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8-K


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): November 5, 2015


Shutterstock, Inc.
(Exact name of registrant as specified in its charter) 

Delaware
 
001-35669
 
80-0812659
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
350 Fifth Avenue, 21st Floor
New York, New York 10118
(Address of principal executive offices, including zip code)
 
(646) 419-4452
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)



 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 



Item 2.02
Results of Operations and Financial Condition.
 
On November 5, 2015, Shutterstock, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2015.  A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated herein by reference. In addition, a copy of the presentation slides which will be referenced on the Company’s earnings call at 8:30 a.m. Eastern Time on Thursday, November 5, 2015 is furnished as Exhibit 99.2 to this current report and incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

 


2


Item 7.01
Regulation FD Disclosure.
 
The information provided above in “Item 2.02 Results of Operations and Financial Condition” is incorporated by reference in this Item 7.01. 


 

Item 9.01             Financial Statements and Exhibits.
 
(d)                                 Exhibits.
 
99.1                        Press release dated November 5, 2015
99.2    Presentation slides referenced on the earnings call held by Shutterstock, Inc. on November 5, 2015

3


SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
SHUTTERSTOCK, INC.
 
 
 
 
 
Dated: November 5, 2015
By:
/s/ Steven Berns
 
 
Steven Berns
 
 
Chief Financial Officer

4


EXHIBIT INDEX
 
Exhibit No.
 
Exhibit Description
 
 
 
99.1
 
Press release dated November 5, 2015
 
 
 
99.2
 
Presentation slides referenced on the earnings call held by Shutterstock, Inc. on November 5, 2015

5
Exhibit


Exhibit 99.1
 

Shutterstock Reports Third Quarter 2015 Financial Results
Board Authorizes $100 Million Share Repurchase Program
 

Third Quarter 2015 Highlights:
 
•
Revenue increased 28% to $107.3 million
•
Adjusted EBITDA increased 11% to $19.6 million
•
Non-GAAP Net Income per Diluted Share increased 4% to $0.28
•
Paid downloads increased 22% and revenue per download increased 4%
•
Image collection expanded 49% to 63.7 million images and video collection expanded 60% to 3.3 million video clips
 
New York - November 5, 2015 - Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial imagery and music, today announced financial results for the third quarter ended September 30, 2015.
 
Founder and CEO Jon Oringer said “Shutterstock's strong third quarter results reflect the sustained operating performance we are delivering across our diverse platforms as both new and existing customers further recognize the value of our high quality content. Each side of our marketplace continues to grow consistently as we remain focused on delivering the best user experience to our customers and contributors. Expanding our product offerings and developing innovative technology solutions remains a priority to ensure that we can continually evolve to meet the needs of the creative community, while delivering significant financial growth."

 
THIRD QUARTER RESULTS
 
Revenue
 
Third quarter revenue of $107.3 million increased $23.5 million or 28% as compared to the third quarter of 2014, primarily due to a 22% increase in the number of paid downloads, mainly due to new customers, as well as from a 4% increase in revenue per download from growth in both on-demand offerings and enterprise sales.  Third quarter results also included contributions from PremiumBeat and Rex Features, which were acquired during the first quarter of 2015.  Excluding contributions from these acquired businesses and the impact of foreign currency, total Company revenue growth was approximately 25% in the third quarter.
 
Adjusted EBITDA
 
Adjusted EBITDA of $19.6 million increased $2.0 million or 11% as compared to the third quarter of 2014 as the 28% revenue growth was partially offset by an increase in operating expenses primarily from higher royalty costs associated with the increase in paid downloads.  Additionally, the third quarter of 2015 included higher personnel and marketing expenses to support growth, severance costs associated with executive management and operating costs from businesses acquired during the first quarter of 2015.  Excluding the contributions from these businesses, as well as severance costs associated with executive management and the impact of foreign currency, Adjusted EBITDA growth was approximately 27% in the third quarter as compared to the third quarter of 2014.  Adjusted EBITDA is defined as net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.
 








Net Income
 
Net income available to common stockholders of $4.1 million ($0.11 per diluted share) for the third quarter decreased as compared with $5.3 million ($0.15 per diluted share) in the third quarter a year ago as the improved operating performance was more than offset by an increase in non-cash equity-based compensation expense, changes to the fair value of contingent consideration, and amortization of acquisition related intangible assets.

