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For me, it has become a morning ritual to stumble on a paywall after reading a few gripping paragraphs of an opinion piece someone has shared. Frustrated and wondering whether I should get an online subscription for this or that news outlet, I counted that, to read all the news stories and opinion pieces of interest to me online on an average day, sticking just to Indian newspapers in English, I would need to manage at least eight subscriptions and have the relevant log-in information ready at my fingertips. This is a bit much.

Of course, the online content of newspapers cannot be free, given the cost of producing the content. From the consumer’s point of view, there are two aspects of the cost of buying something we need, whether it is groceries or newspapers: The price of the item and the non-monetary cost of getting it. To get your groceries, you must go to the local market or order online and all this involves some time and effort. Let us call the non-monetary cost the hassle cost (the more formal term would be transaction cost). Is there a way to reduce the hassle cost for newspaper readers without adversely affecting the subscription revenue flow?

For printed newspapers, the standard model of delivery involves a person dropping the newspapers at your residence in the morning and collecting their dues by the end of the month. This continues to be the model in my mother’s residence in Kolkata, as she steadfastly refuses to read newspapers online. However, for a more compulsive newsreader (like my late father, who passed on this trait to me), this is not enough. In addition to subscribing to a few newspapers regularly, going to the local news-stand, browsing and picking up a few more newspapers depending on the content or the need to get a broader coverage of specific events or issues, was also very much part of the ritual.

Online newspapers made browsing easier by making newspapers available at our fingertips. Therefore, technologically it made the hassle cost zero to newspaper readers in principle, while it was available for free. However, we all knew that this was a transitional phase that could not last. As printed newspapers’ sales and advertisement revenue dwindle and online readership grows, the search for a new revenue model for online newspaper subscriptions has become more urgent. Online advertising is of course another channel of revenue but digital ads increasingly end up going to the giant social media sites and search engines. Therefore, many newspapers are introducing paywalls.

If all newspaper readers had fixed preferences in terms of outlets and viewed alternative outlets as substitutes, then this would not be an issue – you could subscribe to the one or two outlets that you want to read and disregard the rest, exactly as you would do with utilities like electricity or broadband.

However, the nature of news or current events means that the demand for these also depends on readers with flexible preferences. There is demand for variety – you might want to explore a particular issue from various angles. There is also an ideological or political slant – you may want to know about alternative viewpoints and a range of facts to form an opinion on an issue. In addition, different outlets have comparative advantages in terms of categories of news and opinion pieces – some are good for political coverage, some for economic coverage, and some run excellent opinion pages.

Therefore, in the case of news and views, there is likely to be a taste for variety, as in the case of music, books, or food. But that brings us back to the problem of the hassle cost of navigating multiple paywalls. Is there a model that can work better for readers (in terms of reducing the hassle cost of access) while generating a steady flow of revenue from them that newspapers badly need?

Imagine a single sign-on (SSO) portal – an authentication scheme that allows users to log in with a single ID to several independent news outlets. Call it NewsIndia for the sake of illustration. This would be no different from signing into Apple Music, Amazon or Netflix.

How about the pay model? The subscriber can pay a single annual or monthly fee for a subscription to the basic news content of all the participating outlets. There can then be a premium subscription at a higher annual fee that allows subscribers to access all content, including opinion pieces and supplements.

Some versions of this have already been tried promising to be iTunes for news. Blendle is the most popular one – launched in the Netherlands in 2014 and later expanding to Germany and the United States, it is a website that allows readers to pay for individual articles for newspapers rather than paying for monthly subscriptions. However, the model has not been able to generate profits and in 2019 it was announced that it would change its model to premium subscriptions instead of per-article micropayments.

The question is – why has this model not worked? We might find an answer in how the digital music industry has evolved. It was ironic that when Blendle entered the US in 2016 promising to be the iTunes model for digital newspapers, the digital music scene was already on the cusp of change. In 2015 Apple launched a music streaming service called Apple Music as a competitor to music streaming pioneers such as Spotify. For a small monthly subscription fee (around $10 a month), music streaming services like Apple, Spotify and Amazon offer access to 90 million songs. This has changed how people listen to music, shifting the focus from ownership (CDs or vinyl records or downloaded songs) to access. In the US, in 2021, streaming services accounted for 83% of the revenue, while physical forms accounted for 11% and digital downloads merely 4%. Only ten years ago, CDs accounted for 43% of revenue while downloads (singles and albums) a total of 36%.

This access model that streaming offers for music – or for that matter what Netflix offers for films – may offer a solution to the problem that newspapers are facing. News, in-depth stories, and opinion pieces are great examples of access goods. We do not necessarily want to “own” these stories. After all, old print newspapers are always discarded periodically (barring scrapbook-worthy items). In contrast, favourite music CDs that we want to listen to or film DVDs that we want to view from time to time are still worth holding on to.

In addition, while we want access to news and views, we do not know in advance exactly what stories we would like to read in-depth in a given morning without browsing through the paper. Having access to a digital version of a newspaper room in a library serves this purpose and a single log-in and monthly subscription (with the possibility of buying premium content at an extra charge) would minimize the hassle cost for readers while ensuring a steady revenue flow for participating newspapers. The micropayment model lets readers cherry-pick stories they want to read but this creates an uncertain, and judging by the experience of Blendle, a meagre revenue flow for the newspapers. In contrast, letting readers choose bundles of newspapers they want to read regularly will generate a steady flow of revenue.

