Shutterstock Reports Fourth Quarter and Full Year 2012 Financial Results

   Shutterstock Reports Fourth Quarter and Full Year 2012 Financial Results

-- Fourth quarter revenue increases 42% from prior year

-- Full year revenue increases 41% from prior year

-- Adjusted EBITDA of $11.3 million in fourth quarter

-- Quarterly image downloads reach record of 21.4 million

-- Collection exceeds 23 million images and video clips

-- Number of active customer accounts surpasses 750,000

PR Newswire

NEW YORK, Feb. 21, 2013

NEW YORK, Feb. 21, 2013 /PRNewswire/ --Shutterstock, Inc. (NYSE: SSTK) a
leading global provider of commercial digital imagery, today announced
financial results for the fourth quarter and full year ended December 31,
2012.

(Logo: http://photos.prnewswire.com/prnh/20120514/NY06418LOGO )

"Our fourth quarter results capped a very strong year for Shutterstock," said
Founder and CEO Jon Oringer. "We are very pleased with our progress on product
innovation, global market penetration and financial performance over the
course of 2012."

Operating Metrics

                      Three Months Ended December   Twelve Months Ended
                      31,                          December 31,
                      2012           2011           2012           2011
                      (in millions, except revenue  (in millions, except
                      per download)                 revenue per download)
Number of paid        21.4           16.2           76.0           58.6
downloads
                      $        $        $        $     
Revenue per download                                  
                      2.30          2.14          2.23           2.05
Images in collection  23.3           17.4           23.3           17.4
(end of period)

Revenue

Revenue for the fourth quarter was $49.2 million, a 42% increase from the
fourth quarter of 2011. Revenue for the full year was $169.6 million, a 41%
increase from 2011.

Net Income

Net income for the fourth quarter of 2012 was $29.0 million as compared to
$5.8 million in the fourth quarter of 2011. Net income available to common
shareholders/members for the fourth quarter of 2012 was $28.7 million or $0.88
per share on a fully diluted basis as compared to $4.3 million or $0.21 per
share on a fully diluted basis in the fourth quarter of 2011.

Net income for the full year 2012 was $47.5 million as compared to $21.9
million in 2011. Net income available to shareholders/common members for the
full year was $42.6 million or $1.79 per share on a fully diluted basis as
compared to $13.4 million or $0.64 per share on a fully diluted basis in 2011.

Both net income and net income available to common shareholders/members for
the fourth quarter and the full year include a one-time tax benefit of $28.8
million related to the Company's reorganization from an LLC to a C-corporation
on October 5, 2012.

Non-GAAP net income for the fourth quarter of 2012 was $6.6 million as
compared to $6.5 million in the fourth quarter of 2011. Non-GAAP net income
for the full year of 2012 was $28.0 million as compared to $23.9 million in
2011.

Non-GAAP net income excludes a one-time tax benefit related to the Company's
reorganization from an LLC to a C-corporation on October 5, 2012, non-cash
equity based compensation expense and the tax benefit for deductible non-cash
equity based compensation.

Adjusted EBITDA

Adjusted EBITDA for the fourth quarter of 2012 was $11.3 million as compared
to $7.3 million in the fourth quarter of 2011. Adjusted EBITDA for the full
year 2012 was $34.9 million as compared to $26.5 million in 2011.

Cash

The Company's cash balance was $102.1 million at December 31, 2012 as compared
to $14.1 million as of December 31, 2011. The Company also had short-term
debt of $6.0 million and no long-term debt as of December 31, 2012. The
Company generated $12.6 million of cash from operations in the fourth quarter
of 2012 and $45.5 million of cash from operations in the full year 2012.

Also, during the fourth 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 and patent
acquisitions, resulting in a cash outlay of approximately $0.6 million. Cash
outlays in this category for the full year of 2012 totaled $4.1 million.

Free cash flow for the fourth quarter of 2012 was $12.1 million as compared to
$9.4 million in the fourth quarter of 2011. Free cash flow for the full year
of 2012 was $41.5 million as compared to $36.1 million in 2011.

On October 16, 2012, the Company completed an 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 first
quarter of 2013 and full year 2013 are as follows:

First Quarter 2013

  oRevenue of $48.5 - $50.5 million
  oAdjusted EBITDA of $9.0 - $10.0 million
  oNon-cash equity-based compensation expense of approximately $2 million
  oAn effective tax rate of approximately 40%

Full Year 2013

  oWe are increasing our expectations for revenue to $213 - $219 million
  oWe are increasing our expectations for adjusted EBITDA to $44.0 - $46.5
    million
  oNon-cash equity-based compensation expense of approximately $8 million
  oAn effective tax rate of approximately 40%
  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 fourth quarter and full year 2012 financial
results during a teleconference today, February 21, 2013, at 5:00 PM ET. The
conference call can be accessed at (888) 396-2298 or (617) 847-8708 (outside
the US), conference ID# 220 161 30. The call will also be broadcast
simultaneously at http://investor.shutterstock.com.

