stock options using the treasury stock method.
The following table sets forth the computation of basic and diluted net income per share for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31,
20242023
Net income$16,121 $32,843 
Shares used to compute basic net income per share35,591 35,856 
Dilutive potential common shares
Stock options84 153 
Unvested restricted stock awards391 566 
Shares used to compute diluted net income per share36,066 36,575 
Basic net income per share$0.45 $0.92 
Diluted net income per share$0.45 $0.90 
Dilutive shares included in the calculation1,357 1,691 
Anti-dilutive shares excluded from the calculation665 176 

21

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



(13) Geographic Information
The following table presents the Company’s revenue based on customer location (in thousands): 
 Three Months Ended March 31,
 20242023
North America$110,427 $99,140 
Europe55,400 59,034 
Rest of the world48,488 57,106 
Total revenue$214,315 $215,280 
The United States, included in North America in the above table, accounted for 49% and 43% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. No other country accounts for more than 10% of the Company’s revenue in any period presented.
The Company’s long-lived tangible assets were located as follows (in thousands):
As of March 31,As of December 31,
20242023
North America$45,509 $46,531 
Europe17,859 17,695 
Rest of the world62 74 
Total long-lived tangible assets$63,430 $64,300 
The United States, included in North America in the above table, accounted for 67% and 68% of total long-lived tangible assets as of March 31, 2024 and December 31, 2023, respectively. Ireland, included in Europe in the above table, accounted for 22% and 21% of total long-lived tangible assets as of March 31, 2024 and December 31, 2023, respectively. No other country accounts for more than 10% of the Company’s long-lived tangible assets in any period presented.

(14) Commitments and Contingencies
As of March 31, 2024, the Company had total non-lease obligations in the amount of approximately $73.9 million, which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of March 31, 2024, the Company’s non-lease obligations for the remainder of 2024 and for the years ending December 31, 2025, and 2026 were approximately $37.1 million, $32.1 million, and $4.6 million, respectively.
Legal Matters
From time to time, the Company may become party to litigation in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of occurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company reviews reserves, if any, at least quarterly and may change the amount of any such reserve in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and threats of litigation, investigations and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company currently has no material active litigation matters and, accordingly, no material reserves related to litigation.
22

Shutterstock, Inc.
Notes to Consolidated Financial Statements 
(unaudited)



Indemnification and Employment Agreements
In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including, but not limited to, losses arising out of the breach of the Company’s intellectual property warranties for damages to the customer directly attributable to the Company’s breach. The Company is not responsible for any damages, costs, or losses to the extent such damages, costs or losses arise as a result of the modifications made by the customer, or the context in which an image is used. The standard maximum aggregate obligation and liability to any one customer for all claims is generally limited to ten thousand dollars The Company offers certain of its customers greater levels of indemnification, including unlimited indemnification and believes that it has appropriate insurance coverage in place to adequately cover indemnification claims, if necessary. As of and for the three months ended March 31, 2024, the Company made no material payments for losses on customer indemnification claims and recorded no liabilities related to indemnification for loss contingencies, before considering any insurance recoveries.
Pursuant to the Company’s charter documents and separate written indemnification agreements, the Company has certain indemnification obligations to its executive officers, certain employees and directors, as well as certain former officers and directors.
The Company has also entered into employment agreements with its executive officers and certain employees. These agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination or in the event of a change in control or otherwise, with or without cause.

(15) Subsequent Events
Share Purchase Agreement
On May 1, 2024, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) to acquire all of the outstanding shares (the “Acquisition”) of Envato Pty Ltd. (“Envato”). The consideration payable for the Acquisition, after customary working capital and other adjustments, will be approximately $245 million. The purchase price will be funded through a newly established credit facility. Envato is an Australian based company that provides an on-line marketplace for creative digital assets. The Company believes the Acquisition will expand its offerings across customers and products. The acquisition is anticipated to close in the third quarter, subject to regulatory approvals and other customary closing conditions.
Commitment Letter

On May 1, 2024, in connection with the execution of the Purchase Agreement, the Company entered into a commitment letter (the “Debt Commitment Letter”) with Bank of America, N.A., BofA Securities, Inc., Citibank, N.A., Wells Fargo Bank, N.A. and Citizens Bank, N.A. (collectively, the “Commitment Parties”). The Debt Commitment Letter provides that the Commitment Parties have agreed to provide the Company with debt financing in connection with the Acquisition comprised of (i) a senior unsecured term loan facility in an aggregate principal amount of $125.0 million and (ii) a senior unsecured revolving credit facility in an aggregate principal amount of $250.0 million. The funding of the debt financing pursuant to the Debt Commitment Letter is contingent on the satisfaction of certain conditions set forth therein, including negotiation and execution of the definitive debt financing agreement contemplated by the Debt Commitment Letter and the Acquisition being consummated substantially contemporaneously with the initial funding of the debt financing. The proceeds from the debt financing will be used by the Company: (i) to finance the consideration, and related transaction costs, due in connection with the Acquisition, (ii) to repay certain existing indebtedness and (iii) for general corporate purposes of the Company and its subsidiaries.