The participating outlets will have to share the subscription revenue and not all of them may have equal demand as measured by digital access data. This is no different from a shopping mall where different shops may experience different kinds of footfall. While the subscribers may pay a basic or premium fee that allows them partial or complete access to all participating outlets, there would be no rationale for distributing the revenue generated through this portal equally among the outlets. Thus, the revenue earned by each outlet would depend on how many readers want to include that newspaper in their subscription bundle.

Indian, as well as global news media, have been experiencing a crisis in the digital era which has only gotten worse during the pandemic. It is time to think about alternative revenue models. The one proposed here could lead to a win-win situation for news outlets and readers alike.

Maitreesh Ghatak is professor of economics at the London School of Economics (LSE).

The views expressed are personal

 

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The acquisition solidifies Shutterstock’s position as the marketplace leader for premium editorial and commercial video and music content for creative professionals and enterprises

NEW YORK, May 11, 2022 /PRNewswire/ — Shutterstock, Inc. (NYSE: SSTK), the leading global creative platform for transformative brands and media companies, today announced the acquisition of Pond5, the world’s largest video-first content marketplace for filmmakers, media organizations, and marketers worldwide. Pond5 is the world’s leading online marketplace for royalty-free and editorial video, with customers including Netflix, Disney, NBC, BBC, Discovery Channel and The Wall Street Journal. Pond5’s comprehensive collection includes 30 million licensable video clips, 1.6 million music tracks and 1.7 million sound effects assets.

Shutterstock + POND5

This acquisition solidifies Shutterstock’s position as the premium destination for its global customer community for unique access to editorial content, video footage and music. Integrated with Shutterstock’s workflow applications, this expansive content library enables Shutterstock’s global customer community to create with confidence, and provides value to Pond5’s 115K+ contributors, by expanding the distribution of their content to new regions and customers. Shutterstock Studios customers are also able to leverage their access to the offering, integrating clips from Pond5’s unparalleled offering into powerful short form and long form content.

Pond5 combines their vast collection – which can be seen in various destinations, ranging from films and TV shows including Succession and The Queen’s Gambit, to YouTube videos, video games and Super Bowl ads – with a best-in-class search experience that makes it seamless for creators to find what they need, even for the most unpredictable and niche content searches.

Since its inception in 2006, Pond5 has built an expanding contributor network of over 115,000 active contributors across 180 countries, who upload over 2.5 million assets each month. Additionally, Pond5’s premium editorial content partners, such as Reuters, PA Media and British Movietone, will provide Shutterstock’s global customer community access to up-to-the-minute and archival news footage.

“The acquisition of Pond5 provides immense value for our global customer base, with unparalleled access to one of the largest collections of editorial and commercial video content in the world,” said Jon Oringer, Interim Chief Executive Officer at Shutterstock. “Our contributors will also benefit from having their work showcased on Pond5’s platform, expanding their portfolio to new customers.”

Jamie Elden, Chief Revenue Officer at Shutterstock said, “With this acquisition, we are able to offer our customers across global agency, corporate, and media channels access to one of the largest premium archival collections in the industry. Shutterstock is constantly reinventing, and this acquisition brings together powerful creators and exceptional content to ensure our customers have world class video, music and editorial collections at their fingertips.”

Tom Crary, CEO at Pond5 said, “We could not be more thrilled to join forces with Shutterstock to lead the video and music space. Our combined editorial offerings will be a competitive force in the market, and offer additional choice to customers with highly exclusive editorial video content.”

Transaction Highlights:

Consideration for the transaction consists of $210 million of cash paid at closing
Further scales Shutterstock’s video business and expands Shutterstock’s editorial offering with unique and high-quality exclusive video content
Complementary customer base with powerful relationships with the world’s largest media outlets, social media platforms, and OTT streaming companies
Maintaining 2022 revenue and adjusted EBITDA margin guidance
Immediately accretive to 2022 adjusted EBITDA, even after one-time transaction related costs
CapM Advisors acted as financial advisor, and Cahill Gordon & Reindel LLP acted as legal advisor to Shutterstock. Jefferies LLC acted as financial advisor, and Goodwin Procter LLP acted as legal advisor to Pond5. Investors can find a link to the presentation materials on the Pond5 transaction at https://investor.shutterstock.com

About Shutterstock, Inc.

Shutterstock, Inc. (NYSE: SSTK), is the leading global creative platform for transformative brands and media companies. Directly and through its group subsidiaries, Shutterstock’s comprehensive collection includeshigh-quality licensed photographs,vectors,illustrations,3D models,videos andmusic. Working with its growing community of over 2 million contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 405 million images and more than 25 million video clips available.

Headquartered in New York City, Shutterstock has offices around the world and customers in more than 150 countries. The Company also owns Pond5, the world’s largest video marketplace, TurboSquid, the world’s largest 3D content marketplace, PicMonkey, aleading online graphic design and image editing platform; Offset, ahigh-end image collection; Shutterstock Studios,an end-to-end custom creative shop; PremiumBeat, a curatedroyalty-free music library; Shutterstock Editorial, a premier source ofeditorial images andvideos for the world’s media; Amper Music, anAI-driven music platform; andBigstock, a value-oriented stock media offering.

