Shutterfly, Inc. (NASDAQ:SFLY), the leading manufacturer and digital
retailer of high-quality personalized products and services offered
through a family of lifestyle brands, today announced financial results
for the second quarter ended June 30, 2014.
"We had a strong second quarter, driving momentum in our business
through focused execution," said Jeffrey Housenbold, president and chief
executive officer of Shutterfly. "Consumer revenue grew 20%
year-over-year and mobile revenues on our Shutterfly brand more than
doubled as consumers responded to our assortment of high quality
personalized products and services across our portfolio of premium
lifestyle brands.”
Second Quarter 2014 Financial Highlights
-
Net revenues totaled $159.1 million, a 19% year-over-year increase.
-
Second quarter 2014 represents the 54th consecutive quarter
of year-over-year net revenue growth.
-
Consumer net revenues totaled $150.1 million, a 20% year-over-year
increase.
-
Enterprise net revenues totaled $9.0 million, a 5% year-over-year
increase.
-
Gross profit margin was 47.6% of net revenues, compared to 46.3% in
the second quarter of 2013.
-
Operating expenses, excluding $13.8 million of stock-based
compensation, totaled $88.7 million.
-
GAAP net loss was ($27.1) million, compared to ($11.8) million in the
second quarter of 2013.
-
GAAP net loss per share was ($0.70), compared to ($0.31) in the second
quarter of 2013.
-
Adjusted EBITDA was $11.7 million, compared to $6.3 million in the
second quarter of 2013.
-
At June 30, 2014, cash and cash equivalents and investments totaled
$341.3 million.
Second Quarter 2014 Operating Metrics
-
Transacting customers totaled 2.6 million, a 13% year-over-year
increase.
-
Orders totaled 4.2 million, a 16% year-over-year increase.
-
Average order value was $36.14, an increase of 3% year-over-year.
Business Outlook
Third Quarter 2014:
-
Net revenues to range from $140.5 million to $143.5 million, a
year-over-year increase of 14.5% to 17.0%.
-
GAAP gross profit margin to range from 38.0% to 39.0% of net revenues.
-
Non-GAAP gross profit margin to range from 40.6% to 41.6% of net
revenues.
-
GAAP operating loss to range from ($49.6) million to ($51.6) million.
-
Non-GAAP operating loss to range from ($25.4) million to ($27.1)
million.
-
GAAP effective tax rate to range from 15.8% to 16.5%.
-
GAAP net loss per share to range from ($1.18) to ($1.22).
-
Weighted average shares of approximately 38.4 million.
-
Adjusted EBITDA loss to range from ($8.0) million to ($9.5) million.
Full Year 2014:
-
Net revenues to range from $905.0 million to $920.0 million, a
year-over-year increase of 15.5% to 17.4%.
-
GAAP gross profit margin to range from 51.5% to 52.5% of net revenues.
-
Non-GAAP gross profit margin to range from 53.1% to 54.1% of net
revenues.
-
GAAP operating income/(loss) to range from ($2.5) million to $12.3
million.
-
Non-GAAP operating income to range from $95.5 million to $109.8
million.
-
GAAP effective tax rate to range from 16.5% to 20.0%.
-
GAAP net loss per share to range from ($0.09) to ($0.39).
-
Weighted average shares of approximately 38.5 million.
-
Adjusted EBITDA to range from $161.0 million to $174.8 million, or
17.8% to 19.0% of net revenues.
-
Capital expenditures to range from 9.5% to 10.5% of net revenues.
Notes to the Second Quarter 2014 Financial Results and Business
Outlook
Adjusted EBITDA is a non-GAAP financial measure that the Company defines
as earnings before interest, taxes, depreciation, amortization and
stock-based compensation.
Free cash flow is a non-GAAP financial measure that the Company defines
as adjusted EBITDA less purchases of property, plant, and equipment and
capitalization of software development costs.
Non-GAAP earnings per share is defined as non-GAAP net income (loss),
which excludes interest expense related to the Company’s issuance of
0.25% convertible senior notes in May 2013, divided by diluted non-GAAP
shares outstanding, which is GAAP diluted weighted average shares
outstanding less any shares issuable under the Company’s convertible
senior notes.
