Shutterstock(SSTK) - 2025 Q4 - Annual Report

Revenue Projections - Total revenue for 2025 is projected to be $989.9 million, an increase of 5.8% from $935.3 million in 2024[17] - Content revenues are expected to reach $786.7 million in 2025, up from $760.0 million in 2024, representing a growth of 3.5%[17] - Data, Distribution, and Services revenues are anticipated to grow to $203.3 million in 2025, a significant increase of 16.0% from $175.3 million in 2024[17] Customer and Market Insights - Over 3.5 million customers in more than 150 countries licensed content, with 51% of revenue coming from North America, 27% from Europe, and 22% from the rest of the world in 2025[33] - The company has seen increased demand for access to its metadata for machine learning and generative AI model training, indicating a growing market for its Data, Distribution, and Services offerings[26] - The company has seen increased demand for monthly subscription products, which provide a fixed number of content licenses for a set period, enhancing creative freedom for users[36] Merger and Acquisition Activities - The merger agreement with Getty Images is set to provide cash consideration of $9.50 per share and 9.17 shares of Getty Images common stock for each share of Shutterstock common stock[20] - The merger is subject to customary closing conditions, including regulatory approvals, with the closing expected to result in Shutterstock's common stock being delisted from the NYSE[19] - The company is currently pursuing a merger with Getty Images, which presents risks such as potential delays in regulatory approvals and the possibility of incurring significant costs related to the merger[82] Competition and Market Risks - The company faces significant competition from various platforms, including Getty Images, AdobeStock, and AI tools like Midjourney and Dall-E, which may affect market share[72] - The company operates in a highly competitive industry with low barriers to entry, facing competition from both established companies and emerging technologies[98] - The company faces significant competition that may lead to variability in operating results and adversely affect financial condition due to competitors having greater resources[102] Financial and Operational Challenges - The company has incurred debt which may negatively impact its financing options and liquidity position[83] - The company’s operating results may fluctuate due to discretionary customer expenditures, which are influenced by economic conditions and industry-specific factors[74] - The company may need to raise additional funds for future acquisitions, which could lead to dilution of existing stockholders[130] Technology and Innovation - The company continues to invest in product development and cloud-based hosting infrastructure to improve customer experience and operational efficiency[32] - Investments in technology are critical for delivering user experiences and supporting scalable platforms, with ongoing improvements planned[51] - The company’s ability to innovate and develop new products is critical for maintaining competitive advantage in a rapidly evolving industry[82] Regulatory and Compliance Issues - The company is subject to evolving U.S. and foreign laws regarding privacy and data protection, including the GDPR, which imposes stringent operational requirements and significant penalties for non-compliance[63] - The California Consumer Privacy Act (CCPA) became effective in January 2020, with the California Privacy Rights Act (CPRA) extending its provisions in January 2023, impacting data collection practices[63] - The company is currently under investigation by the FTC regarding its disclosure and subscription enrollment practices, which could lead to significant monetary costs or penalties[189] Employee and Contributor Relations - The company has implemented a Total Rewards program to support employee growth and well-being, including competitive pay and benefits[71] - The company operates a contributor website in 23 languages, allowing contributors to create accounts, submit content, and receive feedback[38] - Contributors earn royalties based on a tiered earnings rate schedule tied to annual licensing volume, incentivizing high-quality submissions[42] Cybersecurity and Data Protection - The company faces risks related to cybersecurity incidents, which could expose it to liability and damage its reputation[83] - Cybersecurity incidents or failures to comply with data protection regulations could harm the company's reputation and lead to significant costs[164] - The evolving nature of cybersecurity threats necessitates ongoing investment in protective measures, with potential costs impacting financial performance[174] International Operations and Foreign Exchange - Approximately 59%, 55%, and 54% of the company's revenue for the years ended December 31, 2025, 2024, and 2023, respectively, was derived from customers located outside the United States[181] - The company faces significant foreign exchange risk, with operations in multiple currencies including the euro, British pound, Australian dollar, and Japanese yen, affecting reported financial results[184] - A decline in the value of foreign currencies against the U.S. dollar will reduce reported revenues, while an increase will have the opposite effect, impacting financial comparability across periods[185] Taxation and Financial Liabilities - The company is subject to risks related to payment processing, including potential increases in operating costs and compliance challenges[140] - The implementation of digital services taxes in various jurisdictions may lead to inconsistent tax regimes, impacting the company's financial condition[201] - The company has established reserves for additional income tax liabilities, but there is no assurance that these reserves will cover future liabilities[196]