For more information, please visitwww.shutterstock.com and follow Shutterstock onTwitter and onFacebook.

About Pond5

Pond5 strives to create world-class storytellers by providing creators of all types with the content they need to tell stories, share knowledge, and inspire audiences.

Driven by a commitment to its passionate and growing global community of more than 115,000 professional visual and audio artists, Pond5 provides a platform where creative work can flourish, and artists can make a sustainable living with industry-leading revenue shares. Pond5 serves the needs of creators across industries—from individual users to major corporations—with competitive pricing and an array of purchase options including a unique pay per item model. Purchases are backed by a broad and flexible license, a best price guarantee, and a dedicated team standing by to provide expert assistance.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding guidance, industry prospects, future business, future results of operations or financial condition, future dividends, our ability to consummate acquisitions and integrate the businesses we have acquired or may acquire into our existing operations, new or planned features, products or services, management strategies, our competitive position and the COVID-19 pandemic. You can identify forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “predict,” “project,” “seek,” “potential,” “opportunities” and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, those discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, as well as in other documents that the Company may file from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, Shutterstock’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. The forward-looking statements contained in this press release are made only as of this date and Shutterstock assumes no obligation to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

(PRNewsfoto/Shutterstock, Inc.)

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Shutterstock Reports First Quarter 2022 Financial Results
PR Newswire

NEW YORK, April 26, 2022

NEW YORK, April 26, 2022 /PRNewswire/ — Shutterstock, Inc. (NYSE: SSTK) (the “Company”), the leading global creative platform for transformative brands and media companies, today announced financial results for the first quarter ended March 31, 2022.

(PRNewsfoto/Shutterstock, Inc.)

Commenting on the Company’s performance, Stan Pavlovsky, the Company’s Chief Executive Officer, said, “We had a solid start to 2022 with continued profitable revenue growth. Our Enterprise channel is continuing to perform strongly supported by the integration of strategic solutions along with our creative content offerings. Our acquisitions are also now manifesting themselves more tangibly in our product. As a result, Shutterstock is delivering more value to our customers through our enhanced workflow applications, and we intend to launch additional features and functionalities that we believe will further differentiate our creative platform.”

First Quarter 2022 highlights compared to First Quarter 2021:

Financial Highlights

Revenue increased 9% to $199.1 million. On a constant currency basis, revenue increased 11%.
Income from operations decreased 16% to $31.9 million.
Net income decreased 10% to $26.6 million.
Adjusted EBITDA decreased 3% to $54.8 million.
Net income per diluted share decreased $0.08 to $0.71.
Adjusted net income per diluted share increased $0.02 to $1.00.
Operating cash flows decreased 37% to $22.7 million.
Free cash flow decreased 62% to $10.2 million.
Key Operating Metrics

Subscribers increased 17% to 359,000.
Subscriber revenue increased 12% to $85.4 million.
Average revenue per customer increased 4% to $355.
Paid downloads decreased 3% to 44.6 million.
Revenue per download increased 7% to $4.22.
Image collection expanded 9% to over 405 million images.
Footage collection expanded 19% to over 25 million clips.
SHUTTERSTOCK INVESTOR RELATIONS MICRO SITE

Accessible at content.shutterstock.com/investor-report/index.html.

FIRST QUARTER RESULTS

Revenue

First quarter revenue of $199.1 million increased $15.9 million or 9% as compared to the first quarter of 2021. Revenue generated through our E-commerce sales channel increased 7% as compared to the first quarter of 2021, to $127.1 million, and represented 64% of total revenue in the first quarter of 2022. E-commerce revenue growth was driven by higher subscriber revenue and also benefited from our acquisitions of TurboSquid and PicMonkey. Revenue from our Enterprise sales channel increased 11% as compared to the first quarter of 2021, to $72.1 million, and represented 36% of first quarter revenue in 2022. Enterprise revenue growth was driven by our multi-asset product offerings and continued momentum in Shutterstock Studios and Shutterstock Editorial.

On a constant currency basis, revenue increased 11% in the first quarter of 2022 as compared to the first quarter of 2021. On a constant currency basis, E-commerce and Enterprise revenues increased by 9% and 13%, respectively, in the first quarter of 2022, as compared to 2021.

Net income and net income per diluted share

Net income of $26.6 million decreased $2.9 million as compared to $29.5 million for the first quarter in 2021. Net income per diluted share was $0.71, as compared to $0.79 for the same period in 2021. This decrease was due primarily to increases in operating expenses partially offset by revenue growth in the first quarter of 2022 as compared to 2021. The increase in operating expenses was driven by higher depreciation and amortization expense reported in cost of revenues resulting from our 2021 acquisitions and higher marketing expenses.

Adjusted net income per diluted share was $1.00 as compared to $0.98 for the first quarter of 2021, an increase of $0.02 per diluted share.

Adjusted EBITDA

Adjusted EBITDA of $54.8 million for the first quarter of 2022 decreased by $1.6 million, or 3%, as compared to the first quarter of 2021, due primarily to higher operating expenses, partially offset by increased revenue. The adjusted EBITDA margin decreased to 27.5% from 30.8% in the first quarter of 2021.

