Shutterstock Reports Second Quarter 2024 Financial Results

NEW YORK, Aug. 6, 2024 /PRNewswire/ -- Shutterstock, Inc. (NYSE: SSTK) (the "Company"), a leading global creative platform offering high-quality creative content for transformative brands, digital media and marketing companies, today announced financial results for the second quarter ended June 30, 2024.

Commenting on the Company's performance, Paul Hennessy, the Company's Chief Executive Officer, said, "Shutterstock's second quarter results exceeded our expectations for revenue and adjusted EBITDA driven by exceptional growth in Data, Distribution and Services. We are thrilled to have closed the Envato acquisition and added a value-packed unlimited subscription to enhance our Content business. And our innovation around GenAI continues with our launches of Gen3D and ImageAI models trained exclusively on Shutterstock data."

Second Quarter 2024 measures as compared to Second Quarter 2023:

Financial Measures

    --  Revenues were $220.1 million compared to $208.8 million.
    --  Net income was $3.6 million compared to $50.0 million.
    --  Net income per diluted common share was $0.10 compared to $1.37.
    --  Adjusted net income was $35.9 million compared to $39.1 million.
    --  Adjusted net income per diluted common share was $1.00 compared to
        $1.07.
    --  Adjusted EBITDA was $62.1 million compared to $60.1 million.

Acquisition of Envato Pty Ltd.

On July 22, 2024, the Company completed its previously announced acquisition of Envato Pty Ltd. ("Envato") pursuant to a Share Purchase Agreement entered into May 1, 2024, and the Company purchased all of the issued and outstanding capital stock of Envato. The aggregate consideration paid by the Company, after customary working capital and other adjustments, was $250 million.

SECOND QUARTER RESULTS

Revenue

Second quarter revenue of $220.1 million increased $11.2 million or 5% as compared to the second quarter of 2023.

Revenue from our Content product offering decreased $17.0 million, or 9%, as compared to the second quarter of 2023, to $170.0 million. The decline in our Content revenues was driven by weakness in new customer acquisition. Content revenue represented 77% of our total revenue in the second quarter of 2024. Revenue generated from our Data, Distribution, and Services product offering increased $28.2 million, or 129%, as compared to the second quarter of 2023, to $50.1 million, and represented 23% of second quarter revenue in 2024.

On a constant currency basis, revenue increased approximately 6% in the second quarter of 2024 as compared to the second quarter of 2023.

Net income and net income per diluted common share

Net income in the second quarter of 2024 of $3.6 million decreased $46.4 million as compared to net income of $50.0 million for the second quarter in 2023. Net income per diluted common share was $0.10, as compared to $1.37 for the same period in 2023. The decline in net income was driven by a bargain purchase gain of $41.9 million related to the acquisition of Giphy recognized in the second quarter of 2023 and expenses associated with reimbursable costs paid to the Giphy workforce.

Adjusted net income and adjusted net income per diluted common share

Adjusted net income in the second quarter of 2024 of $35.9 million decreased $3.2 million as compared to adjusted net income of $39.1 million for the second quarter in 2023. Second quarter 2024 adjusted net income was unfavorably impacted by expenses associated with reimbursable costs paid to the Giphy workforce.

Adjusted net income per diluted common share was $1.00 as compared to $1.07 for the second quarter of 2023, a decrease of $0.07 per diluted share.

Adjusted EBITDA

Adjusted EBITDA of $62.1 million for the second quarter of 2024 increased by $2.0 million, or 3%, as compared to the second quarter of 2023, primarily due to higher revenue partially offset by the increase in expenses associated with reimbursable costs paid to the Giphy workforce.

Net income margin of 1.6% for the second quarter of 2024 decreased by 22.3%, as compared to 23.9% in the second quarter of 2023. The adjusted EBITDA margin of 28.2% for the second quarter of 2024 decreased by 0.6%, as compared to 28.8% in the second quarter of 2023.

