Shutterfly, Inc. (NASDAQ:SFLY), the leading Internet-based social
expression and personal publishing service, today announced financial
results for the three months ended June 30, 2010.
"Shutterfly continues to gain momentum and enhance our competitive
position through our commitment to innovation, design forward products
and services, customer friendly policies, industry-leading quality and
focused financial discipline,? said President and Chief Executive
Officer Jeffrey Housenbold. ?Strong growth in our personalized products
and services during the Mother's Day and Father's Day holidays led to
our record Q2 financial performance.?
Second Quarter 2010 Financial Highlights
? Net revenues totaled $46.8 million, a 20% year-over-year increase.
? Second quarter 2010 represents the 38th consecutive quarter of
year-over-year net revenue growth.
? Personalized Products & Services net revenues totaled $31.7 million, a
34% year-over-year increase.
? Personalized Products & Services net revenues represented 68% of total
net revenues.
? Net revenues from prints declined 2% year-over-year, to $14.4 million.
? Commercial print net revenues totaled $0.8 million.
? Existing customers generated 74% of total net revenues.
? Gross profit margin was 50% of net revenues, compared to 48% in the
second quarter of 2009.
? Operating expenses, excluding $3.9 million of stock-based
compensation, totaled $29.5 million.
? GAAP net loss was ($5.9) million, compared to a net loss of ($5.7)
million in the second quarter of 2009.
? GAAP net loss per diluted share was ($0.22) and in line with the
second quarter of 2009.
? Adjusted EBITDA was $1.2 million, compared to $0.2 million in the
second quarter of 2009.
? At June 30, 2010, the Company had $159.0 million of cash, cash
equivalents and short-term investments.
Second Quarter 2010 Operating Metrics
? Transacting customers totaled 1.1 million, an 18% increase over the
second quarter of 2009.
? Orders totaled 1.8 million, a 9% increase over the second quarter of
2009.
? Average order value was $25.56, an 11% increase over the second
quarter of 2009.
Recent Operating Highlights
? Launched our Simple Path integration with Facebook, allowing users to
access Facebook photos.
? Improved our attribute-based navigation to make it faster and easier
for customers to find the perfect card. Introduced 5x5 square stationery
cards, enhanced our 3x5 folded note cards by adding more design and
layout options, and expanded selection across occasions like summer
parties, moving announcements and Bar and Bat Mitzvah.
? Enhanced Baby-themed Share sites with a customized creation
experience, milestone widget and 12 new site designs that coordinate
with birth announcements, allowing new parents to celebrate their baby's
arrival with style.
? Together with The Knot & The Wedding Channel, introduced a tool that
integrates gift registries into Shutterfly Share Sites.
Business Outlook
The Company's current financial expectations for the third quarter and
the full year 2010 are as follows:
Third Quarter 2010:
? Net revenues to range from $45.5 million to $47.5 million, a
year-over-year change of 12% to 17%.
? GAAP gross profit margins to range from 47% to 49% of net revenues.
? Non-GAAP gross profit margins to range from 49% to 51% of net revenues.
? GAAP operating loss to range from ($11) million to ($12) million.
? Non-GAAP operating loss to range from ($7) million to ($8) million.
? GAAP effective tax rate to range from 33% to 38%.
? Non-GAAP effective tax rate to range from 35% to 36%.
? GAAP diluted net loss per share to range from ($0.26) to ($0.30).
? Non-GAAP diluted net loss per share to range from ($0.16) to ($0.18).
? Weighted average diluted shares of approximately 27.3 million.
? Adjusted EBITDA loss to range from ($1.0) million to ($2.0) million.
Full Year 2010:
? Net revenues to range from $277 million to $287 million, a
year-over-year change of 12% to 16%.
? GAAP gross profit margins to range from 54% to 56% of net revenues.
? Non-GAAP gross profit margins to range from 55% to 57% of net revenues.
? GAAP operating income to range from $10 million to $14 million.
? Non-GAAP operating income to range from $29 million to $33 million.
? GAAP effective tax rate to range from 33% to 38%.
? Non-GAAP effective tax rate to range from 35% to 36%.