Consumer category includes net revenues from stationery and greeting
cards, photo books, calendars and photo-based merchandise, photo prints,
and the related shipping revenues and rental revenue. Consumer also
includes net revenues from advertising and sponsorship programs.
Enterprise category includes net revenues primarily from variable,
four-color direct marketing collateral manufactured and fulfilled for
business customers.
Average Order Value (AOV) is defined as total net revenues (excluding
Enterprise) divided by total orders.
The foregoing financial guidance replaces any of the Company’s
previously issued financial guidance which should no longer be relied
upon.
Second Quarter 2014 Conference Call
Management will review the second quarter 2014 financial results and its
expectations for the third quarter and full year 2014 on a conference
call on Wednesday, July 30, 2014 at 2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time). To listen to the call and view the accompanying slides,
please visit http://www.shutterfly.com.
In the Investor Relations area, found in the "About Us" section, click
on the link provided for the webcast, or dial 970-315-0490. The webcast,
as well as a podcast, will be archived and available at http://www.shutterfly.com.
A replay of the conference call will be available through Tuesday,
August 12, 2014. To hear the replay, please dial 404-537-3406, replay
passcode 66525037.
Non-GAAP Financial Information
This press release contains non-GAAP financial measures. Tables are
provided at the end of this press release that reconcile the non-GAAP
financial measures that the Company uses to the most directly comparable
financial measures prepared in accordance with Generally Accepted
Accounting Principles (GAAP). These non-GAAP financial measures include
non-GAAP gross profit margin, non-GAAP operating income (loss) and
operating margin, adjusted EBITDA, free cash flow, and non-GAAP net
income (loss) per share. The method the Company uses to produce non-GAAP
financial measures is not computed according to GAAP and may differ from
methods used by other companies.
To supplement the Company's consolidated financial statements presented
on a GAAP basis, we believe that these non-GAAP measures provide useful
information about the Company's core operating results and thus are
appropriate to enhance the overall understanding of the Company's past
financial performance and its prospects for the future. These
adjustments to the Company's GAAP results are made with the intent of
providing both management and investors a more complete understanding of
the Company's underlying operational results and trends and performance.
Management uses these non-GAAP measures to evaluate the Company's
financial results, develop budgets, manage expenditures, and determine
employee compensation. The presentation of additional information is not
meant to be considered in isolation or as a substitute for or superior
to gross margins, operating income (loss), net income (loss) or net
income (loss) per share determined in accordance with GAAP. For more
information, please see Shutterfly's SEC Filings, including the most
recent Form 10-K and Form 10-Q, which are available on the Securities
and Exchange Commission's Web site at www.sec.gov.
Notice Regarding Forward-Looking Statements
This media release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. These forward-looking statements
include statements regarding the Company's growth and financial
expectations for the third quarter and full year 2014 set forth under
the caption "Business Outlook," and statements about historical results
that may suggest trends for our business. The Company's actual results
may differ materially from those anticipated in these forward-looking
statements. Factors that might contribute to such differences include,
among others, economic downturns and the general state of the economy;
changes in consumer discretionary spending as a result of the
macroeconomic environment; the loss of sales partners for our products;
our ability to expand our customer base, increase sales to existing
customers and meet production requirements; our ability to successfully
integrate acquired businesses and assets; our ability to retain and hire
necessary employees, including seasonal personnel, and appropriately
staff our operations; the impact of seasonality on our business; our
ability to develop innovative, new products and services on a timely and
cost-effective basis; consumer acceptance of our products and services;
our ability to develop additional adjacent lines of business; unforeseen
changes in expense levels; and competition and the pricing strategies of
our competitors, which could lead to pricing pressure. For more
information regarding the risks and uncertainties that could cause
actual results to differ materially from those expressed or implied in
these forward-looking statements, as well as risks relating to our
business in general, we refer you to the "Risk Factors" section of the
Company's most recent Form 10-K and Form 10-Q, and the Company's other
filings, which are available on the Securities and Exchange Commission's
Web site at www.sec.gov.
These forward-looking statements are based on current expectations and
the Company assumes no obligation to update this information.
About Shutterfly, Inc.
