SSTK - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Shutterstock Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this call is being recorded. I would now like to turn the conference over to Amy Behrman, Senior Director of Corporate Development, Strategy and Investor Relations.

begin. may You

Amy Behrman

Good us operator. and you thank Thank Shutterstock's morning, second joining for call. quarter for you, everyone XXXX earnings

today Officer. our Oringer, Chairman; our is Executive Operating me Chief Financial and Berns, and Founder, Chief and Officer Steven Joining Chief Jon

management new include forward-looking statements call, product investments results long-term of statements growth expense risk relating subject that and estimates in make existing predictions, future the our to business and of guidance. our our and impact our including to financial solutions our uncertainties, expectations, strategy, may profitability, and XXXX future our large-scale potential, other growth offerings, footprint, this are implementation reduce our to During of and information. of long-term and and success future business, potential These efforts effects

time-to-time the results make constant and cash which financial Webdam, a basis, EBITDA, measures. refer of materially including ended refer actual not XX, should those future may considered in Our the net quarterly on results the in call. differ today's filed basis from are this and adjusted for excluding section Exchange differ Report cause discussed discussions ended we entitled Commission, from to on free a the reported press and December per and XXXX on XX-Q with report results of for performance. including actual may important predicted. to revenue indication results constant-currency all XX, on forward-looking year On non-GAAP And quarter Form to Factors and June we company's Annual XXXX income, from as on will the and the reports of Please documents growth an we could Risk risk U.S. factors the revenue flow, be XX-K download this materially adjusted release that Form any for Securities call, statements, currency

in This used reconciliation with investors Relations the description that insights overall of in consider to them on with to important the measures website. release, on GAAP management. assessing believe our these these about basis the performance, most of items, reporting. earnings by of comparable a Investor the financial measure section in along use directly measures posted results business today's GAAP with same provides the can and You the We find is conjunction additional our operating financial our and enhances comparability allow financial company's operating which

prepared these not substitute as with accordance measures GAAP. non-GAAP or in should considered be a financial to, for, financial information However, superior

sold therefore we quarter Webdam operating not the in XXXX results. to reminder, a second of as and XXXX contribute first Lastly, our Webdam quarter did

we in state specifically of However, results over to quarter excluding that the the our to Jon. results turn would that of our second and to of Webdam are the Webdam, XXXX commentary was the meaning we provide from second therefore it with I included call that, XXXX like of today basis to excluding comparable XXXX. are And some will a quarter

Jonathan Oringer

call. earnings us thank for second XXXX for you Thanks, Amy, joining Shutterstock's and quarter everyone today

an Our continued basis. showed XX.X% second increasing revenue revenue with in on as quarter improvement profitability and reported

technology revenue we the have Adjusted management years past over and Excluding XX.X%. driven in the EBITDA increased and have grew financial couple impact and quarter second cost offerings of yield by revenue operational primarily The investments of foreign of efforts. product currency impact returns. to movements, Webdam strong XX.X%, and begun the made promising growth our continued

environment and made. technology contributed from launching performance level improvements and quarter, was of acquisition testing the Our Activities the pricing included we of quarter's related platform by to the quarter resulting that XXXX. highest grew XX.X% funnels. optimization growth in of our have packaging, fourth enabled since growth new This innovative acceleration channel e-commerce of our our customer this improved and

In tailored pricing segments. addition, Checkout different pages, customized pages landing on customer and we experiences Express our in to continued localization, launched efforts

also accelerate to in to in and We number line invested drive plan out to further top pay and a activities continue invest time. to We these growth. marketing of initiatives expect additional traffic global them over marketing

future site Our in with represented Asia-Pacific the continued result enterprise adding variety to tailored the locations. in functionality the our resources as incremental we XX.X% quarter, its enterprise continued compared In features and sales continued in our processes expand as of invest marketing growth second quarter and of sales growth. channel strong enhanced support total to in business XXXX. revenue of our enterprise region, of in a in XX% we to quarter Furthermore, the XX% performance by the same a and experience, efficiency customer The to quarter strategic improved initiatives sales performance. capabilities

high our library, enabling customers building previously need. up PremiumBeat currencies customers' and in quickly languages, offering more library, using (XX:XX). including list payment tracks as offering all of discover offering, we our to part second payments local everywhere ability HubSpot partners, second search our Facebook, and and Watson also to continued the music product We've XX their from with the customers many as it, in announced As language. quarter, in the to to launched ability by it Shutterstock's two well methods our quarter, Shutterstock.com's our language the music partnership of may bringing to platform, strategy need images their accept localizing music with of with Editor supported, par more adds Microsoft, from customers Hub, to and customers imagery entire give the and by on in Google, IBM Pro, edit languages our access chance the to in marketing site Shutterstock localized personalized quality they the to growing customers providing Insightly the experiences. further Late our and out curated Content Across local this improve our we the experience Snap, our Shutterstock Wigs, are it

workflow a been to targeted to engagement. Pro. high browser results launched Another area customers tools. The group promising suite of customer levels a with We extremely in been Editor of Shutterstock our of professional focus have as version our and investment of feature-rich tool of had Editor referred

also their innovative and power Showcase, AI Shutterstock suite and into workflows learning seamlessly search enhance easy-to-use, and our deep customers' which tools, We discovery launched of a integrate experience.

