Exhibit 99.01
Shutterfly Announces Third Quarter 2009 Financial Results
| | ● | Net revenues increase 13% year-over-year to $40.5 million |
| | ● | 35th consecutive quarter of year-over year net revenue growth |
| | ● | GAAP net loss of ($0.25) per diluted share |
| | ● | Adjusted EBITDA1 of $2.0 million |
REDWOOD CITY, October 28, 2009 -- Shutterfly, Inc. (NASDAQ:SFLY), the leading Internet-based social expression and personal publishing service, today announced financial results for the three months ended September 30, 2009.
“Shutterfly delivered very solid third quarter results with better than expected revenue and EBITDA growth, despite an increasingly tough macro-economic environment,” said President and Chief Executive Officer Jeffrey Housenbold. “During the quarter we launched the innovative Simple Path photo book creation experience, enhanced our cards and stationery offering and acquired Tiny Pictures. We also made strong progress on our commercial printing initiative and prepared our manufacturing facilities in Charlotte and Phoenix for the seasonally busy fourth quarter.”
Third Quarter 2009 Financial Highlights
| ● | Net revenues totaled $40.5 million, a 13% year-over-year increase. |
| ● | Third quarter 2009 represents the 35th consecutive quarter of year-over-year net revenue growth. |
| ● | Personalized Products & Services2 net revenues totaled $23.6 million, a 22% year-over-year increase. |
| ● | Personalized Products & Services net revenues represented 58% of total net revenues. |
| ● | Net revenues from prints declined 6% year-over-year, to $15.6 million. |
| ● | Commercial print net revenues totaled $1.2 million. |
| ● | Existing customers generated 76% of total net revenues. |
| ● | Gross profit margin was 47% of net revenues, compared to 49%3 in the third quarter of 2008. |
| ● | Operating expenses, excluding $4.0 million of stock-based compensation, totaled $24.1 million. |
| ● | GAAP net loss was ($6.3) million, compared to a net loss of ($2.8)3 million in the third quarter of 2008. |
| ● | GAAP net loss per diluted share was ($0.25), compared to ($0.11)3 in the third quarter of 2008. |
| ● | Adjusted EBITDA was $2.0 million, compared to $0.1 million in the third quarter of 2008. |
| ● | At September 30, 2009, the Company had $111.6 million of cash, cash equivalents and short-term investments. |
Third Quarter 2009 Operating Metrics
| ● | Transacting customers totaled 982,000, a 7% increase over the third quarter of 2008. |
| ● | Orders totaled 1.7 million, a 3% increase over the third quarter of 2008. |
| ● | Average order value4 was $23.03, a 6% increase over the third quarter of 2008. |
Recent Operating Highlights
| ● | Introduced Shutterfly Simple Path creation experience that automatically makes photo books. |
| ● | Acquired Tiny Pictures, a leading developer of mobile and social applications. |
| ● | Launched our 2009 holiday cards and stationery collection including Shutterfly Support-a-Cause cards from organizations like LiveSTRONG and Special Olympics. |
| ● | Enhanced Share Sites to include a solution for Youth Sports and announced partnerships with national and regional youth sports organizations. |
| ● | Launched next generation of Shutterfly Video and iPhone application. |
| ● | Named Brian Swette to the Board of Directors. |
Business Outlook
The Company's current financial expectations for the fourth quarter and the full year 2009 are as follows:
Fourth Quarter 2009:
| ● | Net revenues to range from $102.6 million to $112.6 million, a year-over-year change of (4%) to 5%. |
| ● | GAAP gross profit margins to range from 55% to 59% of net revenues. |
| ● | Non-GAAP gross profit margins to range from 56% to 60% of net revenues. |
| ● | GAAP operating income to range from $21 million to $27 million. |
| ● | Non-GAAP operating income to range from $26 million to $32 million. |
| ● | GAAP effective tax rate to range from 30% to 35%. |
| ● | Non-GAAP effective tax rate to range from 30% to 35%. |
| ● | GAAP diluted net income per share to range from $0.55 to $0.66. |
| ● | Non-GAAP diluted net income per share to range from $0.68 to $0.78. |
| ● | Weighted average diluted shares of approximately 27.2 million. |
| ● | Adjusted EBITDA to range from $33 million to $39 million. |
Full Year 2009:
| ● | Net revenues to range from $218 million to $228 million, a year-over-year change of 2% to 7%. |
| ● | GAAP gross profit margins to range from 51% to 53% of net revenues. |
| ● | Non-GAAP gross profit margins to range from 52% to 54% of net revenues. |
| ● | GAAP operating loss to range from ($7) million to $0 million. |
| ● | Non-GAAP operating income to range from $10 million to $16 million. |
| ● | GAAP effective tax rate to range from 25% to 40%. |
| ● | Non-GAAP effective tax rate to range from 30% to 35%. |
| ● | GAAP diluted net income (loss) per share to range from a net loss of ($0.14) to net income of $0.01. |
| ● | Non-GAAP diluted net income per share to range from $0.27 to $0.40. |
| ● | Weighted average diluted shares of 25.8 million in net loss scenario to 26.8 million in net income scenario. |
| ● | Adjusted EBITDA to range from 16% to 18% of net revenues. |
| ● | Capital expenditures to range from $19 million to $21 million. |
The foregoing financial guidance replaces any of the Company’s previously issued guidance and all such previous guidance should no longer be relied upon.