Shutterfly, Inc. is the leading manufacturer and digital retailer of
high-quality personalized products and services offered through a family
of lifestyle brands. Founded in 1999, the Shutterfly, Inc. family of
brands includes Shutterfly,
where your photos come to life in photo books, cards and gifts; Tiny
Prints, premium cards and stationery for all life’s occasions; Wedding
Paper Divas, wedding invitations and stationery for every step of
the planning process; Treat,
personalized greeting cards that really stand out; MyPublisher,
one of the pioneers in the photo book industry and creator of
easy-to-use photo book-making software; ThisLife,
a private, cloud-based solution that makes it easy for consumers to
find, share and enjoy their photos and videos, all in one place; and BorrowLenses,
the premier online marketplace for photographic and video equipment
rentals. For more information about Shutterfly, Inc. (NASDAQ:SFLY),
visit www.shutterflyinc.com.
|
Shutterfly, Inc.
|
|
Consolidated Statements of Income
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
159,148
|
|
|
$
|
133,461
|
|
|
$
|
296,247
|
|
|
$
|
250,169
|
|
|
Cost of net revenues
|
|
|
83,335
|
|
|
|
71,716
|
|
|
|
159,678
|
|
|
|
133,569
|
|
|
Gross profit
|
|
|
75,813
|
|
|
|
61,745
|
|
|
|
136,569
|
|
|
|
116,600
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Technology and development
|
|
|
32,131
|
|
|
|
26,497
|
|
|
|
63,614
|
|
|
|
50,524
|
|
|
Sales and marketing
|
|
|
44,480
|
|
|
|
38,277
|
|
|
|
86,613
|
|
|
|
73,172
|
|
|
General and administrative
|
|
|
25,899
|
|
|
|
20,904
|
|
|
|
51,650
|
|
|
|
40,801
|
|
|
Total operating expenses
|
|
|
102,510
|
|
|
|
85,678
|
|
|
|
201,877
|
|
|
|
164,497
|
|
|
Loss from operations
|
|
|
(26,697
|
)
|
|
|
(23,933
|
)
|
|
|
(65,308
|
)
|
|
|
(47,897
|
)
|
|
Interest expense
|
|
|
(3,856
|
)
|
|
|
(1,936
|
)
|
|
|
(7,803
|
)
|
|
|
(2,075
|
)
|
|
Interest and other income, net
|
|
|
54
|
|
|
|
35
|
|
|
|
281
|
|
|
|
42
|
|
|
Loss before income taxes
|
|
|
(30,499
|
)
|
|
|
(25,834
|
)
|
|
|
(72,830
|
)
|
|
|
(49,930
|
)
|
|
Benefit from income taxes
|
|
|
3,447
|
|
|
|
14,023
|
|
|
|
11,564
|
|
|
|
25,714
|
|
|
Net loss
|
|
$
|
(27,052
|
)
|
|
$
|
(11,811
|
)
|
|
$
|
(61,266
|
)
|
|
$
|
(24,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
$
|
(0.70
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(1.59
|
)
|
|
$
|
(0.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding - basic and diluted
|
|
|
38,438
|
|
|
|
37,775
|
|
|
|
38,470
|
|
|
|
37,405
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation is allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of net revenues
|
|
$
|
894
|
|
|
$
|
592
|
|
|
$
|
1,896
|
|
|
$
|
1,156
|
|
|
Technology and development
|
|
|
2,452
|
|
|
|
2,452
|
|
|
|
4,876
|
|
|
|
4,384
|
|
|
Sales and marketing
|
|
|
5,618
|
|
|
|
4,551
|
|
|
|
11,246
|
|
|
|
8,256
|
|
|
General and administrative
|
|
|
5,750
|
|
|
|
5,054
|
|
|
|
12,688
|
|
|
|
10,391
|
|
|
|
|
$
|
14,714
|
|
|
$
|
12,649
|
|
|
$
|
30,706
|
|
|
$
|
24,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Consolidated Balance Sheets
|
|
(In thousands, except par value amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
