SSTK - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to your Q1 2019 Shutterstock, Inc. Earnings Conference Call. [Operator Instructions].

As a reminder, today's conference is being recorded. I would now like to turn the call over to Steve Ciardiello, Chief Accounting Officer. begin. may you Sir,

Steven Ciardiello

Good Shutterstock's and Call. First Operator. joining you us for Quarter morning, you, thank everyone for Thank XXXX Earnings

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

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

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

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

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

we prior was Lastly, sold the of XXXX as QX a reminder, and Webdam to XXXX our in results, Webdam in sale. February included therefore

are from commentary a quarter Some of provide And of state the first now, XXXX. I we results basis comparable are of that our that excluding meaning today to turn Webdam, excluding over Jon. will to specifically it the the call XXXX of to our we quarter will first

Jonathan Oringer

XXXX you Thank call. first today Steve. us earnings quarter Shutterstock's everyone Thanks, joining for for

believe of Head welcomed to Co-Chief to and deep to execute President and positioned of better expertise addition as Digital Executive and are serving with our e-commerce, in to and strategy our ongoing customers, growth. my of focus we the and Vice Corporation. drive Meredith recently to more customer Stan, remain in plan of the Meredith digital President I of We fuel innovation our most the contributors and to space teams report strategy First, product, our marketing in Stan we joins will I X areas Pavlovsky Stan most contributor April the Operating Operations. namely experience and with vision, I for Strategic where time pleased as can have of on value Officer the us The add long-term business, are best creating technology company experiences. our our on growing and continuous to employees. the possible improvement and across further focused Stan. business

first XXXX onto our quarter moving performance. Now

we see growth the and revenue of on talent, quarter, in and first network, to the remained three During focused pillars our profitability. continue platform, we strategy: and

enhance our several including than more on anytime, registration Android and content make platform. network ever features XX firewall contributor to improving We languages the their contributor experience tools in continuously We to and our strengthen on upgrades to on platform The with the Android experience our our while and to the iOS and enhancements, continue focused iOS. high monetize for upgraded makes customer anywhere, effectively users it scalability through our We of several and available and developed performance easier enhancing launching platform. network several marketer both stability in-app app content. and and completed our enhancements

We try [ph] should a also any and really iOS which feature our View recently camera It's cool in wall their allows Shutterstock's position against XXX users everyone million images application, it access their virtually over of phone in a to released room choosing. Room out. of and the

initiatives. to quarter quarter in progress first X.X% grew a XXXX from on impact quarter of from management which our the and revenue improvements grew marketing of a reported as of result basis, Our and the technology, Webdam XX.X%.Adjusted was increased excluding effect XXXX of occurred result the foreign of throughout effort, period. the movements, and prior the EBITDA and in XXXX, Revenue many currency product XX.X% cost in grew the the ongoing and of first first

to of increased products. first growth overall devices driven made we mobile load through improvements by Our previous This and technology website our grew in on the platform our page quarter, experience in to including user e-commerce increased a primarily X.X% functionality result stability. is channel the speeds, improvements image enhancements improve quarters,

specific continue customer to our APAC. sales focus efficiency marketing The in first enterprise X.X% to quarter strategies business to continue grew to our our and we of as rates XXXX, as compared with In on revenue Europe growth growth in first deliver and the our We ROI driven of on incremental accelerating XX% primarily strong from offering, represents focus well as go-to-market initiatives, implement channel, capabilities. approximately enterprise revenue also in and value. and footage growth the increasing quarter, conversion lifetime

has brand to team it done compelling clutter new in value largest create buildout campaign, all We cuts our message video Festival the customers. in drive Fools and quick the our how have to within capture Shutterstock' than strengthen first platform of April marketing launched brick-and-mortar which elevated telling of in marketing library, to Prank -- marketing and content them, our the that quarter our show first we the the brand have not customers, we we through the stock, world's activities Our Fyre launched amazing and bring messaging further 'It's the These brand released community. work the new great and our it's shoot of is their and affordable rather home. Video

Getting on on activities, analytical will marketing our we lead believe in the with We have and areas. our the specific along the will are response encouraged a more work marketing these marketing return continue brand detail by combination team we the of years increased acquisition the the a of of differentiate brand-building developed machine high and highly efforts over generate into to for and past to market. future. investment further product customer The to our Shutterstock ph patience honed XX

