Shutterstock Reports Third Quarter 2012 Financial Results -- Quarterly image downloads reach record of 18.7 million -- Collection exceeds 21 million images and video clips -- Third quarter revenue increased 36% from prior year -- Adjusted EBITDA of $10.3 million PR Newswire NEW YORK, Nov. 15, 2012 NEW YORK, Nov.15, 2012 /PRNewswire/ --Shutterstock, Inc. (NYSE: SSTK) a leading global provider of commercial digital imagery, today announced financial results for the third quarter ended September 30, 2012. (Logo: http://photos.prnewswire.com/prnh/20120514/NY06418LOGO ) "We are very pleased with our operating results in the third quarter and for 2012 to date," said CEO Jon Oringer. "We continue to see strong growth in both volume and revenue across all geographies and all of our product offerings." Operating Metrics Three Months Ended September 30, 2012 2011 (in millions, except revenue per download) Number of paid downloads 18.7 14.8 Revenue per download $ 2.26 $ 2.10 Images in collection (end of 21.7 16.2 period) Revenue Revenue for the third quarter was $42.3 million, a 36% increase from the third quarter of 2011. The Company experienced growth in all product lines and in all major global territories. Net Income GAAP net income for the third quarter of 2012 was $8.7 million as compared to $5.7 million in the third quarter of 2011. GAAP net income available to common members for the third quarter of 2012 was $6.6 million or $0.31 per share as compared to $4.3 million or $0.20 per share in the third quarter of 2011. Non-GAAP net income for the third quarter of 2012 was $9.4 million as compared to $6.3 million in the third quarter of 2011. Non-GAAP net income excludes the after tax impact of non-cash equity based compensation expense. Adjusted EBITDA Adjusted EBITDA for the third quarter of 2012 was $10.3 million, as compared to $6.9 million in the third quarter of 2011. Cash The Company's cash balance was $28.8 million at September 30, 2012 as compared to $14.1 million as of December 31, 2011. The Company also had short-term debt of $12.0 million and no long-term debt as of September 30, 2012. The Company generated $14.0 million of cash from operations in the third quarter of 2012 and $32.9 million of cash from operations in the first nine months of 2012. Also, during the third quarter, the Company incurred planned capital expenditures related primarily to the purchase of computer servers and networking equipment, and to a lesser extent leasehold improvements, resulting in a cash outlay of approximately $0.6 million. Cash outlays in this category for the first nine months of 2012 totaled $3.5 million. Free cash flow for the third quarter of 2012 was $13.4 million as compared to $8.3 million in the third quarter of 2011. On October 16, 2012, the Company completed its initial public offering that resulted in net proceeds to the Company of $81.8 million after deducting underwriting discounts and commissions. Financial Outlook The Company's current financial and operating expectations for the fourth quarter of 2012, full year 2012 and full year 2013 are as follows: Fourth Quarter 2012 oRevenue of $44 - $45 million oAdjusted EBITDA of $9.0 - $9.5 million oNon-cash equity-based compensation expense of approximately $8 million oEffective and cash tax rate of 43% oFully diluted adjusted weighted average share count of approximately 34 million Full Year 2012 oRevenue of $164 - $166 million oAdjusted EBITDA of $32.5 - $33.0 million oFully diluted adjusted weighted average share count of approximately 32 million Other Full Year 2012 Assumptions oAmortization of intangibles of approximately $0.3 million oDepreciation of approximately $2.5 million oNon-cash equity-based compensation expense of approximately $11 million oCapital expenditures of approximately $5.0 million Full Year 2013 oWe are increasing our expectations for revenue to $204 - $208 million oWe are increasing our expectations for adjusted EBITDA to $44 - $45 million oFully diluted share count of approximately 35.5 million oCapital expenditures related to network servers and technology of approximately $5 million oCapital expenditures for leasehold improvements related to a headquarters office expansion/relocation of approximately $6 million Earnings Teleconference Information The Company will discuss its third quarter 2012 financial results during a teleconference today, November 15, 2012, at 5:00 PM ET. To participate, please call 800-706-7749 or 617-614-3474. Please use the conference ID: 3816 7173. For recorded conference replay starting at 6:00 p.m. ET on November 15, 2012 until November 29, 2012 please call 888-286-8010 or 617-801-6888. Please use the conference ID: 3780 8719. 