Our Custom product, which ago, year continues purchased we nicely. almost grow to a

are sales product focused We the Shutterstock building and on by refining marketing additional scaling Custom and functionality. strategy

media drove Cup, activity its incremental primarily business. the and Wedding quarter customers Key British continued by with events business include entertainment growth, increased the we editorial the breaking and expanding news second Our and in Royal for relationships of coverage covered new driven which the World events.

creating accelerate our As marketing, content working to strategic growth, are in optimize value more future order collaborate we we efforts. production to we and look are closely the partners sales from with to

artists quarter, XXX,XXX celebrated ago, musicians, This photographers, years videographers, $XXX XX become our more in of designers the nearly contributors XXth the we million Since anniversary than them platform, to Shutterstock have of company. launch and royalties. the earning

progress of with has drive innovative summary, of first tools discovery compelling platform lot faster, In XXXX. made that empowered more content, Our services valuable we've and the a customers content half and in efficient creation.

we we will believe, strategy, six building of first continue year. to During our this months the year, execute in been of remainder which, have momentum will the we the continue the on

cash Board Directors of dividend. operating cash favorably per allowing initiatives. proceeds returns our share and of Finally, of special Based while has our declared that, of as one-time $X consistent growth is I'll that Steven from cash remarks, us over to to other impacting and declaring Steven. structure with will operations capital our And his with our this Directors maximizing turn the strategy fund detail Board call believe factors to stockholder our Webdam special strong the maintain flows, a on dividend in sale position, our

Steven Berns

Thanks, joining us Jon, for and thank you today. everyone

I deck have contains to call. always, discuss our Before materials we for on that today's website that brief know I posted supporting you as our information a performance, let want

of Two foreign first which in the items, impacted quarter, in As margin XXXX Jon growth against of to fluctuations. of growth second resulting quarter the occurred this revenue we in execute reported and of continued revenue has basis XX.X% second highlighted, in of Webdam, a quarter which the quarter throughout XXXX. were XX.X% and sale strategic of currency an the the on year quarter, compared adjusted EBITDA our our the objectives to

Excluding to XXXX. movements, compared quarter of revenue currency foreign the in the growth as impact second was approximately XX.X%

you addition, of In exclude if Webdam second quarter, the from approximately was XXXX's impact revenue XX.X%. growth

movements indicator of and Webdam, is this growth. grew FX organic both quarter our Excluding year. useful second in believe the We of a revenue this XX.X%

image our basis by download some XX% XX% library XX% key and a million grew increased base paid million; customer XX% grew XXX library by revenue a discuss more by metrics customers; grew video reported X.X% X.X constant basis; Regarding each than year-over-year on to nearly downloads XX.X and images; basis, per quarter, XX.X million to by a our to to expanded on that X% million clips. our currency by on we

XX% our quarter. the quarter. localization second our half enterprise In improved payment to part earlier, and And United combined. customers as grew XXXX, Europe These functionality, Jon our generated America, Middle revenues Of was mentioned our and derived As year and from Latin in currency million Canada quarter features business of East continue XX.X% $XX.X features the be a local improvements. amount, to of to the include functionality prior second $XX.X and about compared search algorithm XX% core workflow e-commerce from the in our Asia-Pacific, and to of in from outside the revenues million strategy. business International half that by growth contributor States. nearly improvements expansion approximately was were the other customers