Non-GAAP net income, which excludes the after tax impact of non-cash equity-based compensation, changes in fair value of contingent consideration related to acquisitions, and amortization of acquisition related intangible assets, was $10.1 million ($0.28 per diluted share) for the third quarter, an increase of 5% as compared to $9.6 million ($0.27 per diluted share) in the third quarter of 2014.
 
Cash
 
Free cash flow was $14.8 million for the third quarter, a decrease of $6.0 million from the third quarter of 2014, as the improved operating performance was more than offset by increased capital expenditures and content acquisitions as well as working capital fluctuations.  Free cash flow is defined as cash provided by operating activities adjusted for capital expenditures and content acquisition.
 
The Company’s cash, cash equivalents and short term investments totaled $282.1 million at September 30, 2015 as compared to $288.3 million as of December 31, 2014, primarily reflecting the $59.4 million of cash generated from operations, which was more than offset by cash paid for acquisitions of approximately $65 million.  The Company generated $19.4 million of cash from operations in the third quarter of 2015, as compared to $22.7 million generated in the third quarter of 2014.
 
OPERATING METRICS

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
(in millions, except revenue per download)
 
(in millions, except revenue per download)
Number of paid downloads
 
38.1

 
31.2

 
107.4

 
92.4

Revenue per download (1)
 
$
2.76

 
$
2.65

 
$
2.83

 
$
2.54

Images in our collection (end of period)
 
63.7

 
42.7

 
63.7

 
42.7

_______________________________________________________________________________________________________________________ 
(1)  Revenue per download metric excludes the impact of revenue not associated with content downloads.
 
FINANCIAL OUTLOOK
 
The Company’s current expectations for the full year 2015 remain as follows:
 
Full Year 2015
 
•
Revenue of $425 - $430 million (29% - 31% growth)
•
Adjusted EBITDA of $82 - $85 million (16% - 20% growth)
•
Non-cash equity-based compensation expense of approximately $31 million
•
Effective tax rate of approximately 44%
•
Capital expenditures of approximately $17 million










STOCK REPURCHASE PROGRAM

The Company's Board of Directors approved a stock repurchase program, pursuant to which the Company is authorized to purchase up to $100 million of its common stock. The Company expects to fund repurchases through a combination of cash on hand, cash generated by operations and future financing transactions. Accordingly, the Company's stock repurchase program is subject to the Company having available cash to fund repurchases. Under the program, management is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements. The timing and amount of any shares repurchased will be determined by the Company's management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time.





NON-GAAP FINANCIAL MEASURES
 
Shutterstock considers Adjusted EBITDA, non-GAAP net income, and free cash flow to be important financial indicators of the Company’s operational strength and the performance of its business. Shutterstock defines adjusted EBITDA as net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation; non-GAAP net income as net income excluding the after tax impact of non-cash equity-based compensation, the amortization of acquisition related intangible assets and changes in fair value of contingent consideration related to acquisitions; and free cash flow as cash provided by/(used in) operating activities adjusted for capital expenditures and content acquisition. These figures have not been calculated in accordance with United States generally accepted accounting principles (GAAP) and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, Adjusted EBITDA, non-GAAP net income, and free cash flow should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.

 A reconciliation of the differences between Adjusted EBITDA, non-GAAP net income, and free cash flow, and the most comparable financial measure calculated and presented in accordance with GAAP, is presented under the heading “Reconciliation of Non-GAAP Financial Information to GAAP” immediately following the Consolidated Balance Sheets.
 
EARNINGS TELECONFERENCE INFORMATION
 
The Company will discuss its third quarter financial results during a teleconference today, November 5, 2015, at 8:30 AM ET.  The conference call can be accessed in the U.S. at (877) 306-0077 or outside the U.S. at (678) 562-4243 with the conference ID# 50972839.  A live audio webcast of the call will also be available simultaneously at http://investor.shutterstock.com.
 
Following completion of the call, a recorded replay of the webcast will be available in the investor relations section of Shutterstock’s website. A telephone replay of the call will also be available until November 12, 2015 in the U.S. at (855) 859-2056 or outside the U.S. at (404) 537-3406 with the conference ID# 50972839.
 
Additional investor information can be accessed at http://investor.shutterstock.com.
 
