Shutterstock(US:SSTK)2022-10-25 15:16Financial Data and Key Metrics Changes - Revenue growth for Q3 2022 was 5%, or 10% on a constant currency basis, with reported revenue declining 1% excluding Pond5 [25] - Adjusted EBITDA for the quarter was $56 million, with margins at 27.5%, up more than 450 basis points year-on-year [29] - GAAP diluted EPS was $0.64 and adjusted diluted EPS was $1.00 [30] Business Line Data and Key Metrics Changes - Ecommerce revenue grew 2% on a reported basis or 6% on a constant currency basis, significantly impacted by weakness in Europe [25] - Enterprise revenue grew 9% on a reported basis or 15% on a constant currency basis, with strong momentum from large brands [26] - Subscriber count increased to 607,000, up 80% year-over-year, with subscriber revenue representing 43% of total revenues [34] Market Data and Key Metrics Changes - North America saw revenue growth of 15%, while Europe experienced a decline of 5%, indicating a 20% growth differential between the two regions [25] - The macroeconomic uncertainty has had a pronounced impact on demand in Europe, particularly in the ecommerce channel [25][10] Company Strategy and Development Direction - The company is focused on integrating generative AI into its product offerings, partnering with OpenAI to enhance its capabilities [16][19] - The acquisition of Pond5 is aimed at expanding video leadership, with a significant increase in the combined video library size [12][13] - The company aims to balance growth and margins while navigating macroeconomic challenges [11] Management's Comments on Operating Environment and Future Outlook - Management noted a softening demand environment, particularly in Europe and ecommerce, but highlighted ongoing strength in the U.S. and enterprise channels [10] - The company is lowering its 2022 revenue guidance to $815 million, equating to 5% year-over-year growth, while raising EBITDA margin guidance to 26.5% [36] - Management expressed confidence in the long-term sustainability of margin improvements and the ability to drive revenue growth [43] Other Important Information - The company repurchased $16 million of shares, completing a $100 million authorization, reducing total shares outstanding by 200,000 [32] - A deferred revenue balance of $174 million increased by $3 million from the previous year, affected by foreign exchange rates [33] Q&A Session Summary Question: Higher margin guidance sustainability - Management indicated that the margin levels are expected to be durable and sustainable, with ongoing efforts to improve gross margins [42][43] Question: Customer demand for AI-generated content - Management noted significant excitement around AI technology, with a focus on providing a platform for exploration and creativity [54] Question: Competitive landscape changes - Management stated that they are focused on their strategy and have not noticed significant changes in the competitive landscape, aside from macroeconomic issues [56] Question: Subscriber behavior amid macro headwinds - No uptick in churn was observed, but new customer demand is focused in Europe, particularly in ecommerce [72] Question: Growth rate differences between North America and Europe - Management highlighted a significant divide in growth rates, with North America growing 15% and Europe 6% on a constant currency basis, attributing some of the difference to foreign exchange [80] Question: Impact of AI on competitive dynamics - Management believes they are well-positioned to lead the change in the industry rather than be changed by it, emphasizing their comprehensive platform [91]