23

Table of Contents                            
Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and with information contained in our other filings, including the audited consolidated financial statements included in our 2023 Form 10-K.
In addition to historical consolidated financial information, this discussion contains forward-looking statements including statements about our plans, estimates and beliefs. These statements involve risks and uncertainties and our actual results could differ materially from those expressed or implied in forward-looking statements. See “Forward Looking Statements” above. See also the “Risk Factors” disclosures contained in our 2023 Form 10-K for additional discussion of the risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.
Overview and Recent Developments
Shutterstock, Inc. (referred to herein as the “Company”, “we,” “our,” and “us”) is a leading global creative platform connecting brands and businesses to high quality content.
Our platform brings together users and contributors of content by providing readily-searchable content that our customers pay to license and by compensating contributors as their content is licensed. Contributors upload their content to our web properties in exchange for royalty payments based on customer download activity. Beyond content, customers also leverage our platform to assist with the entire creative process from ideation through creative execution.
Digital content licensed to our customers for their creative needs includes images, footage, music, and 3D models (our “Content” offering). Our Content revenues represent the majority of our business and are supported by our searchable creative platform and driven by our large contributor network.
In addition, our customers have needs that are beyond traditional content license products and services. These include (i) licenses to metadata associated with our images, footage, music tracks and 3D models through our data offering, (ii) distribution and advertising services from our Giphy business, which consists of GIFs (graphics interchange format visuals) that serve as a critical ingredient in text- and message- based conversations and in contextual advertising settings, (iii) specialized solutions for high-quality content matched with production tools and services through Shutterstock Studios and (iv) other tailored white-glove services (collectively, our “Data, Distribution, and Services” offerings).
Over 2.1 million active, paying customers contributed to our revenue for the twelve-month period ended March 31, 2024.
Our Content Offering
Our Content offering includes licenses for:
Images - consisting of photographs, vectors and illustrations. Images are typically used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and other similar uses.
Footage - consisting of video clips, premium footage filmed by industry experts and cinema grade video effects, available in HD and 4K formats. Footage is often integrated into websites, social media, marketing campaigns and cinematic productions.
Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage.
3 Dimensional (“3D”) Models - consisting of 3D models available in a variety of formats, used in a variety of industries such as advertising, media and video production, gaming, retail, education, design and architecture.
Generative AI Content - consisting of images generated from algorithms trained with high-quality, ethically sourced content. Customers can generate images by entering a description of their desired content into model prompts.
Our Content is distributed to customers under the following brands: Shutterstock; Pond5; TurboSquid; PicMonkey; PremiumBeat; Splash News; Bigstock; and Offset. Shutterstock, our flagship brand, includes various content types such as image, footage, music and editorial.
24

Table of Contents                            
Pond5 is a video-first content marketplace which expands the Company’s content offerings across footage, image and music. TurboSquid operates a marketplace that offers more than one million 3D models and a 2 dimensional (“2D”) marketplace derived from 3D objects. PicMonkey is a leading online graphic design and image editing platform. PremiumBeat offers exclusive high-quality music tracks and provides producers, filmmakers and marketers the ability to search handpicked production music from the world’s leading composers. Splash News provides editorial image and video content across celebrity and red carpet events. Bigstock maintains a separate content library tailored for creators seeking to incorporate cost-effective imagery into their projects. Our Offset brand provides authentic and exceptional content for high-impact use cases that require extraordinary images, featuring work from top assignment photographers and illustrators from around the world.
On February 1, 2024, we acquired Backgrid USA, Inc. and Backgrid London, Ltd. (collectively “Backgrid”). Backgrid supplies media organizations with real-time celebrity content.
Our Data, Distribution, and Services Offering:
Our Data, Distribution, and Services offering addresses customer demand for products and services that are beyond our Content licenses. These products and services include, among other things, the use of our metadata, leveraging our Giphy, Inc. platform, and customized Shutterstock Studios offerings.
We have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training. We offer ethically sourced and licenseable metadata at industry leading scales and quality. Our metadata customer base ranges from large technology and media companies to smaller start-up organizations.
In 2023, we completed our acquisition of Giphy, Inc. (“Giphy”). Giphy is a content platform that allows users to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners. We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet.
Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”). Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets. Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution. We offer a whole spectrum of services at pre-production, production, live production and post-production stages.
Acquisition of Envato Pty Ltd.
Share Purchase Agreement
On May 1, 2024, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) to acquire all of the outstanding shares (the “Acquisition”) of Envato Pty Ltd. (“Envato”). The consideration payable for the Acquisition, after customary working capital and other adjustments, will be approximately $245 million. The purchase price will be funded through a newly established credit facility. Envato is an Australian based company that provides an on-line marketplace for creative digital assets. The Company believes the Acquisition will expand its offerings across customers and products. The acquisition is anticipated to close in the third quarter, subject to regulatory approvals and other customary closing conditions.

