Business News
Shutterfly Announces Third Quarter 2010 Financial Results
Thursday 28. October 2010 - ? Net revenues increase 21% year-over-year to $49.0 million ? 39th consecutive quarter of year-over year net revenue growth ? GAAP net loss of ($0.17) per diluted share ? Adjusted EBITDA of $2.2 million
Shutterfly, Inc. (NASDAQ:SFLY), a leading Internet-based social expression and personal publishing service, today announced financial results for the three months ended September 30, 2010.
“Shutterfly continued the momentum from the first half of the year to drive record third quarter revenues, customers, orders and EBITDA,” said President and Chief Executive Officer Jeffrey Housenbold. “Investments in our product and service offerings, platform infrastructure and people throughout 2010 have positioned us well for the Q4 holiday shopping period. Our commitment to innovation, design forward products and services, customer friendly policies, industry-leading quality and focused financial discipline continue to differentiate Shutterfly from the competition.”
Third Quarter 2010 Financial Highlights
? Net revenues totaled $49.0 million, a 21% year-over-year increase and a 25% increase excluding referral fee revenue.
? Third quarter 2010 represents the 39th consecutive quarter of year-over-year net revenue growth.
? Personalized Products & Services net revenues totaled $32.7 million, a 38% year-over-year increase and a 47% increase excluding referral fee revenue.
? Personalized Products & Services net revenues represented 67% of total net revenues.
? Net revenues from prints totaled $15.7 million and were in line with the third quarter of 2009.
? Commercial print net revenues totaled $0.6 million.
? Existing customers generated 76% of total net revenues.
? Gross profit margin was 49% of net revenues, compared to 47% in the third quarter of 2009.
? Operating expenses, excluding $3.7 million of stock-based compensation, totaled $28.3 million.
? GAAP net loss was ($4.8) million, compared to a net loss of ($6.3) million in the third quarter of 2009.
? GAAP net loss per diluted share was ($0.17), compared to a net loss per diluted share of ($0.25) in the third quarter of 2009.
? Adjusted EBITDA was $2.2 million, compared to $2.0 million in the third quarter of 2009.
? At September 30, 2010, the Company had $160.5 million of cash and cash equivalents.
Third Quarter 2010 Operating Metrics
? Transacting customers totaled 1.2 million, a 27% increase over the third quarter of 2009.
? Orders totaled 2.0 million, a 20% increase over the third quarter of 2009.
? Average order value was $23.75, a 3% increase over the third quarter of 2009.
Recent Operating Highlights
? Continued to improve our photo book creation experience by adding access to Picasa images from the photo book creation path, and by introducing new styles like travel, vacation, and holiday and enhancing layout control options.
? Launched Shutterflys largest holiday collection ever with nearly 1,400 new holiday designs across all form factors – including our new 5×5 flat stationery cards with new innovations like “Story Cards” and “Tarjetas de Navidad.” Expanded our direct mail service to include 5×5 stationery cards in addition to 5×7 stationery cards and folded greeting cards.
? Enhanced features added to Shutterflys Classroom and Youth Sports Share sites to offer parents, teachers and coaches a powerful, easy-to-use solution for sharing information, photos and videos. Partnered with AYSO to make Share sites available to over 50,000 soccer teams across the country.
? Expanded retail presence by providing Shutterfly customers more shopping options with in-store pickup at CVS/pharmacy and Walgreens locations, and by offering Best Buy customers promotional offers for photo books.
? Introduced new calendar designs and form factors and unveiled a new home décor collection in time for the holiday gift giving season.
Business Outlook
The Company’s current financial expectations for the fourth quarter and the full year 2010 are as follows:
Fourth Quarter 2010:
? Net revenues to range from $148.5 million to $153.5 million, a year-over-year increase of 13% to 17%.
? GAAP gross profit margins to range from 60% to 62% of net revenues.
? Non-GAAP gross profit margins to range from 60% to 62% of net revenues.
? GAAP operating income to range from $40 million to $44 million.
? Non-GAAP operating income to range from $44 million to $48 million.
? GAAP effective tax rate to range from 36% to 38%.
? Non-GAAP effective tax rate to range from 36% to 37%.
? GAAP diluted net income per share to range from $0.86 to $0.92.
? Non-GAAP diluted net income per share to range from $0.97 to $1.04.
? Weighted average diluted shares of approximately 29.5 million.
? Adjusted EBITDA to range from $49.5 million to $53.5 million.
Full Year 2010:
? Net revenues to range from $290 million to $295 million, a year-over-year increase of 18% to 20%.
? GAAP gross profit margins to range from 55% to 56% of net revenues.
? Non-GAAP gross profit margins to range from 56% to 57% of net revenues.
? GAAP operating income to range from $14 million to $18 million.
? Non-GAAP operating income to range from $33 million to $37 million.
? GAAP effective tax rate to range from 32% to 37%.
? Non-GAAP effective tax rate to range from 36% to 37%.
? GAAP diluted net income per share to range from $0.34 to $0.40.
? Non-GAAP diluted net income per share to range from $0.74 to $0.81.
? Weighted average diluted shares of 29.0 million.
? Adjusted EBITDA to range from 19.5% to 20.5% of net revenues.
? Capital expenditures to range from $22 million to $24 million.
Notes to the Third Quarter 2010 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 minus purchases of property, plant, and equipment, and capitalization of software and website development costs.
Print revenues consist of photo prints in wallet, 2×6, 4×6, 5×7, 8×10, photocards, and large format sizes.
Personalized Products and Services (“PPS”) revenues primarily include photo books, stationery and folded greeting cards, calendars, and photo-based merchandise. PPS also includes revenue from advertising and sponsorship programs and referral fees. The Companys referral fee program was discontinued effective March 31, 2010, and no referral fee revenue has been recorded subsequent to that date.
Commercial printing revenues are a separate component of net revenues and are excluded from prints and PPS revenues.
Average order value is defined as total net revenues, excluding commercial printing revenues, divided by total orders.
The foregoing financial guidance replaces any of the Companys previously issued guidance and all such previous guidance should no longer be relied upon.