Shutterstock(SSTK) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Shutterstock's unaudited condensed consolidated financial statements and management's financial analysis Item 1. Financial Statements (Unaudited) This section presents Shutterstock's unaudited condensed consolidated financial statements and related notes for specified periods Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific dates Consolidated Balance Sheet Highlights (in thousands) | Item | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :------- | :------- | | Cash and cash equivalents | $76,244 | $314,017 | $(237,773) | -75.7% | | Total current assets | $161,052 | $388,215 | $(227,163) | -58.5% | | Total assets | $840,180 | $851,710 | $(11,530) | -1.4% | | Total current liabilities | $360,073 | $333,784 | $26,289 | 7.9% | | Debt | $50,000 | $— | $50,000 | N/A | | Total liabilities | $409,597 | $383,228 | $26,369 | 6.9% | | Total stockholders' equity | $430,583 | $468,482 | $(37,899) | -8.1% | Consolidated Statements of Operations This section details the company's revenues, expenses, and net income over specific reporting periods Consolidated Statements of Operations Highlights (in thousands, except per share data) | Item | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $204,096 | $194,439 | $610,100 | $567,632 | | Net income | $23,040 | $16,029 | $69,057 | $74,997 | | Basic EPS | $0.64 | $0.44 | $1.91 | $2.05 | | Diluted EPS | $0.64 | $0.43 | $1.88 | $2.01 | - Revenue increased by 5% for the three months ended September 30, 2022, and by 7% for the nine months ended September 30, 2022, compared to the respective prior periods. Net income increased by 44% for the three months ended September 30, 2022, but decreased by 8% for the nine months ended September 30, 2022[18] Consolidated Statements of Comprehensive Income This section presents total change in equity from non-owner sources, including net income and other comprehensive items Consolidated Statements of Comprehensive Income (in thousands) | Item | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $23,040 | $16,029 | $69,057 | $74,997 | | Foreign currency translation loss | $(6,101) | $(1,842) | $(11,932) | $(1,552) | | Comprehensive income | $16,939 | $14,187 | $57,125 | $73,445 | - Foreign currency translation loss significantly increased for both the three and nine months ended September 30, 2022, impacting comprehensive income[21] Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including net income, dividends, and repurchases Changes in Stockholders' Equity (in thousands) | Item | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | | Balance at December 31, 2021/2020 | $468,482 | $421,925 | | Equity-based compensation | $23,958 | $26,639 | | Repurchase of treasury shares | $(72,812) | $(4,858) | | Cash dividends paid | $(26,004) | $(23,000) | | Other comprehensive loss | $(11,932) | $(1,552) | | Net income | $69,057 | $74,997 | | Balance at September 30, 2022/2021 | $430,583 | $474,896 | - Total stockholders' equity decreased from $468.5 million at December 31, 2021, to $430.6 million at September 30, 2022, primarily due to significant treasury share repurchases ($72.8 million) and cash dividends paid ($26.0 million), partially offset by net income and equity-based compensation[24] Consolidated Statements of Cash Flows This section reports the cash generated and used by operating, investing, and financing activities over a period Consolidated Statements of Cash Flows (in thousands) | Activity | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $97,289 | $161,858 | | Net cash used in investing activities | $(257,905) | $(242,407) | | Net cash used in financing activities | $(70,277) | $(46,426) | | Net decrease in cash and cash equivalents | $(237,773) | $(127,995) | | Cash and cash equivalents, end of period | $76,244 | $300,579 | - Net cash provided by operating activities decreased significantly from $161.9 million in 2021 to $97.3 million in 2022. Investing activities saw increased cash usage, primarily due to business combinations, while financing activities also used more cash, driven by higher share repurchases and debt proceeds[26] Notes to Consolidated Financial Statements This section provides detailed explanations of accounting policies, acquisitions, debt, equity, and other financial disclosures - Shutterstock is a leading global creative platform, offering images, footage, music, 3D models, and creative design software. Recent acquisitions include Pond5 (video-first content marketplace) and Splash News (entertainment news network) in May 2022, expanding content offerings and editorial capabilities[28][29][32] Allowance for Doubtful Accounts (in thousands) | Item | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Allowance for doubtful accounts | $3,498 | $1,910 | | Bad debt expense (9 months) | $993 | $182 | - Revenue is primarily recognized from content licenses (subscription and transactional) and creative tools. The company acts as the principal in transactions, recognizing revenue gross of contributor royalties[40][41][44] Acquisition Details (in thousands) Pond5 & Splash News Acquisitions (May 2022): | Item | Pond5 | Splash News | Total | | :-------------------------- | :------ | :---------- | :------ | | Purchase Price | $218,014 | $6,316 | $224,330 | | Goodwill | $158,957 | $5,565 | $164,522 | | Intangible Assets | $67,800 | $1,263 | $69,063 | | Revenue Contribution (3 months ended Sep 30, 2022) | N/A | N/A | $13,100 | | Revenue Contribution (9 months ended Sep 30, 2022) | N/A | N/A | $20,300 | PicMonkey & TurboSquid Acquisitions (2021): | Item | PicMonkey | TurboSquid | Total | | :-------------------------- | :-------- | :--------- | :------ | | Purchase Price | $109,395 | $77,330 | $186,725 | | Goodwill | $71,607 | $59,491 | $131,098 | | Intangible Assets | $44,700 | $21,500 | $66,200 | Goodwill and Intangible