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): | February 24, 2016 |
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) 766-1855 (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 February 24, 2016, Shutterstock, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 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 Wednesday, February 24, 2016 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 8.01 | Other Events. |
On February 19, 2016, the Compensation Committee of the Board of Directors of the Company approved the following equity awards to certain of the Company's "executive officers" (as such term is defined in Rule 3b-7 under the Exchange Act) pursuant to the Company's 2012 Omnibus Equity Incentive Plan (the "2012 Plan"):
Name and Position | Stock Options (#) | Restricted Stock Units (#) |
Jonathan Oringer, Chairman and Chief Executive Officer | 250,000 | — |
Steven Berns, Chief Financial Officer | 40,000 | 15,000 |
Anshu Aggarwal, Chief Technology Officer | 10,000 | — |
The grant date for the equity awards described above will be March 1, 2016. All stock options described above will be granted at exercise prices equal to the fair market value of our common stock, which is defined under the 2012 Plan as the closing sales price per share of our common stock as quoted on The New York Stock Exchange on the date of grant, as reported in The Wall Street Journal.
3
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press release dated February 24, 2016
99.2 Presentation slides referenced on the earnings call held by Shutterstock, Inc. on February 24, 2016
4
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: February 24, 2016 | By: | /s/ Steven Berns |
Steven Berns | ||
Chief Financial Officer | ||
5
EXHIBIT INDEX
Exhibit No. | Exhibit Description | |
99.1 | Press release dated February 24, 2016 | |
99.2 | Presentation slides referenced on the earnings call held by Shutterstock, Inc. on February 24, 2016 | |
6
Exhibit 99.1
Shutterstock Reports Fourth Quarter And Full Year 2015 Financial Results
Full Year 2015 Highlights:
• | Revenue increased 30% to $425.1 million |
• | Adjusted EBITDA increased 19% to $84.7 million |
• | Non-GAAP Net Income per diluted share increased 14% to $1.22 |
• | Repurchased $15.6 million of stock in the fourth quarter |
• | Paid downloads increased 17% and revenue per download increased 10% |
• | Image collection expanded 53% to 71.4 million images and video collection expanded 61% to 3.7 million video clips |
• | Acquired PremiumBeat and Rex Features in January 2015 |
New York - February 24, 2016 - Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial imagery and music, today announced financial results for the fourth quarter and full year ended December 31, 2015.
Founder and CEO Jon Oringer said “2015 was another year of sustained operating momentum and strong financial growth as Shutterstock continued to focus on providing the highest quality content and an unmatched user experience to our expanding customer base. We significantly increased our traditional image and video libraries while diversifying our product offering to include extensive music and editorial content, further meeting the evolving needs of our diverse users. We continued to innovate, building on our industry leading search capabilities and introducing new workflow tools to increase engagement with our customers. In 2016, we once again expect to deliver strong financial results as we invest in new technology solutions and expanded product offerings that will enable us to drive long-term value."
FULL YEAR RESULTS
Revenue
Full year revenue of $425.1 million increased $97.2 million or 30% as compared to the full year 2014, primarily due to a 17% increase in the number of paid downloads, mainly due to new customers, as well as from a 10% increase in revenue per download driven by growth in both on-demand offerings and enterprise sales. Current year 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 27% in 2015.
Adjusted EBITDA
Adjusted EBITDA of $84.7 million increased $13.6 million or 19% as compared to the full year 2014 as the 30% revenue growth was partially offset by an increase in operating expenses primarily from higher royalty costs associated with the increase in paid downloads. Additionally, 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 31% in 2015 as compared to 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 $19.6 million ($0.54 per diluted share) for the full year decreased 11% as compared with $22.0 million ($0.61 per diluted share) a year ago as the improved operating performance was partially offset by an increase in non-cash equity-based compensation expense, changes in the fair value of contingent consideration, amortization of acquisition related intangible assets and an unrealized non-cash loss associated with foreign currency movements.
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 $44.2 million ($1.22 per diluted share) for the full year, an increase of 14% as compared to $38.6 million ($1.07 per diluted share) in 2014.
