Shutterstock(SSTK) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company's financial statements for the period ended June 30, 2025, show significant year-over-year growth in revenue and net income, largely driven by the Envato acquisition and expansion in data offerings Consolidated Balance Sheets As of June 30, 2025, total assets were $1.376 billion, an increase from $1.309 billion at December 31, 2024, primarily driven by increases in accounts receivable and other assets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,376,451 | $1,309,156 | | Cash and cash equivalents | $116,410 | $111,251 | | Goodwill | $575,249 | $569,668 | | Total Liabilities | $790,288 | $790,806 | | Deferred revenue | $226,719 | $225,489 | | Debt (Current & Long-term) | $276,227 | $277,704 | | Total Stockholders' Equity | $586,163 | $518,350 | Consolidated Statements of Operations For Q2 2025, revenue grew 21.3% year-over-year to $267.0 million, and net income surged to $29.4 million, driven by higher revenue and a substantial gain from other income Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $266,990 | $220,053 | $509,610 | $434,368 | | Income from operations | $34,731 | $20,666 | $44,932 | $37,412 | | Net income | $29,440 | $3,625 | $48,128 | $19,746 | | Diluted EPS | $0.82 | $0.10 | $1.35 | $0.55 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $52.1 million, while cash used in financing activities decreased due to lower share repurchases Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $52,083 | $36,265 | | Net cash used in investing activities | ($26,199) | ($8,227) | | Net cash used in financing activities | ($29,699) | ($50,778) | | Net increase / (decrease) in cash | $5,159 | ($25,619) | Notes to Consolidated Financial Statements The notes detail significant events and accounting policies, including the pending merger with Getty Images, a $5.0 million investment impairment, and revenue breakdown by offering - On January 6, 2025, the Company entered into a merger agreement with Getty Images, which received stockholder approval on June 10, 2025, and is subject to customary closing conditions, including regulatory approvals[32][33] - In Q2 2025, the company recorded a $5.0 million impairment charge on a long-term equity security, offset by a significant unrealized gain on its investment in Meitu, Inc., which had a fair value of $51.9 million at June 30, 2025[60][63] - The company is involved in stockholder litigation related to the proxy statement for the Getty Images merger, believing the claims are without merit but making supplemental disclosures to avoid delays[132][268] Revenue by Offering (in thousands) | Offering | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Content | $199,796 | $169,951 | $402,684 | $343,781 | | Data, Distribution, and Services | $67,194 | $50,102 | $106,926 | $90,587 | | Total Revenue | $266,990 | $220,053 | $509,610 | $434,368 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 21% year-over-year revenue growth in Q2 2025 primarily to the Envato acquisition and strong performance in the Data, Distribution, and Services offering, with operating income rising 68% to $34.7 million - The number of subscribers more than doubled to 1,073,000 at the end of Q2 2025 from 490,000 a year prior, primarily due to the inclusion of Envato, which was acquired in July 2024[156][161] - General and Administrative expenses in Q2 2025 increased by $12.0 million, or 33%, driven by $8.7 million of expenses associated with the Getty merger and costs from the Envato acquisition[189] - Other income in Q2 2025 was $12.6 million, primarily driven by an $18.0 million unrealized gain on the company's investment in Meitu, Inc., partially offset by a $5.0 million investment impairment[191] Key Operating Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Subscribers (end of period) | 1,073,000 | 490,000 | | Subscriber revenue (in millions) | $108.0 | $80.3 | | Average revenue per customer (LTM) | $266 | $434 | | Paid downloads (in millions) | 112.6 | 33.4 | Results of Operations Comparing Q2 2025 to Q2 2024, revenue increased 21% to $267.0 million, driven by the Envato acquisition and a 34% increase in Data, Distribution, and Services revenue, leading to a 68% growth in income from operations Comparison of Three Months Ended June 30 (in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $266,990 | $220,053 | $46,937 | 21% | | Cost of revenue | $105,994 | $91,254 | $14,740 | 16% | | Sales and marketing | $57,077 | $51,881 | $5,196 | 10% | | General and administrative | $48,434 | $36,393 | $12,041 | 33% | | Income from operations | $34,731 | $20,666 | $14,065 | 68% | | Net income | $29,440 | $3,625 | $25,815 | 712% | Comparison of Six Months Ended June 30 (in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $509,610 | $434,368 | $75,242 | 17% | | General and administrative | $106,741 | $68,471 | $38,270 | 56% | | Income from operations | $44,932 | $37,412 | $7,520 | 20% | | Net income | $48,128 | $19,746 | $28,382 | 144% | Liquidity and Capital Resources As of June 30, 2025, the company had $116.4 million in cash and cash equivalents, financing operations primarily through cash flow and a credit facility with approximately $276 million in outstanding debt - The company had cash and cash equivalents of $116.4 million as of June 30, 2025[214] - In the first six months of 2025, the company paid cash dividends of $23.1 million ($0.66 per share) and did not repurchase any common stock, with $30.2 million remaining authorized under the share repurchase program[216][220] - The company has a senior unsecured term loan and revolving credit facility under its A&R Credit Agreement, with total outstanding debt of approximately $276.2 million as of June 30, 2025[222][226] Non-GAAP Financial Measures Management uses non-GAAP measures like Adjusted EBITDA, which was $82.2 million for Q2 2025 (30.8% margin), and Adjusted Net Income of $42.9 million, to evaluate business performance Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $29,440 | $3,625 | $48,128 | $19,746 | | Adjustments (Depreciation, Amortization, Interest, Taxes, etc.) | $39,449 | $33,571 | $67,213 | $61,023 | | Non-cash equity-based compensation | $15,625 | $14,976 | $33,509 | $26,126 | | Merger related costs | $8,710 | $0 | $20,571 | $0 | | Unrealized (gain) / loss on investment | ($18,029) | $3,625 | ($31,289) | ($130) | | Adjusted EBITDA | $82,236 | $62,072 | $145,600 | $118,049 | Reconciliation of Net Income to Adjusted Net Income (in thousands) | Line Item | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $29,440 | $3,625 | $48,128 | $19,746 | | Non-GAAP adjustments (net of tax) | $13,432 | $32,272 | $31,036 | $49,272 | | Adjusted net income | $42,872 | $35,897 | $79,164 | $69,018 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency exchange rates and interest rates, with approximately 26% of revenue denominated in foreign currencies - Revenue denominated in foreign currencies was 26% of total revenue for the six months ended June 30, 2025, with a hypothetical 10% change in the U.S. dollar exchange rate impacting revenue by approximately 3%[258] - The company's debt under the A&R Credit Agreement accrues interest at variable rates tied to the base rate or SOFR, exposing it to interest rate fluctuation risk[262] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[265] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[266] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is facing two stockholder complaints alleging the proxy statement for the Getty Images merger contained false or misleading information, which Shutterstock denies but has supplemented to avoid delays - Two complaints have been filed against Shutterstock and its board of directors alleging the proxy statement for the Getty Images merger was false and misleading[268][132] - The company denies all allegations but has voluntarily supplemented the proxy statement to mitigate litigation risk and avoid delays to the merger[270][134] Item 1A. Risk Factors There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - During the three months ended June 30, 2025, there were no material changes to the risk factors as described in the company's 2024 Form 10-K[271] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[272]