239,851
|
|
|
$
|
499,084
|
|
Short-term investments
|
|
|
40,471
|
|
|
|
-
|
|
Accounts receivable, net
|
|
|
15,441
|
|
|
|
21,641
|
|
Inventories
|
|
|
9,107
|
|
|
|
9,629
|
|
Deferred tax asset, current portion
|
|
|
24,268
|
|
|
|
26,942
|
|
Prepaid expenses and other current assets
|
|
|
36,862
|
|
|
|
21,260
|
|
Total current assets
|
|
|
366,000
|
|
|
|
578,556
|
|
Long-term investments
|
|
|
60,992
|
|
|
|
-
|
|
Property and equipment, net
|
|
|
189,652
|
|
|
|
155,727
|
|
Intangible assets, net
|
|
|
102,082
|
|
|
|
118,621
|
|
Goodwill
|
|
|
396,942
|
|
|
|
397,306
|
|
Deferred tax asset, net of current portion
|
|
|
520
|
|
|
|
520
|
|
Other assets
|
|
|
20,134
|
|
|
|
15,412
|
|
Total assets
|
|
$
|
1,136,322
|
|
|
$
|
1,266,142
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
16,672
|
|
|
$
|
33,656
|
|
Accrued liabilities
|
|
|
44,063
|
|
|
|
107,448
|
|
Deferred revenue
|
|
|
27,190
|
|
|
|
24,114
|
|
Total current liabilities
|
|
|
87,925
|
|
|
|
165,218
|
|
Convertible senior notes, net
|
|
|
249,273
|
|
|
|
243,493
|
|
Deferred tax liability
|
|
|
31,938
|
|
|
|
42,995
|
|
Other liabilities
|
|
|
37,863
|
|
|
|
26,341
|
|
Total liabilities
|
|
|
406,999
|
|
|
|
478,047
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock, $0.0001 par value; 100,000 shares authorized; 38,407
and 38,196 shares issued and outstanding at June 30, 2014 and
December 31, 2013, respectively
|
|
|
4
|
|
|
|
4
|
|
Additional paid-in-capital
|
|
|
820,411
|
|
|
|
771,875
|
|
Accumulated other comprehensive loss
|
|
|
(11
|
)
|
|
|
-
|
|
Accumulated earnings / (deficit)
|
|
|
(91,081
|
)
|
|
|
16,216
|
|
Total stockholders' equity
|
|
|
729,323
|
|
|
|
788,095
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,136,322
|
|
|
$
|
1,266,142
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(61,266
|
)
|
|
$
|
(24,216
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
29,194
|
|
|
|
19,268
|
|
|
Amortization of intangible assets
|
|
|
17,323
|
|
|
|
14,050
|
|
|
Amortization of debt discount and transaction costs
|
|
|
6,362
|
|
|
|
1,561
|
|
|
Stock-based compensation, net of forfeitures
|
|
|
30,706
|
|
|
|
24,187
|
|
|
Loss on disposal of property and equipment and rental assets
|
|
|
45
|
|
|
|
87
|
|
|
Deferred income taxes
|
|
|
(8,375
|
)
|
|
|
(1,891
|
)
|
|
Tax benefit from stock-based compensation
|
|
|
15,461
|
|
|
|
9,856
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
(15,743
|
)
|
|
|
(10,502
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
6,200
|
|
|
|
(65
|
)
|
|
Inventories
|
|
|
522
|
|
|
|
880
|
|
|
Prepaid expenses and other current assets
|
|
|
(15,232
|
)
|
|
|
(33,485
|
)
|
|
Other assets
|
|
|
(7,131
|
)
|
|
|
(6,612
|
)
|
|
Accounts payable
|
|
|
(19,619
|
)
|
|
|
(12,596
|
)
|
|
Accrued and other liabilities
|
|
|
(66,121
|
)
|
|
|
(53,794
|
)
|
|
Deferred revenue
|
|
|
3,077
|
|
|
|
1,685
|
|
|
Other non-current liabilities
|
|
|
(594
|
)
|
|
|
6
|
|
|
Net cash used in operating activities
|
|
|
(85,191
|
)
|
|
|
(71,581
|
)
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Acquisition of business and intangible assets, net of cash acquired
|
|
|
-
|
|
|
|
(38,801
|
)
|
|
