Shutterstock Reports First Quarter 2023 Financial Results

NEW YORK, April 25, 2023 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) (the "Company"), a premier partner for transformative brands, newsrooms and media companies, today announced financial results for the first quarter ended March 31, 2023.

Commenting on the Company's performance, Paul Hennessy, the Company's Chief Executive Officer, said, "We are pleased to report an exceptional quarter for Shutterstock. We integrated generative AI into our offering and also concluded landmark data partnerships with some of the largest companies in the world. Our investments are paying tangible dividends, as demonstrated by record Adjusted EBITDA in the first quarter and increased guidance for the full year. Shutterstock is an extremely exciting place to be right now with our end-to-end creative platform uniquely positioning us for sustained growth and profitability."

First Quarter 2023 highlights as compared to First Quarter 2022:

Financial Highlights

• Revenue increased 8% to $215.3 million. On a constant currency basis, revenue increased 10%.
• Income from operations increased 26% to $40.4 million.
• Net income increased 24% to $32.8 million.
• Adjusted EBITDA increased 27% to $69.8 million.
• Net income per diluted share increased $0.19 to $0.90.
• Adjusted net income per diluted share increased $0.29 to $1.29.
• Operating cash flows increased $44.1 million to $66.8 million.
• Free cash flow increased $40.7 million to $50.9 million.

Key Operating Metrics

• Subscribers increased to 559,000.
• Subscriber revenue increased to $90.6 million.
• Average revenue per customer increased to $356.
• Paid downloads decreased to 42.7 million.
• Revenue per download increased to $4.41.
• Image collection expanded to 615 million images.
• Footage collection expanded to 47 million clips.

SHUTTERSTOCK INVESTOR RELATIONS MICRO SITE

Accessible at content.shutterstock.com/investor-report/index.html.

FIRST QUARTER RESULTS

Revenue

First quarter revenue of $215.3 million increased $16.1 million or 8% as compared to the first quarter of 2022. Revenue generated through our E-commerce sales channel decreased 6% as compared to the first quarter of 2022, to $119.8 million, and represented 56% of total revenue in the first quarter of 2023. The decline in E-commerce revenue was primarily driven by weakness in customer acquisition, partially offset by revenue generated from Pond5 which was acquired in May 2022. Revenue from our Enterprise sales channel increased 33% as compared to the first quarter of 2022, to $95.5 million, and represented 44% of first quarter revenue in 2023. The increase in Enterprise revenues was primarily driven by growth in our computer vision data partnerships and our Studios business, in addition to revenue generated from our acquisitions of Pond5 and Splash News.

On a constant currency basis, revenue increased 10% in the first quarter of 2023 as compared to the first quarter of 2022. On a constant currency basis, E-commerce revenue decreased by 4% and Enterprise revenues increased by 35% in the first quarter of 2023, as compared to 2022.

Net income and net income per diluted share

Net income of $32.8 million increased $6.3 million as compared to $26.6 million for the first quarter in 2022. Net income per diluted share was $0.90, as compared to $0.71 for the same period in 2022. These increases are due primarily to the first quarter 2023 revenue growth.

Adjusted net income per diluted share was $1.29 as compared to $1.00 for the first quarter of 2022, an increase of $0.29 per diluted share.

Adjusted EBITDA

Adjusted EBITDA of $69.8 million for the first quarter of 2023 increased by $15.0 million, or 27%, as compared to the first quarter of 2022, due primarily to increased revenue. The adjusted EBITDA margin of 32.4% for first quarter of 2023 increased by 490 basis points, as compared 27.5% in the first quarter of 2022.

FIRST QUARTER LIQUIDITY

Our cash and cash equivalents decreased by $19.3 million to $95.8 million at March 31, 2023, as compared with $115.2 million as of December 31, 2022. This decrease was driven by $70.7 million used in financing activities and $15.9 million used in investing activities, partially offset by $66.8 million of net cash provided by our operating activities.

Net cash provided by our operating activities was driven by our operating income, in addition to changes in the timing of cash collections from our customers and payments pertaining to operating expenses. Cash used in investing activities primarily consists of $15.9 million related to capital expenditures and content acquisition. Cash used in financing activities primarily consists of $50.0 million used for the repayment of our Credit Facility and $9.7 million related to the payment of the quarterly cash dividend.

Free cash flow was $50.9 million for the first quarter of 2023, an increase of $40.7 million from the first quarter of 2022. This change was primarily driven by growth in cash flows from operating activities.

QUARTERLY CASH DIVIDEND

During the three months ended March 31, 2023, the Company declared and paid a cash dividend of $0.27 per common share or $9.7 million.

On April 17, 2023, the Board of Directors declared a dividend of $0.27 per share of outstanding common stock, payable on June 15, 2023 to stockholders of record at the close of business on June 1, 2023.

