Business News

Shutterfly Announces Fourth Quarter and Full Year 2010 Financial Results

Thursday 03. February 2011 - Fourth Quarter 2010 net revenues increase 27% year-over-year to $166.2 million

Full Year 2010 net revenues increase 25% year-over-year to $307.7 million
Fourth Quarter GAAP net income of $1.09 per diluted share
Record Full Year Adjusted EBITDA of $67.1 million, representing 21.8% of net revenues
Record Full Year Free Cash Flows of $44.7 million
Shutterfly, Inc. (NASDAQ:SFLY), a leading Internet-based social expression and personal publishing service, today announced financial results for the fourth quarter and full-year ended December 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 Chief Executive Officer 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% year-over-year increase; 29% increase excluding referral fees.
? Fourth quarter 2010 represents the 40th consecutive quarter of year-over-year net revenue growth.
? Personalized Products & Services net revenues totaled $123.8 million, a 33% year-over-year increase; 37% increase excluding referral fees.
? Personalized Products & Services net revenues represented 75% of total net revenues.
? Net revenues from Prints totaled $40.1 million, a 10% year-over-year increase.
? Commercial Print net revenues totaled $2.3 million.
? Existing customers generated 72% of total net revenues.
? Gross profit margin was 62% of net revenues, compared to 61% in the fourth quarter of 2009.
? Operating expenses, excluding $3.9 million of stock-based compensation, totaled $47.9 million.
? GAAP net income was $32.5 million, compared to $24.1 million in the fourth quarter of 2009.
? GAAP net income per diluted share was $1.09, compared to $0.88 in the fourth quarter of 2009.
? Adjusted EBITDA was $60.2 million, compared to $47.9 million in the fourth quarter of 2009.
? At December 31, 2010, cash and cash equivalents totaled $252.2 million.
Full Year 2010 Financial Highlights
? Net revenues totaled $307.7 million, a 25% year-over-year increase; 27% increase excluding referral fees.
? Personalized Products & Services net revenues totaled $218.7 million, a 35% year-over-year increase; 39% increase excluding referral fees.
? Personalized Products & Services net revenues represented 71% of total net revenues.
? Net revenues from Prints totaled $83.9 million, a 4% year-over-year increase.
? Commercial Print net revenues totaled $5.1 million, a 33% year-over-year increase.
? Existing customers generated 73% of total net revenues.
? Gross profit margin was 56% of net revenues, compared to 55% in 2009.
? Operating expenses, excluding $15.9 million of stock-based compensation, totaled $132.6 million.
? GAAP net income was $17.1 million, compared to $5.9 million in 2009.
? GAAP net income per diluted share was $0.59, compared to $0.22 in 2009.
? Adjusted EBITDA was $67.1 million, compared to $50.2 million in 2009.
Fourth Quarter 2010 Operating Metrics
? Transacting customers totaled 2.3 million, a 23% year-over-year increase.
? Orders totaled 3.7 million, a 21% year-over-year increase.
? Average order value was $44.41, a 5% year-over-year increase.
Full Year 2010 Operating Metrics
? Transacting customers totaled 4.1 million, a 24% year-over-year increase.
? Orders totaled 9.2 million, a 17% year-over-year increase.
? Average order value was $32.88, a 7% year-over-year increase.
Recent Operating Highlights
Enabled Simple Path photo books using photos from various sources, including: My Shutterfly, Shutterfly Share Sites, Facebook, Picasa and directly from personal computers.
Enhanced Simple Path algorithm to improve and expand page layout control options.
Improved customer shopping experience and expanded the breadth and depth of Cards & Stationery collection.
Introduced attribute-based navigation tools, making it faster and easier for customers to find the perfect card.
Launched Shutterfly’s largest holiday collection ever with nearly 1,400 new holiday designs across all form factors.
Added Shutterfly Share Site support for classrooms, youth sports, baby and wedding occasions.
Partnered with AYSO to enable Share Sites to over 50,000 youth soccer teams across the United States.
Partnered with Sony to provide instant access to Shutterfly photo books on VAIO(R) PCs.
Partnered with Best Buy to provide innovative solutions for preserving and sharing digital memories.
Expanded customer shopping options through partnerships with Target, Walgreens and CVS/pharmacy.
Business Outlook
First Quarter 2011:
? Net revenues to range from $52 million to $53 million, a year-over-year increase of 14% to 16%; 20% to 22% excluding referral fees.
? GAAP gross profit margin to range from 47% to 48% of net revenues.
? Non-GAAP gross profit margin to range from 49% to 50% of net revenues.
? GAAP operating loss to range from ($12) million to ($13) million.
? Non-GAAP operating loss to range from ($6) million to ($7) million.
? GAAP effective tax rate to range from 33% to 37%.
? Non-GAAP effective tax rate to range from 35% to 37%.
? GAAP diluted net loss per share to range from ($0.26) to ($0.30).
? Non-GAAP diluted net loss per share to range from ($0.14) to ($0.17).
? Weighted average diluted shares of approximately 28.3 million.
? Adjusted EBITDA to range from ($1.0) million to ($2.0) million.
Full Year 2011:
? Net revenues to range from $363 million to $373 million, a year-over-year increase of 18% to 21%; 19% to 22% excluding referral fees.
? GAAP gross profit margin to range from 56% to 57% of net revenues.
? Non-GAAP gross profit margin to range from 57% to 58% of net revenues.
? GAAP operating income to range from $35 million to $40 million.
? Non-GAAP operating income to range from $56 million to $61 million.
? GAAP effective tax rate to range from 33% to 37%.
? Non-GAAP effective tax rate to range from 35% to 37%.
? GAAP diluted net income per share to range from $0.74 to $0.81.
? Non-GAAP diluted net income per share to range from $1.16 to $1.24.
? Weighted average diluted shares of 31.3 million.
? Adjusted EBITDA to range from 21% to 22% of net revenues.
? Capital expenditures to range from 7.5% to 8.5% of net revenues.
Notes to the Fourth Quarter and Full Year 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 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, 2×6, 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.