? GAAP diluted net income per share to range from $0.23 to $0.32.
? Non-GAAP diluted net income per share to range from $0.66 to $0.75.
? Weighted average diluted shares of 28.9 million.
? Adjusted EBITDA to range from 19% to 20% of net revenues.
? Capital expenditures to range from 7% to 9% of net revenues.
Notes to the Second 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, 2x6, 4x6, 5x7, 8x10,
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 Company's referral fee
program was discontinued effective March 31, 2010, and no referral fee
revenue has been recorded subsequent to that date.
Commercial print 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 print revenues, divided by total orders.
The foregoing financial guidance replaces any of the Company's
previously issued guidance and all such previous guidance should no
longer be relied upon.
Second Quarter 2010 Conference Call
Management will review the second quarter 2010 financial results and its
expectations for the third quarter and full year 2010 on a conference
call on Wednesday, July 28, 2010 at 2:00 p.m. Pacific Daylight Time
(5:00 p.m. Eastern Daylight Time). To listen to the call and view the
accompanying slides, please visit http://www.shutterfly.com.
In the Investor Relations area, found in the "About Us" section, click
on the link provided for the webcast, or dial 970-315-0490. The webcast,
as well as a podcast, will be archived and available at http://www.shutterfly.com.
A replay of the conference call will be available through Thursday,
August 11, 2010. To hear the replay, please dial 706-645-9291, replay
passcode 84668467.
About Non-GAAP Financial Information
This press release contains certain non-GAAP financial measures. Tables
are provided at the end of this press release that reconcile the
non-GAAP financial measures to the most directly comparable financial
measures prepared in accordance with Generally Accepted Accounting
Principles (GAAP). These non-GAAP financial measures include non-GAAP
gross margins, non-GAAP operating income (loss) and the related
operating income (loss) margins, non-GAAP income (loss) per share,
adjusted EBITDA and free cash flow. For more information, please see
Shutterfly's SEC Filings.
To supplement the Company's consolidated financial statements presented
on a GAAP basis, we believe that these non-GAAP measures provide useful
information about the Company's core operating results and thus are
appropriate to enhance the overall understanding of the Company's past
financial performance and its prospects for the future. These
adjustments to the Company's GAAP results are made with the intent of
providing both management and investors a more complete understanding of
the Company's underlying operational results and trends and performance.
Management uses these non-GAAP measures to evaluate the Company's
financial results, develop budgets, manage expenditures, and determine
employee compensation. The presentation of additional information is not
meant to be considered in isolation or as a substitute for or superior
to net income (loss) or net income (loss) per share determined in
accordance with GAAP.
Notice Regarding Forward-Looking Statements
This media release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which
involve risks and uncertainties. These forward-looking statements
include all statements regarding the Company's financial expectations
for the third quarter and full year 2010 set forth under the caption
"Business Outlook." The Company's actual results may differ materially
from those anticipated in these forward-looking statements. Factors that
might contribute to such differences include, among others, economic
downturns and the general state of the economy, our ability to expand
our customer base; our ability to retain and hire necessary employees,
including seasonal personnel, and appropriately staff our operations;
the impact of seasonality on our business; our ability to develop on a
timely basis, as well as consumer acceptance of, new products and
services; our ability to develop additional adjacent lines of business;
unforeseen changes in expense levels; and competition, which could lead
to pricing pressure. For more information regarding the risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied in these forward-looking statements, as well
as risks relating to our business in general, we refer you to the "Risk
Factors" sections of the Company's Form 10-K for the year ended December
31, 2009, and the Company's other filings, which are available on the
Securities and Exchange Commission's Web site at www.sec.gov.
These forward-looking statements are based on current expectations and
the Company assumes no obligation to update this information.
About Shutterfly
Founded in 1999, Shutterfly, Inc. is an Internet-based social expression
and personal publishing service. 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. More information
about Shutterfly (NASDAQ:SFLY) is available at www.shutterfly.com.
Shutterfly and Shutterfly.com are trademarks of Shutterfly, Inc.
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Shutterfly, Inc.
