Shutterstock Reports Q3 Results

Posted on 11/5/2015 by Jim Pickerell | Printable Version | Comments (0)

Today, Shutterstock reported $107.3 million in revenue for Q3 2015, a 28% increase over Q3 2014 and up nearly $3 million from the previous quarter. The increase was primarily due to a 22% increase in the number of paid downloads compared to a year earlier.

However, if we compare Q3 2015 with Q2 2015 there was a 2,200,000 increase in downloads that generated the additional $2.9 million in revenue, or about $1.32 per download. This would indicate that nearly all the additional activity was in subscription downloads, not in downloads of the higher paying products.

The average price per download during the quarter was $2.76 down from $2.85 in the previous quarter, and compared to $2.65 in Q3 2014. There were 38.1 million downloads in the quarter. Shutterstock paid out about 29% of its gross revenue, or $31 million, in royalties to contributors.



Shutterstock said the growth in revenue for the year was, “mainly due to new customers, as well as from a 4% increase in revenue per download from growth in both on-demand offerings and enterprise sales. (It would appear that much of that growth in on-demand offerings and enterprise sales came in previous quarters, not the last quarter.) Third quarter results also included contributions from PremiumBeat and Rex Features, which were acquired during the first quarter of 2015.  Excluding contributions from these acquired businesses and the impact of foreign currency, total Company revenue growth was approximately 25% in the third quarter.”

They noted that 39% of revenue came from North America and 33% from Europe. These figures are the same as the previous quarter. Seventy percent of revenue came from outside the U.S. meaning that 2% came from Canada and Mexico, and 28% from the Rest of the World. Sales were particularly strong in Korea, Germany and the UK. 



At the end of Q3 they had about 63.7 million photos, vectors and illustrations in the collection and 3million video clips. They also had 1.4 million customers, about 22,000 of them are Enterprise users. They did not report the current number of employees, but at the end of Q2 they had 642 employees worldwide. Sales and marketing expenses were approximately 24% of revenue in the quarter.

Adjusted EBITDA


Adjusted EBITDA of $19.6 million increased $2.0 million or 11% as compared to the third quarter of 2014. The 28% revenue growth was partially offset by an increase in operating expenses primarily from higher royalty costs associated with the increase in paid downloads.  Additionally, the third quarter of 2015 included higher personnel and marketing expenses to support growth, severance costs associated with executive management and operating costs from businesses acquired during the first quarter of 2015.
 


Net Income


Net income available to common stockholders of $4.1 million ($0.11 per diluted share) for the third quarter decreased as compared with $5.3 million ($0.15 per diluted share) in the third quarter a year ago as the improved operating performance was more than offset by an increase in non-cash equity-based compensation expense, changes to the fair value of contingent consideration, and amortization of acquisition related intangible assets.

The company reported $0.28 Earnings Per Share for the quarter, beating the analyst consensus estimate by $0.01. Analyst had a consensus of $0.27 EPS.

The stock market liked the results and shares prices were up 15% from the previous close to $32.33.

Cash


The Company's cash, cash equivalents and short term investments totaled $282.1 million at September 30, 2015 as compared to $288.3 million as of December 31, 2014, primarily reflecting the $59.4 million of cash generated from operations, which was more than offset by cash paid for acquisitions of approximately $65 million.  The Company generated $19.4 million of cash from operations in the third quarter of 2015, as compared to $22.7 million generated in the third quarter of 2014.

The Company's Board of Directors approved a stock repurchase program of up to $100 million of its common stock. The Company expects to fund repurchases through a combination of cash on hand, cash generated by operations and future financing transactions. Accordingly, the Company's stock repurchase program is subject to the Company having available cash to fund repurchases. Under the program, management is authorized 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.

Future Guidance


Revenue for all of 2015 is expected to be between $425 and $430 million, the same as was announced at the end of Q2. CFO Steven Berns said it may be near the low end of the range.

