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 |
|
|
|