FOURTH QUARTER RESULTS
Revenue
Fourth quarter revenue of $116.0 million increased $24.8 million or 27% as compared to the fourth quarter of 2014, primarily due to a 19% increase in the number of paid downloads, mainly due to new customers, as well as from a 7% increase in revenue per download driven by growth in both on-demand offerings and enterprise sales. Fourth 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 24% in the fourth quarter.
Adjusted EBITDA
Adjusted EBITDA of $25.6 million increased $3.1 million or 14% as compared to the fourth quarter of 2014 as the 27% 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 fourth 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 25% in the fourth quarter as compared to the fourth 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 $6.9 million ($0.19 per diluted share) for the fourth quarter decreased slightly as compared with $7.0 million ($0.20 per diluted share) in the fourth quarter a year ago as the improved operating performance and a decrease in non-cash equity-based compensation expense was more than offset by changes in 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 $13.8 million ($0.38 per diluted share) for the fourth quarter, an increase of 8% as compared to $12.8 million ($0.36 per diluted share) in the fourth quarter of 2014.
LIQUIDITY
The Company’s cash, cash equivalents and short term investments totaled $288.4 million at December 31, 2015 as compared to $288.3 million at December 31, 2014, primarily reflecting the $85.3 million of cash generated from operations, which was partially offset by cash paid for acquisitions of approximately $65.0 million and cash used to repurchase shares of approximately $15.6 million. The Company generated $25.9 million of cash from operations in the fourth quarter of 2015, as compared to $23.4 million in the fourth quarter of 2014.
Free cash flow was $68.3 million for the full year, an increase of $4.2 million from 2014, as the improved operating performance and lower spending on capital expenditures and content acquisitions were partially offset by working capital fluctuations. Free cash flow was $21.0 million for the fourth quarter, a decrease of $0.4 million from the fourth 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.
STOCK REPURCHASE PROGRAM
During the fourth quarter, the Company repurchased approximately 460,000 shares of its stock, pursuant to its existing $100 million stock repurchase program, at an average price per share of $34.01 for a total of $15.6 million. Under the stock repurchase 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.
OPERATING METRICS
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in millions, except revenue per download) | ||||||||||||||||
Number of paid downloads | 39.8 | 33.5 | 147.2 | 125.9 | ||||||||||||
Revenue per download (1) | $ | 2.86 | $ | 2.68 | $ | 2.84 | $ | 2.58 | ||||||||
Images in our collection (end of period) (2) | 71.4 | 46.8 | 71.4 | 46.8 | ||||||||||||
(1) Revenue per download metric excludes the impact of revenue not associated with content downloads.
(2) Images are photographs, vectors and illustrations available on shutterstock.com at the end of the period. We exclude content that is not uploaded directly to our site but is available to our customers through an application program interface and certain images that may be licensed for editorial use only.
FINANCIAL OUTLOOK
The Company’s current expectations for the full year 2016 are as follows:
Full Year 2016
• | Revenue of $495 - $510 million (17% - 20% growth) |
• | Adjusted EBITDA of $95 - $100 million (12% - 18% growth) |
• | Non-cash equity-based compensation expense of approximately $35 million |
• | Capital expenditures of approximately $25 million |
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 the 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 fourth quarter financial results during a teleconference today, February 24, 2016, 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# 24579053. 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 March 2, 2016 in the U.S. at (855) 859-2056 or outside the U.S. at (404) 537-3406 with the conference ID# 24579053.