SECOND QUARTER LIQUIDITY

Our cash and cash equivalents increased by $3.1 million to $74.9 million at June 30, 2024, as compared with $71.8 million as of March 31, 2024. This increase was driven by $28.0 million of net cash provided by our operating activities and $8.3 million of net cash provided by investing activities, partially offset by $32.1 million of net cash used in financing 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. Operating cash flows were unfavorably impacted by payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities.

Cash provided by investing activities for the three months ended June 30, 2024 consisted of $18.1 million related to the receipt of the Giphy Retention Compensation, as reimbursed by the Giphy seller, partially offset by $9.9 million related to capital expenditures and content acquisition.

Cash used in financing activities for the three months ended June 30, 2024 consisted of $20.6 million paid for the repurchase of common stock under our share repurchase program, $10.7 million related to the payment of the quarterly cash dividend and $0.9 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards.

Adjusted free cash flow was $36.2 million for the second quarter of 2024, an increase of $2.8 million from the second quarter of 2023.

QUARTERLY CASH DIVIDEND

During the three months ended June 30, 2024, the Company declared and paid a cash dividend of $0.30 per common share or $10.7 million.

On July 22, 2024, the Board of Directors declared a dividend of $0.30 per share of outstanding common stock, payable on September 12, 2024 to stockholders of record at the close of business on August 29, 2024.

KEY OPERATING METRICS


                                                                         Three Months Ended June 30,         Six Months Ended June 30,


                                                                    2024               2023             2024        2023





     Subscribers (end of period)(1)                             490,000            556,000          490,000     556,000



     Subscriber revenue (in millions)(2)                          $80.3              $87.4           $164.2      $178.0





     Average revenue per customer (last twelve months)(3)          $434               $374             $434        $374



     Paid downloads (in millions)(4)                               33.4               38.5             68.4        81.2



     Revenue per download(5)                                      $5.09              $4.71            $5.03       $4.56



     Content in our collection (end of period, in millions)(6):



     Images                                                         837                734              837         734



     Footage clips                                                   58                 50               58          50




     Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023. These metrics exclude the respective counts and revenues from Giphy and Backgrid.





     (1) Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period.





     (2) Subscriber revenue is defined as the revenue generated from subscribers during the period.





     (3) Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period.





     (4) Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to our Studios business, downloads of content that are offered to customers for no charge, including our free trials and metadata delivered through our data deal offering.





     (5) Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from our Studios business, revenue that is not derived from or associated with content licenses and revenue associated with our data deal offering.





     (6) Content in our collection represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library at the end of the period. This metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, content from our Studios business and AI generated content.

SHUTTERSTOCK DATA BUSINESS UPDATE

Details of our Data Business Update as of June 30, 2024 may be found in our investor presentation titled "Shutterstock Data Business Update," available at https://investor.shutterstock.com/.

2024 GUIDANCE

The Company is updating its guidance as follows:

    --  Revenue guidance of $927 million to $936 million, representing growth of
        6% to 7% year-over-year.
    --  Adjusted net income per diluted share of between $4.18 to $4.32.
    --  Adjusted EBITDA of $245 million to $248 million.

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 adjusted free cash flow.

Shutterstock defines adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, bargain purchase gain related to the acquisition of Giphy, Giphy Retention Compensation Expense - non-recurring, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, unrealized losses / gains on investments, 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, bargain purchase gain related to the acquisition of Giphy, Giphy Retention Compensation Expense - non-recurring, severance costs associated with strategic workforce optimizations, unrealized losses / gains on investments and the estimated tax impact of such adjustments; adjusted net income per diluted common share as adjusted net income divided by weighted average diluted shares; revenue growth (including by product offering) 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 adjusted free cash flow as net cash provided by operating activities, adjusted for capital expenditures, content acquisition and cash received related to Giphy Retention Compensation in connection with the acquisition of Giphy.