Debt Commitment Letter
On May 1, 2024, in connection with the execution of the Purchase Agreement, the Company entered into a commitment letter (the “Debt Commitment Letter”) with Bank of America, N.A., BofA Securities, Inc., Citibank, N.A., Wells Fargo Bank, N.A. and Citizens Bank, N.A. (collectively, the “Commitment Parties”). The Debt Commitment Letter provides that the Commitment Parties have agreed to provide the Company with debt financing in connection with the Acquisition comprised of (i) a senior unsecured term loan facility in an aggregate principal amount of $125.0 million and (ii) a senior unsecured revolving credit facility in an aggregate principal amount of $250.0 million. The funding of the debt financing pursuant to the Debt Commitment Letter is contingent on the satisfaction of certain conditions set forth therein, including negotiation and execution of the definitive debt financing agreement contemplated by the Debt Commitment Letter and the Acquisition being consummated substantially contemporaneously with the initial funding of the debt financing. The proceeds from the debt financing will be used by the Company: (i) to finance the consideration, and related transaction costs, due in connection with the Acquisition, (ii) to repay certain existing indebtedness and (iii) for general corporate purposes of the Company and its subsidiaries.
25

Table of Contents                            

Key Operating Metrics
In addition to key financial metrics, we regularly review a number of key operating metrics to evaluate our business, determine the allocation of resources and make decisions regarding business strategies. We believe that these metrics can be useful for understanding the underlying trends in our business.
Subscribers, subscriber revenue and average revenue per customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023. These metrics exclude the respective counts and revenues from Giphy and Backgrid.
Subscribers
We define subscribers 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. We believe the number of subscribers is an important metric that provides insight into our monthly recurring business. We believe that an increase in our number of subscribers is an indicator of engagement in our platform and potential for future growth.
Subscriber Revenue
We define subscriber revenue as the revenue generated from subscribers during the period. We believe subscriber revenue, together with our number of subscribers, provide insight into the portion of our business driven by our monthly recurring products.
Average Revenue Per Customer
Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. We define customers as total active, paying customers that contributed to total revenue over the last twelve-month period. Changes in our average revenue per customer will be driven by changes in the mix of our subscription-based and transactional products as well as pricing in our transactional business.
Paid Downloads
We define paid downloads as the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to our Studios business, downloads of content that are offered to customers for no charge (including our free trials), and metadata delivered through our data deal offering. Measuring the number of paid downloads that our customers make in a given period is important because it is a measure of customer engagement on our platform and triggers the recognition of revenue and contributor royalties.
Revenue per Download
We define revenue per download as the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from our Studios business, revenue that is not derived from or associated with content licenses and revenue associated with our data deal offering. This metric captures any changes in our pricing, including changes resulting from the impact of competitive pressures, as well as the mix of licensing options that our customers choose, some of which generate more revenue per download than others, and the impact that changes in foreign currency rates have on our pricing. Changes in revenue per download are primarily driven by the introduction of new product offerings, changes in product and sales channel mix and customer utilization of our products.
Content in our Collection
We define content in our collection as the total number of approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library at the end of the period. We exclude content from this collection metric that is not uploaded directly to our site but is available for license by our customers through an application program interface, content from our Studios business and AI generated content. Prior to December 31, 2022, this metric only included approved images and footage clips in our library on shutterstock.com at the end of the period. We believe that our large selection of high-quality content enables us to attract and retain customers and drives our network effect.
26

Table of Contents                            
The following table summarizes our key operating metrics, which are unaudited, for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
 20242023
 
Subscribers (end of period)1
499,000 559,000 
Subscriber revenue (in millions)1
$83.9 $90.6 
Average revenue per customer (last twelve months)1
$418 $356 
Paid downloads (in millions)35.0 42.7 
Revenue per download$4.97 $4.41 
Content in our collection (end of period, in millions):
Images832 731 
Footage clips56 48 
___________________________________________________
1 Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023. These metrics exclude the respective counts and revenues from our acquisitions of Giphy and Backgrid.