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 100,000 contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 70 million images and nearly 4 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 drive long-term value, 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; our inability to effectively manage our growth: failure to respond to technological changes or upgrade Shutterstock's website and technology systems; 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, including fluctuations in currency exchange rates; 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, 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 per share data)
(unaudited)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue | $ | 116,002 | $ | 91,226 | $ | 425,149 | $ | 327,971 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 47,944 | 35,603 | 174,526 | 130,022 | ||||||||||||
Sales and marketing | 26,709 | 21,235 | 106,636 | 82,125 | ||||||||||||
Product development | 9,622 | 11,379 | 41,322 | 38,301 | ||||||||||||
General and administrative | 16,698 | 10,671 | 61,647 | 38,487 | ||||||||||||
Total operating expenses | 100,973 | 78,888 | 384,131 | 288,935 | ||||||||||||
Income from operations | 15,029 | 12,338 | 41,018 | 39,036 | ||||||||||||
Other expense, net | (3,360 | ) | (532 | ) | (6,746 | ) | (859 | ) | ||||||||
Income before income taxes | 11,669 | 11,806 | 34,272 | 38,177 | ||||||||||||
Provision for income taxes | 4,800 | 4,773 | 14,720 | 16,088 | ||||||||||||
Net income | $ | 6,869 | $ | 7,033 | $ | 19,552 | $ | 22,089 | ||||||||
Less: | ||||||||||||||||
Undistributed earnings to participating stockholder | — | 12 | 2 | 42 | ||||||||||||
Net income available to common stockholders | $ | 6,869 | $ | 7,021 | $ | 19,550 | $ | 22,047 | ||||||||
Net income per common share available to common stockholders: | ||||||||||||||||
Basic | $ | 0.19 | $ | 0.20 | $ | 0.54 | $ | 0.63 | ||||||||
Diluted | $ | 0.19 | $ | 0.20 | $ | 0.54 | $ | 0.61 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 35,975 | 35,452 | 35,880 | 35,235 | ||||||||||||
Diluted | 36,468 | 36,001 | 36,319 | 35,913 | ||||||||||||
Shutterstock, Inc.
Consolidated Balance Sheets
(In thousands, except par value amount)
(unaudited)
December 31, 2015 | December 31, 2014 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 241,304 | $ | 233,453 | ||||
Short-term investments | 47,078 | 54,844 | ||||||
Credit card receivables | 2,811 | 2,451 | ||||||
Accounts receivable, net | 25,653 | 15,251 | ||||||
Prepaid expenses and other current assets | 11,713 | 12,141 | ||||||
Deferred tax assets, net | 7,116 | 5,390 | ||||||
Total current assets | 335,675 | 323,530 | ||||||
Property and equipment, net | 32,094 | 26,744 | ||||||
Intangibles assets, net | 29,781 | 4,934 | ||||||
Goodwill | 50,934 | 10,186 | ||||||
Deferred tax assets, net | 18,691 | 16,484 | ||||||
Other assets | 1,946 | 1,899 | ||||||
Total assets | $ | 469,121 | $ | 383,777 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,816 | $ | 5,334 | ||||
Accrued expenses | 30,696 | 24,982 | ||||||
Contributor royalties payable | 17,822 | 11,933 | ||||||
Income taxes payable | 953 | 91 | ||||||
Deferred revenue | 98,239 | 75,789 | ||||||
Other liabilities | 6,258 | 2,198 | ||||||
Total current liabilities | 160,784 | 120,327 | ||||||
Deferred tax liability, net | 3,778 | — | ||||||
Other non-current liabilities | 15,994 | 12,017 | ||||||
Total liabilities | 180,556 | 132,344 | ||||||
Commitment and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value; 200,000 shares authorized; 36,146 and 35,603 shares issued and 35,686 and 35,603 shares outstanding as of December 31, 2015 and December 31, 2014, respectively | 361 | 356 | ||||||
Treasury stock, at cost; 460 shares as of December 31, 2015 | (15,635 | ) | — | |||||
Additional paid-in capital | 213,851 | 174,821 | ||||||
Accumulated other comprehensive loss | (6,449 | ) | (629 | ) | ||||
Retained earnings | 96,437 | 76,885 | ||||||
Total stockholders’ equity | 288,565 | 251,433 | ||||||
Total liabilities and stockholders’ equity | $ | 469,121 | $ | 383,777 | ||||
Shutterstock, Inc.