FIRST QUARTER LIQUIDITY

Our cash and cash equivalents decreased by $55.9 million to $258.1 million at March 31, 2022, as compared with $314.0 million as of March 31, 2021. This decrease was driven by $65.6 million used in financing activities and $12.5 million used in investing activities, partially offset by $22.7 million of net cash provided by our operating activities.

Net cash provided by our operating activities was driven by our operating income, in addition to changes in the timing of payments pertaining to operating expenses. Cash used in investing activities primarily consists of $12.5 million related to capital expenditures and content acquisition. Cash used in financing activities consists primarily of $38.4 million for the repurchase of common stock under our share repurchase program, $18.5 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards and $8.7 million related to the payment of the quarterly cash dividend.

Free cash flow was $10.2 million for the first quarter of 2022, a decrease of $16.6 million from the first quarter of 2021. This change was primarily driven by lower cash flows from operating activities.

QUARTERLY CASH DIVIDEND

During the three months ended March 31, 2022, the Company declared and paid cash dividends of $0.24 per common share, or $8.7 million.

On April 19, 2022, the Board of Directors declared a dividend of $0.24 per share of outstanding common stock, payable on June 16, 2022 to stockholders of record at the close of business on June 2, 2022.

KEY OPERATING METRICS

Three Months Ended March 31,

2022

2021

Subscribers (end of period)(1)

359,000

306,000

Subscriber revenue (in millions)(2)

$ 85.4

$ 76.5

Average revenue per customer (last twelve months)(3)

$ 355

$ 342

Paid downloads (in millions)(4)

44.6

45.8

Revenue per download(5)

$4.22

$3.96

Content in our collection (end of period, in millions)(6):

Images

405

370

Footage clips

25

21

____________________________________________________________________________________________________________________________

(1)

Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period. For periods ending on or prior to December 31, 2021, subscribers excludes customers related to our acquisitions of TurboSquid and PicMonkey. For the three months ended March 31, 2022, subscribers excludes customers related to PicMonkey.

(2)

Subscriber revenue is defined as the revenue generated from subscribers during the period. For periods ending on or prior to December 31, 2021, subscriber revenue excludes revenues related to our acquisitions of TurboSquid and PicMonkey. For the three months ended March 31, 2022, subscriber revenue excludes revenues related to PicMonkey.

(3)

Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period. For periods ending on or prior to December 31, 2021, average revenue per customer excludes revenues and customers related to our acquisitions of TurboSquid and PicMonkey. For the three months ended March 31, 2022, average revenue per customer excludes revenues and customers related to PicMonkey.

(4)

Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to custom content, downloads of content that are offered to customers for no charge, including our free image of the week and downloads associated with our computer vision offering.

(5)

Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from custom content, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering.

(6)

Represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library on shutterstock.com at the end of the period. This collection metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, custom content and certain content that may be licensed for editorial use only.

2022 GUIDANCE

The Company’s current expectations for the full year 2022, remain unchanged as follows:

Revenue of $835 million to $850 million, representing annual growth of 8% – 10%.
Adjusted EBITDA of between $210 million to $217 million.
Adjusted net income per diluted share of between $3.65 to $3.80.
NON-GAAP FINANCIAL MEASURES

To supplement Shutterstock’s consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, Shutterstock’s management considers certain financial measures that are not prepared in accordance with GAAP, collectively referred to as non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow.

Shutterstock defines adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, foreign currency transaction gains and losses, interest income and expense and income taxes; adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue; adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets and the estimated tax impact of such adjustments; adjusted net income per diluted share as adjusted net income divided by weighted average diluted shares; revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) as the increase in current period revenues over prior period revenues, utilizing fixed exchange rates for translating foreign currency revenues for all periods in the comparison; billings as revenue adjusted for the change in deferred revenue, excluding deferred revenue acquired through business combinations; and free cash flow as cash provided by operating activities, adjusted for capital expenditures, and content acquisition. These figures have not been calculated in accordance with GAAP and should be considered only in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. Shutterstock cautions investors that non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

Shutterstock’s management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow are useful to investors because these measures enable investors to analyze Shutterstock’s operating results on the same basis as that used by management. Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted share provide useful information to investors about the performance of the Company’s overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to Shutterstock’s underlying operating performance; and revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) provides useful information to investors by eliminating the effect of foreign currency fluctuations that are not directly attributable to Shutterstock’s operating performance. Management also believes that providing these non-GAAP financial measures enhances the comparability for investors in assessing Shutterstock’s financial reporting. Shutterstock’s management believes that free cash flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in internal-use software and website development costs to support the Company’s ongoing business operations and provides them with the same measures that management uses as the basis for making resource allocation decisions.

Shutterstock’s management also uses the non-GAAP financial measures adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow, in conjunction with GAAP financial measures, as an integral part of managing the business and to, among other things: (i) monitor and evaluate the performance of Shutterstock’s business operations, financial performance and overall liquidity; (ii) facilitate management’s internal comparisons of the historical operating performance of its business operations; (iii) facilitate management’s external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of Shutterstock’s management team and, together with other operational objectives, as a measure in evaluating employee compensation and bonuses; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.

