Shutterstock(US:SSTK)2023-08-01 17:08Financial Data and Key Metrics Changes - The company reported adjusted EBITDA growth of 23% year-over-year to $60.1 million, with adjusted EBITDA margins increasing by 510 basis points to 28.8% due to modest revenue growth and effective cost management [37][60]. - Revenue for the second quarter was $209 million, with the Enterprise channel growing by 22% driven by data engine revenue of $70 million, marking a record quarter [60][61]. - The company raised its full-year revenue guidance to a growth range of 3% to 5%, translating to revenues of $852 million to $869 million [41][67]. Business Line Data and Key Metrics Changes - The E-commerce channel experienced a decline of 12% in the second quarter, primarily due to challenges in new customer acquisition [61]. - Editorial subscriptions have shown strong early momentum, contributing to growth in the Enterprise channel alongside SMB subscription products [50][60]. - The creative engine has expanded significantly, with Shutterstock Studios delivering approximately 50,000 unique productions in the past year [10][24]. Market Data and Key Metrics Changes - The average total contract value (TCV) for data partnerships increased from $350,000 in 2021 to over $7 million in 2023, reflecting heightened customer interest in licensing larger elements of the library [27][60]. - The contributor base has doubled year-over-year, with submissions up nearly 30% year-to-date, resulting in a content library of 784 million licensable assets [29][56]. Company Strategy and Development Direction - The company is focusing on enhancing its data engine and creative offerings, particularly through partnerships with major tech firms like Google and OpenAI [6][55]. - There is a strong emphasis on generative AI, with the company positioning itself to capitalize on the growing demand for AI-generated content [8][58]. - The acquisition of Giphy is expected to significantly enhance the company's advertising capabilities and expand its reach into conversational content [52][65]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing the potential for growth in generative AI and the importance of indemnification for enterprise clients [9][22]. - The company acknowledged challenges in the E-commerce segment but is implementing strategies to improve conversion rates and marketing effectiveness [34][48]. - Management highlighted the importance of ongoing experimentation to understand customer needs and improve product offerings [73][86]. Other Important Information - The company announced a new $100 million share buyback program and repurchased 80,000 shares for $4 million during the quarter [40][66]. - The acquisition of Giphy was completed for $53 million, recognized as a bargain purchase gain of $42 million [65]. Q&A Session Summary Question: Any early progress on conversations with enterprises regarding the new indemnification product? - Management indicated that conversations are underway, and while optimism exists, the indemnification product's impact is not included in the guidance for the second half of the year [46][47]. Question: Can you provide insights on E-commerce performance and marketing strategies? - Management acknowledged underperformance in E-commerce and emphasized the need for increased marketing investment and improved conversion strategies [48][73]. Question: What is the outlook for data revenue retention in 2024? - Management noted that the ability to grow data revenue will depend on expanding existing relationships and acquiring new clients, with no specific guidance provided for 2024 [75][76]. Question: How significant is the advertising opportunity with Giphy? - Management believes the advertising potential from Giphy could reach hundreds of millions of dollars over time, indicating a strong long-term outlook [77][78]. Question: Can you elaborate on the traction in Editorial and Studios? - Management highlighted strong demand in Editorial, particularly after the Splash News acquisition, and expressed optimism about the growth potential in Studios [93][94].