X,XXX editorial and entertainment to the Our traction as gain sporting continued we quarter. events offering to provided over throughout coverage

engagement on levels product, quarter access self-service XXXX of increased are in was the from which comprehensive e-commerce and to customers of collection. launched We for provides our editorial the fourth seeing editorial

which editorial XXX,XXX Select add As new average our and collection grade images last cameras. tier images contains are filmed equipment, highest video per including red footage, in our we is November. new Shutterstock of royalty-free our offering, we a similar a video reminder, more video on seeing editorial content over than offering we premium This on In is million value month. XX momentum available production launched

Shutterstock and API solution deliver offering, partners. our continues up developers released improvements platform will platform help integration, time speed our to to growth amount our developers more integration API kit help which they will with reduce This integrate launched takes our and has product applications first API Our build. integrate the help software partners. We more to to launch development represents for the into of it steady easily

which We increase end of XXXX. of their we partners who more since subscription the quarter XXXX, have daily At API Shutterstock In workflows. also first XX% products, customers built the their the offer users to XX,XXX recently launched had API. in reached platform an the of our can quarter Shutterstock contributors, applications solution quarter, XXX,XXX first of the using than over

cash we growth our I'll our shareholder revenue contributor enhancements ability and in our improve to and confident over continuing experience. languages deliver In from to improvements, flow growth, network to our the global in contributor increased believe from We on a to ultimately long-term call our opportunity turn available in and the remains ongoing resulting user margins for successfully market strong I'm financial XX, summary, that, to With strategy review. operational languages and more X Steven detailed see increase to increase the XXXX to contributor platform drive execute the value. expect process

Steven Berns

everyone. good and Thanks, Jon, morning

to a know call. in a contains of downloads X.X% X.X% an our on reported for constant paid brief our website download on the information supporting on revenue Before high discuss million, first to quarter a I basis. that and deck per materials metrics XX.X we've X% let performance, currency all-time Reviewing I key of today's our you some want that basis, on a year-over-year posted grew grew basis

reported X.X%. expanded images first Our of growth million February our currency as items to was increased fluctuations. in sale and foreign over the video Two in growth Webdam clips. XXX which and image were library million XX% XXXX over first impacted revenue the quarter XX our library XX% quarter by to Revenue by

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

XXXX continuous grew finally, approximately XX.X% same both XX%, and the income. to first in period $XX.X movements Adjusted approximately of EBITDA an was the compares by the revenue. the first driven the a 'XX year for ago, in revenue was in quarter. first in to X.X%. million million, income FX growth increase by impact the And $XX.X XX.X% grew of first our quarter in Webdam, revenue in Webdam Excluding primarily Operating efforts cost $X.X and quarter, from which of quarter, the management growth operating excluding the increase million driven quarter

X.X% to improved in efficiencies growth The to platform acquisition was channel which the our led by to revenue into first prior from first XXXX $XX.X and and earlier, trends. XXXX, mentioned Jon e-commerce quarter. continued steady year compared As driven improvements the as million quarter marketing the retention

$XX.X enterprise revenue channel million. quarter to grew in Our the X.X%

movements currency our XXXX impacted e-commerce unfavorably and enterprise. growth Foreign in

million $X.X in XXXX. in income one-third diluted euro -- that $X.XX quarter of the share diluted and majority of decrease the net revenues per approximately pound first of quarter in of for As foreign was GAAP from $XX.X revenues currencies the income with denominated a $X.XX British million or reminder, first net of one-third are our sterling. per a share, those or

as importantly, to from of increase Webdam. million with our earnings East. the $XX.X derived a the prior items, was net on gain States. income share Canada and excludes outside customers amount, quarter coming per for two-thirds this Adjusted of represents XX.X% from or among million Of reminder, quarter of that sale ago, about approximately on Asia-Pac, from balance periods, includes same the $X.XX of Latin the $X.XX a year-over-year. of per Europe a which net first United the the diluted first XXXX, income, were in customers in the Middle sale and XXXX and Consistent period diluted recorded XXXX the the the with America, half other year was in revenues compared per However, $XX.X share or gain Webdam, share as a

revenue First was expense, expenses, versus quarter with quarters. quarter The revenue, the as prior direct stock-based varies driven X% was growth, to expenses. which marketing by well increase operating as XX.X% Contributor in XXXX. which in our compared increases relatively royalty expense constant our increased as increase approximately remained first an of excluding comp, of royalty has