Purchases of property and equipment
|
|
|
(34,461
|
)
|
|
|
(27,613
|
)
|
|
Capitalization of software and website development costs
|
|
|
(9,744
|
)
|
|
|
(7,750
|
)
|
|
Purchases of investments
|
|
|
(101,259
|
)
|
|
|
-
|
|
|
Maturities and sales of investments
|
|
|
820
|
|
|
|
-
|
|
|
Proceeds from sale of equipment and rental assets
|
|
|
275
|
|
|
|
38
|
|
|
Net cash used in investing activities
|
|
|
(144,369
|
)
|
|
|
(74,126
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from borrowings of convertible senior notes, net of
issuance costs
|
|
|
-
|
|
|
|
292,465
|
|
|
Proceeds from issuance of warrants
|
|
|
-
|
|
|
|
43,560
|
|
|
Purchase of convertible note hedge
|
|
|
-
|
|
|
|
(63,510
|
)
|
|
Proceeds from issuance of common stock upon exercise of stock options
|
|
|
1,492
|
|
|
|
15,853
|
|
|
Repurchases of common stock
|
|
|
(46,031
|
)
|
|
|
(32,241
|
)
|
|
Excess tax benefits from stock-based compensation
|
|
|
15,743
|
|
|
|
10,502
|
|
|
Principal payments of capital lease and financing obligations
|
|
|
(877
|
)
|
|
|
(169
|
)
|
|
Net cash provided by / (used in) financing activities
|
|
|
(29,673
|
)
|
|
|
266,460
|
|
|
|
|
|
|
|
|
|
Net increase / (decrease) in cash and cash equivalents
|
|
|
(259,233
|
)
|
|
|
120,753
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
499,084
|
|
|
|
245,088
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
239,851
|
|
|
$
|
365,841
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash activities
|
|
|
|
|
|
|
Net increase / (decrease) in accrued purchases of property and
equipment
|
|
$
|
4,692
|
|
|
$
|
(912
|
)
|
|
Net increase in accrued capitalized software and website development
costs
|
|
|
692
|
|
|
|
-
|
|
|
Increase in estimated fair market value of building under
build-to-suit leases
|
|
|
12,910
|
|
|
|
3,121
|
|
|
Amount due from adjustment of net working capital from acquired
business
|
|
|
253
|
|
|
|
73
|
|
|
Amount due for acquisition of business
|
|
|
-
|
|
|
|
309
|
|
|
Unpaid debt issuance costs
|
|
-
|
|
|
|
568
|
|
|
|
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Consumer Metrics Disclosure
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Consumer Metrics
|
|
|
|
|
|
|
|
|
|
|
|
Customers
|
|
2,640,739
|
|
2,344,355
|
|
year-over-year growth
|
|
13%
|
|
|
|
|
|
|
|
|
|
Orders
|
|
4,154,806
|
|
3,572,665
|
|
year-over-year growth
|
|
16%
|
|
|
|
|
|
|
|
|
|
Average order value*
|
|
$36.14
|
|
$34.96
|
|
year-over-year growth
|
|
3%
|
|
|
|
|
|
|
|
|
|
* Average order value excludes Enterprise revenue.
|
|
|
|
Shutterfly, Inc.
|
|
Reconciliation of Forward-Looking Guidance for Non-GAAP Financial
Measures to GAAP Measures
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Guidance
|
|
|
|
|
|
GAAP
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
Range of Estimate
|
|
Adjustments
|
|
|
Range of Estimate
|
|
|
|
|
|
From
|
|
To
|
|
From
|
|
To
|
|
|
From
|
|
To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ending September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$140.5
|
|
$143.5
|
|
-
|
|
-
|
|
|
|
$140.5
|
|
$143.5
|
|
|
|
Gross profit margin
|
|
38.0%
|
|
39.0%
|
|
2.6%
|
|
2.6%
|
|
[a]
|
|
40.6%
|
|
41.6%
|
|
|
|