ABOUT SHUTTERSTOCK
 
Shutterstock, Inc. (NYSE: SSTK) is a leading global provider of high-quality licensed photographs, vectors, illustrations, videos and music to businesses, marketing agencies and media organizations around the world. Working with its growing community of over 80,000 contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 65 million images and 3 million video clips available.
 
Headquartered in New York City, with offices in Amsterdam, Berlin, Chicago, Dallas, Denver, London, Los Angeles, Montreal, Paris, San Francisco and Silicon Valley, Shutterstock has customers in more than 150 countries. The Company also owns Bigstock, a value-oriented stock media agency; Offset, a high-end image collection; PremiumBeat a curated royalty-free music library; Rex Features, a premier source of editorial images for the world’s media; and WebDAM, a cloud-based digital asset management service for businesses.
 
For more information, please visit www.shutterstock.com, and follow Shutterstock on Twitter or Facebook.






SAFE HARBOR PROVISION
 
Statements in this press release regarding management’s future expectations, predictions, beliefs, goals, intentions, plans, prospects or strategies, including statements regarding Shutterstock’s future financial and operating performance on both a GAAP and non-GAAP basis and statements regarding Shutterstock’s ability to grow its two-sided marketplace, may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors including risks related to any unforeseen changes to or the effects on liabilities, financial condition, future capital expenditures, revenue, expenses, net income or loss, synergies and future prospects; our inability to continue to attract and retain customers and contributors to our online marketplace for commercial digital imagery and music; a decrease in repeat customer purchases or in content contributed to our online marketplace; our inability to successfully operate in a new and rapidly changing market and to evaluate our future prospects; competitive factors; assertions by third parties of infringement or other violations of intellectual property rights by Shutterstock; our inability to increase market awareness of Shutterstock and our services; Shutterstock’s inability to increase the percentage of its revenues that come from larger companies; our inability to continue expansion into international markets and the additional risks associated with operating internationally; failure to respond to technological changes or upgrade Shutterstock’s website and technology systems; general economic conditions worldwide; our ability to successfully integrate acquisitions and the associated technology and achieve operational efficiencies; and other factors and risks discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as well as in other documents that may be filed by Shutterstock from time to time with the Securities and Exchange Commission.  As a result of such risks, uncertainties and factors, Shutterstock’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. Shutterstock is providing the information in this press release as of this date and assumes no obligation to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Media Contact:
Investor Contact:
Niamh Hughes
Craig Felenstein
917 563 4991
212 598 9440
press@shutterstock.com
ir@shutterstock.com




Shutterstock, Inc.
Consolidated Statements of Operations
(In thousands, except for share and per share data)
(unaudited)
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Revenue
 
$
107,260

 
$
83,730

 
$
309,147

 
$
236,745

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 

 
 

 
 

 
 

Cost of revenue
 
44,512

 
33,260

 
126,582

 
94,419

Sales and marketing
 
27,393

 
21,122

 
79,927

 
60,890

Product development
 
10,827

 
9,870

 
31,700

 
26,922

General and administrative
 
16,441

 
10,265

 
44,949

 
27,816

Total operating expenses
 
99,173

 
74,517

 
283,158

 
210,047

Income from operations
 
8,087

 
9,213

 
25,989

 
26,698

Other expense, net
 
(767
)
 
(373
)
 
(3,386
)
 
(327
)
Income before income taxes
 
7,320

 
8,840

 
22,603

 
26,371

Provision for income taxes
 
3,217

 
3,562

 
9,920

 
11,315

Net income
 
$
4,103

 
$
5,278

 
$
12,683

 
$
15,056

Less:
 
 

 
 

 
 

 
 

Undistributed earnings to participating stockholder
 
—

 
9

 
2

 
30

Net income available to common stockholders
 
$
4,103

 
$
5,269

 
$
12,681

 
$
15,026

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share available to common stockholders:
 
 

 
 

 
 

 
 

Basic
 
$
0.11

 
$
0.15

 
$
0.35

 
$
0.43

Diluted
 
$
0.11

 
$
0.15

 
$
0.35

 
$
0.42

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 

 
 

 
 

 
 

Basic
 
36,039,907

 
35,304,066

 
35,847,748

 
35,161,644

Diluted
 
36,270,044

 
35,931,454

 
36,269,067

 
35,883,202













Shutterstock, Inc.
Consolidated Balance Sheets
(In thousands, except par value amount)
(unaudited)
 