equally quarter variances to first XX%. the quarter expense, categories, spend expense my to sales last cost between details the and the due compensation discuss first marketing X% in marketing Generally will I first split expenses quarter of revenue the our of year. and first prior stock-based of they compared first of the this lower year, XXXX development XX% quarter as and the XXXX. Product and As XXXX cost comments spend of of personnel the and enterprise category in quarter Sales between XX% was marketing refer of consulting to of expense decreased versus costs. and of organization. Sales exclude primarily is increased

a XXXX the expenses XX% quarter first General for and percentage were the X% remained flat XXXX. of revenue, As of product period. development the versus from administrative of costs revenue in quarter

first percentage compared quarter on million XXXX.Moving pertaining on As of Webdam. gain XXXX the million of revenue, $X.X expense of of last includes Income of G&A XX.X% the sale were quarter $XX.X in as XX.X% The XXXX the a with expense taxes. quarter in to year. was versus expense in expenses tax to the taxes first an first the

XXXX effective XX.X% in quarter rate XX.X% tax first was compared to XXXX. Our

our XX% million, end which balance the as approximately the During of the of a $X.X channel. quarter our quarter net cash March first a channel to net as quarter. to and $XXX,XXX XXXX revenue compared deferred revenue, the were XX, our relates million XXXX's was deferred paid of ended in look taxes to of Taking XX% refund at XXXX, received enterprise approximately $XXX.X first e-commerce

flows to the sheet. Moving balance cash and

positive We position. a capital continue to strong working maintain

first decrease from flow Free driven operations XXXX. the as defined million was from a million offset cash purchases. operations. of cash content first an expenditures and quarter less was and increase free the operations from $XX.X for last cash in a of payments million, year. primarily quarter capital quarter, is flow In decrease flow quarter, $X.X acquisitions, content free cash the was million, of increase The from by first net expenditures $X.X the $XX.X cash capital lower in For by cash cash provided by flow flow

levels business the we cash the quarter $XX and manage CapEx reasonable actively of equivalents. had cash that At the We're for million, of decrease our of the are end Lastly, quarter in the quarter, expenditures believe to are first $XXX to growth. managing million $X.X of in a XXXX. million capital first a from we were expenditures the size our of and continuing approximately capital XXXX, and of

flexibility continues cash and providing us opportunities. operational while Our maintaining strategic growth that with a to be to liquidity enables us strong the strategy operations fund position to consider

generated work have shareholders. we expenses believe and cash all objectives continue evaluate we As enable we strengthening to of us for done in our continue we the we to XXXX. achieve growth profitability deliver the historically, channels and our sheet, managing to have business and to will across for of return business will Overall, our appropriate balance use maximize revenue done

release. included guidance guidance XXXX. today's financial in All provided previously our reiterating are We for the details are press earnings

please have. million; capital you the questions. $XX prompt Shutterstock. would and XXX XXX million For adjusted XX%; low your the now, to appreciate I equity-based tax is million and capitalized million Jon XX of of including of questions and answer our growth the interest of for between revenue full approximately expenditures, compensation guidance Sidney, an and XX% for mid-XX%.We growth operations be representing year and $XXX finally, income $XXX ; of any of in and $XX , between approximately time XXXX, XX% and , to $XX XX%; labor and rate may from approximately happy your to EBITDA today of in non-cash effective expense And between between participants million

Operator

[Operator Instructions].

Our with Youssef from first question SunTrust. comes Squali

Nate Nalibotsky

This is Nate Youssef. on for

believe year full I year guidance growth. XX.X% your organic your implies fiscal to So FX-neutral XX.X% --

And so in bit came that. this you below quarter a

in, linearity between So that you color and what e-commerce, that across you accelerate guidance? does quarters areas And well, will be you we're to what then your acceleration look helpful. like, wondering confidence maybe what full on gives then see year can enterprise would as the the the