The expense associated with the Giphy Retention Compensation related to (i) the one-time employment inducement bonuses and (ii) the vesting of the cash value of unvested Meta equity awards held by the employees prior to closing, which are reflected in operating expenses (together, the "Giphy Retention Compensation Expense - non-recurring"), are required payments in accordance with the terms of the acquisition. Meta's sale of Giphy was directed by the United Kingdom Competition and Markets Authority (the "CMA") and accordingly, the terms of the acquisition were subject to CMA preapproval. Management considers the operating expense associated with these required payments to be unusual and non-recurring in nature. The Giphy Retention Compensation Expense - non-recurring is not considered an ongoing expense necessary to operate the Company's business. Therefore, such expenses have been included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share. For the three months ended June 30, 2024, the Company also incurred $5.1 million of Giphy Retention Compensation expense related to recurring employee costs, which is included in operating expenses, and are not included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share.

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 common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage), billings and adjusted 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 common 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 product offering) 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 adjusted 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 common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage), billings and adjusted 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; (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 each of our non-GAAP financial measures (adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage), billings, adjusted free cash flow), and each measure's most directly comparable financial measure 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 this cannot be done without unreasonable effort due to the impact of potential future transactions, including, but not limited to, capital structure transactions, restructuring, acquisitions, divestitures or other events and asset impairments. These amounts which lack predictability 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. 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 second quarter and financial results during a teleconference today, August 6, 2024, at 8:30 AM Eastern Time. The conference call is being webcast live and can be accessed by either visiting the Company's website at http://investor.shutterstock.com/ or clicking here (https://edge.media-server.com/mmc/p/fffgc3rf/) for direct access. The webcast is listen-only.

A webcast replay of the call will be available on the Company's website beginning on August 6, 2024 at approximately 10:30 AM Eastern Time.

ABOUT SHUTTERSTOCK

Shutterstock, Inc. (NYSE: SSTK) is a leading global creative platform offering high-quality creative content for transformative brands, digital media and marketing companies. Fueled by millions of creators around the world, a growing data engine and a dedication 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 services--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, X, 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 "2024 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," "targets," "guidance" 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 risks 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.


                                                  
         
                Shutterstock, Inc.


                                            
           
           Consolidated Statements of Operations


                                          
           
           (In thousands, except for per share data)


                                                      
         
                (unaudited)




                                                                                                         Three Months Ended June 30,                 Six Months Ended June 30,


                                                                                                    2024         2023                  2024     2023





     Revenue                                                                                   $220,053     $208,840              $434,368 $424,120





     Operating expenses:



     Cost of revenue                                                                             91,254       84,416               179,458  162,579



     Sales and marketing                                                                         51,881       48,392               108,117   95,919



     Product development                                                                         19,859       29,218                40,910   44,624



     General and administrative                                                                  36,393       38,099                68,471   71,914



     Total operating expenses                                                                   199,387      200,125               396,956  375,036



     Income from operations                                                                      20,666        8,715                37,412   49,084



     Bargain purchase gain                                                                                   41,940                        41,940



     Other (expense) /  income, net                                                             (4,106)         726                 (462)   1,771



     Income before income taxes                                                                  16,560       51,381                36,950   92,795



      Provision for income taxes                                                                 12,935        1,368                17,204    9,939



     Net income                                                                                  $3,625      $50,013               $19,746  $82,856





     Earnings per share:



     Basic                                                                                        $0.10        $1.39                 $0.55    $2.31



     Diluted                                                                                      $0.10        $1.37                 $0.55    $2.27





     Weighted average common shares outstanding:



     Basic                                                                                       35,697       36,047                35,644   35,952



     Diluted                                                                                     35,982       36,406                36,023   36,490


                                                                                                      
          
                Shutterstock, Inc.