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 earnings adjusted for interest income/(expense), income taxes, depreciation, amortization and non-cash equity-based compensation; non-GAAP net income as net income excluding the after tax impact of non-cash equity based compensation expense; and free cash flow as cash provided by (used in) operating activities adjusted for capital expenditures and interest income/(expense). 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. 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 Statements of Operations included below. Historical Operating Metrics Three Months Ended 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12 9/30/12 (in millions, except revenue per download) Number of paid 11.1 12.5 13.3 14.4 14.8 16.2 17.6 18.3 18.7 downloads Revenue $ $ $ $ $ $ $ $ $ per 1.89 1.91 1.92 2.01 2.10 2.14 2.13 2.22 2.26 download Images in our library 12.3 13.3 14.4 15.3 16.2 17.4 18.8 20.2 21.7 (end of period) Amortization of Intangible Assets and Depreciation Included in the accompanying financial results are expenses related to the amortization of intangible assets, as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Cost of revenue $ $ $ $ 8 8 24 24 General and 55 53 163 159 administrative Total $ $ $ $ 63 61 187 183 Included in the accompanying financial results are expenses related to depreciation, as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Cost of revenue $ $ $ $ 401 168 984 411 General and 264 181 717 439 administrative Total $ $ $ $ 665 349 1,701 850 Adjusted Weighted Average Shares Reconciliation The following table presents a reconciliation of weighted average shares to adjusted weighted average shares. The adjusted shares give effect to our reorganization from a New York limited liability company to a Delaware corporation on October 5, 2012. The adjusted weighted average shares measure is similar to the expected weighted average shares measure post-reorganization and its sole purpose is for use in calculating adjusted EBITDA per share: Three Months Ended September Nine Months Ended September 30, 30, 2012 2011 2012 2011 Weighted average 20,882,191 21,380,178 20,957,222 21,678,381 shares Incremental shares representing conversion of 541,305 571,749 545,893 589,979 profits interest awards Preferred interest 6,960,730 7,126,726 6,985,741 7,226,127 shares Adjusted weighted 28,384,226 29,078,653 28,488,855 29,494,487 average shares About Shutterstock Shutterstock is a leading global provider of high-quality licensed photographs, vectors, illustrations and videos to businesses, marketing agencies and media organizations around the world. Headquartered in New York City, Shutterstock works closely with its growing contributor community of photographers, videographers, illustrators and designers to curate a global marketplace for royalty-free imagery. Shutterstock adds tens of thousands of rights-cleared images each week, and with more than 21 million images currently available, the Company recently surpassed 250 million image downloads. Shutterstock also owns Bigstock, a value-oriented stock agency that offers both credit and simple Pay As You Go purchase options. For more information, please visit http://www.shutterstock.com, and follow Shutterstock on Twitter or on Facebook. Safe Harbor Provision The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding the Company's expectations, predictions, beliefs, hopes, intentions or strategies regarding the future. Forward looking statements include statements regarding the Company's business strategy, timing of, and plans for, the introduction of new products and enhancements, future sales, market growth and direction, competition, market share, revenue growth, operating margins and profitability. All forward looking statements included in this document are based upon information available to the Company as of the date hereof. Actual events or results could