Shutterstock Reports First Quarter 2023 Financial Results
Shutterstock (NYSE: SSTK) reported strong financial results for Q1 2023, showing a revenue increase of 8% to $215.3 million. Adjusted EBITDA rose 27% to $69.8 million, with net income climbing 24% to $32.8 million. Key growth drivers included a 33% increase in Enterprise sales, bolstered by data partnerships and acquisitions like Pond5. The company also recorded a significant rise in subscription metrics, with subscribers growing to 559,000. Operating cash flow improved by $44.1 million, resulting in free cash flow of $50.9 million. Shutterstock raised its 2023 guidance, anticipating revenue between $844 million and $853 million. CEO Paul Hennessy expressed optimism regarding the company's ongoing investments and integration of generative AI.
- Revenue increased 8% to $215.3 million.
- Adjusted EBITDA increased 27% to $69.8 million.
- Net income rose 24% to $32.8 million.
- Enterprise sales increased 33% to $95.5 million.
- Subscriber count grew to 559,000.
- Free cash flow increased by $40.7 million to $50.9 million.
- 2023 revenue guidance raised to $844-$853 million.
- E-commerce revenue decreased by 6% to $119.8 million.
- Paid downloads dropped to 42.7 million.
Commenting on the Company's performance,
First Quarter 2023 highlights as compared to First Quarter 2022:
Financial Highlights
- Revenue increased
8% to$215.3 million 10% . - Income from operations increased
26% to$40.4 million - Net income increased
24% to$32.8 million - Adjusted EBITDA increased
27% to$69.8 million - Net income per diluted share increased
$0.19 $0.90 - Adjusted net income per diluted share increased
$0.29 $1.29 - Operating cash flows increased
$44.1 million $66.8 million - Free cash flow increased
$40.7 million $50.9 million
Key Operating Metrics
- Subscribers increased to 559,000.
- Subscriber revenue increased to
$90.6 million - Average revenue per customer increased to
$356 - Paid downloads decreased to 42.7 million.
- Revenue per download increased to
$4.41 - Image collection expanded to 615 million images.
- Footage collection expanded to 47 million clips.
SHUTTERSTOCK INVESTOR RELATIONS
Accessible at content.shutterstock.com/investor-report/index.html.
FIRST QUARTER RESULTS
Revenue
First quarter revenue of
On a constant currency basis, revenue increased
Net income and net income per diluted share
Net income of
Adjusted net income per diluted share was
Adjusted EBITDA
Adjusted EBITDA of
FIRST QUARTER LIQUIDITY
Our cash and cash equivalents decreased by
Net cash provided by our operating activities was driven by our operating income, in addition to changes in the timing of cash collections from our customers and payments pertaining to operating expenses. Cash used in investing activities primarily consists of
Free cash flow was
QUARTERLY CASH DIVIDEND
During the three months ended
On
KEY OPERATING METRICS
Three Months Ended | ||||
2023 | 2022 | |||
Subscribers (end of period)(1) | 559,000 | 359,000 | ||
Subscriber revenue (in millions)(2) | $ 90.6 | $ 85.4 | ||
Average revenue per customer (last twelve months)(3) | $ 356 | $ 355 | ||
Paid downloads (in millions)(4) | 42.7 | 44.6 | ||
Revenue per download(5) | ||||
Content in our collection (end of period, in millions)(6): | ||||
Images | 615 | 405 | ||
Footage clips | 47 | 25 | ||
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 TurboSquid beginning | |
(1) Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period. | |
(2) Subscriber revenue is defined as the revenue generated from subscribers during the period. | |
(3) Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period. | |
(4) Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to our Studios business, downloads of content that are offered to customers for no charge, including our free trials and downloads associated with our computer vision offering. | |
(5) Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from our Studios business, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering. | |
(6) Content in our collection represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library at the end of the period. This metric excludes content 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 Editorial content. Prior to | |
2023 GUIDANCE
The Company increased its guidance for the full year 2023, to the following:
- Revenue of
$844 million $853 million 2% to3% . - Adjusted EBITDA of between
$227 million $231 million - Adjusted net income per diluted share of between
$4.00 $4.10
NON-GAAP FINANCIAL MEASURES
To supplement Shutterstock's consolidated financial statements presented in accordance with the accounting principles generally accepted in
Shutterstock defines adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, interest income and expense and income taxes; adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue; adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, amortization of acquisition-related intangible assets, severance costs associated with strategic workforce optimizations and the estimated tax impact of such adjustments; adjusted net income per diluted share as adjusted net income divided by weighted average diluted shares; revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) as the increase in current period revenues over prior period revenues, utilizing fixed exchange rates for translating foreign currency revenues for all periods in the comparison; billings as revenue adjusted for the change in deferred revenue, excluding deferred revenue acquired through business combinations; and free cash flow as cash provided by operating activities, adjusted for capital expenditures, and content acquisition. These figures have not been calculated in accordance with GAAP and should be considered only in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. Shutterstock cautions investors that non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.