Steven Berns

e-commerce the in side, let I'll I'd first and seeing on Steve. acceleration our I'll jump say there. we're

platform studio very well. new is performing Our

continued us also lot then users. a on It customer through revenue for key need on conversion continue and more the our flows to to increase optimization As with to make platform, to gives generate our we we improvements pages that also the flexibility plan. performance to our see move more we KPIs

premier includes which subscription. SMB On product is is enterprise say product, working side, the what improving the the strategy. I that also team go-to-market doing our we're We're our and would we're on

them move really all best. marketing bit business on flow working which prices to an taking us as reps and both of improve We're a environment the like we how and of to and to understanding really optimize certain pipeline, how needs continue those. changing have into the [Indiscernible] enterprise from leads at kind looking SMB of side. And catalog our right product those a continue be our working point of need and revenue to enterprise et marketers are back-end scrutinizing enterprise at inflection customers. to continue we generate and how prices and cetera. on our customers of the the sales product, and the the looking our the where right where change products. change we and just to includes We're we're kind further and a reps really the can are, and lead marketing well, We to around they understanding of [indiscernible] they customer, to of over strategy the That also how our the go-to-market further Jon's go improving our grow how these continue is where could spot our looking systems, as sell products answer performance lot understand enterprise we're product time, we optimizing where optimization, towards for to exactly look exactly comments. reach we understanding We're efforts, we including geographic optimization

had I don't Nate, know you a if So, follow-up.

Nate Nalibotsky

before, that at these Maybe maybe studio there. I starting heard e-commerce, if don't just more color digging platform, don't least just some maybe I -- about calls. new -- on with we've in know on

Steven Berns

is platforms. all our single allows the but move really it's service internal name, of towards Yeah, us product platform that do an to what for

service, to how really media what instance, understanding the underlying we our types customers store product kind you can as really and metadata and and of where our look search environment big of optimize services optimization key when in our evolved, need. going for at So has one for also place infrastructure we're advanced certain of

this displayed to different metadata page as in kind images can ways, leads asset ways of the we way of metadata. based index on will services customers that And evolve interesting start that on going or So different different is similar way more types, and cross-sell able creative that and make different are products That our platform, show discover our ways. details our to regions. our all and using algorithm asset we more search progress to we're in to continue on continue which be when we to start be the to to we in and

Nate Nalibotsky

thank it get enterprise back it's way Is then to going probably take sounds enterprise, I maybe right to maybe may more really drilling for is things about that some e-commerce time? you right it, that, Got -- take here that. going on time And think then the some direction in accelerant guess, to there. the the that like and

Steven Berns

it's the say year fourth for this would I enterprise was quarter. I that quarter and first think growth of to ex-Webdam, -- is ex-FX our saw what what we Well, the in relatively in consistent

continuing Jon do we're just improve enterprise. mentioned to to that so And the work the

growth improved. the things past indicated, you As e-commerce number over significant that. significantly has to just the improve -- done of quarters We've many been

of was versus mid-single to for XXXX. growth the the last quarter XX.X% first year, ex-FX that on As an and the talked basis in digit we e-commerce compares growth quarter about in

an hit like the us the we said, we So enable of tools XXXX this point, channels. like to both capabilities feel like and to objectives. I at our the mix again, we us But to have the two growth feel on improved enable

Operator

Alex And Giaimo our following from question Jefferies. with comes

Your line open. is

Alexander Giaimo

to been there have and how of platform? you other overall And just are on capabilities comfortable update Jon, way music the then have businesses progressed? forward, provide some businesses Thanks. the Do can add maybe editorial? to performing, non-image you feel there with the you mainly are an those looking moving any

Jonathan Oringer

Sure. Yes.

types, we So image besides the asset be about on platform. continue excited all to our

can one. through them one I think I go by

on a few is that music, the than If you bit acquired a continue product. the user and of music. it's -- at other a bit years you we sell way we That PremiumBeat that ago to look different interface ways work because different

of to you of the are And to and that a lot music go kind Today, customer exact details well. elements a see product if of serve premier so like time but need really have customers -- that opportunity with going type of into to those for platform, bring UI/UX the goes of our you'll to we over platform need Shutterstock some as we integrated on over the well, which be that kind premiumbeat.com, product. there as website, enterprise website that there's and Shutterstock continue the PremiumBeat that

were If lot we into just continue we that our to we channels. images wouldn't signed that before you to to continues to our entertainment And that news, it a deal gives those continues have us we well to again, look more and at get some sell get we We to AP customers. products services and improve before continue which and sports able sell editorial, current that as allow of been -- selling customers us to there.