                                                                                                 
             
             Consolidated Balance Sheets


                                                                                           
              
            (In thousands, except par value amount)


                                                                                                         
          
                (unaudited)




                                                                                                                                                       June 30, 2024 December 31, 2023





              
                ASSETS



              Current assets:



              Cash and cash equivalents                                                                                                                     $74,871           $100,490



              Accounts receivable, net of allowance of $4,616 and $6,335                                                                                     97,442             91,139



              Prepaid expenses and other current assets                                                                                                      68,534            100,944



              Total current assets                                                                                                                          240,847            292,573



              Property and equipment, net                                                                                                                    63,069             64,300



              Right-of-use assets                                                                                                                            15,392             15,395



              Intangible assets, net                                                                                                                        164,508            184,396



              Goodwill                                                                                                                                      402,774            383,325



              Deferred tax assets, net                                                                                                                       23,779             24,874



              Other assets                                                                                                                                   93,497             71,152



              Total assets                                                                                                                               $1,003,866         $1,036,015





              
                LIABILITIES AND STOCKHOLDERS' EQUITY



              Current liabilities:



              Accounts payable                                                                                                                              $10,545             $9,108



              Accrued expenses                                                                                                                               96,910            131,443



              Contributor royalties payable                                                                                                                  65,705             54,859



              Deferred revenue                                                                                                                              186,522            203,463



              Debt                                                                                                                                           30,000             30,000



              Other current liabilities                                                                                                                      42,649             23,513



              Total current liabilities                                                                                                                     432,331            452,386



              Deferred tax liability, net                                                                                                                     3,744              4,182



              Lease liabilities                                                                                                                              26,433             29,404



              Other non-current liabilities                                                                                                                  20,946             22,949



              Total liabilities                                                                                                                             483,454            508,921



              Commitments and contingencies



              Stockholders' equity:



              Common stock, $0.01 par value; 200,000 shares authorized; 40,286 and 39,982 shares                                                                402                399
    issued and 35,359 and 35,572 shares outstanding as of June 30, 2024 and December 31,
    2023, respectively



              Treasury stock, at cost; 4,927  and 4,410 shares as of June 30, 2024 and December 31, 2023                                                  (248,805)         (228,213)



              Additional paid-in capital                                                                                                                    441,497            424,229



              Accumulated other comprehensive loss                                                                                                         (13,754)          (11,974)



              Retained earnings                                                                                                                             341,072            342,653



              Total stockholders' equity                                                                                                                    520,412            527,094



              Total liabilities and stockholders' equity                                                                                                 $1,003,866         $1,036,015


                                                                               
              
                Shutterstock, Inc.


                                                                     
              
                Consolidated Statements of Cash Flows


                                                              
              
                (In thousands, except par value amount) (unaudited)




                                                                                                                                                         Three Months Ended                        Six Months Ended

                                                                                                                                                         June 30,                         June 30,


                                                                                                                                               2024      2023              2024        2023





     
                CASH FLOWS FROM OPERATING ACTIVITIES



     Net income                                                                                                                             $3,625   $50,013           $19,746     $82,856



     Adjustments to reconcile net income to net cash provided by operating activities:



     Depreciation and amortization                                                                                                          21,433    19,206            42,696      38,102



     Deferred taxes                                                                                                                          4,357       831               503       (146)



     Non-cash equity-based compensation                                                                                                     14,976    14,943            26,126      23,586



     Bad debt expense                                                                                                                        (262)      235           (1,772)      1,025



     Bargain purchase gain                                                                                                                         (41,940)                    (41,940)



     Unrealized gain on investments                                                                                                          3,624                      (131)



     Changes in operating assets and liabilities:



     Accounts receivable                                                                                                                   (3,143) (13,459)          (3,879)      5,709



     Prepaid expenses and other current and non-current assets                                                                            (13,300) (35,023)         (25,299)   (29,834)



     Accounts payable and other current and non-current liabilities                                                                          3,283     8,572          (16,899)    (4,144)



     Contributor royalties payable                                                                                                           4,561     (424)           10,688       1,822



     Deferred revenue                                                                                                                     (11,189)   26,860          (15,514)     19,553



     Net cash provided by operating activities                                                                                             $27,965   $29,814           $36,265     $96,589