Critical Accounting Estimates
Our financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure or inclusion of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to allowance for doubtful accounts, the volume of expected unused licenses used in revenue recognition for our subscription-based products, the fair value of acquired goodwill and intangible assets and income tax provisions. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Therefore, we consider these to be our critical accounting estimates. Actual results could differ from those estimates.
A description of our critical accounting policies that involve significant management judgments appears in our 2023 Form 10-K, under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.”
See Note 1 to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a full description of the impact of the adoption of new accounting standards on our financial statements. There have been no material changes to our critical accounting estimates as compared to our critical accounting policies and estimates included in our 2023 Form 10-K.

27

Table of Contents                            


Key Components of Our Results of Operations
Revenue
We distribute our product offerings through two primary channels:
Content: The majority of our customers license image, video, music and 3D content for commercial purposes either directly through our self-service web properties or through our dedicated sales teams. Content customers have the flexibility to purchase subscription-based plans that are paid on a monthly or annual basis. Customers are also able to license content on a transactional basis. These customers generally license content under our standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs. Certain content customers also have unique content, licensing and workflow needs. These customers communication with dedicated sales professionals, service and research teams which provide a number of tailored enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on the e-commerce platform.
Data, Distribution, and Services: Our Data, Distribution, and Services offering addresses customer demand for products and services that are beyond our stock image, footage music and 3D model licenses. We have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training. We offer ethically sourced and licenseable metadata at unique scales and quality. Our metadata customer base ranges from large technology and media companies to smaller start-up organizations.
In 2023, we completed our acquisition of Giphy, Inc. (“Giphy”). Giphy is a content platform that allows used to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners. We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet.
Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”). Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets. Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution. We offer a whole spectrum of services at pre-production, production and post-production stages.
The Company’s revenues by distribution channel for the three months ended March 31, 2024 and 2023 are as follows (in thousands):
 Three Months Ended
March 31,
 20242023
Content$173,830 $193,984 
Data, Distribution, and Services40,485 21,296 
Total Revenues$214,315 $215,280 

Costs and Expenses
Cost of Revenue. Cost of revenue consists of royalties paid to contributors, credit card processing fees, content review costs, customer service expenses, infrastructure and hosting costs related to maintaining our creative platform and cloud-based software platform, depreciation and amortization of capitalized internal-use software, purchased content and acquisition-related intangible assets, allocated facility costs and other supporting overhead costs. Cost of revenue also includes employee compensation, including non-cash equity-based compensation, bonuses and benefits associated with the maintenance of our creative platform and cloud-based software platform.
Sales and Marketing. Sales and marketing expenses include third-party marketing, advertising, branding, public relations and sales expenses. Sales and marketing expenses also include associated employee compensation, including non-cash equity-based compensation, bonuses and benefits, and commissions as well as allocated facility and other supporting overhead costs.
Product Development. Product development expenses consist of employee compensation, including non-cash equity-based compensation, bonuses and benefits, and expenses related to vendors engaged in product management, design, development and testing of our websites and products. Product development costs also includes software and other IT equipment costs, allocated facility expenses and other supporting overhead costs.
28

Table of Contents                            
General and Administrative. General and administrative expenses include employee compensation, including non-cash equity-based compensation, bonuses and benefits for executive, finance, accounting, legal, human resources, internal information technology, internet security, business intelligence and other administrative personnel. In addition, general and administrative expenses include outside legal, tax and accounting services, bad debt expense, insurance, facilities costs, other supporting overhead costs and depreciation and amortization expense.
Other Income, Net. Other income, net consists of non-operating costs such as foreign currency transaction gains and losses, in addition to unrealized gains and losses on investments and interest income and expense.
Income Taxes. We compute income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted statutory income tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized.

29

Table of Contents                            
Results of Operations
The following table presents our results of operations for the periods indicated. The period-to-period comparisons of results are not necessarily indicative of results for future periods.
 Three Months Ended March 31,
 20242023
 (in thousands)
Consolidated Statements of Operations:  
Revenue$214,315 $215,280 
Operating expenses:
Cost of revenue88,204 78,163 
Sales and marketing56,236 47,527 
Product development21,051 15,406 
General and administrative32,078 33,815 
Total operating expenses197,569 174,911 
Income from operations16,746 40,369 
Other income, net3,644 1,045 
Income before income taxes20,390 41,414 
Provision for income taxes4,269 8,571 
Net income$16,121 $32,843 

The following table presents the components of our results of operations for the periods indicated as a percentage of revenue:
 Three Months Ended March 31,
 20242023
Consolidated Statements of Operations:  
Revenue100 %100 %
Operating expenses:
Cost of revenue41 %36 %
Sales and marketing26 %22 %
Product development10 %%
General and administrative15 %16 %
Total operating expenses92 %81 %
Income from operations%19 %
Other income, net%— %
Income before income taxes10 %19 %
Provision for income taxes%%
Net income%15 %
__________________________________
Note: Due to rounding, percentages may not sum to totals.
30