first studio first could at platform, days see to today the that If you about our Footage onto entered different which from to it platform. was sell the the ways footage, as you type when has those customers continue asset look to think well. improved we

onto those common, of those and studio get see [ph] footage stacked put between image results. image. improvements applied key even code search pages to on could platform, that, those which both flows, that the image will as get well, also you on Some our They're as now by side

micro most to We've between see customers -- image, make we made product, every pretty second to can time six a merchandising testing could continue site And we be. continue two important So months those than and details you our that the of just cross-sell of tiniest year back beat the images six fastest, to tiny to work single just that that's AB it lot a able makes of we're way over going I and the these sell mean to that to differences going the more types. to the improvements that's asset platform. really those of site some past and difference. that be a speed on in our to little And performant a flows biggest ph

planning that So lot to a future. more of the in do we're

Alexander Giaimo

Great. And then capabilities in the be any just follow-up on might add future. to the other looking that you

Jonathan Oringer

there definitely PM kind same the coming traffic the at through, improvements, lists, every I road of mean these are it's really improvements on a thousands goes, across our as there we is and as product -- that our the [ph] and day top XXX ph with far traffic as on. allows The certain sometimes time, X:XX we our time map of make asset schedule between in and types of to more lists, overlap different make different we different improvements all many to improve now as Planet . in of so which AM -- traffic, is XX:XX different is It's on since site, the websites gets the countries the platform, make fully scale flow focus of better, morning right enabled. lot U.S., international, when firing us we the most SEO This we as cloud see and types we're on

look you to kind really that the when so And scale of level, performing technology being at platform able at well. is

upside of lot there. we So we have think a

Operator

Lloyd question Bank. following Deutsche with from comes our Walmsley And

line Your open. is

Seth Gilbert

wanted we Lloyd. associated dig to I Thank two, enterprise the if anything enterprise a with I quarter-over-quarter. little this. there This in be and call bit may. after I walk into addition going about just the on the thinking us have then could FX to further follow-up just it maybe if some business forward? I had how out you through product, Seth wondering Is you. to is went And of one-time drivers should was a negative that. deeper I for

Steven Berns

a flat relates as the the performance, historically of year the relatively to I've think, past, it quarter has as quarter, I the plus prior So been of year. or in fourth discussed, first the quarter to quarter-over-quarter the minus,

of the that trend deviate performance terms -- in wasn't in it didn't from the so first And we saw that absolute. general quarter the

sales it both there on one-time was engineering, an of go-to-market in the anything from the of activities a to a some was would level activity, point from was question of of As in selling the we're we from nothing terms lot on about but all those, is a no. answer that to of relates that a talked the there that product, change. or -- solution improving a capability, What key from nature, doing, I quarter-over-quarter year-over-year in

Seth Gilbert

business an to how the any Thank that follow-up And is, you. update signed wondering been on on just deals just and any Thanks. Flashstock or progressing, information that is willing large have that share? you're

Steven Berns

I'd things. say a few

customers. of enabled revenue a our is We've some in others, the an product, continuing is both absolute custom be behalf say business by an of our I'd work part First, break but growth made we growth -- is in out believe Jon? don't feel details, terms and it of it. part certain still has it It we strongly important need technology and in customers again that to but with it that significant not improvements important important platform on that continues opportunities invest are does offering to an product part and and of in once we which it of the we the can Shutterstock has portfolio way to enterprise and customers. conversations strengthened product significant

Jonathan Oringer

buy easy to of photo how a created, you to the photo to end as we -- to a productize of -- -- image the customer for as customized, would the get the to that technology just need as of I product actual the looking if side, that solution stock. that on improve it day. of look wants thing the that only easy that right? as little work is exactly amount process never at close We the stock kind brief But The briefs that's bit. manual So it's do. you but It's are it, needs custom add want we continue the stock as think nature so as a that you'll at stock makes modify really we're to and someone it's it, reduce about

So at into client to custom. right the image be get the and and that customer quick die understanding with can automated, customer C type other if mechanized think and to their for how brief is we happier customer as in at operator, the -- time, customer. the right, of really kind All produce cuts get able we so of an day the match BXB questions? kind in that will intelligence of that as of of we'll all kind field, any be flow, can way, right the we That's their is possible that photographer end about that the and he

Operator

I'm the further for turn now closing no at would back questions time. like I call this to remarks. Berns showing to Steven

Steven Berns

not We appreciate speak interest in all quarter. before, speak Shutterstock and you to everybody's if of soon, to you. next you Thank

Operator

disconnect. participating conference. and Ladies all you and gentlemen, have conclude does you a great in may day. today's Everyone This the program thank for

Shutterstock (SSTK) 26 Apr 192019 Q1 Earnings call transcript