(MENAFNEditorial) NEW YORK, Feb.22, 2018 /PRNewswire/ -- Shutterstock,Inc. (NYSE: SSTK), a leading global technology company offering a creative platform for high-quality assets, tools and services, today announced financial results for the fourth quarter and full year ended December31, 2017.
Commenting on the company's performance, founder and CEO Jon Oringer said, "We had a strong finish to 2017, seeing customer engagement at an all-time high – both in the number of paid downloads and the number of active users on our sites. Our investments in our technology and products combined with pricing and packaging optimization across our entire platform are enabling our customers to search, discover and license the perfect content to meet their needs better and faster than ever before. In 2017, with the addition of Shutterstock Custom, we took steps to provide our customers with custom content creation capabilities for their specific brand use-cases. We've helped streamline our customers' workflows through plug-ins and features including our ever improving editing tool, Shutterstock Editor; and we broke new ground with our enhanced AI-driven search and discovery tools, all with the goal of delivering on our commitment to meet our customers' broad array of unique content needs. Through our innovation and execution, we continue to attract new customers and expand our workflow product offerings and penetrate deeper into international markets. Earlier this year, we celebrated a milestone of having 1 billion licenses to date and we believe we are well-positioned for strong, profitable growth in 2018 and beyond."
Full Year 2017 highlights as compared to Full Year 2016:
Key Operating Metrics
Paid downloads increased 2% to 172.0 million Revenue per download increased 9% to $3.13 Images in our collection expanded 46% to 170.1 million images Videos in our collection expanded 47% to 9.1 million clips Financial Highlights
Revenue increased 12.7% to $557.1 million (on a constant currency basis, increased 12.6%) Income from operations decreased 42% to $26.3 million Net income decreased 49% to $16.7 million Adjusted EBITDA decreased 8% to $88.0 million Diluted EPS decreased 48% to $0.47 per share Fourth Quarter 2017 highlights as compared to Fourth Quarter 2016: Key Operating Metrics
Paid downloads increased 4% to 43.9 million Revenue per download increased 11% to $3.33 Financial Highlights
Revenue increased 16.6% to $151.8 million (on a constant currency basis, increased 13.9%) Income from operations decreased 46% to $7.2 million Net income decreased 79% to $2.1 million Adjusted EBITDA decreased 10% to $23.3 million Diluted EPS decreased 78% to $0.06 per share FULL YEAR RESULTS
Revenue
Full year revenue of $557.1million increased $62.8million or 12.7% as compared to 2016, driven by continued growth in our customer base resulting from the continued expansion of our product offerings to meet the needs of a more diverse customer base and increased activity by our enterprise customers. These factors also drove a 9% increase in revenue per download and a 2% increase in the number of paid downloads. Foreign currency movements had virtually no impact on the revenue growth from 2016 to 2017.
Revenue generated through our e-commerce platform increased approximately 6.0% as compared to 2016, to $348.0million or 62.5% of total revenue in 2017. Revenue from direct sales to enterprise customers increased approximately 24.1% as compared to 2016, to $186.0million or 33.4% of total revenue in 2017. Revenue from our other sales channels, including Webdam and content sold through application program interfaces increased approximately 44.4% as compared to 2016, to $23.1million or 4.1% of total revenue in 2017.
Income from Operations
Income from operations of $26.3million decreased $19.4million or 42% as compared to the full year 2016. This decrease is driven by increased operating expenses during the year, which were partially offset by the full year revenue growth. Operating expense increases were primarily due to costs associated with increased employee expenses, sales and marketing expenses, and additional costs related to technology and infrastructure enhancements, including depreciation.
Net Income
Net income available to common stockholders of $16.7million, or $0.47 per diluted share, decreased $15.9million as compared to $32.6million, or $0.91 per diluted share, for the full year 2016, primarily due to the decline in Income from Operations and an increase in the effective tax rate, partially offset by favorable non-operating foreign exchange impact and the impact of contingent consideration expenses in 2016 that did not recur in 2017. The higher effective tax rate during 2017 was primarily a result of recently enacted tax legislation, commonly known as the Tax Cuts and Jobs Act ("TCJA"), which, among other things, required a non-cash devaluation of our deferred tax assets and a one-time tax on earnings held in jurisdictions outside of the United States.