differ materially from those contained in the Company's current projections or forward-looking statements. It is routine for internal projections and expectations to change as the quarter progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change prior to the end of the quarter. Although these expectations may change, the Company assumes no obligation to update any such forward looking statement, whether as a result of new information, future developments or otherwise. Factors that could cause or contribute to such differences include the Company's inability to continue to attract customers and contributors to its online marketplace for commercial digital imagery; a decrease in repeat customer purchases; a reduction in customer spending; a decrease in contributor participation in the Company's marketplace; the Company's inability to evaluate its future prospects; competitive factors; the Company's inability to prevent the misuse of its imagery; assertions by third parties of infringement or other violations of intellectual property rights by the Company; the Company's inability to increase market awareness of the Company and its services; the Company's inability to increase the percentage of its revenues that come from larger companies; the Company's inability to effectively manage its growth; the Company's inability to continue expansion into international markets; failure to respond to technological changes or upgrade the Company's website and technology systems; failure to adequately protect the Company's intellectual property; general economic conditions worldwide; and other factors and risks discussed in the Company's Final Prospectus dated October 10, 2012 and other reports filed by the Company from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Shutterstock Images LLC Consolidated Balance Sheets (In Thousands) September 30, 2012 December 31, 2011 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ $ 28,793 14,097 Credit card receivables 2,100 964 Accounts receivable, net 1,377 647 Prepaid expenses and other current 5,151 1,554 assets Deferred tax assets 807 644 Due from related party - 168 Total current assets 38,228 18,074 Property and equipment, net 5,402 3,844 Intangibles, net 1,045 1,029 Goodwill 1,423 1,423 Deferred tax assets 146 58 Other assets 427 427 Total assets $ $ 46,671 24,855 LIABILITIES, REDEEMABLE PREFERRED MEMBERS' INTEREST AND MEMBERS' DEFICIT Current liabilities: Accounts payable $ $ 2,325 1,838 Accrued expenses 13,728 10,875 Contributor royalties payable 6,734 5,261 Deferred revenue 36,214 28,451 Term loan debt 12,000 Other liabilities 95 85 Total current liabilities 71,096 46,510 Other non-current liabilities 5,454 2,548 Total liabilities 76,550 49,058 Commitment and contingencies Redeemable preferred members' interest 27,675 33,725 Members' deficit: Common members' interest 5,699 5,699 Accumulated deficit (63,253) (63,627) Total members' deficit (57,554) (57,928) Total liabilities, redeemable preferred $ $ members' interest, and members' deficit 46,671 24,855 Shutterstock Images LLC Consolidated Statements of Operations (In thousands, except for share and per share information) Unaudited Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Revenue $ $ $ $ 42,260 31,156 120,459 85,543 Operating expenses: Cost of revenue 16,208 11,373 46,312 32,529 Sales and marketing 9,633 8,493 32,760 22,329 Product development 3,992 2,811 11,062 7,066 General and 3,536 2,539 11,430 6,836 administrative Total operating expenses 33,369 25,216 101,564 68,760 Income from operations 8,891 5,940 18,895 16,783 Other income / (3) 1 2 8 (expense), net Income before income 8,888 5,941 18,897 16,791 taxes Provision for income 146 253 374 715 taxes Net income $ $ $ $ 8,742 5,688 18,523 16,076 Less: Preferred interest 2,263 1,313 6,050 6,188 distributed Preferred interest - - - 4,058 discount accretion Undistributed earnings (loss) to participating (77) 109 (1,419) (3,183) members Net income available to $ $ $ $ common members 6,556 4,266 13,892 9,013 Net income (loss) per basic share available to common members: Distributed $ $ $ $ 0.32 0.18 0.87 0.86 Undistributed (0.01) 0.02 (0.20) (0.44) Basic $ $ $ $ 0.31 0.20 0.67 0.42 Net income (loss) per diluted share available to common members: Distributed $ $ $ $ 0.32 0.18 0.87 0.86 Undistributed (0.01) 0.02 (0.20) (0.44) Diluted $ $ $ $ 0.31 0.20 0.67 0.42 Weighted average shares outstanding: Basic 20,882,191 21,380,178 20,957,222 21,678,381 Diluted 20,882,191 21,380,178 20,957,222 21,678,381 Shutterstock Images LLC Consolidated Statements of Cash Flows (In thousands) (unaudited) Nine Months Ended September31, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES Net income $18,523 $16,076 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,888 1,033 Deferred taxes (251) 236 Non-cash equity-based compensation 2,827 1,390 Bad debt reserve 131 - Changes in operating assets and liabilities: Credit card receivable (1,136) (299) Accounts receivable (861) (349) Prepaid expenses and other current and non-current (1,066) (935) assets Due from member 168 (37) Accounts payable and other liabilities 3,429 3,229 Contributors payable 1,473 1,212 Deferred revenue 7,763 7,908 Net cash provided by operating activities $32,888 $29,464 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (3,268) (2,742) Acquisition of patents (193) (25) Security deposit receipt 38 - Net cash used in investing activities $ (3,423) $ (2,767) CASH FLOWS FROM FINANCING ACTIVITIES Term loan facility 12,000 - Payment of term loan fee (30) - Payment of deferred offering fees (2,539) - Members' distributions (24,200) (24,750) Net cash used in financing activities (14,769) (24,750) Net increase in cash and cash equivalents $14,696 $ 1,947 Cash and cash equivalents—Beginning 14,097 6,544 Cash and cash equivalents—Ending $28,793 $ 8,491 Supplemental Disclosure of Cash Information: Cash paid for: Income taxes $ 300 $ 1,226 Non-cash financing activities: Preferred members' interest accretion $ - $ 4,058 Shutterstock Images LLC Reconciliation of Non-GAAP Financial Information to GAAP (In thousands, except for share and per share information) Unaudited Unaudited Supplemental Data 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 Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Net income in accordance with generally accepted $ $ $ $ accounting principles 8,742 5,688 18,523 16,076 Add/(less): (a) Depreciation and 728 410 1,888 1,033 amortization (b) Non-cash equity based 670 599 2,827 1,390 compensation (c) Interest 3 (1) (2) (8) (income)/expense, net (d) Provision for income 146 253 374 715 taxes Adjusted EBITDA (1) $ $ $ 23,610 $ 10,289 6,949 19,206 Adjusted EBITDA per diluted $ $ $ $ common share 0.49 0.33 1.13 0.89 Adjusted EBITDA per diluted $ $ $ $ common share (2) 0.36 0.24 0.83 0.65 Weighted average shares 20,882,191 21,380,178 20,957,222 21,678,381 Adjusted weighted average 28,384,226 29,078,653 28,488,855 29,494,487 shares (2) Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Net income $ $ $ $ 8,742 5,688 18,523 16,076 (a) Non-cash equity based 670 599 2,827 1,390 compensation (b) Adjustment for the tax impact of certain Non-GAAP (11) (26) (56) (59) adjustments Non-GAAP net income $ $ $ $ 9,401 6,261 21,294 17,407 Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Net cash provided by $ $ $ $ operating activities 13,966 9,517 32,888 29,464 Interest income/(expense), (3) 1 2 8 net Capital expenditures (597) (1,213) (3,461) (2,767) Free cash flow $ $ $ $ 13,372 8,303 29,425 26,689 Adjusted EBITDA $ $ $ $ 10,289 6,949 23,610 19,206 Add/(less): (a) Changes in operating 3,841 2,746 9,770 10,729 assets and liabilities (b) Provision for income (146) (253) (374) (715) taxes (c) Deferred income taxes (96) 74 (251) 236 (d) Provision for doubtful 81 - 131 - accounts (e) Other (3) 1 2 8 (income)/expense, net Net cash provided by $ $ $ $ operating activities 13,966 9,517 32,888 29,464 (1) Earnings/(loss) before interest income/(expense), income taxes, depreciation, amortization, non-cash equity-basedcompensation and other non-cash charges. (2) The adjusted shares give effect to our reorganization from a New York limited company to a Delaware corporation and includesincremental shares for profit interest awards and preferred shares that are excluded from the weighted average shares. Media Contacts: Meagan Kirkpatrick Denise Garcia Shutterstock, Inc. ICR firstname.lastname@example.org email@example.com SOURCE Shutterstock, Inc. Website: http://www.shutterstock.com
Shutterstock Reports Third Quarter 2012 Financial Results
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