Table of Contents                            

Comparison of the Three Months Ended March 31, 2024 and 2023
The following table presents our results of operations for the periods indicated (in thousands):
 Three Months Ended March 31,
 20242023$ Change% Change
Consolidated Statements of Operations:    
Revenue$214,315 $215,280 $(965)— %
Operating expenses:  
Cost of revenue88,204 78,163 10,041 13 
Sales and marketing56,236 47,527 8,709 18 
Product development21,051 15,406 5,645 37 
General and administrative32,078 33,815 (1,737)(5)
Total operating expenses197,569 174,911 22,658 13 
Income from operations16,746 40,369 (23,623)(59)
Other income, net3,644 1,045 2,599 249 
Income before income taxes20,390 41,414 (21,024)(51)
Provision for income taxes4,269 8,571 (4,302)(50)
Net income$16,121 $32,843 $(16,722)(51)%

Revenue
Revenue for the three months ended March 31, 2024 was in-line with revenue for the three months ended March 31, 2023, declining by $1.0 million. Revenue was not impacted on a constant currency basis in the three months ended March 31, 2024, compared to the same period in 2023.
The Company’s Content revenues decreased by 10%, to $173.8 million in the three months ended March 31, 2024, compared to the same period in 2023. The decline in our Content revenues was primarily driven by weakness in new customer acquisition.
The Company’s Data, Distribution, and Services revenues increased by 90%, to $40.5 million in the three months ended March 31, 2024, compared to the same period in 2023. The increase in Data, Distribution, and Services revenues was primarily driven by growth in our data offering, which grew 73% in the three months ended March 31, 2024 compared to the same period in 2023.
In the three months ended March 31, 2024 and 2023, we delivered 35.0 million and 42.7 million paid downloads, respectively, and our revenue per download was $4.97 and $4.41 for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, the decline in paid downloads is attributed to the decline in the Content business.
Changes in our revenue by region were as follows: revenue from North America increased by $11.3 million, or 11%, to $110.4 million, revenue from Europe decreased by $3.6 million, or 6%, to $55.4 million and revenue from outside Europe and North America decreased by $8.6 million, or 15%, to $48.5 million, in the three months ended March 31, 2024 compared to the same period in 2023.

Costs and Expenses
Cost of Revenue. Cost of revenue increased by $10.0 million, or 13% to $88.2 million in the three months ended March 31, 2024 compared to the same period in 2023. This increase was primarily driven by: (i) higher costs associated with website hosting, hardware and software licenses; (ii) higher employee-related costs, and; (iii) increased depreciation and amortization expense. These increases relate to expenses associated with the Giphy and Backgrid acquisitions, which are not in the first quarter 2023 expenses. The Giphy employee-related costs were comprised of $2.5 million of recurring Giphy Retention Compensation and $0.7 million of non-recurring Giphy Retention Compensation. We expect that our cost of revenue will continue to fluctuate in-line with changes in revenue.
31

Table of Contents                            
Sales and Marketing. Sales and marketing expenses increased by $8.7 million, or 18%, to $56.2 million in the three months ended March 31, 2024 compared to the same period in 2023. As a percentage of revenue, sales and marketing expenses increased to 26% for the three months ended March 31, 2024, from 22% for the same period in 2023. This was primarily driven by $5.5 million increase in marketing spend for brand and performance-based marketing. In addition, for the three months ended March 31, 2024, sales and marketing expenses included higher commissions and bonus related expenses. We expect sales and marketing expenses to continue to fluctuate as we optimize our sales channels and invest in new customer acquisition, products and geographies.
Product Development. Product development expenses increased by $5.6 million, or 37%, to $21.1 million in the three months ended March 31, 2024 compared to the same period in 2023. The increase in product development was primarily driven by Giphy employee-related costs comprised of $2.7 million of recurring Giphy Retention Compensation and $4.3 million of non-recurring Giphy Retention Compensation, offset by declines in software and outside consultant expenses. We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies.
General and Administrative. General and administrative expenses decreased by $1.7 million, or 5%, to $32.1 million in the three months ended March 31, 2024 compared to the same period in 2023. This decrease was driven primarily by reductions in compensation related expenses and a recovery in bad debt expense, offset by increases in professional fees associated with the acquisition of Backgrid and Envato, and Giphy employee-related expenses. The recurring Giphy Retention Compensation was $0.6 million and the non-recurring Giphy Retention Compensation was $1.6 million for the three months ended March 31, 2024.
Other Income, Net. In the three months ended March 31, 2024, other income, net was primarily driven by $3.8 million of unrealized gains related to our investment in Meitu, Inc. In the first quarter of 2024, we exchanged our investment in ZCool Technologies Limited with Meitu, Inc. for $18.4 million of Meitu common shares, resulting in an investment carrying value increase of $3.4 million, which is recorded in Other income, net in the Consolidated Statement of Operations. In addition, other income, net had $1.0 million of interest income, $0.6 million of unfavorable unrealized foreign currency losses and $0.6 million of interest expense related to our credit facility. During the three months ended March 31, 2023, other income, net substantially consisted of $1.1 million of favorable unrealized foreign currency fluctuations. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.
Income Taxes. Income tax expense decreased by $4.3 million for the three months ended March 31, 2024, compared to the same period in 2023. Our effective tax rates were 20.9% and 20.7% for the three months ended March 31, 2024 and 2023, respectively.
For the three months ended March 31, 2024, the net effect of discrete items increased the effective tax rate by 1.5%. Excluding discrete items, our effective tax rate would have been 19.4% for the three months ended March 31, 2024.
For the three months ended March 31, 2023, the net effect of discrete items increased the effective tax rate by 0.9%. Excluding discrete items, our effective tax rate would have been 19.8% for the three months ended March 31, 2023.
As we continue to expand our operations outside of the United States, we have been and may continue to become subject to taxation in additional non-U.S. jurisdictions and our effective tax rate could fluctuate accordingly.