Reconciliations of the differences between adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings, free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, are presented under the headings “Reconciliation of Non-GAAP Financial Information to GAAP” and “Supplemental Financial Data” immediately following the Consolidated Balance Sheets.

EARNINGS TELECONFERENCE INFORMATION

The Company will discuss its first quarter and full year financial results during a teleconference today, April 26, 2022, at 8:30 AM ET. The conference call can be accessed in the U.S. at (844) 634-1442 or outside the U.S. at (615) 247-0239 with the conference ID# 9054804. A live audio webcast of the call will also be available simultaneously at http://investor.shutterstock.com.

Following completion of the call, a recorded replay of the webcast will be available in the investor relations section of Shutterstock’s website. A telephone replay of the call will also be available until May 3, 2022 in the U.S. at (855) 859-2056 or outside the U.S. at (404) 537-3406 with the conference ID# 9054804.

Additional investor information can be accessed at http://investor.shutterstock.com.

ABOUT SHUTTERSTOCK

Shutterstock, Inc. (NYSE: SSTK), is the leading global creative platform for transformative brands and media companies. Directly and through its group subsidiaries, Shutterstock’s comprehensive collection includes high-quality licensed photographs, vectors, illustrations, 3D models, videos and music. Working with its growing community of over 2 million contributors, Shutterstock adds hundreds of thousands of images each week, and currently has more than 405 million images and more than 25 million video clips available.

Headquartered in New York City, Shutterstock has offices around the world and customers in more than 150 countries. The Company also owns PicMonkey, a leading online graphic design and image editing platform; Offset, a high-end image collection; Shutterstock Studios, an end-to-end custom creative shop; PremiumBeat, a curated royalty-free music library; Shutterstock Editorial, a premier source of editorial images and videos for the world’s media; TurboSquid, a leading 3D content marketplace; Amper Music, an AI-driven music platform; and Bigstock, a value-oriented stock media offering.

For more information, please visit www.shutterstock.com and follow Shutterstock on Twitter and on Facebook.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding guidance, industry prospects, future business, future results of operations or financial condition, future dividends, our ability to consummate acquisitions and integrate the businesses we have acquired or may acquire into our existing operations, new or planned features, products or services, management strategies, our competitive position and the COVID-19 pandemic. You can identify forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “predict,” “project,” “seek,” “potential,” “opportunities” and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, those discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, as well as in other documents that the Company may file from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, Shutterstock’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. The forward-looking statements contained in this press release are made only as of this date and Shutterstock assumes no obligation to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

Shutterstock, Inc.

Consolidated Statements of Operations

(In thousands, except for per share data)

(unaudited)

Three Months Ended March 31,

2022

2021

Revenue

$ 199,132

$ 183,281

Operating expenses:

Cost of revenue

69,451

61,832

Sales and marketing

53,329

41,921

Product development

13,626

10,731

General and administrative

30,808

30,679

Total operating expenses

167,214

145,163

Income from operations

31,918

38,118

Other income / (expense), net

758

(2,462)

Income before income taxes

32,676

35,656

Provision for income taxes

6,104

6,142

Net income

$ 26,572

$ 29,514

Earnings per share

Basic

$ 0.73

$ 0.81

Diluted

$ 0.71

$ 0.79

Weighted average common shares outstanding:

Basic

36,303

36,336

Diluted

37,204

37,249

Shutterstock, Inc.

Consolidated Balance Sheets

(In thousands, except par value amount)

(unaudited)

March 31, 2022

December 31, 2021

ASSETS

Current assets:

Cash and cash equivalents

$ 258,112

$ 314,017

Accounts receivable, net of allowance of $2,125 and $1,910

44,774

47,707

Prepaid expenses and other current assets

36,833

26,491

Total current assets

339,719

388,215

Property and equipment, net

50,206

48,074

Right-of-use assets

32,935

34,570

Intangibles assets, net

116,859

123,822

Goodwill

219,176

219,816

Deferred tax assets, net

11,559

10,512

Other assets

25,524

26,701

Total assets

$ 795,978

$ 851,710

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 7,208

$ 10,092

Accrued expenses

74,131

99,529

Contributor royalties payable

29,816

29,004

Deferred revenue

178,734

180,979

Other liabilities

13,997

14,180

Total current liabilities

303,886

333,784

Deferred tax liability, net

2,517

2,781

Lease liabilities

35,857

36,966

Other non-current liabilities

9,295

9,697

Total liabilities

351,555

383,228

Commitment and contingencies

Stockholders’ equity:

Common stock, $0.01 par value; 200,000 shares authorized; 39,352 and 39,209 shares issued and 36,138 and 36,417 shares outstanding as of March 31, 2022 and December 31, 2021, respectively

394

392

Treasury stock, at cost; 3,214 and 2,792 shares as of March 31, 2022 and December 31, 2021, respectively

(165,465)

(127,196)

Additional paid-in capital

373,765

376,537

Accumulated other comprehensive loss

(11,674)

(10,788)

Retained earnings

247,403

229,537

Total stockholders’ equity

444,423

468,482

Total liabilities and stockholders’ equity

$ 795,978

$ 851,710

Shutterstock, Inc.

