NEW YORK, Oct. 25, 2022 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) (the "Company"), the leading global creative platform for transformative brands and media companies, today announced financial results for the third quarter ended September 30, 2022.

"I'm excited to announce our partnership with OpenAI to bring Generative AI to benefit Shutterstock's customers and contributors," said Paul Hennessy, the Company's Chief Executive Officer.  "With this partnership, Shutterstock positions itself at the forefront of emerging technology -- supercharging ethical, creative storytelling for all. We also strengthened our leadership position in video content, by progressing with the integration of Pond5 and securing an exclusive relationship with Filmpac for cinematic quality video. And financially, we are delivering exceptional profitability and margins despite macroeconomic and demand headwinds."

Third Quarter 2022 highlights compared to Third Quarter 2021:

Financial Highlights

• Revenue increased 5% to $204.1 million. On a constant currency basis, revenue increased 10%.
• Income from operations increased 29% to $28.7 million.
• Net income increased 44% to $23.0 million.
• Adjusted EBITDA increased 26% to $56.0 million.
• Net income per diluted share increased $0.21 to $0.64.
• Adjusted net income per diluted share increased $0.30 to $1.00.
• Operating cash flows decreased 31% to $37.7 million.
• Free cash flow decreased 52% to $21.4 million.

Key Operating Metrics

• Subscribers increased to 607,000.
• Subscriber revenue increased to $87.7 million.
• Average revenue per customer decreased to $329.
• Paid downloads decreased 3% to 42.8 million.
• Revenue per download increased 5% to $4.43.
• Image collection expanded 9% to over 424 million images.
• Footage collection expanded 17% to over 27 million clips, excluding Pond5 footage clips.

SHUTTERSTOCK INVESTOR RELATIONS MICRO SITE

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

THIRDQUARTER RESULTS

Revenue

Third quarter revenue of $204.1 million increased $9.7 million or 5% as compared to the third quarter of 2021. Revenue generated through our E-commerce sales channel increased 2% as compared to the third quarter of 2021, to $124.6 million, and represented 61% of total revenue in the third quarter of 2022. E-commerce revenue growth was primarily driven by revenue generated from our acquisitions of PicMonkey and Pond5. Revenue from our Enterprise sales channel increased 9% as compared to the third quarter of 2021, to $79.5 million, and represented 39% of third quarter revenue in 2022.  Enterprise revenue growth was driven by our multi-asset product offerings and continued momentum in Shutterstock Studios and Shutterstock Editorial. Enterprise revenue growth also benefited from our acquisitions of Pond5 and Splash News.

On a constant currency basis, revenue increased 10% in the third quarter of 2022 as compared to the third quarter of 2021. On a constant currency basis, E-commerce and Enterprise revenues increased by 6% and 15%, respectively, in the third quarter of 2022, as compared to 2021. Over 30% of the Company's revenues are denominated in foreign currencies, many of which have depreciated to historically low values in comparison to the U.S. Dollar.

Net income and net income per diluted share

Net income of $23.0 million increased $7.0 million as compared to $16.0 million for the third quarter in 2021. Net income per diluted share was $0.64, as compared to $0.43 for the same period in 2021. This increase was due primarily to revenue growth in the third quarter of 2022 as compared to 2021, partially offset by higher operating expenses. The increase in operating expenses was driven by costs associated with the PicMonkey, Pond5 and Splash News acquired businesses.

Adjusted net income per diluted share was $1.00 as compared to $0.70 for the third quarter of 2021, an increase of $0.30 per diluted share.

Adjusted EBITDA

Adjusted EBITDA of $56.0 million for the third quarter of 2022 increased by $11.6 million, or 26%, as compared to the third quarter of 2021, due primarily to increased revenue, partially offset by higher operating expenses. The adjusted EBITDA margin increased to 27.5% from 22.8% in the third quarter of 2021.

THIRDQUARTER LIQUIDITY

Our cash and cash equivalents decreased by $7.8 million to $76.2 million at September 30, 2022, as compared with $84.0 million as of June 30, 2022. This decrease was driven by $24.9 million used in financing activities and $17.6 million used in investing activities, partially offset by $37.7 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 payments pertaining to operating expenses. Cash used in investing activities primarily consists of $16.3 million related to capital expenditures and content acquisition. Cash used in financing activities primarily consists of $16.6 million paid for the repurchase of common stock under our share repurchase program and $8.6 million related to the payment of the quarterly cash dividend.

Free cash flow was $21.4 million for the third quarter of 2022, a decrease of $22.9 million from the third quarter of 2021. This change was primarily driven by lower cash flows from operating activities impacted by working capital and timing of cash expenditures. 

QUARTERLY CASH DIVIDEND

During the three months ended September 30, 2022, the Company declared and paid cash dividends of $0.24 per common share, or $8.6 million.

On October 17, 2022, the Board of Directors declared a dividend of $0.24 per share of outstanding common stock, payable on December 15, 2022 to stockholders of record at the close of business on December 1, 2022.

KEY OPERATING METRICS

2022 GUIDANCE

We are revising our full year revenue target to $815 million based on weak demand in Europe and foreign currency pressures, and assuming no improvement in underlying demand through the rest of the year.  Our profitability remains strong, and we expect 2022 Adjusted EBITDA to come in towards the high end of our previously provided guidance. 

2022 full-year guidance, including the revised revenue guidance, is as follows:

• Revenue of $815 million, representing annual growth of 5% and 9% on a constant currency basis.
• Adjusted EBITDA of between $214 million to $217 million.
• Adjusted net income per diluted share of between $3.75 to $3.80.

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, 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, the amortization of acquisition-related intangible assets 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 third quarter and full year financial results during a teleconference today, October 25, 2022, at 8:30 AM ET. 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://register.vevent.com/register/BI3f1637ebd8804c66a8f44d166b421e0c) 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 October 25, 2022 at approximately 10:30 AM Eastern Time.

ABOUT SHUTTERSTOCK

Shutterstock, Inc. (NYSE: SSTK), is the leading global creative platform for transformative brands and media companies. Directly and through its group subsidiaries, Shutterstock's comprehensive collection includes high-quality licensed photographs, vectors, illustrations, 3D models, videos and music. Working with its growing community of over 2 million contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 424 million images and more than 27 million video clips available.

Headquartered in New York City, Shutterstock has offices around the world and customers in more than 150 countries. The Company also owns Splash News, the world's leading entertainment news agency for newsrooms and media companies worldwide; Pond5, the world's largest video marketplace, TurboSquid, the world's largest 3D content marketplace; PicMonkey, a leading online graphic design and image editing platform; Offset, a high-end image collection; Shutterstock Studios, an end-to-end custom creative shop; PremiumBeat, a curated royalty-free music library; Shutterstock Editorial, a premier source of editorial images and videos for the world's media; Amper Music, an AI-driven music platform; and Bigstock, a value-oriented stock media offering.

For more information, please visit www.shutterstock.com and follow Shutterstock on Twitter and on Facebook.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, future dividends, our ability to consummate acquisitions and integrate the businesses we have acquired or may acquire into our existing operations, new or planned features, products or services, management strategies, our competitive position and the COVID-19 pandemic. 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 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, 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.

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SOURCE Shutterstock, Inc.