Shutterstock's management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow are useful to investors because these measures enable investors to analyze Shutterstock's operating results on the same basis as that used by management. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted share provide useful information to investors about the performance of the Company's overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to Shutterstock's underlying operating performance; and revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) provides useful information to investors by eliminating the effect of foreign currency fluctuations that are not directly attributable to Shutterstock's operating performance. Management also believes that providing these non-GAAP financial measures enhances the comparability for investors in assessing Shutterstock's financial reporting. Shutterstock's management believes that free cash flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in 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 allocation decisions.
Shutterstock's management also uses the non-GAAP financial measures adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow, in conjunction with GAAP financial measures, as an integral part of managing the business and to, among other things: (i) monitor and evaluate the performance of Shutterstock's business operations, financial performance and overall liquidity; (ii) facilitate management's internal comparisons of the historical operating performance of its business operations; (iii) facilitate management's external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of Shutterstock's management team and, together with other operational objectives, as a measure in evaluating employee compensation and bonuses; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
Reconciliations of the differences between adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings, free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, are presented under the headings "Reconciliation of Non-GAAP Financial Information to GAAP" and "Supplemental Financial Data" immediately following the Consolidated Balance Sheets.
We do not provide a reconciliation of adjusted EBITDA guidance to net income guidance or a reconciliation of adjusted net income per diluted share guidance to net income per diluted share guidance, because we are unable to calculate with reasonable certainty the impact of potential future transactions, including, but not limited to, capital structure transactions, restructuring, acquisitions, divestitures or other events and asset impairments, without unreasonable effort. These amounts depend on various factors and could have a material impact on net income and net income per diluted share, but may be excluded from adjusted EBITDA and adjusted net income per diluted share. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information.
EARNINGS TELECONFERENCE INFORMATION
The Company will discuss its first quarter and full year financial results during a teleconference today,
Participants may register for the call here (https://edge.media-server.com/mmc/p/pnmfv5x7) to receive the dial-in numbers and unique PIN to access the call seamlessly. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).
A webcast replay of the call will be available on the Company's website beginning on
ABOUT SHUTTERSTOCK
Learn more at www.shutterstock.com and follow us on LinkedIn, Instagram, Twitter, Facebook and YouTube.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, particularly in the discussion under the caption "2023 Guidance." 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, new or planned features, products or services, management strategies and our competitive position. You can identify forward-looking statements by words such as "may," "will," "would," "should," "could," "expect," "aim," "anticipate," "believe," "estimate," "intend," "plan," "predict," "project," "seek," "potential," "opportunities" and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, those discussed under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other documents that the Company may file from time to time with the
Shutterstock, Inc. | ||||
Consolidated Statements of Operations | ||||
(In thousands, except for per share data) | ||||
(unaudited) | ||||
Three Months Ended | ||||
2023 | 2022 | |||
Revenue | $ 215,280 | $ 199,132 | ||
Operating expenses: | ||||
Cost of revenue | 78,163 | 69,451 | ||
Sales and marketing | 47,527 | 53,329 | ||
Product development | 15,406 | 13,626 | ||
General and administrative | 33,815 | 30,808 | ||
Total operating expenses | 174,911 | 167,214 | ||
Income from operations | 40,369 | 31,918 | ||
Other income, net | 1,045 | 758 | ||