Third Quarter 2009 Conference Call
Management will review the third quarter 2009 financial results and its expectations for the fourth quarter and full year 2009 on a conference call on Wednesday, October 28, 2009 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 719-325-4880. 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 Wednesday, November 11, 2009. To hear the replay, please dial 719-457-0820, replay passcode 2471402.
About Non-GAAP Financial Information
The accompanying press release dated October 28, 2009, 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 flow. 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 free cash flow is defined as Adjusted EBITDA less purchases of property and equipment and capitalization of software and website development costs. 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 fourth quarter and full year 2009 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, 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.
# # #
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: John Kaelle, 650-610-3541 jkaelle@shutterfly.com |
2 Personalized Products and Services revenues primarily include photo books, stationery and folded greeting cards, calendars, photo-based merchandise. Commercial printing revenues are excluded from personalized products and services revenues.
3 As restated. See Form 8-K dated October 23, 2009 for details of restatement which recorded an additional $1.1 million of stock-based compensation in FY 2008, of which $0.2 million related to third quarter 2008.
4 Average order value excludes commercial printing revenue.
| Shutterfly, Inc. | | | | | | | | | | | | |
| Condensed Consolidated Statements of Operations | | | | | | | | | | | | |
| (In thousands, except per share amounts) | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| | | | | | (As restated) | | | | | | (As restated) | |
| Net revenues | | $ | 40,495 | | | $ | 35,953 | | | $ | 115,365 | | | $ | 105,738 | |
| Cost of net revenues (1) | | | 21,420 | | | | 18,451 | | | | 61,161 | | | | 53,777 | |
| Gross profit | | | 19,075 | | | | 17,502 | | | | 54,204 | | | | 51,961 | |
| Operating expenses (1): | | | | | | | | | | | | | | | | |
| Technology and development | | | 11,390 | | | | 9,689 | | | | 33,347 | | | | 28,796 | |
| Sales and marketing | | | 9,377 | | | | 10,138 | | | | 26,075 | | | | 26,936 | |
| General and administrative | | | 7,363 | | | | 6,901 | | | | 22,642 | | | | 22,299 | |
| Total operating expenses | | | 28,130 | | | | 26,728 | | | | 82,064 | | | | 78,031 | |
| Loss from operations | | | (9,055 | ) | | | (9,226 | ) | | | (27,860 | ) | | | (26,070 | ) |
| Interest expense | | | (22 | ) | | | (100 | ) | | | (136 | ) | | | (185 | ) |
| Interest and other income, net | | | 74 | | | | 455 | | | | 681 | | | | 2,514 | |
| Loss before income taxes | | | (9,003 | ) | | | (8,871 | ) | | | (27,315 | ) | | | (23,741 | ) |
| Benefit from income taxes | | | 2,657 | | | | 6,071 | | | | 9,083 | | | | 13,032 | |
| Net loss | | $ | (6,346 | ) | | $ | (2,800 | ) | | $ | (18,232 | ) | | $ | (10,709 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net loss per share - basic and diluted | | $ | (0.25 | ) | | $ | (0.11 | ) | | $ | (0.72 | ) | | $ | (0.43 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted-average shares outstanding - basic and diluted | | | 25,517 | | | | 25,067 | | | | 25,303 | | | | 25,020 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) Stock-based compensation is allocated as follows: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Cost of net revenues | | $ | 119 | | | $ | 109 | | | $ | 297 | | | $ | 301 | |
| Technology and development | | | 1,077 | | | | 654 | | | | 2,292 | | | | 1,693 | |