Operating loss
|
|
($51.6)
|
|
($49.6)
|
|
$24.5
|
|
$24.2
|
|
[b]
|
|
($27.1)
|
|
($25.4)
|
|
|
|
Operating margin
|
|
(37%)
|
|
(35%)
|
|
18%
|
|
17%
|
|
[b]
|
|
(19%)
|
|
(18%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
$16.0
|
|
$15.7
|
|
$16.0
|
|
$15.7
|
|
|
|
-
|
|
-
|
|
|
|
Amortization of intangible assets
|
|
$8.5
|
|
$8.5
|
|
$8.5
|
|
$8.5
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
|
|
|
|
|
|
|
|
|
|
($9.5)
|
|
($8.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
($1.22)
|
|
($1.18)
|
|
$0.07
|
|
$0.08
|
|
[e]
|
|
($1.14)
|
|
($1.11)
|
|
|
|
Weighted average shares
|
|
38.4
|
|
38.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
16.5%
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ending December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$905.0
|
|
$920.0
|
|
-
|
|
-
|
|
|
|
$905.0
|
|
$920.0
|
|
|
|
Gross profit margin
|
|
51.5%
|
|
52.5%
|
|
1.6%
|
|
1.6%
|
|
[c]
|
|
53.1%
|
|
54.1%
|
|
|
|
Operating income / (loss)
|
|
($2.5)
|
|
$12.3
|
|
$98.0
|
|
$97.5
|
|
[d]
|
|
$95.5
|
|
$109.8
|
|
|
|
Operating margin
|
|
0%
|
|
1%
|
|
11%
|
|
11%
|
|
[d]
|
|
11%
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
$63.5
|
|
$63.0
|
|
$63.5
|
|
$63.0
|
|
|
|
-
|
|
-
|
|
|
|
Amortization of intangible assets
|
|
$34.5
|
|
$34.5
|
|
$34.5
|
|
$34.5
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
|
|
|
|
|
|
|
|
|
|
$161.0
|
|
$174.8
|
|
|
|
Adjusted EBITDA* margin
|
|
|
|
|
|
|
|
|
|
|
|
17.8%
|
|
19.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (loss) per share
|
|
($0.39)
|
|
($0.09)
|
|
$0.28
|
|
$0.29
|
|
[f]
|
|
($0.11)
|
|
$0.20
|
|
|
|
Weighted average shares
|
|
38.5
|
|
38.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
20.0%
|
|
16.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures - % of net revenues
|
|
9.5%
|
|
10.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Adjusted EBITDA is a non-GAAP financial measure defined as
earnings before interest, taxes, depreciation, amortization and
stock-based compensation.
|
|
[a]
|
|
Reflects estimated adjustments for stock-based compensation
expense of approximately $0.9 million and amortization of
purchased intangible assets of approximately $2.8 million.
|
|
[b]
|
|
Reflects estimated adjustments for stock-based compensation
expense of approximately $15.7 million to $16.0 million, and
amortization of purchased intangible assets of approximately $8.5
million.
|
|
[c]
|
|
Reflects estimated adjustments for stock-based compensation
expense of approximately $3.7 million and amortization of
purchased intangible assets of approximately $11.3 million.
|
|
[d]
|
|
Reflects estimated adjustments for stock-based compensation
expense of approximately $63.0 million to $63.5 million and
amortization of purchased intangible assets of approximately $34.5
million.
|
|
[e]
|
|
Reflects estimated adjustments for interest expense of
approximately $2.9 million, net of tax.
|
|
[f]
|
|
Reflects estimated adjustments for interest expense of approximately
$10.9 million to $11.4 million, net of tax.
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Reconciliation of GAAP Gross Profit Margin to Non-GAAP Gross
Profit Margin
