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Shutterstock Reports Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Board Authorizes $100 Million Share Repurchase Program

Third Quarter 2015 Highlights:

Revenue increased 28% to $107.3 million

Adjusted EBITDA increased 11% to $19.6 million

Non-GAAP Net Income per Diluted Share increased 4% to $0.28

Paid downloads increased 22% and revenue per download increased 4%

Image collection expanded 49% to 63.7 million images and video collection expanded 60% to 3.3 million video clips

New York - November 5, 2015 -

Shutterstock, Inc. (NYSE: SSTK), a leading global provider of commercial imagery and music, today announced financial r esults for the third quarter ended September 30, 2015.

Founder and CEO Jon Oringer said “Shutterstock's strong third quarter results reflect the sustained operating performance we are delivering across our diverse platforms as both new and existing customers further recognize the value of our high quality content. Each side of our marketplace continues to grow consistently as we remain focused on delivering the best user experience to our customers and contributors. Expanding our product offerings and developing innovative technology solutions remains a priority to ensure that we can continually evolve to meet the needs of the creative community, while delivering significant financial growth."

THIRD QUARTER RESULTS

Third quarter revenue of $107.3 million increased $23.5 million or 28% as compared to the third quarter of 2014, primarily due to a 22% increase in the number of paid downloads, 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. 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.

Adjusted EBITDA of $19.6 million increased $2.0 million or 11% as compared to the third quarter of 2014 as 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. Excluding the contributions from these businesses, as well as severance costs associated with executive management and the impact of foreign currency, Adjusted EBITDA growth was approximately 27% in the third quarter as compared to the third quarter of 2014. Adjusted EBITDA is defined as net income adjusted for other (expense)/income, income taxes, depreciation, amortization, disposals and non-cash equity-based compensation.

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.

Non-GAAP net income, which excludes the after tax impact of non-cash equity-based compensation, changes in fair value of contingent consideration related to acquisitions, and amortization of acquisition related intangible assets, was $10.1 million ($0.28 per diluted share) for the third quarter, an increase of 5% as compared to $9.6 million ($0.27 per diluted share) in the third quarter of 2014.

Free cash flow was $14.8 million for the third quarter, a decrease of $6.0 million from the third quarter of 2014, as the improved operating performance was more than offset by increased capital expenditures and content acquisitions as well as working capital fluctuations. Free cash flow is defined as cash provided by operating activities adjusted for capital expenditures and content acquisition.

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.

OPERATING METRICS

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions, except revenue per download)

Number of paid downloads

Revenue per download

Images in our collection (end of period)

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(1) Revenue per download metric excludes the impact of revenue not associated with content downloads.

FINANCIAL OUTLOOK

The Company’s current expectations for the full year 2015 remain as follows:

Full Year 2015

Revenue of $425 - $430 million (29% - 31% growth)

Adjusted EBITDA of $82 - $85 million (16% - 20% growth)

Non-cash equity-based compensation expense of approximately $31 million

Effective tax rate of approximately 44%

Capital expenditures of approximately $17 million

STOCK REPURCHASE PROGRAM

The Company's Board of Directors approved a stock repurchase program, pursuant to which the Company is authorized to purchase up to...


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