| Sales and marketing | | | 955 | | | | 696 | | | | 2,428 | | | | 1,733 | |
| General and administrative | | | 2,005 | | | | 1,216 | | | | 4,778 | | | | 3,327 | |
| | | $ | 4,156 | | | $ | 2,675 | | | $ | 9,795 | | | $ | 7,054 | |
| Shutterfly, Inc. | | | | | | |
| Condensed Consolidated Balance Sheets | | | | | | |
| (In thousands, except par value amounts) | | | | | | |
| (Unaudited) | | | | | | |
| | | | | | | |
| | | September 30, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| | | | | | (As restated) | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 63,250 | | | $ | 88,164 | |
| Short-term investments | | | 48,375 | | | | - | |
| Accounts receivable, net | | | 3,607 | | | | 5,992 | |
| Inventories | | | 3,316 | | | | 3,610 | |
| Deferred tax asset, current portion | | | 1,030 | | | | 1,194 | |
| Prepaid expenses and other current assets | | | 15,703 | | | | 4,749 | |
| Total current assets | | | 135,281 | | | | 103,709 | |
| Long-term investments | | | - | | | | 52,250 | |
| Property and equipment, net | | | 43,217 | | | | 48,108 | |
| Goodwill and intangible assets, net | | | 13,872 | | | | 14,547 | |
| Deferred tax asset, net of current portion | | | 11,759 | | | | 12,266 | |
| Other assets | | | 4,719 | | | | 2,417 | |
| Total assets | | $ | 208,848 | | | $ | 233,297 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 6,265 | | | $ | 11,214 | |
| Accrued liabilities | | | 11,442 | | | | 24,712 | |
| Deferred revenue | | | 8,916 | | | | 9,461 | |
| Current portion of capital lease obligations | | | 9 | | | | 90 | |
| Total current liabilities | | | 26,632 | | | | 45,477 | |
| Other liabilities | | | 1,613 | | | | 1,001 | |
| Capital lease obligations, less current portion | | | 8 | | | | 17 | |
| Total liabilities | | | 28,253 | | | | 46,495 | |
| | | | | | | | | |
| Stockholders' equity | | | | | | | | |
| Common stock, $0.0001 par value; 100,000 shares authorized; 25,651 and | | | | | | | | |
| 25,138 shares issued and outstanding on September 30, 2009 and | | | | | | | | |
| December 31, 2008, respectively | | | 3 | | | | 2 | |
| Additional paid-in-capital | | | 215,926 | | | | 203,902 | |
| Accumulated deficit | | | (35,334 | ) | | | (17,102 | ) |
| Total stockholders' equity | | | 180,595 | | | | 186,802 | |
| Total liabilities and stockholders' equity | | $ | 208,848 | | | $ | 233,297 | |
| Shutterfly, Inc. | | | | | | |
| Condensed Consolidated Statements of Cash Flows | | | | | | |
| (In thousands) | | | | | | |
| (Unaudited) | | | | | | |
| | | Nine Months Ended | |
| | | September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| | | | | | (As restated) | |
| Cash flows from operating activities: | | | | | | |
| Net loss | | $ | (18,232 | ) | | $ | (10,709 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 18,844 | | | | 17,463 | |
| Amortization of intangible assets | | | 1,491 | | | | 1,370 | |
| Stock-based compensation | | | 9,795 | | | | 7,054 | |
| Loss on disposal of property and equipment | | | 79 | | | | 308 | |
| Deferred income taxes | | | 703 | | | | (10,123 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable, net | | | 2,389 | | | | 1,336 | |
| Inventories | | | 294 | | | | 1,518 | |
| Prepaid expenses and other current assets | | | (10,700 | ) | | | (3,553 | ) |
| Other assets | | | (2,421 | ) | | | 352 | |
| Accounts payable | | | (5,083 | ) | | | (2,758 | ) |
| Accrued and other liabilities | | | (14,737 | ) | | | (6,086 | ) |
| Deferred revenue | | | (546 | ) | | | 468 | |
| Net cash used in operating activities | | | (18,124 | ) | | | (3,360 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Acquisition of business and intangibles, net of cash acquired | | | (796 | ) | | | (10,098 | ) |