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Dec. 31,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
$
|
54,855
|
|
|
$
|
61,745
|
|
|
$
|
51,377
|
|
|
$
|
246,072
|
|
|
$
|
60,756
|
|
|
$
|
75,813
|
|
|
$
|
414,049
|
|
|
Stock-based compensation
|
|
|
564
|
|
|
|
592
|
|
|
|
646
|
|
|
|
683
|
|
|
|
1,002
|
|
|
|
894
|
|
|
|
2,485
|
|
|
Amortization of intangible assets
|
|
|
2,390
|
|
|
|
2,608
|
|
|
|
2,685
|
|
|
|
2,800
|
|
|
|
2,823
|
|
|
|
2,823
|
|
|
|
10,483
|
|
|
Non-GAAP gross profit
|
|
$
|
57,809
|
|
|
$
|
64,945
|
|
|
$
|
54,708
|
|
|
$
|
249,555
|
|
|
$
|
64,581
|
|
|
$
|
79,530
|
|
|
$
|
427,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross profit margin
|
|
|
50
|
%
|
|
|
49
|
%
|
|
|
45
|
%
|
|
|
61
|
%
|
|
|
47
|
%
|
|
|
50
|
%
|
|
|
54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Reconciliation of GAAP Operating Margin to Non-GAAP Operating
Margin
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Dec. 31,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income (loss)
|
|
$
|
(23,964
|
)
|
|
$
|
(23,933
|
)
|
|
$
|
(34,622
|
)
|
|
$
|
104,577
|
|
|
$
|
(38,611
|
)
|
|
$
|
(26,697
|
)
|
|
$
|
22,058
|
|
|
Stock-based compensation
|
|
|
11,538
|
|
|
|
12,649
|
|
|
|
13,982
|
|
|
|
15,359
|
|
|
|
15,992
|
|
|
|
14,714
|
|
|
|
53,528
|
|
|
Amortization of intangible assets
|
|
|
6,511
|
|
|
|
7,539
|
|
|
|
8,189
|
|
|
|
8,730
|
|
|
|
8,583
|
|
|
|
8,740
|
|
|
|
30,969
|
|
|
Non-GAAP operating income (loss)
|
|
$
|
(5,915
|
)
|
|
$
|
(3,745
|
)
|
|
$
|
(12,451
|
)
|
|
$
|
128,666
|
|
|
$
|
(14,036
|
)
|
|
$
|
(3,243
|
)
|
|
$
|
106,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating margin
|
|
|
(5
|
%)
|
|
|
(3
|
%)
|
|
|
(10
|
%)
|
|
|
31
|
%
|
|
|
(10
|
%)
|
|
|
(2
|
%)
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Dec. 31,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
$
|
(12,405
|
)
|
|
$
|
(11,811
|
)
|
|
$
|
(10,148
|
)
|
|
$
|
43,649
|
|
|
$
|
(34,214
|
)
|
|
$
|
(27,052
|
)
|
|
$
|
9,285
|
|
|
Interest expense
|
|
|
139
|
|
|
|
1,936
|
|
|
|
3,609
|
|
|
|
3,762
|
|
|
|
3,947
|
|
|
|
3,856
|
|
|
|
9,446
|
|
|
Interest and other income, net
|
|
|
(7
|
)
|
|
|
(35
|
)
|
|
|
(139
|
)
|
|
|
(127
|
)
|
|
|
(227
|
)
|
|
|
(54
|
)
|
|
|
(308
|
)
|
|
Tax (benefit) provision
|
|
|
(11,691
|
)
|
|
|
(14,023
|
)
|
|
|
(27,944
|
)
|
|
|
57,293
|
|
|
|
(8,117
|
)
|
|
|
(3,447
|
)
|
|
|
3,635
|
|
|
Depreciation and amortization
|
|
|
15,738
|
|
|
|
17,580
|
|
|
|
19,573
|
|
|
|
21,965
|
|
|
|
22,805
|
|
|
|
23,712
|
|
|
|
74,856
|
|
|
Stock-based compensation
|
|
|
11,538
|
|
|
|
12,649
|
|
|
|
13,982
|
|
|
|
15,359
|
|
|
|
15,992
|
|
|
|
14,714
|
|
|
|
53,528
|
|
|
Non-GAAP Adjusted EBITDA
|
|
$
|
3,312
|
|
|
$
|
6,296
|
|
|
$
|
(1,067
|
)
|
|
$
|
141,901
|
|
|
$
|
186
|
|
|
$
|
11,729
|
|
|
$
|
150,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Reconciliation of Cash Flow from Operating Activities to Non-GAAP
Adjusted EBITDA and Free Cash Flow
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Dec. 31,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(83,504
|
)
|
|
$
|
11,923
|
|
|
$
|
309
|
|
|
$
|
218,540
|
|
|
$
|
(97,473
|
)
|
|
$
|
12,282
|
|
|
$
|
147,268
|
|
|
Interest expense
