Exhibit 99.01
Shutterfly Announces Second Quarter 2008 Financial Results
| · | Net revenues increase to $35.4 million, up from $29.9 million in Q2 2007 |
| · | 30th quarter of year-over-year net revenue growth |
| · | Improved gross profit margin and Adjusted EBITDA1 |
| · | Reduced capital expenditure guidance for FY 2008 |
REDWOOD CITY, July 30, 2008 (BUSINESS WIRE) -- Shutterfly, Inc. (NASDAQ:SFLY), an Internet-based social expression and personal publishing service, today announced second quarter 2008 financial results for the period ended June 30, 2008.
“We are beginning to achieve leverage in our business model with improved margins, despite a challenging economy," said president and chief executive officer Jeffrey Housenbold. "In addition, in the second quarter 2008 we launched several new service and technology enhancements, including the beta version of our Share 2.0 service that extends our customers’ ability to tell and share their stories.”
Second Quarter 2008 Financial Highlights
| · | Net revenues totaled $35.4 million, a 19% year-over-year increase. |
| · | Personalized Products & Services revenues2 were $19.7 million, a 26% year-over-year increase, and comprising 55% of total net revenues. |
| · | Print revenues totaled $15.8 million, an 11% year-over-year increase. |
| · | Net revenues from existing customers were 79% of total net revenues. |
| · | Gross profit margin was 51% of net revenues, as compared to 50% in Q2 2007. |
| · | Operating expenses, excluding $2.0 million of stock-based compensation, totaled $24.0 million |
| · | Adjusted EBITDA was $0.4 million, as compared to $(0.6) million in Q2 2007. |
| · | GAAP net loss was $(4.0) million, as compared to $(2.4) million in Q2 2007. |
| · | GAAP net loss per diluted share was $(0.16), as compared to $(0.10) in Q2 2007. |
| · | The Company ended the quarter with $40.6 million in cash and cash equivalents and $48.8 million of long-term investments in auction rate securities. |
Second Quarter 2008 Operating Metrics
| · | Orders totaled 1.6 million, a 7% increase over Q2 2007. |
| · | Transacting customers totaled 834,000, a 14% increase over Q2 2007. |
| · | Average order value was $22.70, an 11% increase over Q2 2007. |
| · | Average orders per day were approximately 17,200, as compared to 16,100 per day in Q2 2007. |
1 Adjusted EBITDA is a non-GAAP financial measure that the Company defines as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
2 Personalized Products and Services revenues include, primarily, photo books, folded greeting cards, calendars and photo-based merchandise.
Recent Operating Highlights
| · | Launched the beta version of Shutterfly Share 2.0, a powerful yet simple, next-generation collaboration solution that enables customers to easily create secure personal websites for sharing stories, pictures, events and calendars with family members, sports teams and other social networking groups. Shutterfly Share 2.0 combines the power and benefits of photo-sharing, blogging, self-publishing, social-networking sites and a multi-level security layer into one easy-to-use experience. |
| · | Implemented several other key services and technology innovations, including a new media storage platform to enhance the Company’s ability to store multiple media types, which provides greater scalability, performance and reliability of media storage; and Project Lightbox, to facilitate the product creation process for consumers. |
| · | Scored #5 in the Foresee Results’ list of Top100 retailers in customer satisfaction. |
| · | Announced partnership with Big Picture Scrapbooking, to extend the Company’s presence in the $3 billion scrapbooking market. |
Business Outlook
The Company's current financial expectations for the third quarter and the full year 2008 are as follows:
Third Quarter 2008:
| · | Net revenues to range from $33 million to $36 million, an increase of 2% to 10% as compared to the third quarter of 2007. |
| · | GAAP gross profit margins to range from 44% to 46% of net revenues. On a non-GAAP3 basis, gross profit margins are expected to range from 46% to 48% of net revenues. |
| · | GAAP operating loss to range from a loss of ($14) million to a loss of $(16) million. On a non-GAAP basis, operating loss is expected to range from a loss of $(11) million to a loss of $(13) million. |
| · | Adjusted EBITDA to range from a loss of $(4) million to a loss of $(6) million. |
| · | GAAP diluted loss per share to range from ($0.15) to ($0.30). On a non-GAAP basis, diluted loss per share is expected to be ($0.25) to ($0.30). |
| · | GAAP effective tax rate of approximately 45% to 76%. On a non-GAAP basis, the effective tax rate is expected to range from 38% to 39%. |
| · | Weighted average diluted shares of approximately 25.1 million for EPS purposes. |
Full Year 2008:
| · | Net revenues to range from $225 million to $240 million, an increase of 21% to 29% as compared to the full year 2007. |
| · | GAAP gross profit margins to range from 53% to 55% of net revenues. On a non-GAAP basis, gross profit margins are expected to range from 54% to 56% of net revenues. |
| · | GAAP operating income to range from a loss of ($1) million to income of $8 million. On a non-GAAP basis, operating income to range from $10 million to $19 million. |
| · | Adjusted EBITDA to range from 16% to 18% of net revenues. |
| · | GAAP diluted income per share to range from $0.01 to $0.20. On a non-GAAP basis, diluted income per share to range from $0.30 to $0.50. |
| · | Capital expenditures of approximately 15.0% of net revenues. |
| · | GAAP effective tax rate of approximately 45% to 76%. On a non-GAAP basis, the effective tax rate is expected to range from 38% to 39%. |
| · | Weighted average diluted shares of approximately 27.2 million for EPS purposes |
Historically approximately half of the Company's net revenues and essentially all of its adjusted EBITDA profits occur during the seasonally strong fourth quarter, and, as a result, the Company's insights into performance may change throughout the course of the year.
The foregoing guidance supersedes any guidance previously issued by the Company. All such previous guidance should no longer be relied upon.
Second Quarter 2008 Conference Call
Management will review the second quarter 2008 financial results and its expectations for the third quarter and full year 2008 at a conference call on Wednesday, July 30, 2008 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern 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 719-325-4934. 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 Tuesday, August 12, 2008. To hear the replay, please dial 719-457-0820, replay passcode 8546185.
About Non-GAAP Financial Information
The accompanying press release dated July 30, 2008 contains certain non-GAAP financial measures. Tables are provided in the 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 flows. When used in connection with historical results and forward-looking guidance, the non-GAAP financial measure Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation while the free cash flows are defined as net cash provided by operating activities less purchases of property and equipment. 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 second quarter and full year 2008 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, our ability to expand our customer base; 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; our ability to retain and hire necessary employees, including seasonal personnel, and appropriately staff our operations; the impact of seasonality on our business; our management's broad discretion regarding the spending of the net proceeds from our public offering; unforeseen changes in expense levels; competition, which could lead to pricing pressure; and general economic conditions. 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-Q for the quarter ended June 30, 2008, 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.
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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.
Contacts Media Relations: Gretchen Sloan, 650-610-5276 gsloan@shutterfly.com | Investor Relations: Marilyn Lattin, 650-610-5853 mlattin@shutterfly.com |
3 “Non-GAAP” metrics exclude stock-based compensation and purchase accounting amortization, and the related tax impact of these adjustments.
