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Shutterstock Reports Third Quarter 2012 Financial Results

          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
                              denise.garcia@icrinc.com
mkirkpatrick@shutterstock.com



SOURCE Shutterstock, Inc.

Website: http://www.shutterstock.com