Adjusted EBITDA
Adjusted EBITDA of $88.0million for the full year decreased $7.4million or 8% as compared to the full year 2016, driven primarily by cost increases during 2017 related to our continued technology and infrastructure enhancements. We define adjusted EBITDA as net income adjusted for foreign currency transaction gains and losses, expenses related to long-term incentives and contingent consideration related to acquisitions, interest income and expense, income taxes, depreciation, amortization, and non-cash equity-based compensation.
Adjusted Net Income
Adjusted net income was $40.8million, or $1.16 per diluted share, for the full year as compared to $55.2million, or $1.54 per diluted share, for the full year 2016. We define adjusted net income as net income excluding the impact of one-time tax charges related to the enactment of the TCJA, non-cash equity-based compensation, amortization of acquisition-related intangible assets, expenses related to long-term incentives and contingent consideration related to acquisitions and the estimated tax impact of such adjustments.
FOURTH QUARTER RESULTS
Revenue
Revenue of $151.8million for the fourth quarter of 2017 increased $21.7 million, or 16.6%, as compared to the fourth quarter of 2016. This increase is attributable to our continued growth in enterprise sales, as well as increased customer acquisition through our e-commerce platform. Excluding the impact of foreign currency movements, revenue growth was approximately 13.9% in the fourth quarter of 2017.
Revenue generated through our e-commerce platform increased approximately 9.7% as compared to the fourth quarter of 2016, to $92.4million or 60.8% of total revenue in the fourth quarter of 2017. Revenue from direct sales to enterprise customers increased approximately 25.8% as compared to 2016, to $51.9million or 34.2% of total revenue in 2017. Revenue from our other sales channels, including Webdam and content sold through application program interfaces increased approximately 60.2% as compared to 2016, to $7.5million or 5.0% of total revenue in 2017.
Income from Operations
Income from operations of $7.2million for the fourth quarter of 2017 decreased $6.0million, or 46%, as compared to the fourth quarter of 2016, due primarily to increases in employee cash compensation expenses and depreciation and amortization expense. These increases are attributable to the Company's ongoing investments in improving its technology platform and operations.
Net Income
Net income of $2.1 million, or $0.06 per diluted share, for the fourth quarter of 2017 decreased $7.8million, or 79%, as compared with $9.9 million, or $0.27 per diluted share, in the fourth quarter of 2016 primarily due to the decline in Income from Operations and the increase in effective tax rate during the fourth quarter of 2017 compared to 2016, driven in large part by the Company's adoption of the TCJA.
Adjusted EBITDA
Adjusted EBITDA of $23.3 million for the fourth quarter of 2017 decreased $2.6million or 10%, as compared to the fourth quarter of 2016 driven primarily by the Company's investment in its smaller but high-growth products and markets.
Adjusted NetIncome
Adjusted net income was $10.6 million, or $0.30 per diluted share, for the fourth quarter of 2017 as compared to $15.1 million or $0.42 per diluted share, in the fourth quarter of 2016.
LIQUIDITY
Our cash, cash equivalents and short-term investments decreased by $25.7million to $253.4million at December31, 2017 as compared with $279.2million at December31, 2016. This decrease reflects approximately $49.6million of cash used to acquire Flashstock (now known as Shutterstock Custom), $25.0million of cash used to repurchase shares of the Company's outstanding common stock, $55.1million of cash used for capital expenditures and a payment of contingent consideration of $10.0 million related to the 2015 acquisition of PremiumBeat,which were partially offset by cash generated from operations. Cash taxes paid in 2017 were $5.0 million in compared to $19.2 million in 2016.
Free cash flow was $18.7million in the fourth quarter of 2017, an increase of $9.2million from the fourth quarter of 2016. This change was primarily driven by increased cash from operations partially offset by slight increases in capital expenditures and cash used to acquire content. Free cash flow is defined as cash provided by operating activities adjusted for capital expenditures and content acquisition.
STOCK REPURCHASE PROGRAM
During the fourth quarter of 2017, we did not repurchase shares of our stock pursuant to our existing stock repurchase program. From the inception of this program through December31, 2017, we have repurchased 2.6million shares of our stock for a total of $100.0million under the stock repurchase program at an average per-share price of $39.09. As of December31, 2017, there remains $100million available for purchases under our share repurchase program.
The stock repurchase program, which commenced in November 2015, authorizes management 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 future share repurchases will be determined by our management based on its evaluation of market conditions and other factors. The repurchase program may be modified, suspended or discontinued at any time.
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