Shutterfly Reports Big Revenue Jump, Boosted by Acquisition
REDWOOD CITY, CA—July 27, 2011—Shutterfly Inc., a leading Internet-based social expression and personal publishing service, announced financial results for the three months ended June 30, 2011.
“Bolstered by contributions from our Tiny Prints acquisition, cards and stationery and photo books once again fueled our strong second-quarter performance, reinforcing what we believe is a winning combination of our two companies,” said President and CEO Jeffrey Housenbold. “Our multi-brand strategy combined with our loyal and growing customer base is strengthening our leading position in the online personal expression and photo publishing market.”
Second Quarter 2011 Financial Highlights
- Net revenues increased 62 percent year-over-year to $75.8 million.
- Personalized Products & Services (PP&S) net revenues increased 85 percent year-over-year to $58.5 million.
- Net revenues from Prints increased 1 percent year-over-year to $14.5 million.
- Commercial Print net revenues totaled $2.8 million.
- Gross profit margin was 47.4 percent of net revenues, compared to 50.5 percent in Q2 2010.
- GAAP net loss was ($3.6) million, compared to ($5.9) million in Q2 2010.
- Adjusted EBITDA was ($0.3) million, compared to $1.2 million in Q2 2010.
- At June 30, 2011, cash and cash equivalents totaled $75.9 million.
Second Quarter 2011 Operating Metrics
- Existing customers generated 72 percent of consumer net revenues.
- Transacting customers totaled 1.4 million, a 26 percent year-over-year increase.
- Orders totaled 2.2 million, a 24 percent year-over-year increase.
- Average order value was $26.10, a 2 percent year-over-year increase.
Tiny Prints (Pro Forma for the full quarter ended June 30, 2011)
- Existing customers generated 36 percent of Tiny Prints net revenues.
- Transacting customers totaled 224 thousand, a 67 percent year-over-year increase.
- Orders totaled 362 thousand, a 124 percent year-over-year increase.
- Average order value was $56.43; $112.13 excluding 1:1 greeting cards, a 12 percent year-over-year increase.
Recent Operating Highlights
- Tiny Prints acquisition already proving successful, evidenced by its 44 percent year-over-year pro forma second quarter revenue growth, expanding customer base and improvements in key metrics.
- Made significant progress on Tiny Prints integration, completing the 2011 manufacturing transition plan, migrating Finance and HR systems and coordinating key marketing and merchandising strategies.
- Introduced the “All New Custom Path” photo book creation experience, which gives consumers full creative control to tell their story with more designs and the ability to access photos from multiple sources.
- New and improved Share Site welcome page and site creation path, with an “Events and Celebrations” category, sample sites, larger previews and easier site selection and development.
- Updates to the cards and stationery shopping experience with icon-based navigation, Quick View launching point and infinite scrolling features to facilitate ease of browsing.
Third Quarter 2011
- Net revenues to range from $73 million to $75 million.
- GAAP gross profit margin to range from 45 percent to 46 percent of net revenues.
- Non-GAAP gross profit margin to range from 47.5 percent to 48.5 percent of net revenues.
- GAAP operating loss to range from ($25) million to ($28) million.
- Non-GAAP operating loss to range from ($11) million to ($14) million.
- GAAP effective tax rate to range from 45 percent to 55 percent.
- Adjusted EBITDA loss to range from ($6) million to ($7) million.
Full Year 2011
- Net revenues to range from $475 million to $485 million.
- GAAP gross profit margin to range from 54.5 percent to 55.5 percent of net revenues.
- Non-GAAP gross profit margin to range from 56.2 percent to 57.2 percent of net revenues.
- GAAP operating income to range from $18 million to $25 million.
- Non-GAAP operating income to range from $67.5 million to $74.5 million.
- GAAP effective tax rate to range from 25 percent to 35 percent.
- Adjusted EBITDA to range from 18.7 percent to 19.7 percent of net revenues.
- Capital expenditures to range from 7.0 percent to 7.5 percent of net revenues.
Notes to Second Quarter 2011 Financial Results and Business Outlook
Unless otherwise stated, all financial measures include the effects of the Tiny Prints acquisition effective April 25, 2011.
Adjusted EBITDA is a non-GAAP financial measure that the Company defines as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
Free cash flow is a non-GAAP financial measure that the Company defines as Adjusted EBITDA less purchases of property, plant, and equipment and capitalization of software development costs.
Personalized Products and Services (“PP&S”) net revenues primarily include Photo Books, Stationery and folded Greeting Cards, Calendars and Photo-based Merchandise. PP&S also includes net revenues from advertising and sponsorship programs.
Print net revenues consist of photo prints in Wallet, 2x6, 4x6, 5x7, 8x10 and various large format sizes; as well as personalized Photo Cards manufactured using a silver halide process.
Commercial Print net revenues are excluded from PP&S and Print revenues, and primarily include variable, four-color direct marketing collateral manufactured and fulfilled for business customers.
Average Order Value (AOV) is defined as total net revenues (excluding Commercial Print) divided by total orders.
The foregoing financial guidance replaces any of the Company’s previously issued financial guidance which should no longer be relied upon.
Founded in 1999, Shutterfly, Inc. is an Internet-based social expression and personal publishing company and operates Shutterfly.com, Tiny Prints.com and Weddingpaperdivas.com. Shutterfly provides high quality products and world class services that make it easy, convenient and fun for consumers to preserve their digital photos in a creative and thoughtful manner. Shutterfly's flagship product is its award-winning photo book line, which helps consumers celebrate memories and tell their stories in professionally bound coffee table books. Shutterfly was recently named one of the top 25 Best Midsized Companies to Work For by the Great Place to Work Institute. More information about Shutterfly is available at www.shutterfly.com.