Consolidated Statements of Cash Flows

(In thousands, except par value amount)

(unaudited)

Three Months Ended

March 31,

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$ 26,572

$ 29,514

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

15,065

10,091

Deferred taxes

(1,242)

(433)

Non-cash equity-based compensation

7,826

8,210

Bad debt expense

361

526

Changes in operating assets and liabilities:

Accounts receivable

2,366

(5,892)

Prepaid expenses and other current and non-current assets

(1,376)

(9,306)

Accounts payable and other current and non-current liabilities

(26,717)

(72)

Contributor royalties payable

1,030

(369)

Deferred revenue

(1,162)

3,559

Net cash provided by operating activities

$ 22,723

$ 35,828

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(11,775)

(8,548)

Business combination, net of cash acquired

(72,165)

Acquisition of content

(734)

(489)

Security deposit payment

(16)

(11)

Net cash used in investing activities

$ (12,525)

$ (81,213)

CASH FLOWS FROM FINANCING ACTIVITIES

Repurchase of treasury shares

(38,372)

Proceeds from exercise of stock options

1,309

Cash paid related to settlement of employee taxes related to RSU vesting

(18,496)

(13,034)

Payment of cash dividend

(8,706)

(7,646)

Net cash used in financing activities

$ (65,574)

$ (19,371)

Effect of foreign exchange rate changes on cash

(529)

108

Net decrease in cash, cash equivalents and restricted cash

(55,905)

(64,648)

Cash, cash equivalents and restricted cash, beginning of period

314,017

428,574

Cash, cash equivalents and restricted cash, end of period

$ 258,112

$ 363,926

Supplemental Disclosure of Cash Information:

Cash paid for income taxes

$ 1,666

$ 3,363

Shutterstock, Inc.

Reconciliation of Non-GAAP Financial Information to GAAP

(In thousands, except per share information)

(unaudited)

Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), billings and free cash flow are not financial measures prepared in accordance with United States generally accepted accounting principles (GAAP). Such non-GAAP financial measures should not be construed as alternatives to any other measures of performance determined in accordance with GAAP. Investors are cautioned that non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

Three Months Ended March 31,

2022

2021

Net income

$ 26,572

$ 29,514

Add / (less) Non-GAAP adjustments:

Depreciation and amortization

15,065

10,091

Non-cash equity-based compensation

7,826

8,210

Other adjustments, net (1)

(758)

2,462

Provision for income taxes

6,104

6,142

Adjusted EBITDA

$ 54,809

$ 56,419

Adjusted EBITDA margin

27.5%

30.8%

(1) Other adjustments, net includes foreign currency transaction gains and losses, and interest income and expense.

Three Months Ended March 31,

2022

2021

Net income

$ 26,572

$ 29,514

Add / (less) Non-GAAP adjustments:

Non-cash equity-based compensation

7,826

8,210

Tax effect of non-cash equity-based compensation (2)

(1,838)

(1,929)

Acquisition-related amortization expense (3)

6,045

1,099

Tax effect of acquisition-related amortization expense (2)

(1,421)

(258)

Adjusted net income

$ 37,184

$ 36,636

Net income per diluted share

$ 0.71

$ 0.79

Adjusted net income per diluted share

$ 1.00

$ 0.98

Weighted average diluted shares

37,204

37,249

(2) Statutory tax rates are used to calculate the tax effect of the adjustments.

(3) Of these amounts, $5.5 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively, are

included within cost of revenue in the Statements of Operations. The remainder of acquisition-related amortization expense is

included in general and administrative expense in the Statements of Operations.

Three Months Ended March 31,

2022

2021

Total Revenues

$ 199,132

$ 183,281

Revenue growth

9%

14%

Revenue growth on a constant currency basis

11%

11%

E-commerce revenues

$ 127,070

$ 118,400

Revenue growth: E-commerce

7%

19%

Revenue growth: E-commerce on a constant currency basis

9%

16%

Enterprise revenues

$ 72,062

$ 64,881

Revenue growth: Enterprise

11%

5%

Revenue growth: Enterprise on a constant currency basis

13%

3%

Three Months Ended March 31,

2022

2021

Net cash provided by operating activities

$ 22,723

$ 35,828

Capital expenditures

(11,775)

(8,548)

Content acquisition

(734)

(489)

Free cash flow

$ 10,214

$ 26,791

Three Months Ended March 31,

2022

2021

E-commerce revenue

$ 127,070

$ 118,400

Enterprise revenue

$ 72,062

$ 64,881

Total revenue

$ 199,132

$ 183,281

Change in total deferred revenue(1)

$ (2,245)

$ 3,787

Total billings

$ 196,887

$ 187,068

(1) Change in total deferred revenue excludes deferred revenue acquired through business combinations.

Shutterstock, Inc.