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Condensed Consolidated Statement of Operations
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(In thousands, except per share amounts)
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(Unaudited)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2010
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2009
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2010
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2009
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|
|
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Net revenues
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$
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46,807
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$
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38,858
|
|
|
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$
|
92,549
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|
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$
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74,870
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|
Cost of net revenues
|
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|
23,179
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|
|
20,069
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|
|
|
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45,757
|
|
|
|
39,741
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|
|
Gross profit
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23,628
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|
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18,789
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|
|
|
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46,792
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|
|
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35,129
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|
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Operating expenses:
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Technology and development
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12,477
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10,963
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|
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|
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24,646
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21,957
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Sales and marketing
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11,311
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|
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8,901
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|
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21,468
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|
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16,698
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General and administrative
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9,620
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|
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8,333
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|
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18,421
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|
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15,279
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Total operating expenses
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33,408
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|
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28,197
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64,535
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53,934
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Loss from operations
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(9,780
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)
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(9,408
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)
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|
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(17,743
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)
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(18,805
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)
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Interest expense
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(21
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)
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(27
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)
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|
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(42
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)
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(114
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)
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Interest and other income, net
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194
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|
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283
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|
|
|
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436
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|
|
607
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Loss before income taxes
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(9,607
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)
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(9,152
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)
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|
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(17,349
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)
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|
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(18,312
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)
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Benefit from income taxes
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3,722
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|
|
3,497
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|
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|
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6,733
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|
|
|
6,426
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Net loss
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$
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(5,885
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)
|
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$
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(5,655
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)
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$
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(10,616
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)
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$
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(11,886
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)
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Net loss per share - basic and diluted
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$
|
(0.22
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)
|
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$
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(0.22
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)
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|
|
$
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(0.40
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)
|
|
$
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(0.47
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)
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|
|
|
|
|
|
|
|
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Weighted-average shares outstanding - basic and diluted
|
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|
26,952
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|
|
|
25,246
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|
|
|
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26,595
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|
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25,197
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Stock-based compensation is allocated as follows:
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Cost of net revenues
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$
|
129
|
|
|
$
|
82
|
|
|
|
$
|
260
|
|
|
$
|
178
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Technology and development
|
|
|
756
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|
|
|
582
|
|
|
|
|
1,557
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|
|
|
1,214
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|
Sales and marketing
|
|
|
966
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|
|
|
757
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|
|
|
|
2,068
|
|
|
|
1,473
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|
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General and administrative
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|
|
2,208
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|
|
|
1,413
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|
|
|
|
4,548
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|
|
|
2,773
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|
|
|
|
$
|
4,059
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|
|
$
|
2,834
|
|
|
|
$
|
8,433
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|
|
$
|
5,638
|
|
|
|
|
|
|
|
|
|
|
|
|
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Shutterfly, Inc.
|
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Condensed Consolidated Balance Sheet
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(In thousands, except par value amounts)
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(Unaudited)
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|
|
|
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June 30,
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December 31,
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|
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2010
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2009
|
|
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ASSETS
|
|
|
|
|
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Current assets:
|
|
|
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Cash and cash equivalents
|
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$
|
132,602
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|
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$
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132,812
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|
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Short-term investments
|
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|
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26,350
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|
|
|
47,925
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|
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Accounts receivable, net
|
|
|
|
2,959
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|
|
|
5,472
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|
|
Inventories
|
|
|
|
2,484
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|
|
|
2,968
|
|
|
Deferred tax asset, current portion
|
|
|
|
2,747
|
|
|
|
2,243
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|
|
Prepaid expenses and other current assets
|
|
|
|
12,406
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|
|
|
4,501
|
|
|
Total current assets
|
|
|
|
179,548
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|
|
|
195,921
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|
|
Property and equipment, net
|
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|
|
40,827
|
|
|
|
41,845
|
|
|
Goodwill and intangible assets, net
|
|
|
|
12,464
|
|
|
|
13,406
|
|
|
Deferred tax asset, net of current portion
|
|
|
|
17,455
|
|
|
|
14,674
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© Business Wire 2010
| Latest news on SHUTTERFLY |
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