Traditionally, Shutterstock has given guidance for revenue for the following year at the end of Q3, but this year it was decided not to give that guidance until the year-end report in February 2016.
Revenue And Download Trends

The chart below shows some of the trends in downloads, images in the collection and revenue growth since Q2 2013. (For earlier data going back to Q3 2010 see here.) The "Rev/Image" row is "revenue per image in the collection." For this figure I divide total revenue by the sum of still images and video clips since the video makes up a portion of the revenue.
 
  Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
  2013 2013 2013 2014 2014 2014 2014 2015 2015 2015
Downloads (millions) 24.3 25.4 28 29.7 31.5 31.2 33.5 33.4 35.9 38.1
Rev.per DL $2.33 $2.35 $2.43 $2.45 $2.52 $2.65 $2.68 $2.87 $2.85 $2.76
Images & Video 28 31.3 34.5 37.1 40.7 42.7 48.8 54.2 61 66.7
                     
Total Rev. (millions) $56.8 $56.8 $68 $72.8 $80.2 $83.7 $91.2 $97.5 $104.4 $107.3
                     
Rev/Image $1.96 $1.81 $1.97 $1.96 $1.97 $1.96 $1.87 $1.80 $1.71 $1.61
% Image Lic 87% 81% 81% 80% 77% 73% 69% 62% 59% 57%
    The "% Image Lic” row measures the odds that a single image in the collection will have been licensed one time within the quarter. To arrive at this number, we divide the total downloads by the number of images in the collection at the end of the quarter. This number is significant because it shows that new images are being added to the collection at a rate faster than image downloads are increasing. For example, if a contributor had 1000 images in the collection in Q2 2013 on average he would have had 870 downloads in that quarter. The same 1000 images in the collection in Q3 2015 would have only resulted in 570 downloads.

Interpolating Shutterstock Numbers


It is believed that Enterprise revenue represents about 22% of total revenue, but they would only say in the conference call is that it is over 20%.

Based on the data reported so far in 2015 my estimates of how total 2015 revenue will break down in terms of number of downloads and revenue for each segment of their business are as follows:

  Shutterstock Percent Average Total 2015
  & Bigstock Total
Price Per Downloads
  Revenue Revenue
Downloads  
         
Subscription $167,000,000 41% $1.25 133,600,000
Image on Demand
$106,000,000 26% $9.50 11,157,895
Enterprise $102,000,000 25% $50 2,040,000
Video $32,000,000 8% $60 533,333
         
  $407,000,000 100%   147,331,228
         
Rex, Premium Beat, Other
$20,000,000
     
         
Total 2015 Revenue $427,000,000      


Copyright © 2015 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

Comments

Be the first to comment below.

Post Comment

Please log in or create an account to post comments.

Stay Connected

Sign up to receive email notification when new stories are posted.

Follow Us

Free Stuff

Stock Photo Pricing: The Future
In the last two years I have written a lot about stock photo pricing and its downward slide. If you have time over the holidays you may want to review some of these stories as you plan your strategy ...
Read More
Future Of Stock Photography
If you’re a photographer that counts on the licensing of stock images to provide a portion of your annual income the following are a few stories you should read. In the past decade stock photography ...
Read More
Blockchain Stories
The opening session at this year’s CEPIC Congress in Berlin on May 30, 2018 is entitled “Can Blockchain be applied to the Photo Industry?” For those who would like to know more about the existing blo...
Read More
2017 Stories Worth Reviewing
The following are links to some 2017 and early 2018 stories that might be worth reviewing as we move into the new year.
Read More
Stories Related To Stock Photo Pricing
The following are links to stories that deal with stock photo pricing trends. Probably the biggest problem the industry has faced in recent years has been the steady decline in prices for the use of ...
Read More
Stock Photo Prices: The Future
This story is FREE. Feel free to pass it along to anyone interested in licensing their work as stock photography. On October 23rd at the DMLA 2017 Conference in New York there will be a panel discuss...
Read More
Important Stock Photo Industry Issues
Here are links to recent stories that deal with three major issues for the stock photo industry – Revenue Growth Potential, Setting Bottom Line On Pricing and Future Production Sources.
Read More
Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More
Finding The Right Image
Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
Read More

More from Free Stuff