Supplemental Financial Data

(unaudited)

Historical Operating Metrics

Three Months Ended

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Subscribers (end of period, in thousands) (1)

359

343

336

321

306

281

255

223

Subscriber revenue (in millions) (2)

$ 85.4

$ 81.4

$ 81.5

$ 78.1

$ 76.5

$ 71.1

$ 67.6

$ 62.7

Average revenue per customer (last twelve months) (3)

$ 355

$ 368

$ 361

$ 356

$ 342

$ 333

$ 328

$ 326

Paid downloads (in millions) (4)

44.6

45.0

44.3

44.9

45.8

45.8

43.4

44.0

Revenue per download (5)

$ 4.22

$ 4.29

$ 4.20

$ 4.17

$ 3.96

$ 3.91

$ 3.79

$ 3.61

Content in our collection (end of period, in millions): (6)

Images

405

400

390

380

370

360

350

340

Footage clips

25

24

23

22

21

21

20

19

Equity-Based Compensation by expense category

Three Months Ended

($ in thousands)

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Cost of revenue

$ 78

$ 54

$ (49)

$ 194

$ 164

$ 155

$ 125

$ 99

Sales and marketing

928

857

638

926

467

586

467

374

Product development

1,781

2,017

1,675

1,799

1,229

1,038

1,263

1,068

General and administrative

5,039

6,612

6,479

6,767

6,350

8,849

6,430

2,095

Total non-cash equity-based compensation

$ 7,826

$ 9,540

$ 8,743

$ 9,686

$ 8,210

$ 10,628

$ 8,285

$ 3,636

Depreciation and Amortization by expense category

Three Months Ended

($ in thousands)

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Cost of revenue

$ 13,760

$ 13,682

$ 11,343

$ 8,214

$ 8,311

$ 8,679

$ 8,222

$ 9,274

General and administrative

1,305

1,358

2,146

1,937

1,780

1,560

1,527

1,578

Total depreciation and amortization

$ 15,065

$ 15,040

$ 13,489

$ 10,151

$ 10,091

$ 10,239

$ 9,749

$ 10,852

(1)

Subscribers is defined as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period. For periods ending on or prior to December 31, 2021, subscribers excludes customers related to our acquisitions of TurboSquid and PicMonkey. For the three months ended March 31, 2022, subscribers excludes customers related to PicMonkey.

(2)

Subscriber revenue is defined as the revenue generated from subscribers during the period. For periods ending on or prior to December 31, 2021, subscriber revenue excludes revenues related to our acquisitions of TurboSquid and PicMonkey. For the three months ended March 31, 2022, subscriber revenue excludes revenues related to PicMonkey.

(3)

Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. Customers is defined as total active, paying customers that contributed to total revenue over the last twelve-month period. For periods ending on or prior to December 31, 2021, average revenue per customer excludes revenues and customers related to our acquisitions of TurboSquid and PicMonkey. For the three months ended March 31, 2022, average revenue per customer excludes revenues and customers related to PicMonkey.

(4)

Paid downloads is the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to custom content, downloads of content that are offered to customers for no charge, including our free image of the week and downloads associated with our computer vision offering.

(5)

Revenue per download is the amount of revenue recognized in a given period divided by the number of paid downloads in that period excluding revenue from custom content, revenue that is not derived from or associated with content licenses and revenue associated with our computer vision offering.

(6)

Represents approved images (photographs, vectors and illustrations) and footage (in number of clips) in our library on shutterstock.com at the end of the period. This collection metric excludes content that is not uploaded directly to our site but is available for license by our customers through an application program interface, custom content and certain content that may be licensed for editorial use only.

CisionView original content to download multimedia:https://www.prnewswire.com/news-releases/shutterstock-reports-first-quarter-2022-financial-results-301532514.html

SOURCE Shutterstock, Inc.

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Shutterstock buys stock video marketplace Pond5 for $210m, including a library of 1.6m royalty-free music tracks

New York-based stock content firm Shutterstock has acquired Pond5, which claims to be the world’s largest online marketplace for royalty-free and editorial video.

Pond5’s customers include the likes of Netflix, Disney, NBC, BBC, Discovery Channel and The Wall Street Journal and its collection includes 30 million licensable video clips.

The company also runs a royalty-free stock music service, with a library of 1.6 million music tracks and 1.7 million sound effects assets, which Shutterstock now owns, following a $210 million cash deal to acquire Pond5.

The move bolsters Shutterstock’s positioning amongst stock image and video sites that also offer rights-free music.

Shutterstock rival Adobe, for example inked a deal in 2020 to carry rights-free music catalogs from both Epidemic Sound and Jamendo.

Getty Images, meanwhile, also hosts a royalty-free music library powered by Epidemic Sound.

The Pond5 deal follows Shutterstock’s buyout of AI-driven music platform Amper Music for an undisclosed sum in 2020.

Shutterstock, which generated revenues of $773.4 million in 2021, also owns a royalty-free music library called PremiumBeat, which it acquired in 2015.

Shutterstock offers a ‘Music unlimited’ subscription for its royalty free music library priced $16.60/month.

Founded in 2006, Pond5 operates using a network of over 115,000 active contributors across 180 countries. Pond5 says they upload over 2.5 million assets each month.

Shutterstock claims that its acquisition of Pond5 solidifies its position as “the premium destination for its global customer community for unique access to editorial content, video footage and music”.

Shutterstock also revealed today (May 11) that Paul Hennessy has been named as its new Chief Executive Officer, effective July 1, 2022.

Hennessy, a Company Board member since 2015, succeeds Jon Oringer, Shutterstock’s founder, who is currently serving as Interim Chief Executive Officer. Oringer will remain as Executive Chairman of the Board.