| Purchases of property and equipment | | | (8,272 | ) | | | (16,760 | ) |
| Capitalization of software and website development costs | | | (3,032 | ) | | | (3,239 | ) |
| Proceeds from sale of short term investments | | | - | | | | 3,002 | |
| Proceeds from sale of equipment | | | - | | | | 6 | |
| Purchase of auction rate securities | | | - | | | | (52,250 | ) |
| Proceeds from the sale of auction rate securities | | | 3,875 | | | | - | |
| Net cash used in investing activities | | | (8,225 | ) | | | (79,339 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Principal payments of capital lease obligations | | | (90 | ) | | | (378 | ) |
| Proceeds from issuance of common stock upon exercise of stock options | | | 2,139 | | | | 1,130 | |
| Shares withheld for payment of employee's withholding tax liability | | | (1,041 | ) | | | - | |
| Tax benefit of stock options recorded in additional paid-in capital | | | 427 | | | | - | |
| Net cash provided by financing activities | | | 1,435 | | | | 752 | |
| | | | | | | | | |
| Net increase in cash and cash equivalents | | | (24,914 | ) | | | (81,947 | ) |
| Cash and cash equivalents, beginning of period | | | 88,164 | | | | 122,582 | |
| Cash and cash equivalents, end of period | | $ | 63,250 | | | $ | 40,635 | |
| | | | | | | | | |
| | | | | | | | | |
| Supplemental schedule of non-cash investing activities | | | | | | | | |
| Accrued property and equipment liability | | | 1,524 | | | | - | |
| Escrow liability from acquisition of business | | | 150 | | | | - | |
| Shutterfly, Inc. | | | | | | |
| User Metrics Disclosure | | | | | | |
| | | | | | | |
| | | Three Months Ended | |
| | | September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| User Metrics | | | | | | |
| | | | | | | |
| Customers | | | 981,670 | | | | 916,195 | |
| year-over-year growth | | | 7 | % | | | 9 | % |
| | | | | | | | | |
| Orders | | | 1,704,591 | | | | 1,656,050 | |
| year-over-year growth | | | 3 | % | | | 0 | % |
| | | | | | | | | |
| Average order value(1) | | $ | 23.03 | | | $ | 21.71 | |
| year-over-year growth | | | 6 | % | | | 11 | % |
| | | | | | | | | |
| Average orders per customer | | | 1.7 | x | | | 1.8 | x |
| | | | | | | | | |
| (1) Average order value excludes commercial print revenue | |
| Shutterfly, Inc. | | | | | | | | | | | | | |
| Reconciliation of Forward-Looking Guidance for Non-GAAP Financial Measures to GAAP Measures |
| (In millions, except per share amounts) | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | |
| | | | Forward-Looking Guidance |
| | | | GAAP | | | | | | | Non-GAAP |
| | | | Range of Estimate | | Adjustments | | | Range of Estimate |
| | | | From | | To | | From | | To | | | From | | To |
| | | | | | | | | | | | | | | |
| | Three Months Ending December 31, 2009 | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Net revenues | | $102.6 | | $112.6 | | - | | - | | | $102.6 | | $112.6 |
| | Gross profit margin | | 55% | | 59% | | 1% | [a] | | 56% | | 60% |
| | Operating income | | $21 | | $27 | | $5 | [b] | | $26 | | $32 |
| | Operating margin | | 20% | | 24% | | 5% | | 4% | [b] | | 25% | | 28% |
| | | | | | | | | | | | | | | |
| | Stock-based compensation | | $4.5 | | $4.5 | | $4.5 | | $4.5 | | | - | | - |
| | Amortization of intangible assets | | $0.6 | | $0.6 | | $0.6 | | $0.6 | | | - | | - |
| | | | | | | | | | | | | | | |
| | Adjusted EBITDA* | | | | | | | | | | | $33.0 | | $39.0 |
| | | | | | | | | | | | | | | |
| | Diluted income per share | | $0.55 | | $0.66 | | $0.13 | | $0.12 | [c] | | $0.68 | | $0.78 |
| | Diluted shares | | 27.2 | | 27.2 | | - | | - | | | 27.2 | | 27.2 |