XX% excluding businesses. our XXXX quarter high-growth, and X% second approximately by royalty versus recent second our expenses was operating is from smaller driven which quarter in XX.X% quarter the and our of increased infrastructure increased primarily but for XXXX, essentially investments high-potential XXXX, both versus experience. we're compensation, the expense making revenue, first unchanged historical stock-based the of of of Contributor Our

go as half and Expense results continue effort course, the quarter proceeded I an to versus reiterate improved quarter I'd expense throughout yield will operating second take of that the continue believe improved having of We major margins categories, we improved the second well taken growth beyond. our of reduce to first actions we some ongoing the year. as and operating is, XXXX to Before of in expenses. have management into like as we this of margins that our to

second exclude compensation and our and expense enterprise As they this to comments the expense sales I my Sales spend of discuss the stock-based second year. equally marketing expense spend Generally refer variances and marketing categories, organization. quarter increased of XX%. will between year cost split is category last between quarter this of and the the

work the As spend. to always, we on return on investment improve the

as flat to XXXX. quarter of relatively As marketing second quarter the higher the as year quarter versus more a compared year, XX.X% second the sales of from to personnel costs of increased percentage to was and and XX% well costs development last customer revenue, second and expense compared from XXXX as platform. primarily first consulting the of by General expansive expenses XXXX. X% building to decreased a and quarter related quarter first administrative the increased due this of Product

G&A were of percentage quarter year. second the revenue, a As in of as XX.X% XX.X% expenses last compared to

results As have improve I margins and the margin measures throughout to quarter to continue to we continue that to our XXXX. stated actioned have decreases been already calls, prior in of The our G&A early performance. in we this improve work work show cost-cutting

the the second expense six as XX.X% months Income effective quarter $X.X and the Our was months million three for for was ended by higher XXXX. XX% Media. compared write-off our tax by June XX/XX/XXXX ended for investment in driven decreased tax XX, was second to the in rate discrete the the provider a of The content which SilverHub same primarily item, a XXXX. for quarter period rate

net to that discrete ended were Webdam our tax guidance. taxes effective a be the important sale compared XX/XX/XXXX, the range, and year the of (XX:XX) in XXXX expect available and that information. on provisions net SilverHub based first cash relevant six as best low-to-mid-XX% Jobs rate Act] XXXX. tax paid at impact Job $X.X million in is of The of the the write-off, which items of is rate provisions effective is this the of half cash of taxes our months will the Most on estimate Tax refund Excluding the full Act of we of Cuts $XXX,XXX the our with of act actually based consistent during and the that [Tax (sic) point the Cuts and

last the quarter. grew $XXX.X to approximately a X% second XX% business. $XXX,XXX, decrease during And and investment was $X.X approximately or SilverHub last will information income was of of diluted million per diluted share, GAAP of long-term $X.XX our income in the becomes million $X.X $XX.X or Adjusted GAAP guidance net to per of in in to million to of was We $XX year-over-year loss last decrease monitor million The due of e-commerce in diluted year. million our continue diluted quarter $X.X million business $X.XX diluted approximately $X.XX Media. to second share from and to $XX.X to share, total of additional of to the implementation net revenue as second in the compared write-off XX% share the or per tax available deferred enterprise the per loss second income year. for which is Adjusted year compared of a the for million which XXXX, our primarily $X.XX net net related quarter income net $X.XX relates share quarter year. is quarter as second quarter the or EBITDA per

of equivalents. decreases $XXX This million cash was the well quarter, to cash the purchases. quarter, change operations, second flows flow of $X.X offset a flow which cash from partially the expenditures XXXX. primarily and free by payments to for of At sheet, in capital approximately driven was in as of and acquire had $X.X cash by in content used quarter content. decrease second cash cash from expenditures end million, we includes as Moving balance cash was flow $XX.X the cash Free operations. of from the cash and we Free million million capital generated cash decreased

the As a that per of of to announce pleased in amount has share. Jon special mentioned Directors $X earlier, we're our Board cash declared one-time dividend

cash we sale The $XX.X with has have strategy tax strategic that received to on to while was that a go prospects shareholder the dividend and fund strong as will liquidity XXXX, well for that net of plan returns. and on us And a cash based Webdam. to to year-to-date our made consider to variety basis, we, a year including the million strong confidence payments. operational also enables in of proceeds on factors, been growth providing our us lastly, cash flexibility from approximately Our no The The decision to XXXX $XXX several August to in on in be operations close made target record payment pay with payable maximize special dividend on maintain aggregate operating the million, of to cash of million. business opportunities generation, of position dividend approximately amount on flow XXXX (XX:XX) will hand August the connection be the XX, stockholders of $XXX XX, XXXX. be as

for cash will of evaluate continue have to we we done shareholders. generated to appropriate our in As historically, use maximize returns the business

financial previously remain guidance, it the As our XXXX our of to our XXXX reiterating relates year guidance are for XXXX. for and provided expectations full we financial unchanged

in which the the quarter this year. reminder, two months of our we for in the financial first excludes owned a results guidance As Webdam

included details earnings press in of the release. today's guidance All are

on recognized We your may EBITDA gain Jon and XX%. now and Shutterstock. financial adjusted reminder, again, $XXX outcomes for to XXXX, and any again, of million in primary $XXX adjusted today's representing which once between detailed time between and million, once we for today the happy growth XX% and $XXX excludes $XXX answer be EBITDA XXXX; and we of you a As the guidance your appreciate I expect a Webdam. between of versus And that the growth release, million representing XX% the between questions have. will in And XX% sale interest million, revenue are,

questions. Sonia, for prompt the participants

Operator

Thank you.