Shutterstock’s former CEO Stan Pavlovsky exited the firm earlier this month.

Prior to joining Shutterstock, Hennessy, served as Chief Executive Officer and member of the Board of Directors of Vroom, Inc., an online pre-owned car retailer.

“The acquisition of Pond5 provides immense value for our global customer base, with unparalleled access to one of the largest collections of editorial and commercial video content in the world.”

Jon Oringer, Shutterstock

“The acquisition of Pond5 provides immense value for our global customer base, with unparalleled access to one of the largest collections of editorial and commercial video content in the world,” said Jon Oringer, Interim Chief Executive Officer at Shutterstock.

“Our contributors will also benefit from having their work showcased on Pond5’s platform, expanding their portfolio to new customers.”

“Shutterstock is constantly reinventing, and this acquisition brings together powerful creators and exceptional content to ensure our customers have world class video, music and editorial collections at their fingertips.”

Jamie Elden, Shutterstock

Jamie Elden, Chief Revenue Officer at Shutterstock added: “With this acquisition, we are able to offer our customers across global agency, corporate, and media channels access to one of the largest premium archival collections in the industry.

“Shutterstock is constantly reinventing, and this acquisition brings together powerful creators and exceptional content to ensure our customers have world class video, music and editorial collections at their fingertips.”v

“We could not be more thrilled to join forces with Shutterstock to lead the video and music space.”

Tom Crary, Pond5

Tom Crary, CEO at Pond5 said: “We could not be more thrilled to join forces with Shutterstock to lead the video and music space.

“Our combined editorial offerings will be a competitive force in the market, and offer additional choice to customers with highly exclusive editorial video content.”Music Business Worldwide

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Shutterstock acquires stock video marketplace Pond5 for $210m, including a library of 1.6m royalty-free music tracks

New York-based stock content firm Shutterstock has acquired Pond5, which claims to be the world’s largest online marketplace for royalty-free and editorial video.

Pond5’s customers include the likes of Netflix, Disney, NBC, BBC, Discovery Channel and The Wall Street Journal and its collection includes 30 million licensable video clips.

The company also runs a royalty-free stock music service, with a library of 1.6 million music tracks and 1.7 million sound effects assets, which Shutterstock now owns, following a $210 million cash deal to acquire Pond5.

The move bolsters Shutterstock’s positioning amongst stock image and video sites that also offer rights-free music.

Shutterstock rival Adobe, for example inked a deal in 2020 to carry rights-free music catalogs from both Epidemic Sound and Jamendo.

Getty Images, meanwhile, also hosts a royalty-free music library powered by Epidemic Sound.

The Pond5 deal follows Shutterstock’s buyout of AI-driven music platform Amper Music for an undisclosed sum in 2020.

Shutterstock, which generated revenues of $773.4 million in 2021, also owns a royalty-free music library called PremiumBeat, which it acquired in 2015.

Shutterstock offers a ‘Music unlimited’ subscription for its royalty free music library priced $16.60/month.

Founded in 2006, Pond5 operates using a network of over 115,000 active contributors across 180 countries. Pond5 says they upload over 2.5 million assets each month.

Shutterstock claims that its acquisition of Pond5 solidifies its position as “the premium destination for its global customer community for unique access to editorial content, video footage and music”.

Shutterstock also revealed today (May 11) that Paul Hennessy has been named as its new Chief Executive Officer, effective July 1, 2022.

Hennessy, a Company Board member since 2015, succeeds Jon Oringer, Shutterstock’s founder, who is currently serving as Interim Chief Executive Officer. Oringer will remain as Executive Chairman of the Board.

Shutterstock’s former CEO Stan Pavlovsky exited the firm earlier this month.

Prior to joining Shutterstock, Hennessy, served as Chief Executive Officer and member of the Board of Directors of Vroom, Inc., an online pre-owned car retailer.

“The acquisition of Pond5 provides immense value for our global customer base, with unparalleled access to one of the largest collections of editorial and commercial video content in the world.”

Jon Oringer, Shutterstock

“The acquisition of Pond5 provides immense value for our global customer base, with unparalleled access to one of the largest collections of editorial and commercial video content in the world,” said Jon Oringer, Interim Chief Executive Officer at Shutterstock.

“Our contributors will also benefit from having their work showcased on Pond5’s platform, expanding their portfolio to new customers.”

“Shutterstock is constantly reinventing, and this acquisition brings together powerful creators and exceptional content to ensure our customers have world class video, music and editorial collections at their fingertips.”

Jamie Elden, Shutterstock

Jamie Elden, Chief Revenue Officer at Shutterstock added: “With this acquisition, we are able to offer our customers across global agency, corporate, and media channels access to one of the largest premium archival collections in the industry.

“Shutterstock is constantly reinventing, and this acquisition brings together powerful creators and exceptional content to ensure our customers have world class video, music and editorial collections at their fingertips.”v

“We could not be more thrilled to join forces with Shutterstock to lead the video and music space.”

Tom Crary, Pond5

Tom Crary, CEO at Pond5 said: “We could not be more thrilled to join forces with Shutterstock to lead the video and music space.

“Our combined editorial offerings will be a competitive force in the market, and offer additional choice to customers with highly exclusive editorial video content.”Music Business Worldwide

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