Shutterfly Reports Double-Digit Gains in All Services

REDWOOD CITY, CA—Feb. 02, 2011—Shutterfly Inc., a leading Internet-based social expression and personal publishing service, announced financial results for the fourth quarter and full-year ended Dec. 31, 2010.

“Our strategic investments throughout 2010, combined with our focus on strong execution, innovation and improved efficiencies led to record revenues, profits, and free cash flows” said President and CEO Jeffrey Housenbold. “We continue to outpace the industry in terms of innovation, user experience, on-trend designs, quality, and customer service. With the social expression and personal publishing markets still in the early stages, Shutterfly will focus on extending our leadership position in these large markets throughout 2011.”

Fourth Quarter 2010 Financial Highlights

• Net revenues totaled $166.2 million, a 27 percent year-over-year increase; 29 percent increase excluding referral fees.

• Personalized Products & Services net revenues totaled $123.8 million, a 33 percent year-over-year increase; 37 percent increase excluding referral fees.

• Net revenues from Prints totaled $40.1 million, a 10 percent year-over-year increase.

• ommercial Print net revenues totaled $2.3 million.

• Existing customers generated 72 percent of total net revenues.

• Gross profit margin was 62 percent of net revenues, compared to 61 percent in the fourth quarter of 2009.

• GAAP net income was $32.5 million, compared to $24.1 million in the fourth quarter of 2009.

• Adjusted EBITDA was $60.2 million, compared to $47.9 million in the fourth quarter of 2009.

Full Year 2010 Financial Highlights

• Net revenues totaled $307.7 million, a 25 percent year-over-year increase; 27 percent increase excluding referral fees.

• Personalized Products & Services net revenues totaled $218.7 million, a 35 percent year-over-year increase; 39 percent increase excluding referral fees.

• Net revenues from Prints totaled $83.9 million, a 4 percent year-over-year increase.

• Commercial Print net revenues totaled $5.1 million, a 33 percent year-over-year increase.

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