 
 
September 30, 2015
 
December 31, 2014
 
 
 
 
 
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
229,607

 
$
233,453

Short-term investments
 
52,491

 
54,844

Credit card receivables
 
3,941

 
2,451

Accounts receivable, net
 
25,631

 
15,251

Prepaid expenses and other current assets
 
12,355

 
12,141

Deferred tax assets, net
 
6,213

 
5,390

Total current assets
 
330,238

 
323,530

Property and equipment, net
 
29,877

 
26,744

Intangibles assets, net
 
30,818

 
4,934

Goodwill
 
52,170

 
10,186

Deferred tax assets, net
 
19,991

 
16,484

Other assets
 
1,913

 
1,899

Total assets
 
$
465,007

 
$
383,777

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
9,045

 
$
5,334

Accrued expenses
 
27,962

 
24,982

Contributor royalties payable
 
17,614

 
11,933

Income taxes payable
 
993

 
91

Deferred revenue
 
94,314

 
75,789

Other liabilities
 
4,920

 
2,198

Total current liabilities
 
154,848

 
120,327

Deferred tax liability, net
 
4,025

 
—

Other non-current liabilities
 
13,234

 
12,017

Total liabilities
 
172,107

 
132,344

Commitment and contingencies
 
 

 
 

Stockholders’ equity:
 
 

 
 

Common stock, $0.01 par value; 200,000 shares authorized; 36,076 and 35,603 shares outstanding as of September 30, 2015 and December 31, 2014, respectively
 
360

 
356

Additional paid-in capital
 
206,811

 
174,821

Accumulated comprehensive loss
 
(3,839
)
 
(629
)
Retained earnings
 
89,568

 
76,885

Total stockholders’ equity
 
292,900

 
251,433

Total liabilities and stockholders’ equity
 
$
465,007

 
$
383,777






Shutterstock, Inc.
Reconciliation of Non-GAAP Financial Information to GAAP
(In thousands, except for share and per share information)
(Unaudited)
The following information is not a financial measure under generally accepted accounting principles (GAAP). In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with GAAP, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing and financing activities as there may be significant factors or trends that it fails to address. We present this financial information because we believe that it is helpful to some investors as one measure of our operations. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our results with our results from other reporting periods and with the results of other companies. 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net income
 
$
4,103

 
$
5,278

 
$
12,683

 
$
15,056

Add:
 
 
 
 
 
 
 
 
(a)  Depreciation and amortization
 
3,869

 
2,125

 
10,363

 
5,757

(b)  Write-off of property and equipment
 
—

 
—

 
—

 
367

(c)  Non-cash equity-based compensation
 
7,683

 
6,335

 
22,771

 
15,728

(d)  Other expense, net
 
767

 
373

 
3,386

 
327

(e)  Provision for income taxes
 
3,217

 
3,562

 
9,920

 
11,315

Adjusted EBITDA (1)
 
$
19,639

 
$
17,673

 
$
59,123

 
$
48,550

Adjusted EBITDA per diluted common share
 
$
0.54

 
$
0.49

 
$
1.63

 
$
1.35

 
 
 
 
 
 
 
 
 
Weighted average diluted shares
 
36,270,044

 
35,931,454

 
36,269,067

 
35,883,202

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Net income
 
$
4,103

 
$
5,278

 
$
12,683

 
$
15,056

Add (net of tax effect):
 
 
 
 
 
 
 
 
(a)  Non-cash equity-based compensation
 
4,933

 
4,192

 
14,652

 
10,473

(b)  Acquisition related amortization expense
 
758

 
105

 
2,097

 
242

(c)  Change in fair value of contingent consideration
 
342

 
44

 
913

 
69

Non-GAAP net income
 
$
10,136

 
$
9,619

 
$
30,345

 
$
25,840

Non-GAAP net income per diluted common share
 
$
0.28

 
$
0.27

 
$
0.84

 
$
0.72

 
 
 
 
 
 
 
 
 
Weighted average diluted shares
 
36,270,044

 
35,931,454

 
36,269,067

 
35,883,202

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Net cash provided by operating activities
 
$
19,350

 
$
22,712

 
$
59,449

 
$
59,499

Capital expenditures and content acquisition
 
(4,508
)
 
(1,885
)
 
(12,065
)
 