Robinson Squali of SunTrust question Humphrey. comes first from Youssef Our the

now line Your is open.

Youssef Squali

you questions and good very for me. Two morning. Thank much Great.

And be just a continues it First, on to looks on Can second leverage core half, end well. us looks in do your imply coming margin help like the should business pretty guidance line, your even pretty generally understand from? like speaking, to guidance, certainly amount. dollar margin you where that most of strong adjusted it the or top just of the EBITDA the lower EBITDA acceleration Steven, get and to would

this the into as to that mind XXXX, double-digit the As FX Thank we look looking some are growth have to I at be business. rate sustainable How in headwinds XXXX was XXXX? at going impacting the you. we is you're and business going beyond your go

Steven Berns

So, Youssef. thanks

As move factors move infrastructure we of costing the quarter us far re-platform we that XXXX, previously as first from in we to year our guidance number early the our the of a talked tech other a it it to last reduced of the in quarters that money the we that second we the more of half, of some couple now, And second year stack. that year, quarter, as into are fourth year will significantly as about AWS, to had the decrease – for part as this related throughout half the labor and year there external of have. quarter the the were of of efforts our first as to relates

So there of are a number factors.

report guidance but of we as that have into that the seen feel just focused the the continue and days are we expense profitability growth focused the quarters, on we confident not revenue with achievable. see, months levels that actually to Taking and and we're we on account While that reduction. very our in are

well and So but it's both top as as just consistent, expenses. the revenue to it's (XX:XX) stay expenses we not the will once again, need come through line

we As it provide, the it growth. beyond obviously, as XXXX, numbers to reported relates relates to

performing into XXXX refer and We us our what part I organic images growth back the we charged had as both e-commerce in Jon growth. in and things those do do which business, been e-commerce of to The decelerating our enabled and as really well. continue that level have the highlighted I'll not has provided to also think was forward new our that to We many latter that XXXX comments. platform have business and of

customer that platform. time feel We're growth growth. seeing second nothing tells double-digit growth, at downloads very fourth rate. flat a is as us quarter, the quarter growth quarter that healthy seeing We're in good we So of about, good increase We're seeing was period to differently. quite good of sustainable it while was this talked first paid point. the download we some for There's utilization relatively

would give of So, that we don't see indications us pause. anything

Youssef Squali

then helpful. somewhat lastly, Okay. and is And doing between you've did far, which left That's much on How which guys doing mostly decide dividend you what a buyback was surprise. on dividends, of just how the buyback? been Thank is the you. books? And so

Steven Berns

buying relative tax buyback well at, the remains tax at prior all for want really, between $XXX our so, of timeframe the and to dividends the volume as the looked to difference the share we materially you but will shareholders the law, in of terms on factors cap gains don't capacity it to board our as in rate be is of from repurchase, When about impact our the rate when million relevant speak I the available of daily And we various consider the not comes impact many, price authorization. changes in shares dividend would to different. trading of So stock shareholders. all versus the for do which course,

Youssef Squali

it. Got

Okay. Thank you.

Operator

you. Jefferies. our And Brian question of from Fitzgerald Thank next comes

open. now Your is line

Alex Giaimo

could on Thanks. some talk maybe for are to you Alex the morning. This the any How impact had taking thus is infrastructure Maybe the far cost our then about and And move side, commentary GDPR Thanks you've business the Brian. Giaimo regulation AWS? made you just progress around in questions. there? far? good first just along Hey, on that's on the for

Steven Berns

Yeah.

So, let first. take me GDPR

to it was course, compliant to of be I we're expected work disruptive are. done with GDPR, necessary As know all comfortable have – it we it with have, some and GDPR not where their to we would I relates be business. the say folks to

at all. We have not that experienced

a it I steps, at take level and, certain disruptive all. work of of not think, business it to was our us been course, while so, required has global And to

AWS, we of impact points move margin throughout the would what As have to along basis XXXX. was decrease that it to XXX I well we're would that relates said

we've yet we'll cloud. what of don't moving We are at doing this on to in have AWS is, will in in and we're a things where and a at we're hybrid gives a the environments a folks that both certain while it future flexibility our I the to providers a technology And us manner because point a in of containerize the plan. in this environment, the specific so lot co-location. done a this percentage and application if storage in necessary. move cloud it the infrastructure, gives have confident we're utilize flexibility, cloud as have allows from a take in still moving very with pricing we're done getting other around that that way and us portion we're the we've we're But that maintaining place time, we them, good reminder, done this activity once again, our because us

Alex Giaimo

Steven. Thanks, great. Okay.