Following completion of the call, a recorded replay of the webcast will be
available on Shutterstock's website. To listen to the telephone replay, call
toll-free (888) 286-8010 or (617) 801-6888 (outside the US), conference ID#
854 040 29. The telephone replay will be available from 7:00 PM ET February 21
through March 7, 2013. Additional investor information can be accessed at
http://shutterstock.com.

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 is net income excluding a one-time tax benefit due to a
reorganization to a corporation, non-cash equity based compensation and the
tax benefit for deductible non-cash equity based compensation; 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 Cash Flows included below.

Historical Operating Metrics

           12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12 9/30/12 12/31/12
Number of
paid       12.5     13.3    14.4    14.8    16.2     17.6    18.3    18.7    21.4
downloads
Revenue    $     $    $    $    $     $    $    $    $   
per        1.91    1.92   2.01   2.10   2.14    2.13   2.22   2.26   2.30
download
Images in
collection 13.3     14.4    15.3    16.2    17.4     18.8    20.2    21.7    23.3
(end of
period)

Non-Cash Equity Based Compensation

Included in the accompanying financial results are expenses related to
non-cash equity based compensation, as follows (in thousands):

                         Three Months Ended         Twelve Months Ended
                         December 31,               December 31,
                         2012          2011         2012           2011
Cost of revenue          $        $       $         $     
                         219            -       219             -
Sales and marketing      783           -            783            -
Product development      1,696         -            1,696          -
General and              4,860         732          7,687          2,122
administrative
 Total                 $         $       $           $    
                         7,558         732         10,385         2,122

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          Twelve Months Ended
                          December 31,                December 31,
                          2012           2011         2012         2011
Cost of revenue           $        $       $       $     
                            8          8           32        32
General and               48             53           213          212
administrative
 Total                  $        $       $       $     
                            56         61           245        244

Included in the accompanying financial results are expenses related to
depreciation, as follows (in thousands):

                         Three Months Ended         Twelve Months Ended
                         December 31,               December 31,
                         2012          2011         2012          2011
Cost of revenue          $        $        $         $     
                           411       218         1,394        627
General and              284           210          1,001         649
administrative
 Total                 $        $        $         $    
                           695       428         2,395        1,276

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 23 million images
currently available, the Company recently surpassed 250 million image
downloads. Shutterstock also owns Bigstock, a value-oriented stock
mediaagency.

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 section entitled "Risk Factors" in the
Company's latest Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on November 20, 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, Inc.
   Consolidated Balance Sheets
   (In thousands, except par value amount)
   (Unaudited)
                                              December 31,     December 31,
                                              2012             2011
ASSETS
   Current assets:
                                              $         $       
       Cash and cash equivalents                              
                                              102,096         14,097
       Credit card receivables                1,373            964
       Accounts receivable, net               1,738            647
       Prepaid expenses and other current     2,008            1,554
       assets
       Deferred tax assets                    18,760           644
       Due from related party                 -                168
   Total current assets                       125,975          18,074
   Property and equipment, net                5,255            3,844
   Intangibles, net                           1,040            1,029
   Goodwill                                   1,423            1,423
   Deferred tax assets                        13,239           58
   Other assets                               182              427
                                              $         $       
   Total assets                                               
                                              147,114         24,855
LIABILITIES, REDEEMABLE PREFERRED MEMBERS'
INTEREST AND

STOCKHOLDERS' EQUITY/MEMBERS' DEFICIT
   Current liabilities:
                                              $         $       
       Accounts payable                                      
                                              2,606            1,838
       Accrued expenses                       15,606           10,875
       Contributor royalties payable          6,984            5,261
       Deferred revenue                       37,934           28,451
       Term loan debt                         6,000            -
       Other liabilities                      161              85
   Total current liabilities                  69,291           46,510
   Other non-current liabilities              889              2,548
   Total liabilities                          70,180           49,058
   Commitment and contingencies
   Redeemable preferred members' interest     -                33,725
   Stockholders' equity/members' deficit:
       Common members' interest              -                5,699
       Common stock, $0.01 par value; 200,000
       shares authorized and

       33,513 shares outstanding as of        335              -
       December 31, 2012; no shares

       were authorized and outstanding as of
       December 31, 2011
       Additional paid-in capital             48,282           -
       Retained earnings/accumulated deficit  28,317           (63,627)
   Total stockholders' equity/members'        76,934           (57,928)
   deficit
   Total liabilities, redeemable preferred    $         $       
   members' interest, and                                     
                                              147,114         24,855
   stockholders' equity/members' deficit