     
                CASH FLOWS FROM INVESTING ACTIVITIES



     Capital expenditures                                                                                                                  (9,075) (10,490)         (23,536)   (22,870)



     Business combination, net of cash acquired                                                                                                    (53,721)         (19,474)   (53,721)



     Cash received related to Giphy Retention Compensation                                                                                  18,121    15,752            36,522      15,752



     Acquisition of content                                                                                                                  (827)  (1,725)          (1,821)    (5,252)



     Security deposit payment                                                                                                                   82       (7)               82        (37)



     Net cash provided by / (used) in investing activities                                                                                  $8,301 $(50,191)         $(8,227)  $(66,128)





     
                CASH FLOWS FROM FINANCING ACTIVITIES



     Repurchase of treasury shares                                                                                                        (20,592)  (4,000)         (20,592)    (4,000)



     Proceeds from exercise of stock options                                                                                                                                          3



     Cash paid related to settlement of employee taxes related to RSU vesting                                                                (893)  (3,537)          (8,859)   (14,545)



     Payment of cash dividends                                                                                                            (10,664)  (9,725)         (21,327)   (19,387)



     Proceeds from credit facility                                                                                                                   30,000                       30,000



     Repayment of credit facility                                                                                                                                              (50,000)



     Net cash (used in) / provided by financing activities                                                                               $(32,149)  $12,738         $(50,778)  $(57,929)





     Effect of foreign exchange rate changes on cash                                                                                       (1,057)  (1,047)          (2,879)      (540)



     Net increase / (decrease) in cash and cash equivalents                                                                                  3,060   (8,686)         (25,619)   (28,008)





     Cash and cash equivalents, beginning of period                                                                                         71,811    95,832           100,490     115,154



     Cash and cash equivalents, end of period                                                                                              $74,871   $87,146           $74,871     $87,146





     
                Supplemental Disclosure of Cash Information:



     Cash paid for income taxes                                                                                                             $9,659   $11,945           $12,560      $6,795



     Cash paid for interest                                                                                                                    496         1             1,005         429

Shutterstock, Inc.
Reconciliation of Non-GAAP Financial Information to GAAP
(In thousands, except per share information)
(unaudited)

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 adjusted free cash flow are not financial measures prepared in accordance with United States generally accepted accounting principles (GAAP). Such non-GAAP financial measures should not be construed as alternatives to any other measures of performance determined in accordance with GAAP. Investors are cautioned 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.


                                                                                  Three Months Ended June 30,                    Six Months Ended June 30,


                                                                             2024           2023                   2024        2023



              Net income                                                  $3,625        $50,013                $19,746     $82,856



              Add / (less) Non-GAAP adjustments:



              Non-cash equity-based compensation                          14,976         14,943                 26,126      23,586



              Tax effect of non-cash equity-based compensation (1)(2)      2,835        (3,512)                   215     (5,543)



              Acquisition-related amortization expense (3)                 9,163          8,370                 18,326      16,528



              Tax effect of acquisition-related amortization expense (1) (2,153)       (1,967)               (4,306)    (3,884)



              Bargain purchase gain                                                   (41,940)                         (41,940)



              Giphy Retention Compensation Expense - non-recurring         4,715         17,191                 11,544      17,191



              Tax effect of Giphy Retention Compensation Expense - non-  (1,108)       (4,040)               (2,713)    (4,040)
    recurring(1)



              Other(4)                                                     3,907                                  141       1,856



              Tax effect of other(1)                                        (63)                                (61)      (418)



              Adjusted net income(4)                                     $35,897        $39,058                $69,018     $86,192





              Net income per diluted common share                          $0.10          $1.37                  $0.55       $2.27



              Adjusted net income per diluted common share                 $1.00          $1.07                  $1.92       $2.36





              Weighted average diluted shares                             35,982         36,406                 36,023      36,490




     (1) 
     Statutory tax rates are used to calculate the tax effect of the adjustments.