(16,665
)
Free cash flow
 
$
14,842

 
$
20,827

 
$
47,384

 
$
42,834

 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
19,639

 
$
17,673

 
$
59,123

 
$
48,550

Add/(less):
 
 
 
 

 
 
 
 

(a)  Changes in operating assets and liabilities
 
5,842

 
11,722

 
17,570

 
36,200

(b)  Provision for income taxes
 
(3,217
)
 
(3,562
)
 
(9,920
)
 
(11,315
)
(c)  Deferred income taxes
 
(2,762
)
 
(1,707
)
 
(4,587
)
 
(4,181
)
(d)  Tax benefit from exercise/vesting of equity awards
 
(41
)
 
(1,503
)
 
(1,741
)
 
(10,224
)
(e)  Provision for doubtful accounts/chargeback/sales refund reserves
 
116

 
392

 
950

 
686

(f)   Other expense, net
 
(767
)
 
(373
)
 
(3,386
)
 
(327
)
(g)  Change in fair value of contingent consideration
 
540

 
70

 
1,440

 
110

Net cash provided by operating activities
 
$
19,350

 
$
22,712

 
$
59,449

 
$
59,499

_______________________________________________________________________________________________________________________ 
(1)  Earnings/(loss) before other income/(expense), income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.




SHUTTERSTOCK, INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited; in thousands)
 

Non-Cash Equity-Based Compensation
 
Included in the accompanying financial results are expenses related to non-cash equity-based compensation, as follows:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
$
496

 
$
336

 
$
1,444

 
$
953

Sales and marketing
 
1,364

 
819

 
4,110

 
2,689

Product development
 
1,743

 
1,805

 
5,863

 
4,529

General and administrative
 
4,080

 
3,375

 
11,354

 
7,557

Total
 
$
7,683

 
$
6,335

 
$
22,771

 
$
15,728

 
Amortization of Intangible Assets and Depreciation of Property and Equipment
 
Included in the accompanying financial results are expenses related to the amortization of intangible assets, as follows:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
$
402

 
$
29

 
$
1,070

 
$
70

General and administrative
 
867

 
138

 
2,405

 
314

Total
 
$
1,269

 
$
167

 
$
3,475

 
$
384

 
Included in the accompanying financial results are expenses related to the depreciation of property and equipment, as follows:
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
$
1,412

 
$
1,135

 
$
3,758

 
$
3,138

General and administrative
 
1,188

 
823

 
3,130

 
2,235

Total
 
$
2,600

 
$
1,958

 
$
6,888

 
$
5,373

 
Historical Operating Metrics
 
 
9/30/13
 
12/31/13
 
3/31/14
 
6/30/14
 
9/30/14
 
12/31/14
 
3/31/15
 
6/30/15
 
9/30/15
 
 
(in millions, except revenue per download)
Number of paid downloads
 
25.4

 
28.0

 
29.7

 
31.5

 
31.2

 
33.5

 
33.4

 
35.9

 
38.1

Revenue per download (1)
 
$
2.35

 
$
2.43

 
$
2.45

 
$
2.52

 
$
2.65

 
$
2.69

 
$
2.87

 
$
2.85

 
$
2.76

Images in collection (end of period)
 
29.7

 
32.2

 
35.4

 
38.8

 
42.7

 
46.8

 
51.6

 
57.2

 
63.7

_______________________________________________________________________________________________________________________ 
(1)  Revenue per download metric excludes the impact of revenue not associated with content downloads.



ex-992
Q3 2015 Summary November 5, 2015

 
2 This presentation contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of our most recent public filings. You should read our public filings, including the Risk Factors set forth therein and the documents that we have filed as exhibits to those filings, completely and with the understanding that our actual future results may be materially different from what we currently expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. In addition, as we refer to earnings, we will also refer to adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and free cash flow, which we consider to be important financial indicators of the Company’s operational strength and the performance of its business. Shutterstock defines adjusted EBITDA as net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation; adjusted EBITDA margin as adjusted EBITDA divided by revenue; non-GAAP net income as net income excluding the after tax impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets and changes in fair value of contingent consideration related to acquisitions; and free cash flow as cash provided by/(used in) operating activities adjusted for capital expenditures and content acquisition. These figures are non-GAAP financial measures and should be considered in addition to results prepared in accordance with generally accepted accounting principles (GAAP), and should not be considered as a substitute for, or superior to, GAAP results. Safe Harbor

