Prepress

Shutterfly Announces First Quarter 2011 Financial Results

Thursday 28. April 2011 - Net revenues increase 25% year-over-year to $57.2 million

Personalized Products & Services net revenues increase 34% year-over-year
Transacting customers accelerate to 25% year-over-year growth
Shutterfly, Inc. (NASDAQ:SFLY), a leading Internet-based social expression and personal publishing service, today announced financial results for the three months ended March 31, 2011.
“We began 2011 with a quarter of solid execution led by growth in our Photo Books and Cards and Stationery categories. Capitalizing on our strong product line-up, deep customer insights and our loyal and active customer base, we increased net revenues 25% year-over-year,” said President and Chief Executive Officer Jeffrey Housenbold. “We are also very excited to welcome the entire Tiny Prints team and look forward to building the world’s most comprehensive selection of online cards and stationery products and advancing our brands as the leaders in this market.”
First Quarter 2011 Financial Highlights
Net revenues increased 25% year-over-year to $57.2 million.
Net revenues from Personalized Products & Services totaled $40.8 million, a 34% year-over-year increase.
Net revenues from Prints totaled $14.1 million, a 3% year-over-year increase.
Commercial Print net revenues totaled $2.3 million.
Existing customers generated 72% of total net revenues.
Gross profit margin was 48.4% of net revenues, compared to 50.6% in Q1 2010.
GAAP net loss was ($7.8) million, compared to ($4.7) million in Q1 2010.
GAAP net loss per diluted share was ($0.27), compared to ($0.18) in Q1 2010.
Adjusted EBITDA was ($1.9) million, compared to $3.4 million in Q1 2010.
At March 31, 2011, cash and cash equivalents totaled $216.3 million.
First Quarter 2011 Operating Metrics
Transacting customers totaled 1.3 million, a 25% year-over-year increase.
Orders totaled 2.1 million, a 23% year-over-year increase.
Average order value was $26.64, a 1% year-over-year increase.
Recent Operating Highlights
Optimized cards category page by leveraging our enhanced holiday collection and improving the merchandising and overall customer experience.
Introduced key contacts module on share sites allowing users to track contact information of coaches, teachers etc.
Launched Facebook share where customers can post Shutterfly product images and details on their Facebook news feeds and allows users to “shop socially” to endorse and spread the word about our products.
Migrated PhotoWorks customers onto Shutterfly as American Greetings shifted strategy away from personalized photo products and selected Shutterfly as the exclusive destination for its customers.
Business Outlook
Second Quarter 2011:
Net revenues to range from $68 million to $72 million.
GAAP gross profit margin to range from 46% to 48% of net revenues.
Non-GAAP gross profit margin to range from 48.5% to 50.5% of net revenues.
GAAP operating loss to range from ($25) million to ($27) million.
Non-GAAP operating loss to range from ($12) million to ($14) million.
GAAP effective tax rate to range from 45% to 55%.
GAAP net loss per diluted share to range from ($0.35) to ($0.46).
Weighted average shares of approximately 32.0 million.
Adjusted EBITDA loss to range from ($5) million to ($7) million.
Full Year 2011:
Net revenues to range from $468 million to $478 million.
GAAP gross profit margin to range from 54.5% to 56.5% of net revenues.
Non-GAAP gross profit margin to range from 56% to 58% of net revenues.
GAAP operating income to range from $23 million to $31 million.
Non-GAAP operating income to range from $69.5 million to $77.5 million.
GAAP effective tax rate to range from 40% to 50%.
GAAP net income per diluted share to range from $0.39 to $0.44.
Weighted average diluted shares of 35.1 million.
Adjusted EBITDA to range from 18.5% to 19.5% of net revenues.
Capital expenditures to range from 6.5% to 7.5% of net revenues.
Notes to the First Quarter 2011 Financial Results and Business Outlook
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 (“PPS”) net revenues primarily include Photo Books, Stationery and folded Greeting Cards, Calendars and Photo-based Merchandise. PPS also includes net revenues from advertising and sponsorship programs and referral fees. The Company’s referral fee program was discontinued effective March 31, 2010, and no referral fee revenues have been recorded subsequent to that date.
Print net revenues consist of photo prints in Wallet, 2×3, 4×6, 5×7, 8×10, Photo Cards and large format sizes.
Commercial Print net revenues are excluded from net revenues from PPS and Prints.
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 guidance and all previous guidance should no longer be relied upon.