     (2)   The tax effect of non-cash equity-based compensation includes a $6.3 million add-back for the reduction of deferred tax assets associated with the expiration of performance-based
              stock options and restricted stock units granted the Company's Founder and Executive Chairman in 2014. The performance-based metrics were not met, the awards were not exercisable,
              and the Company recognized a non-cash tax expense for the change in deferred taxes.



     (3)   Of these amounts, $8.2 million and $7.7 million are included in cost of revenue for the three months ended June 30, 2024 and 2023, respectively, and $16.4 million and $15.3 million are
              included in cost of revenue for the six months ended June 30, 2024 and 2023, respectively. The remainder of acquisition-related amortization expense is included in general and
              administrative expense in the Statement of Operations.



     (4)   The amount for the six months ended June 30, 2024 is updated to correct an error in the calculation of adjusted net income previously presented for the three months ended March 31,
              2024.Other consists of unrealized gains and losses on investments and severance costs associated with strategic workforce optimizations.


                                                                    Three Months Ended June 30,                  Six Months Ended June 30,


                                                               2024            2023                  2024        2023



     Net income                                             $3,625         $50,013               $19,746     $82,856



     Add / (less) Non-GAAP adjustments:



     Interest (income) / expense, net                        (787)          (175)              (1,268)      (109)



     Provision for income taxes                             12,935           1,368                17,204       9,939



     Depreciation and amortization                          21,433          19,206                42,696      38,102



     EBITDA                                                $37,206         $70,412               $78,378    $130,788





     Non-cash equity-based compensation                     14,976          14,943                26,126      23,586



     Bargain purchase gain                                               (41,940)                        (41,940)



     Giphy Retention Compensation Expense - non-recurring    4,715          17,191                11,544      17,191



     Foreign currency loss / (gain)                          1,268           (551)                1,860     (1,662)



     Unrealized loss / (gain) on investment                  3,625                                (130)



     Workforce optimization - severance                        282                                  271       1,856



     Adjusted EBITDA                                       $62,072         $60,055              $118,049    $129,819





     Revenue                                              $220,053        $208,840              $434,368    $424,120



     Net income margin                                       1.6 %         23.9 %                4.5 %     19.5 %



     Adjusted EBITDA margin                                 28.2 %         28.8 %               27.2 %     30.6 %


                                                                                                       Three Months Ended June 30,              Six Months Ended June 30,


                                                                                                  2024            2023                 2024     2023



         Reported Revenue (in thousands)                                                     $220,053        $208,840             $434,368 $424,120





         
                Revenue growth                                                              5 %            1 %                 2 %     4 %



         
                Revenue growth on a constant currency basis                                 6 %            1 %                 3 %     5 %





         Content reported revenue (in thousands)                                             $169,951        $186,963             $343,781 $380,947



         
                Content revenue growth                                                    (9) %          (7) %              (10) %   (4) %



         
                Content revenue growth on a constant currency basis                       (9) %          (7) %               (9) %   (3) %





         Data, Distribution, and Services reported revenue (in thousands)                     $50,102         $21,877              $90,587  $43,173



         
                Data, Distribution, and Services revenue growth                           129 %          228 %               110 %   306 %



         
                Data, Distribution, and Services revenue growth on a constant currency    129 %          228 %               110 %   306 %
    basis


                                                                      Three Months Ended June 30,                    Six Months Ended June 30,


                                                                 2024           2023                   2024        2023



     Cash flow information:



     Net cash provided by operating activities               $27,965        $29,814                $36,265     $96,589



     Net cash provided by / (used in) investing activities    $8,301      $(50,191)              $(8,227)  $(66,128)



     Net cash (used in) / provided by financing activities $(32,149)       $12,738              $(50,778)  $(57,929)





     Adjusted free cash flow:



     Net cash provided by operating activities               $27,965        $29,814                $36,265     $96,589



     Capital expenditures                                    (9,075)      (10,490)              (23,536)   (22,870)