 
3 The Leading Global Marketplace for Stock Content Contributors Photographers Illustrators Videographers Musicians Customers Designers Businesses Marketing Agencies Media Organizations

 
4 - Reported revenue increased 28% to $107.3 million - Revenues increased approximately 25% excluding the impact of currency and contributions from acquired businesses primarily driven by new customers, increased paid downloads and higher revenue per download - Reported Adjusted EBITDA increased 11% to $19.6 million - Adjusted EBITDA increased approximately 27% excluding the impact of currency and contributions from acquired businesses; revenue growth was partially offset by higher operating expenses due primarily to royalty costs associated with the increase in paid downloads as well as higher personnel and marketing costs - Net Income available to common stockholders decreased to $4.1 million - Non-GAAP net income per diluted share increased 4% to $0.28; excludes non-cash equity-based compensation, amortization of acquisition related intangible assets and changes in the fair value of contingent consideration - Announced $100 million share repurchase program Q3 2015 Financial Highlights

 
5 - Image library expanded 49% to 63.7 million images - Video library expanded 60% to 3.3 million video clips - Paid downloads grew 22% to 38.1 million - Revenue per download increased 4% to $2.76 - 1.4 million customers contributed to revenue in the prior 12 months Q3 2015 Operating Highlights

 
Consolidated Financial Results ($ in millions) Three Months Ended September 30 Nine Months Ended September 30 2015 2014 % 2015 2014 % Operating Revenues $107.3 $83.7 28% $309.1 $236.7 31% Operating Expenses 99.2 74.5 33% 283.2 210.0 35% Operating Profit 8.1 9.2 (12%) 26.0 26.7 (3%) Add: Dep. & Amort. 3.9 2.1 86% 10.4 5.8 79% Add: Stock Based Comp. 7.7 6.3 22% 22.8 15.7 45% Add: Other Adjustments -- -- -- -- 0.4 -- Adjusted EBITDA $19.6 $17.7 11% $59.1 $48.6 22% Adjusted EBITDA Margin 18.3% 21.1% 19.1% 20.5% Add: Executive Severance 0.7 -- -- 0.8 -- -- $20.3 $17.7 15% $59.9 $48.6 23% 6 Note: “Other Adjustments” includes write-off of property & equipment in Q1’14. Totals may not sum due to rounding.

 
Key Financial Results Q3 Y/Y Change Reported Pro-Forma Revenue Growth 28% 25% Adjusted EBITDA Growth 11% 27% Revenue per Download Growth 4% 9% Adjusted EBITDA Margin 18.3% 22.3% Note: Pro-Forma growth excludes the impact of foreign currency, contributions from PremiumBeat & Rex which were acquired in January 2015 and severance for executive management. 7

 
Free Cash Flow 8 ($ in millions) Three Months Ended September 30 Nine Months Ended September 30 2015 2014 2015 2014 Net Cash From Operations $19.4 $22.7 $59.4 $59.5 CapEx and Content Acquisitions (4.5) (1.9) (12.1) (16.7) Free Cash Flow $14.8 $20.8 $47.4 $42.8 Note: Totals may not sum exactly due to rounding.

 
Non-GAAP Net Income 9 ($ in millions) Three Months Ended September 30 Nine Months Ended September 30 2015 2014 2015 2014 GAAP Net Income $4.1 $5.3 $12.7 $15.1 Add: Non-Cash Equity-Based Comp 4.9 4.2 14.7 10.5 Add: Acquisition-Related Amortization 0.8 0.1 2.1 0.2 Add: Change in Fair Value of Contingent Consideration 0.3 0.0 0.9 0.1 Non-GAAP Net Income 10.1 9.6 30.3 25.8 Non-GAAP Net Income / Diluted Share $0.28 $0.27 $0.84 $0.72 Note: Adjustments net of tax effect. Totals may not sum exactly due to rounding.

 
2015 Guidance 2015 Guidance Implied Y/Y Growth Revenue $425 - $430 million 29% - 31% Adjusted EBITDA $82 - $85 million 16% - 20% Non-Cash Equity Based Comp. $31 million Effective Tax Rate 44% Capital Expenditures $17 million 10 2015 Guidance Unchanged from Prior Quarter