KEY OPERATING METRICS

2023 GUIDANCE

The Company increased its guidance for the full year 2023, to the following:

• Revenue of $844 million to $853 million, representing annual growth of 2% to 3%.
• Adjusted EBITDA of between $227 million to $231 million.
• Adjusted net income per diluted share of between $4.00 to $4.10.

NON-GAAP FINANCIAL MEASURES

To supplement Shutterstock's consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, Shutterstock's management considers certain financial measures that are not prepared in accordance with GAAP, collectively referred to as non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow.

Shutterstock defines adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, interest income and expense and income taxes; adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue; adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, amortization of acquisition-related intangible assets, severance costs associated with strategic workforce optimizations and the estimated tax impact of such adjustments; adjusted net income per diluted share as adjusted net income divided by weighted average diluted shares; revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) as the increase in current period revenues over prior period revenues, utilizing fixed exchange rates for translating foreign currency revenues for all periods in the comparison; billings as revenue adjusted for the change in deferred revenue, excluding deferred revenue acquired through business combinations; and free cash flow as cash provided by operating activities, adjusted for capital expenditures, and content acquisition. These figures have not been calculated in accordance with GAAP and should be considered only in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. Shutterstock cautions investors that non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

Shutterstock's management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow are useful to investors because these measures enable investors to analyze Shutterstock's operating results on the same basis as that used by management. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted share provide useful information to investors about the performance of the Company's overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to Shutterstock's underlying operating performance; and revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) provides useful information to investors by eliminating the effect of foreign currency fluctuations that are not directly attributable to Shutterstock's operating performance. Management also believes that providing these non-GAAP financial measures enhances the comparability for investors in assessing Shutterstock's financial reporting. Shutterstock's management believes that free cash flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in internal-use software and website development costs to support the Company's ongoing business operations and provides them with the same measures that management uses as the basis for making resource allocation decisions.

Shutterstock's management also uses the non-GAAP financial measures adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow, in conjunction with GAAP financial measures, as an integral part of managing the business and to, among other things: (i) monitor and evaluate the performance of Shutterstock's business operations, financial performance and overall liquidity; (ii) facilitate management's internal comparisons of the historical operating performance of its business operations; (iii) facilitate management's external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of Shutterstock's management team and, together with other operational objectives, as a measure in evaluating employee compensation and bonuses; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.

Reconciliations of the differences between adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings, free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, are presented under the headings "Reconciliation of Non-GAAP Financial Information to GAAP" and "Supplemental Financial Data" immediately following the Consolidated Balance Sheets.

We do not provide a reconciliation of adjusted EBITDA guidance to net income guidance or a reconciliation of adjusted net income per diluted share guidance to net income per diluted share guidance, because we are unable to calculate with reasonable certainty the impact of potential future transactions, including, but not limited to, capital structure transactions, restructuring, acquisitions, divestitures or other events and asset impairments, without unreasonable effort. These amounts depend on various factors and could have a material impact on net income and net income per diluted share, but may be excluded from adjusted EBITDA and adjusted net income per diluted share. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

EARNINGS TELECONFERENCE INFORMATION

The Company will discuss its first quarter and full year financial results during a teleconference today, April 25, 2023, at 8:30 AM Eastern Time. The conference call is being webcast live at the Company's website at http://investor.shutterstock.com/. The webcast is listen-only. Those interested in participating in the question-and-answer session should register using the link below.

Participants may register for the call here (https://edge.media-server.com/mmc/p/pnmfv5x7) to receive the dial-in numbers and unique PIN to access the call seamlessly. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

A webcast replay of the call will be available on the Company's website beginning on April 25, 2023 at approximately 10:30 AM Eastern Time.

ABOUT SHUTTERSTOCK

Shutterstock, Inc. (NYSE: SSTK) is a premier partner for transformative brands, newsrooms and media companies, empowering the world to create with confidence. Fueled by millions of creators around the world and a fearless approach to product innovation, Shutterstock is the leading global platform for licensing from the most extensive and diverse collection of high-quality 3D models, videos, music, photographs, vectors and illustrations. From the world's largest content marketplace, to breaking news and A-list entertainment editorial access, to all-in-one content editing platform and studio production service—all using the latest in innovative technology—Shutterstock offers the most comprehensive selection of resources to bring storytelling to life.

Learn more at www.shutterstock.com and follow us on LinkedIn, Instagram, Twitter, Facebook and YouTube.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, particularly in the discussion under the caption "2023 Guidance." All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding guidance, industry prospects, future business, future results of operations or financial condition, new or planned features, products or services, management strategies and our competitive position. You can identify forward-looking statements by words such as "may," "will," "would," "should," "could," "expect," "aim," "anticipate," "believe," "estimate," "intend," "plan," "predict," "project," "seek," "potential," "opportunities" and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, those discussed under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other documents that the Company may file from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, Shutterstock's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. The forward-looking statements contained in this press release are made only as of this date and Shutterstock assumes no obligation to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

SOURCE Shutterstock, Inc.