     Content acquisitions                                      (827)       (1,725)               (1,821)    (5,252)



     Cash received related to Giphy Retention Compensation    18,121         15,752                 36,522      15,752



     Adjusted Free Cash Flow                                 $36,184        $33,351                $47,430     $84,219


                                                 Three Months Ended June 30,                  Six Months Ended June 30,


                                            2024           2023                   2024      2023



     Content                           $169,951       $186,963               $343,781  $380,947



     Data, Distribution, and Services   $50,102        $21,877                $90,587   $43,173



     Total revenue                     $220,053       $208,840               $434,368  $424,120





     Change in total deferred revenue $(11,519)       $26,785              $(16,941)  $20,413



     Total billings                    $208,534       $235,625               $417,427  $444,533


                                                                            
         
           Shutterstock, Inc.


                                                                          
         
         Supplemental Financial Data


                                                                              
         
             (unaudited)





     
                Historical Operating Metrics




                                                                                                                             
     
     Three Months Ended


                                                                  6/30/24                3/31/24                  12/31/23       9/30/23            6/30/23     3/31/23      12/31/22       9/30/22





     Subscribers (end of period, in thousands) (1)                   490                     499                        523            551                 556          559            586           607



     Subscriber revenue (in millions) (2)                          $80.3                   $83.9                      $85.2          $88.3               $87.4        $90.6          $88.8         $87.7





     Average revenue per customer (last twelve months) (3)          $434                    $418                       $412           $401                $374         $356           $341          $329



     Paid downloads (in millions) (4)                               33.4                    35.0                       35.4           36.4                38.5         42.7           42.5          42.8



     Revenue per download (5)                                      $5.09                   $4.97                      $5.02          $4.76               $4.71        $4.41          $4.49         $4.43



     Content in our collection (end of period, in millions): (6)



     Images                                                          837                     832                        771            757                 734          731            719           527



     Footage clips                                                    58                      56                         54             52                  50           48             47            28




     Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023. These metrics exclude the respective counts and revenues from Giphy and Backgrid.





     (1) Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period.





     (2) Subscriber revenue is defined as the revenue generated from subscribers during the period.





     (3) Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period.





     (4) Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to our Studios business, downloads of content that are offered to customers for no charge, including our free trials and metadata delivered through our data deal offering.





     (5) Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from our Studios business, revenue that is not derived from or associated with content licenses and revenue associated with our data deal offering.





     (6) Content in our collection represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library at the end of the period. This metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, content from our Studios business and AI generated content.



     
                Equity-Based Compensation by expense category




                                                                                             
     
     Three Months Ended



     
                ($ in thousands)                              6/30/24 3/31/24  12/31/23       9/30/23            6/30/23     3/31/23      12/31/22       9/30/22





     Cost of revenue                                               $300     $224       $145           $180                $306         $184           $160           $173



     Sales and marketing                                          3,167    2,011      2,201          2,067               2,487          604          1,426          1,503



     Product development                                          4,171    2,285      3,022          3,509               4,221        2,448          3,085          2,957



     General and administrative                                   7,338    6,630      6,620          7,247               7,929        5,407          7,111          4,455



     Total non-cash equity-based compensation                   $14,976  $11,150    $11,988        $13,003             $14,943       $8,643        $11,782         $9,088



     
                Depreciation and Amortization by expense category




                                                                                                 
     
     Three Months Ended



     
                ($ in thousands)                                  6/30/24 3/31/24  12/31/23       9/30/23            6/30/23     3/31/23      12/31/22       9/30/22





     Cost of revenue                                                $20,087  $19,874    $18,952        $19,872             $18,134      $17,866        $17,341        $16,856



     General and administrative                                       1,346    1,389      1,404          1,400               1,070        1,031          1,295          1,404



     Total depreciation and amortization                            $21,433  $21,263    $20,356        $21,272             $19,204      $18,897        $18,636        $18,260

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SOURCE Shutterstock, Inc.