OREANDA-NEWS. Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial imagery and music, today announced financial results for the first quarter ended March 31, 2016.

Founder and CEO Jon Oringer said "The momentum Shutterstock generated throughout 2015 continued unabated during the first quarter of 2016 with both sides of our vibrant marketplace continuing their consistent growth.  We added more high quality content than ever before to our diverse portfolio while delivering an unmatched user experience to an expanding customer base.  The increased engagement with our platform is translating into sustained financial strength and we are delivering these strong results even as we further invest in new content initiatives, innovative workflow tools and cutting edge technology solutions to provide additional value to contributors and customers."

FIRST QUARTER RESULTS

Revenue

First quarter revenue of $116.7 million increased $19.1 million or 20% as compared to the first quarter of 2015, primarily due to a 23% increase in the number of paid downloads, mainly due to new customers, and increased activity by enterprise clients.  The impact of foreign currency movements partially offset this growth.  Excluding the impact of foreign currency, total Company revenue growth was approximately 24% in the first quarter.

Adjusted EBITDA

Adjusted EBITDA of $24.0 million increased $5.3 million or 28% as compared to the first quarter of 2015 driven by the 20% revenue growth, partially offset by an increase in operating expenses primarily from higher royalty costs associated with the increase in paid downloads.  Additionally, the first quarter included higher personnel expenses to support growth initiatives.  Excluding the impact of foreign currency, Adjusted EBITDA growth was approximately 36% in the first quarter as compared to the first quarter of 2015.  Adjusted EBITDA is defined as net income adjusted for foreign currency transaction gains and losses, changes in fair value of contingent consideration related to acquisitions, interest income and expense, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.

Net Income

Net income available to common stockholders of $6.1 million ($0.17 per diluted share) for the first quarter increased $2.9 million as compared with $3.2 million ($0.09 per diluted share) in the first quarter a year ago as the improved operating performance and a $0.7 million unrealized non-cash gain associated with foreign currency movements was partially offset by a $2.4 million change in the fair value of contingent consideration.

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 $13.1 million ($0.36 per diluted share) for the first quarter, an increase of 46% as compared to $9.0 million ($0.25 per diluted share) in the first quarter of 2015.

LIQUIDITY

The Company's cash, cash equivalents and short term investments totaled $275.5 million at March 31, 2016 as compared with $288.4 million at December 31, 2015 primarily reflecting the $23.0 million of cash generated from operations, which was more than offset by capital expenditures and content acquisitions of $8.4 million and by cash used to repurchase shares of approximately $27.8 million.

Free cash flow was $14.6 million for the first quarter, a decrease of $3.9 million from the first quarter of 2015, as the improved operating performance was partially offset by increased spending on 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 first quarter of 2016, the Company repurchased approximately 881,000 shares of its stock, pursuant to its existing $100 million stock repurchase program, at an average price per share of $31.59 for a total of $27.8 million.  Through March 31, 2016, the Company has repurchased 1.3 million shares of its stock for a total of $43.5 million under the stock repurchase program.  The stock repurchase program, which commenced in November 2015, authorizes management 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 March 31,
   

2016

  

2015
   

(in millions, except revenue per download)

Number of paid downloads

  

41.2

    

33.4

  

Revenue per download (1)

  

$

2.77

    

$

2.87

  

Images in our collection (end of period) (2)

  

81.0

    

51.6

  
 

(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 remain 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 foreign currency transaction gains and losses, changes in fair value of contingent consideration related to acquisitions, interest income and expense, 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.

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 80 million images and over 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.