Reconciliation of Non-GAAP Financial Information to GAAP
(In thousands, 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 December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income | $ | 6,869 | $ | 7,033 | $ | 19,552 | $ | 22,089 | ||||||||
Add: | ||||||||||||||||
(a) Depreciation and amortization | 4,478 | 2,160 | 14,841 | 7,917 | ||||||||||||
(b) Write-off of property and equipment | — | — | — | 367 | ||||||||||||
(c) Non-cash equity-based compensation | 6,089 | 8,040 | 28,860 | 23,768 | ||||||||||||
(d) Other expense, net | 3,360 | 532 | 6,746 | 859 | ||||||||||||
(e) Provision for income taxes | 4,800 | 4,773 | 14,720 | 16,088 | ||||||||||||
Adjusted EBITDA (1) | $ | 25,596 | $ | 22,538 | $ | 84,719 | $ | 71,088 | ||||||||
Adjusted EBITDA per diluted common share | $ | 0.70 | $ | 0.63 | $ | 2.33 | $ | 1.98 | ||||||||
Weighted average diluted shares | 36,468 | 36,001 | 36,319 | 35,913 | ||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income | $ | 6,869 | $ | 7,033 | $ | 19,552 | $ | 22,089 | ||||||||
Add (net of tax effect): | ||||||||||||||||
(a) Non-cash equity-based compensation | 4,060 | 5,487 | 18,712 | 15,960 | ||||||||||||
(b) Acquisition related amortization expense | 767 | 105 | 2,864 | 347 | ||||||||||||
(c) Change in fair value of contingent consideration | 2,140 | 131 | 3,053 | 200 | ||||||||||||
Non-GAAP net income | $ | 13,836 | $ | 12,756 | $ | 44,181 | $ | 38,596 | ||||||||
Non-GAAP net income per diluted common share | $ | 0.38 | $ | 0.35 | $ | 1.22 | $ | 1.07 | ||||||||
Weighted average diluted shares | 36,468 | 36,001 | 36,319 | 35,913 | ||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net cash provided by operating activities | $ | 25,882 | $ | 23,360 | $ | 85,331 | $ | 82,859 | ||||||||
Capital expenditures and content acquisition | (4,919 | ) | (2,006 | ) | (16,984 | ) | (18,671 | ) | ||||||||
Free cash flow | $ | 20,963 | $ | 21,354 | $ | 68,347 | $ | 64,188 | ||||||||
Adjusted EBITDA | $ | 25,596 | $ | 22,538 | $ | 84,719 | $ | 71,088 | ||||||||
Add/(less): | ||||||||||||||||
(a) Changes in operating assets and liabilities | 3,310 | 9,552 | 20,880 | 45,752 | ||||||||||||
(b) Provision for income taxes | (4,800 | ) | (4,773 | ) | (14,720 | ) | (16,088 | ) | ||||||||
(c) Deferred income taxes | (253 | ) | (716 | ) | (4,840 | ) | (4,897 | ) | ||||||||
(d) Tax benefit from exercise/vesting of equity awards | 56 | (2,913 | ) | (1,685 | ) | (13,137 | ) | |||||||||
(e) Provision for doubtful accounts/chargeback/sales refund reserves | 2,003 | 114 | 2,953 | 800 | ||||||||||||
(f) Other expense, net | (3,360 | ) | (532 | ) | (6,746 | ) | (859 | ) | ||||||||
(g) Change in fair value of contingent consideration | 3,330 | 90 | 4,770 | 200 | ||||||||||||
Net cash provided by operating activities | $ | 25,882 | $ | 23,360 | $ | 85,331 | $ | 82,859 | ||||||||
(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 December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Cost of revenue | $ | 452 | $ | 330 | $ | 1,896 | $ | 1,283 | ||||||||
Sales and marketing | 410 | 1,223 | 4,520 | 3,912 | ||||||||||||
Product development | 1,702 | 3,068 | 7,565 | 7,597 | ||||||||||||
General and administrative | 3,525 | 3,419 | 14,879 | 10,976 | ||||||||||||
Total | $ | 6,089 | $ | 8,040 | $ | 28,860 | $ | 23,768 | ||||||||
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 December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Cost of revenue | $ | 418 | $ | 23 | $ | 1,488 | $ | 99 | ||||||||
General and administrative | 852 | 143 | 3,257 | 452 | ||||||||||||
Total | $ | 1,270 | $ | 166 | $ | 4,745 | $ | 551 | ||||||||