Income before income taxes | 41,414 | 32,676 | ||
Provision for income taxes | 8,571 | 6,104 | ||
Net income | $ 32,843 | $ 26,572 | ||
Earnings per share | ||||
Basic | $ 0.92 | $ 0.73 | ||
Diluted | $ 0.90 | $ 0.71 | ||
Weighted average common shares outstanding: | ||||
Basic | 35,856 | 36,303 | ||
Diluted | 36,575 | 37,204 | ||
Shutterstock, Inc. | ||||
Consolidated Balance Sheets | ||||
(In thousands, except par value amount) | ||||
(unaudited) | ||||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 95,832 | $ 115,154 | ||
Accounts receivable, net of allowance of | 48,303 | 67,249 | ||
Prepaid expenses and other current assets | 34,765 | 33,268 | ||
Total current assets | 178,900 | 215,671 | ||
Property and equipment, net | 56,604 | 54,548 | ||
Right-of-use assets | 16,819 | 17,593 | ||
Intangibles assets, net | 167,807 | 173,087 | ||
382,640 | 381,920 | |||
Deferred tax assets, net | 17,714 | 16,533 | ||
Other assets | 22,039 | 21,832 | ||
Total assets | $ 842,523 | $ 881,184 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 7,778 | $ 7,183 | ||
Accrued expenses | 72,802 | 89,387 | ||
Contributor royalties payable | 41,036 | 38,649 | ||
Deferred revenue | 180,698 | 187,070 | ||
Debt | — | 50,000 | ||
Other current liabilities | 11,148 | 11,445 | ||
Total current liabilities | 313,462 | 383,734 | ||
Deferred tax liability, net | 4,766 | 4,465 | ||
Lease liabilities | 34,017 | 35,611 | ||
Other non-current liabilities | 13,744 | 9,892 | ||
Total liabilities | 365,989 | 433,702 | ||
Commitment and contingencies | ||||
Stockholders' equity: | ||||
Common stock, | 396 | 396 | ||
(200,008) | (200,008) | |||
Additional paid-in capital | 395,934 | 391,482 | ||
Accumulated other comprehensive loss | (14,020) | (15,439) | ||
Retained earnings | 294,232 | 271,051 | ||
Total stockholders' equity | 476,534 | 447,482 | ||
Total liabilities and stockholders' equity | $ 842,523 | $ 881,184 | ||
Shutterstock, Inc. | ||||
Consolidated Statements of Cash Flows | ||||
(In thousands, except par value amount) | ||||
(unaudited) | ||||
Three Months Ended | ||||
2023 | 2022 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ 32,843 | $ 26,572 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 18,896 | 15,065 | ||
Deferred taxes | (977) | (1,242) | ||
Non-cash equity-based compensation | 8,643 | 7,826 | ||
Bad debt expense | 790 | 361 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 19,168 | 2,366 | ||
Prepaid expenses and other current and non-current assets | 5,189 | (1,376) | ||
Accounts payable and other current and non-current liabilities | (12,716) | (26,717) | ||
Contributor royalties payable | 2,246 | 1,030 | ||
Deferred revenue | (7,307) | (1,162) | ||
Net cash provided by operating activities | $ 66,775 | $ 22,723 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Capital expenditures | (12,380) | (11,775) | ||
Acquisition of content | (3,527) | (734) | ||
Security deposit payment | (30) | (16) | ||
Net cash used in investing activities | $ (15,937) | $ (12,525) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Repurchase of treasury shares | — | (38,372) | ||
Proceeds from exercise of stock options | 3 | — | ||
Cash paid related to settlement of employee taxes related to RSU vesting | (11,008) | (18,496) | ||
Payment of cash dividend | (9,662) | (8,706) | ||
Payment of Credit Facility | (50,000) | — | ||
Net cash used in financing activities | $ (70,667) | $ (65,574) | ||
Effect of foreign exchange rate changes on cash | 507 | (529) | ||
Net decrease in cash and cash equivalents | (19,322) | (55,905) | ||
Cash and cash equivalents, beginning of period | 115,154 | 314,017 | ||
Cash and cash equivalents, end of period | $ 95,832 | $ 258,112 | ||
Supplemental Disclosure of Cash Information: | ||||
Cash (received) / paid for income taxes | $ (5,150) | $ 1,666 | ||
Cash paid for interest | 428 | — | ||
Shutterstock, Inc. | ||||
Reconciliation of Non-GAAP Financial Information to GAAP | ||||
(In thousands, except per share information) | ||||
(unaudited) | ||||
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow are not financial measures prepared in accordance with | ||||
Three Months Ended | ||||
2023 | 2022 | |||
Net income | $ 32,843 | $ 26,572 | ||
Add / (less) Non-GAAP adjustments: | ||||
Depreciation and amortization | 18,896 | 15,065 | ||
Non-cash equity-based compensation | 8,643 | 7,826 | ||
Other adjustments, net (1) | 811 | (758) | ||
Provision for income taxes | 8,571 | 6,104 | ||
Adjusted EBITDA | $ 69,764 | $ 54,809 | ||
Adjusted EBITDA margin | 32.4 % | 27.5 % | ||
(1) | Other adjustments, net includes unrealized foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations and interest income and expense. | |
Three Months Ended | ||||