| | Effective tax rate | | 30% | | 35% | | 0% | | 0% | [d] | | 30% | | 35% |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Twelve Months Ending December 31, 2009 | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Net revenues | | $218.0 | | $228.0 | | - | | - | | | $218.0 | | $228.0 |
| | Gross profit margin | | 51% | | 53% | | 1% | [e] | | 52% | | 54% |
| | Operating income (loss) | | ($7) | | $0 | | $17.0 | | $16.0 | [f] | | $10 | | $16 |
| | Operating margin | | (3%) | | 0% | | 8% | | 7% | [f] | | 5% | | 7% |
| | | | | | | | | | | | | | | |
| | Stock-based compensation | | $14.3 | | $14.3 | | $14.3 | | $14.3 | | | - | | - |
| | Amortization of intangible assets | | $2.1 | | $2.1 | | $2.1 | | $2.1 | | | - | | - |
| | | | | | | | | | | | | | | |
| | Adjusted EBITDA* | | | | | | | | | | | $35 | | $41 |
| | Adjusted EBITDA* margin | | | | | | | | | | | 16% | | 18% |
| | | | | | | | | | | | | | | |
| | Diluted earnings (loss) per share | | ($0.14) | | $0.01 | | $0.41 | | $0.39 | [g] | | $0.27 | | $0.40 |
| | Diluted shares | | 25.8 | | 26.8 | | 1.0 | | - | | | 26.8 | | 26.8 |
| | Effective tax rate | | 40% | | 25% | | (10%) | | 10% | [h] | | 30% | | 35% |
| | | | | | | | | | | | | | | |
| | Capital expenditures | | $19.0 | | $21.0 | | | | | | | $19.0 | | $21.0 |
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| * | Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation. |
| [a] | Reflects estimated adjustments for stock-based compensation expense of approximately $100k and amortization of purchased intangible assets of approximately $600k. |
| [b] | Reflects estimated adjustments for stock-based compensation expense of approximately $4.5 million and amortization of purchased intangible assets of approximately $600k. |
| [c] | Reflects the estimated adjustments in item [b] and the income tax impact related to these adjustments. |
| [d] | Reflects the estimated adjustments to the effective tax rate based on the adjustments in item [b]. |
| [e] | Reflects estimated adjustments for stock-based compensation expense of approximately $400k and amortization of purchased intangible assets of approximately $2.1 million. |
| [f] | Reflects estimated adjustments for stock-based compensation expense of approximately $14.3 million and amortization of purchased intangible assets of approximately $2.1 million. |
| [g] | Reflects the estimated adjustments in item [f] and the income tax impact related to these adjustments. |
| [h] | Reflects the estimated adjustments to the effective tax rate based on the adjustments in item [f]. | |
| Shutterfly, Inc. | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Gross Profit Margin to Non-GAAP Gross Profit Margin | | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
| * As restated | | | | | | | | | | | | | | | | | | | | | | | Year Ended | |
| | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | |
| | | 2008* | | | 2008* | | | 2008* | | | 2008* | | | 2009 | | | 2009 | | | 2009 | | | 2008* | |
| GAAP gross profit | | $ | 16,401 | | | $ | 18,058 | | | $ | 17,502 | | | $ | 65,306 | | | $ | 16,340 | | | $ | 18,789 | | | $ | 19,075 | | | $ | 117,267 | |
| Stock-based compensation expense within cost of net revenues | | | 92 | | | | 101 | | | | 109 | | | | 70 | | | | 95 | | | | 82 | | | | 119 | | | | 372 | |
| Amortization of intangible assets within cost of net revenues | | | 367 | | | | 367 | | | | 367 | | | | 368 | | | | 367 | | | | 394 | | | | 460 | | | | 1,469 | |
| Non-GAAP gross profit | | $ | 16,860 | | | $ | 18,526 | | | $ | 17,978 | | | $ | 65,744 | | | $ | 16,802 | | | $ | 19,265 | | | $ | 19,654 | | | $ | 119,108 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP gross profit margin | | | 49 | % | | | 52 | % | | | 50 | % | | | 61 | % | | | 47 | % | | | 50 | % | | | 49 | % | | | 56 | % |