Included in the accompanying financial results are expenses related to the depreciation of property and equipment, as follows:
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Cost of revenue | $ | 1,906 | $ | 1,144 | $ | 5,666 | $ | 4,282 | ||||||||
General and administrative | 1,302 | 850 | 4,430 | 3,084 | ||||||||||||
Total | $ | 3,208 | $ | 1,994 | $ | 10,096 | $ | 7,366 | ||||||||
Historical Operating Metrics
12/31/13 | 3/31/14 | 6/30/14 | 9/30/14 | 12/31/14 | 3/31/15 | 6/30/15 | 9/30/15 | 12/31/15 | ||||||||||||||||||||||||||||
(in millions, except revenue per download) | ||||||||||||||||||||||||||||||||||||
Number of paid downloads | 28.0 | 29.7 | 31.5 | 31.2 | 33.5 | 33.4 | 35.9 | 38.1 | 39.8 | |||||||||||||||||||||||||||
Revenue per download (1) | $ | 2.43 | $ | 2.45 | $ | 2.52 | $ | 2.65 | $ | 2.68 | $ | 2.87 | $ | 2.85 | $ | 2.76 | $ | 2.86 | ||||||||||||||||||
Images in collection (end of period) (2) | 32.2 | 35.4 | 38.8 | 42.7 | 46.8 | 51.6 | 57.2 | 63.7 | 71.4 | |||||||||||||||||||||||||||
_______________________________________________________________________________________________________________________
(1) Revenue per download metric excludes the impact of revenue not associated with content downloads.
(2) Images are photographs, vectors and illustrations available on shutterstock.com at the end of the period. We exclude content that is not uploaded directly to our site but is available to our customers through an application program interface and certain images that may be licensed for editorial use only.
Fourth Quarter & Full Year 2015 Summary February 24, 2016
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, 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; 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 Statement
3 The Leading Global Marketplace for Stock Content Contributors Photographers Illustrators Videographers Musicians Customers Designers Businesses Marketing Agencies Media Organizations
4 - Revenue increased 27% to $116.0 million - Revenue increased approximately 24% excluding the impact of currency and contributions from acquired businesses primarily driven by new customers, increased paid downloads and higher revenue per download - Adjusted EBITDA increased 14% to $25.6 million - Adjusted EBITDA increased approximately 25% excluding the impact of currency, contributions from acquired businesses and severance costs for certain executives; 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 slightly to $6.9 million - Non-GAAP net income per diluted share increased 6% to $0.38; excludes non-cash equity-based compensation, amortization of acquisition related intangible assets and changes in the fair value of contingent consideration - Generated $21.0 million of free cash flow - Repurchased $15.6 million of stock under the $100 million share repurchase program Q4’15 Financial Highlights
5 - Revenue increased 30% to $425.1 million - Revenue increased approximately 27% 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 19% to $84.7 million - Adjusted EBITDA increased approximately 31% excluding the impact of currency, contributions from acquired businesses and severance costs associated with executive managmenet; 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 11% to $19.6 million - Non-GAAP net income per diluted share increased 14% to $1.22; excludes non-cash equity- based compensation, amortization of acquisition related intangible assets and changes in the fair value of contingent consideration - Generated $68.3 million of free cash flow, an increase of 6% versus FY’14 - Repurchased $15.6 million of stock under the $100 million share repurchase program FY’15 Financial Highlights