Quarterly Trends
Our operating results may fluctuate from quarter to quarter as a result of a variety of factors, including the effects of some seasonal trends in customer behavior, timing of acquisitions and the timing of revenue recognition associated with data deal partnerships. For example, we expect that certain customers’ usage may decrease at times during the third quarter of each calendar year due to the summer vacation season and may increase at times during the fourth quarter of each calendar year as demand is generally higher to support marketing campaigns in advance of the fourth quarter holiday season. While we believe seasonal trends have affected and will continue to affect our quarterly results, our growth trajectory may have overshadowed these effects to date.
In addition, expenditures on content by customers tend to be discretionary in nature, reflecting overall economic conditions, the economic prospects of specific industries, budgeting constraints, buying patterns and a variety of other factors, many of which are outside our control. As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indicators of our future operating performance.

32

Table of Contents                            
Liquidity and Capital Resources
As of March 31, 2024, we had cash and cash equivalents totaling $71.8 million which consisted primarily of bank balances. Since inception, we have financed our operations primarily through cash flows generated from operations. In addition, if necessary, we have the ability to draw on our credit facility, which was obtained on May 6, 2022.
Historically, our principal uses of cash have included funding our operations, capital expenditures, content acquisitions, business combinations and asset acquisitions that enhance our strategic position, cash dividend payments and share purchases under our share repurchase programs. We plan to finance our operations, capital expenditures and corporate actions largely through cash generated by our operations and our credit facility. Since our results of operations are sensitive to the level of competition we face, increased competition could adversely affect our liquidity and capital resources.
Dividends
We declared and paid cash dividends of $0.30 per share of common stock, or $10.7 million during the three months ended March 31, 2024.
On April 22, 2024, our Board of Directors declared a quarterly cash dividend of $0.30 per share of outstanding common stock payable on June 13, 2024 to stockholders of record at the close of business on May 30, 2024. Future declarations of dividends are subject to the final determination of our Board of Directors, and will depend on, among other things, our future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors our Board of Directors may deem relevant.
Share Repurchase Program
In June 2023, our Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”), providing authorization to repurchase up to $100 million of our common stock.
We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our 2023 Share Repurchase Program is subject to us having available cash to fund repurchases. Under the share repurchase program, management is authorized to purchase shares of our common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
As of March 31, 2024, we have repurchased approximately 4.4 million shares of our common stock under the 2023 Share Repurchase Program at an average per-share cost of $51.74. During the three months ended March 31, 2024, we did not repurchase shares of our common stock. As of March 31, 2024, we had $71.8 million of remaining authorization for repurchases under the 2023 Share Repurchase Program.
Revolving Credit Facility
On May 6, 2022, we entered into a five-year $100 million unsecured revolving loan facility (the “Credit Facility”) with Bank of America, N.A., as Administrative Agent and other lenders. The Credit Facility includes a letter of credit sub-facility and a swingline facility and it also permits, subject to the satisfaction of certain conditions, up to $100 million of additional revolving loan commitments with the consent of the Administrative Agent.
At our option, revolving loans accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.125% to 0.500%, determined based on the Company’s consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.125% to 1.5%, determined based on our consolidated leverage ratio. We are also required to pay an unused commitment fee ranging from 0.150% to 0.225%, determined based on the Company’s consolidated leverage ratio. In connection with the execution of this agreement, we paid debt issuance costs of approximately $0.6 million.
As of March 31, 2024 and December 31, 2023, we had $30 million of outstanding borrowings under the Credit Facility. As of March 31, 2024, we had a remaining borrowing capacity of $67 million, net of standby letters of credit. For the three months ended March 31, 2024, cash interest paid was not significant.
The Credit Facility contains financial covenants and requirements restricting certain of our activities, which are usual and customary for this type of loan. We are also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the Credit Facility. As of March 31, 2024, we are in compliance with these covenants.
33