Shutterfly, Inc. | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin | | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
| * As restated | | | | | | | | | | | | | | | | | | | | | | | Year Ended | |
| | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | |
| | | 2008* | | | 2008* | | | 2008* | | | 2008* | | | 2009 | | | 2009 | | | 2009 | | | 2008* | |
| GAAP operating income (loss) | | $ | (8,672 | ) | | $ | (8,172 | ) | | $ | (9,226 | ) | | $ | 28,676 | | | $ | (9,396 | ) | | $ | (9,408 | ) | | $ | (9,055 | ) | | $ | 2,606 | |
| Stock-based compensation expense | | | 2,058 | | | | 2,321 | | | | 2,676 | | | | 2,695 | | | | 2,804 | | | | 2,834 | | | | 4,156 | | | | 9,750 | |
| Amortization of intangible assets | | | 457 | | | | 457 | | | | 457 | | | | 456 | | | | 457 | | | | 484 | | | | 550 | | | | 1,827 | |
| Non-GAAP operating income (loss) | | $ | (6,157 | ) | | $ | (5,394 | ) | | $ | (6,093 | ) | | $ | 31,827 | | | $ | (6,135 | ) | | $ | (6,090 | ) | | $ | (4,349 | ) | | $ | 14,183 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP operating margin | | | (18 | %) | | | (15 | %) | | | (17 | %) | | | 30 | % | | | (17 | %) | | | (16 | %) | | | (11 | %) | | | 7 | % |
Shutterfly, Inc. | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Net Income to Non-GAAP Net Income | | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
| * As restated | | | | | | | | | | | | | | | | | | | | | | | Year Ended | |
| | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | |
| | | 2008* | | | 2008* | | | 2008* | | | 2008* | | | 2009 | | | 2009 | | | 2009 | | | 2008* | |
| GAAP net income (loss) | | $ | (3,763 | ) | | $ | (4,146 | ) | | $ | (2,800 | ) | | $ | 14,369 | | | $ | (6,232 | ) | | $ | (5,654 | ) | | $ | (6,346 | ) | | $ | 3,660 | |
| Stock-based compensation expense | | | 2,058 | | | | 2,321 | | | | 2,676 | | | | 2,695 | | | | 2,804 | | | | 2,834 | | | | 4,156 | | | | 9,750 | |
| Amortization of intangible assets | | | 457 | | | | 457 | | | | 457 | | | | 456 | | | | 457 | | | | 484 | | | | 550 | | | | 1,827 | |
| Income taxes associated with certain non-GAAP entries | | | (1,703 | ) | | | (1,523 | ) | | | (3,202 | ) | | | 3,068 | | | | (1,168 | ) | | | (1,190 | ) | | | (1,255 | ) | | | (3,360 | ) |
| Non-GAAP net income (loss) | | $ | (2,951 | ) | | $ | (2,891 | ) | | $ | (2,869 | ) | | $ | 20,588 | | | $ | (4,139 | ) | | $ | (3,526 | ) | | $ | (2,895 | ) | | $ | 11,877 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted net income per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP | | $ | (0.15 | ) | | $ | (0.17 | ) | | $ | (0.11 | ) | | $ | 0.56 | | | $ | (0.25 | ) | | $ | (0.22 | ) | | $ | (0.25 | ) | | $ | 0.14 | |
| Non-GAAP | | $ | (0.12 | ) | | $ | (0.12 | ) | | $ | (0.11 | ) | | $ | 0.81 | | | $ | (0.16 | ) | | $ | (0.14 | ) | | $ | (0.11 | ) | | $ | 0.46 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares used in GAAP and non-GAAP diluted net income per-share calculation | | | 24,949 | | | | 25,045 | | | | 25,067 | | | | 25,455 | | | | 25,148 | | | | 25,246 | | | | 25,517 | | | | 25,787 | |
Shutterfly, Inc. | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP to Non-GAAP Effective Tax Rate | | | | |
| (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
| * As restated | | | | | | | | | | | | | | | | | | | | | | | Year Ended | |
| | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | |
| | | 2008* | | | 2008* | | | 2008* | | | 2008* | | | 2009 | | | 2009 | | | 2009 | | | 2008* | |
| GAAP benefit (provision) for income taxes | | $ | 3,590 | | | $ | 3,371 | | | $ | 6,071 | | | $ | (14,604 | ) | | $ | 2,928 | | | $ | 3,497 | | | $ | 2,657 | | | $ | (1,572 | ) |
