One of the big questions for
Shutterstock is whether they can continue to grow the Enterprise segment of their business and how important that is to the eventual success of the company. In 2016 and 2017 they touted the success of Enterprise, but over the last 12 months Enterprise growth has been slowing and sales overall seem to be flattening.
In Q1 2019 Enterprise sales only grew 7.6% compared to E-commerce sales that were up 9.4%. Enterprise sales have been on a steady decline since to Q2 2018 while E-commerce sales have been relatively flat and rising in the last quarter.
| |
Q2 |
Q3 |
Q4 |
Q1 |
| Revenue Growth Rate |
2018 |
2018 |
2018 |
2019 |
| E-Commerce |
11.6% |
8.4% |
8.9% |
9.4% |
| Enterprise |
40.4% |
14.2% |
12.1% |
7.6% |
In the Q2 2017 report investors were told that there were about 36,000 Enterprise customers who generated about 32% of total revenue. By the end of 2018 Enterprise customers were generating about 40.9% of total revenue, or about
$254.8 million.
There may be about 40,000 Enterprise customers now, but that is only an estimate. If that is the case, then the average Enterprise customer spends $6,370 per year. We have been told in the past that a few of the major Enterprise customers spend over $100,000 a year. Thus, the fees charged Enterprise customers must vary greatly depending on the variety of services each requires and some must be spending much less than $6,000 a year.
We also understand that a growing percentage of Shutterstock staff is engaged in marketing to, and servicing, Enterprise customers, although details on the number and overall cost have not been supplied.
It is important to note that the other more than 1.86 million E-commerce customers generated
$365.7 million in gross revenue in 2018. Thus, the average customer spent about
$196.61 per year. An E-commerce customer can get up to 750 images or illustration per month for an annual fee of $2,388. Presumably, most are not buying such contracts. The average customer downloads about 95 images or film clips per year.
Customers can purchase SD video clips for between $52 and $65, HD for between $63 and $79 or 4K clips for between $148 and $179. Based on these numbers it seems safe to assume that a significant portion of customers are not purchasing much, if anything, on an annual basis.
Adobe Comparison
Meanwhile, Adobe Stock revenue grew
25% in 2018 and
20% in Q1-19, according to Adobe earnings call transcripts.
In its reports Adobe does not break out the revenue from its Adobe Stock line of business but it is believed it is somewhere around 2% of total company revenue. Total Adobe revenue in 2019 is expected to be $11.15 billion so Adobe Stock’s annual revenue may be somewhere in the range of $220 million.
According to Fast Company 85% of the people who buy stock images use Adobe applications. Over 90% of the people who create stock images use Adobe software in the process of creating or preparing the images for marketing
.
Adobe’s ($140B) value is also much larger than Shutterstock ($1.45B) and Adobe has the resources to develop a solution over time that could dwarf Shutterstock on overall quality, content volume, and value.