Shutterstock Full Year 2019 Financial Results

Posted on 2/13/2020 by Jim Pickerell | Printable Version | Comments (0)

Shutterstock has reported Q4 2019 revenue of $166.4 million up 3% compared to Q4 2018 and up from $157.42 million the previous quarter. Revenue per download averaged $3.44 per image, up from $3.40 in Q4 2018.

Total image and video downloads for Q4 were up to 47.7 million compared to 46.8 million a year earlier. At the end of the year Shutterstock had over 314 million images and 17 million video clips, for a total of 331 million pieces of content in its collection.

For the quarter E-commerce revenue was $100.9 million and represented 61% of total revenue, up slightly from the previous quarter when it was 60%. Enterprise revenue was $65.5 million, a 2% decline from Q4 2018 and represented 39% of total revenue.

Full Year

For the full year revenue increased 4% to $650.5 million, up from $623.3 million in 2018. Revenue generated from the E-commerce sales channel was $392.2 million, a 7% increase while Enterprise revenue was $258.3 million a 1% increase when compared to 2018. For all of 2019  E-commerce represented 60% of revenue and Enterprise 40%. As a general trend Enterprise revenue has been decreasing slightly as E-commerce sales increase.

According to CFO Jarrod Yahes, the company expects the negative Enterprise trends to return to positive growth in the latter half of 2020 as a result of the investments the company has been making to reinvigorate its sales team, and its new approaches to customers begin to pay off.

During the conference call it was announced that as of April 1, 2020 Jon Oringer's position with the company will be elevated from CEO to Executive Chairman and Stan Pavlovsky, the current Chief Operating Officer would assume the role of CEO.

Pavlovsky said, “As CEO I look forward to driving our long term strategy in support of Shutterstock’s vision to be a leading content and technology platform that enables marketers and creators around the world to deliver impactful stories that capture and captivate their audiences….. I intend to drive higher customer retention and new revenue streams by focusing on three things: (1) Innovation that enhances our customer workflow, (2) Content that is relevant and fresh and (3) Data and Insight that drives performance.”

Contributor Compensation

About 28% of revenue or $181,730,000 was paid out to contributors during the year. At the end of the Q1 2018 the company said it had 750,000 photographers, videographers, musicians, artists and designers who had contributed to the Shutterstock collection. By the end of Q3 2019 they had added more than 250,000 additional contributors and claimed to have over 1,000,000 contributors. By the end of the year that number was certainly higher, although not reported.

Thus, assuming there are at least 1,000,000 contributors, the average earnings per contributor for the year was about $181.73. We know that somewhere between 2,000 and 3,000 contributors have over 10,000 images in the collection, and at least 2 contributor groups have contributed over one million images each.

Since a handful of contributors earn significantly more the vast majority earn little or nothing for their efforts. The vast majority of contributors have fewer than 300 images in the collection. This probably means that a high percentage of contributors go through the process of submitting a few images, discover that there is not much compensation for their efforts and don’t bother to submit more.

The average contributor has 331 images in the collection and earns about $0.55 per-year, per-image-in-the-collection. It is unclear how long the useful life of an image might be. Some may hope that images will continue earning $0.55 per-year for several years. But, as more and more images are added to the collection that average useful life becomes shorter and shorter.

Future Guidance

For the full year of 2020 the company expects revenue to be between $665 million and $690 million, representing growth of 2% to 6%; Adjusted EBITDA of between $100 million to $107 million, representing growth of 4% to 11% and Adjusted net income per diluted share of between $1.42 and $1.58, representing growth of 15% to 28%.

It is worth noting that at the beginning of 2019 the company expected revenue for the year to be between $685 and $690 million.


The chart below shows some of the trends in downloads, images in the collection and revenue growth since Q3 2017. Video downloads are included in this calculation. (For earlier data going back to Q4 2014 see here.) The “Rev Per DL” is the “Downloads” times the “Avg Rev per DL.” This differs slightly from “Total Rev.” because a small percentage of revenue comes from other activities not associated with stock content downloads. The The "Rev/Image" row is "the average revenue per image in the collection." For this figure, I divide total revenue by the sum of still images.

  Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
  2017 2017 2018 2018 2018 2018 2019 2019 2019 2019
Downloads (millions) 41.9 43.9 43.7 45.2 43.9 46.8 47.2 46.6 46.3 47.7
Avg Rev per DL $3.23 $3.33 $3.40 $3.41 $3.40 $3.40 $3.42 $3.44 $3.40 $3.44
Images in collection 156 170 187 204 221 242 260 280 297 314
Video in collection 8 9 10 11 12 13 14 15 16 17
Total Rev. (millions) $141.1 $151.8 $153 $156.6 $151.6 $162.1 $163.3 $161.7 $159.1 $166.4
Rev. Per DL (millions) $135.34 $146.19 $148.58 $154.13 $149.26 $159.1 $161.42 $160.30 $157.42 $163.06
Rev/Image $0.90 $0.89 $0.81 $0.73 $0.65 $0.62 $0.59 $0.54 $0.51 $0.50
% Image Lic 26% 25% 23% 21% 18% 18% 17% 15% 14.8% 14.4%
    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, I 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 at a much faster rate than image downloads are increasing. For example, if a contributor had 1,000 images in the collection in Q3 2017 on average he would have had 260 downloads in the quarter. In Q4 2019 a collection with 1,000 image would have only had 144 downloads. Back in Q1 2015 a contributor with a 1,000 image collection could have expected to see 650 downloads in a quarter.

Net Income and Income Per Diluted Share

Net income of $20.1 million decreased $34.6 million as compared to $54.7 million for the full year 2018. Net income per diluted share was $0.57 as compared to $1.54 for the full year 2018. This decrease is primarily due to a reduction in income from operations during 2019 caused by higher spending in performance marketing initiatives and higher general and administrative expenses, largely attributable to investments made across cyber security, data science and analytics, and technology spend and a gain recognized in 2018 on the sale of Webdam of $27.6 million, or $0.78 per diluted share, net of tax, partially offset by a 2018 impairment charge of $4.9 million, or $0.14 per diluted share, net of tax, related to our long-term investment in SilverHub Media Limited.

Adjusted net income per diluted share of $1.23 decreased by $0.34, as compared to $1.57 for the full year 2018.

Adjusted EBITDA

Adjusted EBITDA of $96.3 million for 2019 decreased $8.8 million or 8% as compared to the full year 2018, driven primarily by sales and marketing expenses which increased due to higher spending in performance marketing initiatives and higher general and administrative expenses, largely attributable to investments made across cyber security, data science and analytics, and technology spend.


Our cash and cash equivalents increased by $72.4 million to $303.3 million at December 31, 2019, as compared with $230.9 million at December 31, 2018. This increase was driven by $102.6 million of net cash provided by our operating activities, partially offset by $27.2 million used in investing activities and $1.7 million used in financing activities.
Free cash flow was $73.2 million for 2019, an increase of $9.7 million from 2018. This change was primarily driven by lower capital expenditures.

Copyright © 2020 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


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