Shutterstock(SSTK) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Shutterstock reported an 18% year-over-year revenue growth in Q3 2021, with e-commerce and enterprise channels both contributing significantly to this growth [11][27] - Gross margin improved by 70 basis points year-over-year to 64%, consistent with the previous quarter [29] - GAAP diluted earnings per share was $0.43, while adjusted diluted earnings per share was $0.70 [33] Business Line Data and Key Metrics Changes - E-commerce revenue grew 18% year-over-year, driven by strong performance in subscription offerings [28] - The enterprise channel experienced a 17% year-over-year growth, marking its fastest growth since 2018 [13][29] - Subscriber count increased by 32%, and subscriber revenues rose by 21% [40] Market Data and Key Metrics Changes - The deferred revenue balance increased to $171 million, indicating strong future revenue growth potential [36] - The company recognized $1 million in revenue from PicMonkey, contributing to overall revenue growth [28] Company Strategy and Development Direction - The acquisition of PicMonkey is expected to enhance Shutterstock's offerings and expand its customer base [14][15] - The launch of Creative Flow aims to integrate AI-driven workflow applications, enhancing customer collaboration and content management [17][23] - The company is focused on transforming into a leading creative platform, leveraging content, data, and workflow applications [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of the enterprise business, despite anticipated slower growth in e-commerce due to tougher comparisons [45][49] - The company plans to increase its full-year revenue guidance, projecting revenue between $765 million and $770 million [45] - Management acknowledged the challenges posed by changes in advertising dynamics but noted that their business model is less impacted due to its focus away from direct advertising revenue [80][81] Other Important Information - Sales and marketing expenses increased to 28% of revenues, driven by investments in marketing and higher sales commissions [30] - The company plans to grow its dividend in line with cash flow growth and has commenced a $75 million share buyback program [38][39] Q&A Session Summary Question: Clarification on Q4 guidance and organic growth - Management indicated that the Q4 guidance reflects a slowdown in organic growth due to tougher comparisons and highlighted ongoing efforts to improve e-commerce growth rates [53][54] Question: Impact of acquisitions on growth - Management discussed the long-term growth potential from acquisitions like PicMonkey and TurboSquid, emphasizing the expansion of customer offerings and retention strategies [55][56] Question: Insights on marketing spend and ROI - Management acknowledged the longer measurement window for brand marketing spend but expressed confidence in the momentum of the creator economy and the importance of brand repositioning [68][69] Question: Performance of FLEX subscription products - Management noted that the FLEX product has expanded average revenue per customer significantly and has attracted new customers beyond initial expectations [77][78] Question: Market conditions and potential weaknesses - Management stated that their business model is less affected by advertising revenue changes, although they are adapting to new marketing attribution challenges [80][81] Question: Allocation of PicMonkey revenue - PicMonkey revenue will be reported under the e-commerce channel, and it will enhance existing subscriptions by integrating creative capabilities into the Creative Flow platform [84][86] Question: Future acquisition pipeline - Management expressed optimism about the acquisition pipeline, focusing on both product roadmap acceleration and content acquisition opportunities [88][89]