6 Q4’15 Operating Highlights: - Image library expanded to 71.4 million images, up 12% versus Q3’15 - Video library expanded to 3.7 million video clips, up 12% versus Q3’15 - Paid downloads of 39.8 million increased 19% versus Q4’14 - Revenue per download of $2.86 increased 7% versus Q4’14 - Launched Shutterstock Editor in beta FY’15 Operating Highlights: - Image library expanded to 71.4 million images, up 53% versus FY’14 - Video library expanded to 3.7 million video clips, up 61% versus FY’14 - Paid downloads of 147.2 million increased 17% versus FY’14 - Revenue per download of $2.84 increased 10% versus FY’14 - 1.46 million customers contributed to revenue in the prior 12 months - Acquired Rex Features and PremiumBeat in January - Signed exclusive partnerships with Red Bull Media and PMC Media Q4 & FY’15 Key Operating Highlights
Consolidated Financial Results ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2015 2014 % 2015 2014 % Revenues $116.0 $91.2 27% $425.1 $328.0 30% Operating Expenses 101.0 78.9 28% 384.1 288.9 33% Income from Operations 15.0 12.3 22% 41.0 39.0 5% Add: Dep. & Amort. 4.5 2.2 105% 14.8 7.9 87% Add: Stock Based Comp. 6.1 8.0 (24%) 28.9 23.8 21% Add: Other Adjustments -- -- -- -- 0.4 -- Adjusted EBITDA $25.6 $22.5 14% $84.7 $71.1 19% Adjusted EBITDA Margin 22.1% 24.7% 19.9% 21.7% Add: Executive Severance 0.3 -- -- 1.0 -- -- $25.9 $22.5 15% $85.7 $71.1 20% 7 Note: “Other Adjustments” includes write-off of property & equipment in Q1’14. Note: Totals may not sum exactly due to rounding.
Key Financial Results Q4 2015 Y/Y Change 2015 Y/Y Change Reported Adjusted Reported Adjusted Revenue Growth 27% 24% 30% 27% Adjusted EBITDA Growth 14% 25% 19% 31% Revenue per Download Growth 7% 11% 10% 15% Adjusted EBITDA Margin 22.1% 26.3% 19.9% 23.4% Note: Adjusted growth excludes the impact of foreign currency, contributions from PremiumBeat & Rex which were acquired in Jan’15 and severance for executive management. 8
Free Cash Flow 9 ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2015 2014 2015 2014 Net Cash From Operations $25.9 $23.4 $85.3 $82.9 CapEx and Content Acquisitions (4.9) (2.0) (17.0) (18.7) Free Cash Flow $21.0 $21.4 $68.3 $64.2 Note: Totals may not sum exactly due to rounding.
Non-GAAP Net Income 10 ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2015 2014 2015 2014 GAAP Net Income $6.9 $7.0 $19.6 $22.1 Add: Non-Cash Equity-Based Comp 4.1 5.5 18.7 16.0 Add: Acquisition-Related Amortization 0.8 0.1 2.9 0.3 Add: Change in Fair Value of Contingent Consideration 2.1 0.1 3.1 0.2 Non-GAAP Net Income $13.8 $12.8 $44.2 $38.6 Non-GAAP Net Income / Diluted Share $0.38 $0.36 $1.22 $1.07 Note: Adjustments net of tax effect. Totals may not sum exactly due to rounding.
Share Repurchase Activity 11 Note: Share repurchase plan implemented in Nov’15. To date activity through 2/22/16. Note: % of shares acquired calculated as % of shares outstanding at beginning of period. Three Months Ended 12/31/15 2016 Year To Date Total Repurchase Activity Share Repurchase Activity $15,630,734 $17,173,146 $32,803,880 Shares Repurchased 459,602 578,472 1,038,074 Average Repurchase Price $34.01 $29.69 $31.60 Percentage of Outstanding Shares Acquired 1.2% 1.6% 2.8%
2016 Guidance 2016 Guidance Implied Y/Y Growth Revenue $495 - $510 million 17% - 20% Adjusted EBITDA $95 - $100 million 12% - 18% Non-Cash Equity Based Comp. $35 million Capital Expenditures $25 million 12 2016 Guidance Numbers Assume Current FX Rates Throughout the Period