Table of Contents                            
Sources and Uses of Funds
We believe, based on our current operating plan, that our cash and cash equivalents, and cash from operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our longer-term liquidity is contingent upon future operating performance. Future capital expenditures will generally relate to the functionality of our current platform, the acquisition of additional storage, servers, network connectivity hardware, security apparatus and software, leasehold improvements and furniture and fixtures related to office expansion and relocation, content and general corporate infrastructure. 
As of March 31, 2024, we had approximately $74 million in unconditional cash obligations, consisting primarily of purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, of which the majority is due to be paid within the next two years. In addition, as of March 31, 2024, we had approximately $45 million in operating lease obligations with lease payments extending through 2029.
See Note 14 to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding our existing capital commitments as of March 31, 2024.
Cash Flows 
The following table summarizes our cash flow data for the three months ended March 31, 2024 and 2023 (in thousands):
 Three Months Ended March 31,
 20242023
Net cash provided by operating activities$8,300 $66,775 
Net cash used in investing activities$(16,528)$(15,937)
Net cash used in financing activities$(18,629)$(70,667)
Operating Activities
Our primary source of cash from operating activities is cash collections from our customers. The majority of our revenue is generated from credit card transactions and is typically settled within one to five business days. Our primary uses of cash for operating activities are for the payment of royalties to content contributors, employee-related expenditures and the payment of other operating expenses incurred in the ordinary course of business.
Net cash provided by operating activities was $8.3 million for the three months ended March 31, 2024, compared to Net cash provided by operating activities of $66.8 million for the three months ended March 31, 2023. In the three months ended March 31, 2024, operating cash flows were unfavorably impacted from payments of year-end bonuses and commissions, which are typical first quarter cash outflows. In addition, operating cash flows for the three months ended March 31, 2024 were unfavorably impacted by the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows.
Operating cash flows for the three months ended March 31, 2023 were favorably impacted from an increase in operating income and changes in the timing of cash collections from data deal customers, which had large receivable balances at the end of 2022, and lower payments pertaining to operating expenses, which can cause operating cash flow to fluctuate from period to period.
Investing Activities
Cash used in investing activities for the three months ended March 31, 2024 was $16.5 million, consisting primarily of (i) $19.5 million used in the acquisition of Backgrid, net of cash acquired, (ii) capital expenditures of $14.5 million for internal-use software and website development costs and purchases of software and equipment, and (iii) $1.0 million paid to acquire the rights to distribute certain digital content into perpetuity. These cash outflows were partially offset by (i) $18.4 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.
Cash used in investing activities in the three months ended March 31, 2023 was $15.9 million, consisting primarily of (i) capital expenditures of $12.4 million for internal-use software and website development costs and purchases of software and equipment, and (ii) $3.5 million paid to acquire the rights to distribute certain digital content in perpetuity.
Financing Activities
Cash used in financing activities in the three months ended March 31, 2024 was $18.6 million, consisting of (i) $10.7 million, related to the payment of the quarterly cash dividend, and (ii) $8.0 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards.
34

Table of Contents                            
Cash used in financing activities in the three months ended March 31, 2023 was $70.7 million, consisting of (i) $50.0 million used for the repayment of our Credit Facility; (ii) $9.7 million related to the payment of the quarterly cash dividend; and (iii) $11.0 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards.

Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, our 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 common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage), and adjusted free cash flow. These non-GAAP financial measures are included solely to provide investors with additional information regarding our financial results and 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 March 31,
20242023
Non-GAAP Financial Measures (in thousands):
Adjusted EBITDA$55,977 $69,764 
Adjusted net income$40,640 $47,134 
Adjusted free cash flow$11,246 $50,868 
Revenue growth on a constant currency basis— %10 %

These non-GAAP financial measures 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 measures. In addition, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted 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.
Our management uses these non-GAAP financial measures, 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 our 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 our 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. 
Management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted 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 common 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 product offering) 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. Management believes that adjusted 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 internal-use software and website development costs to support the Company’s ongoing business operations and provides them with the same measures that management uses as the basis for making resource
35