Shutterstock, Inc.
Consolidated Statements of Operations
(In thousands, except for share and per share information)
(Unaudited)
                               Three Months Ended       Twelve Months Ended
                               December 31,             December 31,
                               2012         2011        2012        2011
Revenue                        $       $       $       $    
                                49,157       34,728   169,616   120,271
Operating expenses:
       Cost of revenue         18,794       12,975      64,676      45,504
       Sales and marketing     12,022       9,600       45,107      31,929
       Product development     5,675        2,711       16,330      9,777
       General and             9,709        3,335       21,651      10,171
       administrative
Total operating expenses       46,200       28,621      147,764     97,381
Income from operations         2,957        6,107       21,852      22,890
Other (expense)/income, net    (49)         2           (47)        10
Income before income taxes     2,908        6,109       21,805      22,900
(Benefit)/provision for        (26,111)     321         (25,738)    1,036
income taxes
                               $       $       $       $    
Net income                      29,019                47,543    21,864
                                            5,788
Less:
       Preferred interest      2,950        956         9,000       7,144
       distributed
       Preferred interest      -            -           -           4,058
       accretion
       Undistributed (loss)
       earnings to             (2,667)      491         (4,086)     (2,692)
       participating
       shareholder/members
Net income available to        $       $       $       $    
common shareholders/members     28,736                42,629    13,354
                                            4,341
Net income (loss) per basic share
available to common shareholders/members:
                               $       $       $       $    
Distributed                       0.27                      
                                            0.14        1.14        1.03
Undistributed                  0.61         0.07        0.65        (0.39)
                               $       $       $       $    
Basic                             0.88                      
                                            0.21        1.79        0.64
Net income (loss) per diluted share
available to common shareholders/members:
                               $       $       $       $    
Distributed                       0.27                      
                                            0.14        1.13        1.03
Undistributed                  0.61         0.07        0.66        (0.39)
                               $       $       $       $    
Diluted                           0.88                      
                                            0.21        1.79        0.64
Weighted average shares
outstanding:
       Basic                   32,497,727   20,849,242  23,785,299  20,849,242
       Diluted                 32,681,570   20,849,242  23,833,223  20,849,242

Shutterstock, Inc.
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       Twelve Months Ended
                               December 31,             December 31,
                               2012         2011        2012        2011
Net income                    $        $       $       $    
                               29,019        5,788     47,543      21,864
 Add/(less):
 (a)  Depreciation and         751          489         2,640       1,520
      amortization
 (b)  Non-cash equity based    7,558        732         10,385      2,122
      compensation
 (c)  Interest                 49           (2)         47          (10)
      (income)/expense, net
 (d)  Provision (benefit) for  (26,111)     321         (25,738)    1,036
      income taxes
Adjusted EBITDA (1)            $        $       $       $    
                               11,266        7,328     34,877      26,532
Adjusted EBITDA per diluted    $       $       $       $    
common share                   0.34         0.35      1.46      1.27
Adjusted EBITDA per diluted    $       $       $       $    
common share (2)                0.34         0.26      1.46      0.94
Weighted average shares       32,681,570   20,849,242  23,833,223  20,849,242
Adjusted weighted average      32,681,570   28,338,280  23,833,223  28,338,280
shares (2)
                               Three Months Ended       Twelve Months Ended
                               December 31,             December 31,
                               2012         2011        2012        2011
Net income                     $        $       $       $    
                               29,019        5,788     47,543      21,864
      One-time tax benefit due
 (a)  to reorganization to a   (28,811)     -           (28,811)    -
      corporation
 (b)  Non-cash equity based    7,558        732         10,385      2,122
      compensation
 (c)  Non-cash equity based    (1,136)      (14)        (1,136)     (41)
      compensation tax benefit
Non-GAAP net income            $       $       $       $    
                               6,630         6,506     27,981      23,945
                               Three Months Ended       Twelve Months Ended
                               December 31,             December 31,
                               2012         2011        2012        2011
Net cash provided by operating $        $       $       $    
activities                     12,646       10,083      45,534      39,547
 Interest income/(expense),    (49)         2           (47)        10
 net
 Capital expenditures          (601)        (675)       (4,062)     (3,442)
Free cash flow                 $        $       $       $    
                               12,094        9,406     41,519      36,095
Adjusted EBITDA                $        $       $       $    
                               11,266        7,328     34,877      26,532
 Add/(less):
 (a)  Changes in operating     6,131        2,761       15,899      13,492
      assets and liabilities
 (b)  Provision for income     26,111       (321)       25,738      (1,036)
      taxes
 (c)  Deferred income taxes    (31,049)     17          (31,300)    253
      Provision for
 (d)  doubtful                 195          296         326         296
      accounts/chargeback
      reserve
 (e)  Other (income)/expense,  (49)         2           (47)        10
      net
 (f)  Amortization of          41           -           41          -
      financing fees
Net cash provided by operating $        $       $       $    
activities                     12,646       10,083      45,534      39,547
(1) Earnings/(loss) before interest income/(expense), income
taxes, depreciation, amortization, non-cash equity based
 compensation 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 includes
 incremental shares for profit interest awards and preferred shares that
are excluded from the weighted average shares.





SOURCE Shutterstock, Inc.

Website: PRN Photo Desk, photodesk@prnewswire.com
Website: http://www.shutterstock.com
Contact: Meagan Kirkpatrick, Shutterstock, Inc., +1-646-402-2854,
mkirkpatrick@shutterstock.com; or Denise Garcia, ICR, denise.garcia@icrinc.com
 
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