|
|
|
139
|
|
|
|
1,936
|
|
|
|
3,609
|
|
|
|
3,762
|
|
|
|
3,947
|
|
|
|
3,856
|
|
|
|
9,446
|
|
|
Interest and other income, net
|
|
|
(7
|
)
|
|
|
(35
|
)
|
|
|
(139
|
)
|
|
|
(127
|
)
|
|
|
(227
|
)
|
|
|
(54
|
)
|
|
|
(308
|
)
|
|
Tax (benefit) provision
|
|
|
(11,691
|
)
|
|
|
(14,023
|
)
|
|
|
(27,944
|
)
|
|
|
57,293
|
|
|
|
(8,117
|
)
|
|
|
(3,447
|
)
|
|
|
3,635
|
|
|
Changes in operating assets and liabilities
|
|
|
101,426
|
|
|
|
2,555
|
|
|
|
19,961
|
|
|
|
(126,168
|
)
|
|
|
106,531
|
|
|
|
(7,633
|
)
|
|
|
(2,226
|
)
|
|
Other adjustments
|
|
|
(3,051
|
)
|
|
|
3,940
|
|
|
|
3,137
|
|
|
|
(11,399
|
)
|
|
|
(4,475
|
)
|
|
|
6,725
|
|
|
|
(7,373
|
)
|
|
Non-GAAP Adjusted EBITDA
|
|
|
3,312
|
|
|
|
6,296
|
|
|
|
(1,067
|
)
|
|
|
141,901
|
|
|
|
186
|
|
|
|
11,729
|
|
|
|
150,442
|
|
|
Less: Purchases of property and equipment
|
|
|
(10,832
|
)
|
|
|
(15,869
|
)
|
|
|
(20,343
|
)
|
|
|
(12,166
|
)
|
|
|
(16,419
|
)
|
|
|
(22,734
|
)
|
|
|
(59,210
|
)
|
|
Less: Capitalized technology & development costs
|
|
|
(3,495
|
)
|
|
|
(4,255
|
)
|
|
|
(4,307
|
)
|
|
|
(3,703
|
)
|
|
|
(5,112
|
)
|
|
|
(5,324
|
)
|
|
|
(15,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
$
|
(11,015
|
)
|
|
$
|
(13,828
|
)
|
|
$
|
(25,717
|
)
|
|
$
|
126,032
|
|
|
$
|
(21,345
|
)
|
|
$
|
(16,329
|
)
|
|
$
|
75,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shutterfly, Inc.
|
|
Reconciliation of Net Income/(Loss) per Share to Non-GAAP Net
Income/(Loss) per Share
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Dec. 31,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
GAAP net income (loss)
|
|
$
|
(12,405
|
)
|
|
$
|
(11,811
|
)
|
|
$
|
(10,148
|
)
|
|
$
|
43,649
|
|
|
$
|
(34,214
|
)
|
|
$
|
(27,052
|
)
|
|
$
|
9,285
|
|
|
Add back interest expense related to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount
|
|
|
-
|
|
|
|
1,401
|
|
|
|
2,771
|
|
|
|
2,830
|
|
|
|
2,870
|
|
|
|
2,911
|
|
|
|
7,002
|
|
|
Amortization of debt issuance costs
|
|
|
-
|
|
|
|
160
|
|
|
|
260
|
|
|
|
285
|
|
|
|
288
|
|
|
|
293
|
|
|
|
705
|
|
|
0.25% coupon
|
|
|
-
|
|
|
|
93
|
|
|
|
188
|
|
|
|
188
|
|
|
|
188
|
|
|
|
187
|
|
|
|
469
|
|
|
Tax effect
|
|
|
-
|
|
|
|
(770
|
)
|
|
|
(2,046
|
)
|
|
|
516
|
|
|
|
(637
|
)
|
|
|
(438
|
)
|
|
|
(2,300
|
)
|
|
Non-GAAP net income (loss)
|
|
$
|
(12,405
|
)
|
|
$
|
(10,927
|
)
|
|
$
|
(8,975
|
)
|
|
$
|
47,468
|
|
|
$
|
(31,505
|
)
|
|
$
|
(24,099
|
)
|
|
$
|
15,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted shares outstanding
|
|
|
37,034
|
|
|
|
37,775
|
|
|
|
37,814
|
|
|
|
39,713
|
|
|
|
38,503
|
|
|
|
38,438
|
|
|
|
39,493
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Non-GAAP diluted shares outstanding
|
|
|
37,034
|
|
|
|
37,775
|
|
|
|
37,814
|
|
|
|
39,713
|
|
|
|
38,503
|
|
|
|
38,438
|
|
|
|
39,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) per share
|
|
$
|
(0.33
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
1.10
|
|
|
$
|
(0.89
|
)
|
|
$
|
(0.70
|
)
|
|
$
|
0.24
|
|
|
Non-GAAP net income (loss) per share
|
|
$
|
(0.33
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
1.20
|
|
|
$
|
(0.82
|
)
|
|
$
|
(0.63
|
)
|
|
$
|
0.38
|
|
Copyright Business Wire 2014