Operator

you. Thank

question of next from Our William Ralph comes Blair. Schackart

line now open. Your is

Ralph Edward Schackart

Two if could. morning. questions Good I

working talked growth of AWS Can through, as to double-digit about other us some perhaps, perspective but you able potentially margin you optimization On little at side other e-com of where noted? was that thoughts the around the longer-term, you're the of more for of now to you sustain about, it a being particular the all new business? about long-term factors some in and the some some was Was just side sort driving could driving some structure sort bit give the pronounced margins you then one that we business talked think you that tech Thanks. factor Steven, And the or go things and of there that. across the look OpEx. or the execution reacceleration, pricing platform, and

Steven Berns

Sure.

have, testing Editor by steps, it to usage driving wasn't there. of and the payment the item new there enabled we're the good any and of those, implementation which there, the components factors is platform, of e-commerce to as all what implementing these and those we packaging, single localization customer growth has traction. small all of platforms, us (XX:XX), take enabled all contributed greater customers the have pricing, So that again Really, our growth, A/B relates it the the very to the

enables area things I move other what – the those think, all a tech the to new was platform.

the a I and move enabled are platform really the engineering while our our to So key our say, attribute drive that product would speed productivity marketing enable execution, the then all, was to really business to real and and of a those teams folks teams that.

some As time of lower, look infrastructure our it with relates that we costs of to there should with think long-term structure to don't that marketing. margins, run the there we believe talk incremental about and when able adjusted scale. pay this cost royalty And run This than out margins significantly to we revenue. in at that to EBITDA each this our XX%, be structure, that margins that businesses contributors, margin. are the look and mid our We we does the business XX% similar we generate we we ours level have know generate but higher we and at higher more business other

see savvy for the isn't move to that. foreseeable improvement we that's that we to level. a believe to there blocker continued achieving in So, Like to said, we'll move us I as get we more this technologically anything to that have that future, AWS, margins platform,

Ralph Edward Schackart

you. Thank Great.

Operator

Thank And Deutsche Lloyd our of Bank. you. comes next question from Walmsley

open. now is line Your

Seth Gilbert

Seth actually It's for question. Lloyd. the taking for on Thanks Hey.

I if two can. Just

enterprise you And their most you're us the all, any from in enterprise new existing additional uptick, clients the about the just strength and can Thank what the spending, talk Custom? it Cup, on Wedding of seeing color World you provide that? strength coming is if out can Royal you then of the also would where of good so this clients is British is be, or business coming just a portion the tell First you. expanding from from you Custom? And then percentage follow-up could and curious called it

Steven Berns

we the the a relates Custom compared basis or business. it overall to minor driver year-to-date as has new but business, not And our the as impact amounts customers to some second overall many So enterprise, it of forward. of customers piece has a is potentially important as go enterprise the it serving in of was enterprise contributed on in quarter offering material business to It globally. an that are relatively positive well we as our to lots

customers, have As versus and new continue good utilization. very customers we both win it relates existing to to new

Our have value attracting new driven because it which have enterprise really that is that the us customer also customers. important we're in sales had the well both they've level to but delivering our teams renewal performed show customers, and teams utilization, activity when of our conversations having success enables proposition it's for

As the activities, other Wedding editorial World our and people drive Royal it relates to to that platform. Cup,

to the that for and events have like to more enables those, While platform be when you those people – does come back it like connected drive businesses and to other the platform the items. them media major

in those not about driving they while So of really events, are it's and what of itself they important event do in traffic. the terms are

see editorial to the come They're have for to the the made great side. traffic. we've were and lots editorial updates to they great and so, revisions And we offering for on people

feel and number them our that. good how response we client The overwhelmingly events of So really about we we positive. covered has covered, been

So we to for feel to like push that's another lever us on. continue

Operator

turn Thank Berns our closing question-and-answer and ladies like session. call to any remarks. I the would gentlemen, back this does to over you. now for And, conclude Steven

Steven Berns

we you. to next I appreciate today everybody's time to Thank speaking you forward look quarter. and

Operator

in today's participating This program. concludes conference. for you thank gentlemen, and today's Ladies

a Everyone day. great disconnect. all may You have

Shutterstock (SSTK) 1 Aug 182018 Q2 Earnings call transcript