Table of Contents                            
allocation decisions.
Our use of non-GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP, as the excluded items may have significant effects on our operating results and financial condition. Additionally, our methods for measuring non-GAAP financial measures may differ from other companies’ similarly titled measures. When evaluating our performance, these non-GAAP financial measures should be considered alongside other financial performance measures, including various cash flow metrics, net income and our other GAAP results.
Our method for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted free cash flow, as well as a reconciliation of the differences between adjusted EBITDA, adjusted net income, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, is presented below.
The expense associated with the Giphy Retention Compensation related to (i) the one-time employment inducement bonuses and (ii) the vesting of the cash value of unvested Meta equity awards held by the employees prior to closing, which are reflected in operating expenses (together, the “Giphy Retention Compensation Expense - non-recurring”), are required payments in accordance with the terms of the acquisition. Meta’s sale of Giphy was directed by the CMA and accordingly, the terms of the acquisition were subject to CMA preapproval. Management considers the operating expense associated with these required payments to be unusual and non-recurring in nature. The Giphy Retention Compensation Expense - non-recurring is not considered ongoing expense necessary to operate the Company’s business. Therefore, such expenses have been included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share. For the three months ended March 31, 2024, the Company also incurred $7.1 million, of Giphy Retention Compensation expense related to recurring employee costs, which is included in operating expenses, and are not included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share.
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, bargain purchase gain related to the acquisition of Giphy, Giphy Retention Compensation Expense - non-recurring, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, unrealized gains on investments, interest income and expense and income taxes. We define adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue.

The following is a reconciliation of net income to adjusted EBITDA for each of the periods indicated (in thousands):
 Three Months Ended March 31,
 20242023
Net income$16,121 $32,843 
Add / (less) Non-GAAP adjustments:
Depreciation and amortization21,263 18,896 
Non-cash equity-based compensation11,150 8,643 
Giphy Retention Compensation Expense - non-recurring
6,829 — 
Other adjustments, net(1)
(3,655)811 
Provision for income taxes4,269 8,571 
Adjusted EBITDA$55,977 $69,764 
Revenue$214,315 $215,280 
Net income margin7.5 %15.3 %
Adjusted EBITDA margin26.1 %32.4 %
_______________________________________________________________________________
(1)Other adjustments, net includes unrealized foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, unrealized gains on investments, and interest income and expense.
36

Table of Contents                            

Adjusted Net Income and Adjusted Net Income Per Diluted Common Share
We define adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets, Giphy Retention Compensation Expense - non-recurring, unrealized gains on investments, and the estimated tax impact of such adjustments. We define adjusted net income per diluted common share as adjusted net income divided by weighted average diluted shares.
The following is a reconciliation of net income to adjusted net income for each of the periods indicated (in thousands, except per share data):
 Three Months Ended March 31,
 20242023
(in thousands)
Net income$16,121 $32,843 
Add / (less) Non-GAAP adjustments:
Non-cash equity-based compensation11,150 8,643 
Tax effect of non-cash equity-based compensation(1)
(2,620)(2,031)
Acquisition-related amortization expense(2)
9,163 8,158 
Tax effect of acquisition-related amortization expense(1)
(2,153)(1,917)
Giphy Retention Compensation Expense - non-recurring
6,829 — 
Tax effect of Giphy Retention Compensation Expense - non-recurring
(1,605)— 
Other3,755 1,856 
Tax effect of other(1)
— (418)
Adjusted net income$40,640 $47,134 
Net income per diluted common share$0.45 $0.90 
Adjusted net income per diluted common share$1.13 $1.29 
Weighted average diluted shares36,066 36,575 
(1)Statutory tax rates are used to calculate the tax effect of the adjustments.
(2)Of these amounts, $8.2 million and $7.5 million are included in cost of revenue for the three months ended March 31, 2024 and 2023, respectively. The remainder of acquisition-related amortization expense is included in general and administrative expense in the Statement of Operations.
Revenue Growth (including by product offering) on a Constant Currency Basis
We define revenue growth (including by product offering) 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.
 Three Months Ended March 31,
 20242023
Reported revenue (in thousands)$214,315 $215,280 
Revenue growth— %%
Revenue growth on a constant currency basis— %10 %
Content reported revenue (in thousands)$173,830 $193,984 
Content revenue growth(10)%(1)%
Content revenue growth on a constant currency basis(10)%%
Data, Distribution, and Services reported revenue (in thousands)$40,485 $21,296 
Data, Distribution, and Services revenue growth90 %436 %
Data, Distribution, and Services revenue growth on a constant currency basis90 %437 %

37

Table of Contents                            
Adjusted Free Cash Flow
We define adjusted free cash flow as our cash provided by operating activities, adjusted for capital expenditures, content acquisition and cash received related to Giphy Retention Compensation in connection with the acquisition of Giphy.
The following is a reconciliation of net cash provided by operating activities to adjusted free cash flow for each of the periods indicated (in thousands):
 Three Months Ended March 31,
 20242023
Cash flow information:(in thousands)
Net cash provided by operating activities$8,300 $66,775 
Net cash used in investing activities$(16,528)$