Shutterstock Q1 2020 Financial Results

Posted on 4/27/2020 by Jim Pickerell | Printable Version | Comments (0)

Shutterstock has reported Q1 2020 revenue $161.3 million compared to $163.3 million in Q1 2019 and down from $166.4 million the previous quarter. Revenue per download remained flat at $3.42 per-image compared to Q1 2019 and down from $3.44 the previous quarter.

Total image and video downloads for Q1 were 46.8 million compared to 47.2 million a year earlier and down from 47.7 million the previous quarter. At the end of the quarter Shutterstock had over 330 million images and 18 million video clips, for a total of 348 million pieces of content in its collection.

For the quarter E-commerce revenue was $99.7 million and represented 62% of total revenue, up slightly from the previous quarter when it was $100.9 million and represented 61% of total revenue. Revenue from our Enterprise sales channel decreased 6% as compared to the first quarter of 2019, to $61.5 million, and represented 38% of first quarter revenue in 2020.



As a result of the COVID-19 pandemic sales in Asia/Pacific had a big decline in January, but were showing signs of improvement in March and were almost flat for the quarter. Sales in Europe, particularly UK, France and Italy, were down about 3% for the quarter. U.S. and Canada sales declined about 5% in March.

Commenting on the Company's performance, Stan Pavlovsky, the Company's Chief Executive Officer, said, "Amidst unprecedented economic uncertainty globally, Shutterstock has remained resilient and strong, providing our customers with custom services and fresh and relevant content they need to reach their audiences during this time. We are grateful for our contributor community, who continue to document the extraordinary change in our daily lives. Our first quarter results reflect the strength of the Shutterstock brand. We remain focused on executing on our 2020 vision, driving long-term value for our shareholders and are confident that our resilience will make us stronger in the days and years to come.”



Contributor Compensation


No specifics were given with regard to contributor compensation, but in Q4 2019 if was about 28% of revenue. If the contributor share remained about the same the total contributors compensation would have been $45.2 million. At the end of the Q1 2020 the company claimed to have over 1,000,000 contributors and that number has certainly increased since then. Thus, the average contributor would have had 348 pieces of content in the collection at the end of the quarter and received a total of about $45.20 as the contributors share of licensing fees for the quarter .

Future Guidance


Jarrod Yahes, Chief Financial Officer said, "Given the significant uncertainty that remains regarding the COVID-19 pandemic, including the pace of recovery, the severity of the impact on the global economy, our customers' ability to maintain marketing spend, and the resulting difficulty in forecasting, we are withdrawing the 2020 financial guidance we previously announced on February 13, 2020.



“While revenues have been negatively impacted since the onset of the pandemic, at current volumes, we expect to produce significant earnings and free cash flow in 2020, allowing us to continue paying a quarterly dividend and reinvesting in our business. We are well positioned financially with $296 million in cash and no debt. Our strong liquidity position combined with the progress we are making against our margin enhancement initiatives make us well positioned to meet our financial objectives when demand returns to historical levels."

Net income and Income per diluted share


Net income of $4.3 million, decreased $3.2 million as compared to $7.5 million for the first quarter in 2019. Net income per diluted share was $0.12, as compared to $0.21 for the same period in 2019. This decrease is primarily due to lower revenues from our Enterprise business and higher general and administrative expenses in the first quarter of 2020.

Chart


The chart below shows some of the trends in downloads, images in the collection and revenue growth since Q4 2017. Video downloads are included in this calculation. (For earlier data going back to Q2 2015 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.

  Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
  2017 2018 2018 2018 2018 2019 2019 2019 2019 2020
Downloads (millions) 43.9 43.7 45.2 43.9 46.8 47.2 46.6 46.3 47.7
46.8
Avg Rev per DL $3.33 $3.40 $3.41 $3.40 $3.40 $3.42 $3.44 $3.40 $3.44 $3.42
Images in collection 170 187 204 221 242 260 280 297 314 330
Video in collection 9 10 11 12 13 14 15 16 17 18
                     
Total Rev. (millions) $151.8 $153 $156.6 $151.6 $162.1 $163.3 $161.7 $159.1 $166.4 $161.3
Rev. Per DL (millions) $146.19 $148.58 $154.13 $149.26 $159.1 $161.42 $160.30 $157.42 $163.06 $160.05
                     
Rev/Image $0.89 $0.81 $0.73 $0.65 $0.62 $0.59 $0.54 $0.51 $0.50 $0.46
% Image Lic 25% 23% 21% 18% 18% 17% 15% 14.8% 14.4% 13.4%

    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 Q4 2017 on average he would have had 250 downloads in the quarter. In Q1 2020 a collection with 1,000 image would have only had 134 downloads. Back in Q2 2015 a contributor with a 1,000 image collection could have expected to see 630 downloads in a quarter.

Net Income and Income Per Diluted Share


Net income of $4.3 million, decreased $3.2 million as compared to $7.5 million for the first quarter in 2019. Net income per diluted share was $0.12, as compared to $0.21 for the same period in 2019. This decrease is primarily due to lower revenues from our Enterprise business and higher general and administrative expenses in the first quarter of 2020.

Adjusted net income per diluted share was $0.26 as compared to $0.35 for the first quarter of 2019, a decrease of $0.09 per diluted share.

Adjusted EBITDA


Adjusted EBITDA of $22.1 million for the first quarter of 2020 decreased $3.5 million, or 14%, as compared to the first quarter of 2019, driven primarily by lower revenues from our Enterprise business and higher general and administrative expenses. The adjusted EBITDA margin declined to 13.7% from 15.6% in the first quarter of 2019.

Liquidity


Our cash and cash equivalents decreased by $7.6 million to $295.7 million at March 31, 2020, as compared with $303.3 million at December 31, 2019. This decrease was driven by $6.9 million of net cash provided by our operating activities, partially offset by $8.4 million used in investing activities and $7.8 million used in financing activities.

Net cash provided by our operating activities was affected by a one-time $7.8 million payment related to long-term incentives made in conjunction with our 2017 acquisition of Flashstock Technology, Inc. ("Flashstock"), in addition to lower revenues and unfavorable impacts due to changes in the timing of payments pertaining to operating expenses. Cash used in financing activities includes $6.0 million related to the payment of the quarterly cash dividend.

Free cash flow was $6.2 million for 2020, a decrease of $5.7 million from 2019. This change was primarily driven by lower revenues and changes in timing of payments pertaining to operating expenses. Free cash flow for the three months ended March 31, 2020 is presented excluding a nonrecurring payment of $7.8 million with respect to long-term incentives related to our 2017 acquisition of Flashstock.


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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