| Income taxes associated with certain non-GAAP entries | | | (1,703 | ) | | | (1,523 | ) | | | (3,202 | ) | | | 3,068 | | | | (1,168 | ) | | | (1,190 | ) | | | (1,255 | ) | | | (3,360 | ) |
| Non-GAAP benefit (provision) for income taxes | | $ | 1,887 | | | $ | 1,848 | | | $ | 2,869 | | | $ | (11,536 | ) | | $ | 1,760 | | | $ | 2,307 | | | $ | 1,402 | | | $ | (4,932 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP income (loss) before income taxes | | $ | (7,353 | ) | | $ | (7,517 | ) | | $ | (8,871 | ) | | $ | 28,973 | | | $ | (9,160 | ) | | $ | (9,152 | ) | | $ | (9,003 | ) | | $ | 5,232 | |
| Stock-based compensation expense | | | 2,058 | | | | 2,321 | | | | 2,676 | | | | 2,695 | | | | 2,804 | | | | 2,834 | | | | 4,156 | | | | 9,750 | |
| Amortization of intangible assets | | | 457 | | | | 457 | | | | 457 | | | | 456 | | | | 457 | | | | 484 | | | | 550 | | | | 1,827 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP income (loss) before income taxes | | $ | (4,838 | ) | | $ | (4,739 | ) | | $ | (5,738 | ) | | $ | 32,124 | | | $ | (5,899 | ) | | $ | (5,834 | ) | | $ | (4,297 | ) | | $ | 16,809 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GAAP Effective tax rate | | | 49 | % | | | 45 | % | | | 68 | % | | | 50 | % | | | 32 | % | | | 38 | % | | | 30 | % | | | 30 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP effective tax rate | | | 39 | % | | | 39 | % | | | 50 | % | | | 36 | % | | | 30 | % | | | 40 | % | | | 33 | % | | | 29 | % |
| Shutterfly, Inc. | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP Adjusted EBITDA | | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
| * As restated | | | | | | | | | | | | | | | | | | | | | | | Year Ended | |
| | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | |
| | | 2008* | | | 2008* | | | 2008* | | | 2008* | | | 2009 | | | 2009 | | | 2009 | | | 2008* | |
| Income (loss) from Operations | | $ | (8,672 | ) | | $ | (8,172 | ) | | $ | (9,226 | ) | | $ | 28,676 | | | $ | (9,396 | ) | | $ | (9,408 | ) | | $ | (9,055 | ) | | $ | 2,606 | |
| Add back: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 5,885 | | | | 6,266 | | | | 6,682 | | | | 7,205 | | | | 6,706 | | | | 6,779 | | | | 6,850 | | | | 26,038 | |
| Stock-based compensation expense | | | 2,058 | | | | 2,321 | | | | 2,676 | | | | 2,695 | | | | 2,804 | | | | 2,834 | | | | 4,156 | | | | 9,750 | |
| Non-GAAP Adjusted EBITDA | | $ | (729 | ) | | $ | 415 | | | $ | 132 | | | $ | 38,576 | | | $ | 114 | | | $ | 205 | | | $ | 1,951 | | | $ | 38,394 | |
Shutterfly, Inc. | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP Adjusted EBITDA to Free Cash Flows | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
| * As restated | | | | | | | | | | | | | | | | | | | | | | | Year Ended | |
| | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | | | Mar. 31, | | | Jun. 30, | | | Sep. 30, | | | Dec. 31, | |
| | | 2008* | | | 2008* | | | 2008* | | | 2008* | | | 2009 | | | 2009 | | | 2009 | | | 2008* | |
| Non-GAAP Adjusted EBITDA | | $ | (729 | ) | | $ | 415 | | | $ | 132 | | | $ | 38,576 | | | $ | 114 | | | $ | 205 | | | $ | 1,951 | | | $ | 38,394 | |
| Less: Purchases of property and equipment | | | (7,930 | ) | | | (3,840 | ) | | | (4,990 | ) | | | (1,460 | ) | | | (4,158 | ) | | | (1,826 | ) | | | (3,811 | ) | | | (18,220 | ) |
| Less: Capitalized technology & development costs | | | (848 | ) | | | (1,410 | ) | | | (981 | ) | | | (1,288 | ) | | | (824 | ) | | | (1,114 | ) | | | (1,094 | ) | | | (4,527 | ) |
| Free cash flows | | $ | (9,507 | ) | | $ | (4,835 | ) | | $ | (5,839 | ) | | $ | 35,828 | | | $ | (4,868 | ) | | $ | (2,735 | ) | | $ | (2,954 | ) | | $ | 15,647 | |