2023 | 2022 | |||
Net income | $ 32,843 | $ 26,572 | ||
Add / (less) Non-GAAP adjustments: | ||||
Non-cash equity-based compensation | 8,643 | 7,826 | ||
Tax effect of non-cash equity-based compensation (2) | (2,031) | (1,838) | ||
Acquisition-related amortization expense (3) | 8,158 | 6,045 | ||
Tax effect of acquisition-related amortization expense (2) | (1,917) | (1,421) | ||
Other | 1,856 | — | ||
Tax effect of other(2) | (418) | — | ||
Adjusted net income | $ 47,134 | $ 37,184 | ||
Net income per diluted share | $ 0.90 | $ 0.71 | ||
Adjusted net income per diluted share | $ 1.29 | $ 1.00 | ||
Weighted average diluted shares | 36,575 | 37,204 | ||
(2) | Statutory tax rates are used to calculate the tax effect of the adjustments. | |
(3) | Of these amounts, | |
Three Months Ended | ||||
2023 | 2022 | |||
Total Revenues | $ 215,280 | $ 199,132 | ||
Revenue growth | 8 % | 9 % | ||
Revenue growth on a constant currency basis | 10 % | 11 % | ||
E-commerce revenues | $ 119,754 | $ 127,070 | ||
Revenue growth: E-commerce | (6) % | 7 % | ||
Revenue growth: E-commerce on a constant currency basis | (4) % | 9 % | ||
Enterprise revenues | $ 95,526 | $ 72,062 | ||
Revenue growth: Enterprise | 33 % | 11 % | ||
Revenue growth: Enterprise on a constant currency basis | 35 % | 13 % | ||
Three Months Ended | ||||
2023 | 2022 | |||
Net cash provided by operating activities | $ 66,775 | $ 22,723 | ||
Capital expenditures | (12,380) | (11,775) | ||
Content acquisition | (3,527) | (734) | ||
Free cash flow | $ 50,868 | $ 10,214 | ||
Three Months Ended | ||||
2023 | 2022 | |||
E-commerce revenue | $ 119,754 | $ 127,070 | ||
Enterprise revenue | $ 95,526 | $ 72,062 | ||
Total revenue | $ 215,280 | $ 199,132 | ||
Change in total deferred revenue | $ (6,372) | $ (2,245) | ||
Total billings | $ 208,908 | $ 196,887 | ||
Shutterstock, Inc. | ||||||||||||||||
Supplemental Financial Data | ||||||||||||||||
(unaudited) | ||||||||||||||||
Historical Operating Metrics | ||||||||||||||||
Three Months Ended | ||||||||||||||||
Subscribers (end of period, in thousands) (1) | 559 | 586 | 607 | 368 | 359 | 343 | 336 | 321 | ||||||||
Subscriber revenue (in millions) (2) | $ 90.6 | $ 88.8 | $ 87.7 | $ 84.7 | $ 85.4 | $ 81.4 | $ 81.5 | $ 78.1 | ||||||||
Average revenue per customer (last twelve months) (3) | $ 356 | $ 341 | $ 329 | $ 359 | $ 355 | $ 368 | $ 361 | $ 356 | ||||||||
Paid downloads (in millions) (4) | 42.7 | 42.5 | 42.8 | 43.4 | 44.6 | 45.0 | 44.3 | 44.9 | ||||||||
Revenue per download (5) | $ 4.41 | $ 4.49 | $ 4.43 | $ 4.46 | $ 4.22 | $ 4.29 | $ 4.20 | $ 4.17 | ||||||||
Content in our collection (end of period, in millions): (6) | ||||||||||||||||
Images | 615 | 600 | 424 | 415 | 405 | 400 | 390 | 380 | ||||||||
Footage clips | 47 | 45 | 27 | 26 | 25 | 24 | 23 | 22 | ||||||||
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 TurboSquid beginning |
(1) Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period. |
(2) Subscriber revenue is defined as the revenue generated from subscribers during the period. |
(3) Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period. |
(4) Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to our Studios business, downloads of content that are offered to customers for no charge, including our free trials and downloads associated with our computer vision offering. |
(5) Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from our Studios business, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering. |
(6) Content in our collection represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library at the end of the period. This metric excludes content 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 Editorial content. Prior to |
Equity-Based Compensation by expense category | ||||||||||||||||
Three Months Ended | ||||||||||||||||
($ in thousands) | ||||||||||||||||
Cost of revenue | $ 184 | $ 160 | $ 173 | $ 156 | $ 78 | $ 54 | $ (49) | $ 194 | ||||||||
Sales and marketing | 604 | 1,426 | 1,503 | 1,629 | 928 | 857 | 638 | 926 | ||||||||
Product development | 2,448 | 3,085 | 2,957 | 2,557 | 1,781 | 2,017 | 1,675 | 1,799 | ||||||||
General and administrative | 5,407 | 7,111 | 4,455 | 2,702 | 5,039 | 6,612 | 6,479 | 6,767 | ||||||||
Total non-cash equity-based compensation | $ 8,643 | $ 9,088 | $ 7,044 | $ 7,826 | $ 9,540 | $ 8,743 | $ 9,686 | |||||||||
Depreciation and Amortization by expense category | ||||||||||||||||
Three Months Ended | ||||||||||||||||
($ in thousands) | ||||||||||||||||
Cost of revenue | $ 8,214 | |||||||||||||||
General and administrative | 1,031 | 1,295 | 1,404 | 1,338 | 1,305 | 1,358 | 2,146 | 1,937 | ||||||||
Total depreciation and amortization | ||||||||||||||||
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