Shutterfly Announces Fourth Quarter And Full Year 2011 Financial Results

Shutterfly, Inc. (NASDAQ:SFLY), a leading Internet-based social expression and personal publishing service, today announced financial results for the fourth quarter and full-year ended December 31, 2011.

" Our strategic investments throughout 2011, combined with our focus on strong execution, diverse product offerings and improved efficiencies led to record revenues, adjusted EBITDA, and free cash flows," said President and Chief Executive Officer Jeffrey Housenbold. " We continue to outpace the industry in terms of innovation, user experience, quality, and customer service. With the social expression and personal publishing markets still in the early stages, Shutterfly is well prepared to extend our leadership position in these large markets."

Fourth Quarter 2011 Financial Highlights

• Net revenues totaled $263.8 million, a 59% year-over-year increase.
• Q4 2011 represents the 44th consecutive quarter of year-over-year net revenue growth.
• Personalized Products & Services net revenues totaled $218.9 million, a 77% year-over-year increase.
• Personalized Products & Services net revenues represented 83% of total net revenues.
• Net revenues from Prints totaled $40.3 million.
• Commercial Print net revenues totaled $4.6 million, a 104% year-over-year increase.
• Gross profit margin was 59% of net revenues, compared to 62% in the fourth quarter of 2010.
• Operating expenses, excluding $6.1 million of stock-based compensation, totaled $76.6 million.
• GAAP net income was $35.4 million, compared to $32.5 million in the fourth quarter of 2010.
• GAAP net income per diluted share was $0.97, compared to $1.09 in the fourth quarter of 2010.
• Adjusted EBITDA was $89.3 million, compared to $60.2 million in the fourth quarter of 2010.
• At December 31, 2011, cash and cash equivalents totaled $179.9 million.

Full Year 2011 Financial Highlights

• Net revenues totaled $473.3 million, a 54% year-over-year increase.
• Personalized Products & Services net revenues totaled $374.7 million, a 71% year-over-year increase.
• Personalized Products & Services net revenues represented 79% of total net revenues.
• Net revenues from Prints totaled $85.0 million.
• Commercial Print net revenues totaled $13.5 million, a 165% year-over-year increase.
• Gross profit margin was 54% of net revenues, compared to 56% in 2010.
• Operating expenses, excluding $31.7 million of stock-based compensation, totaled $206.6 million.
• GAAP net income was $14.0 million, compared to $17.1 million in 2010.
• GAAP net income per diluted share was $0.40, compared to $0.59 in 2010.
• Adjusted EBITDA was $83.7 million, compared to $67.1 million in 2010.

Fourth Quarter 2011 Operating Metrics Shutterfly

• Transacting customers totaled 2.8 million, a 23% year-over-year increase.
• Orders totaled 4.6 million, a 24% year-over-year increase.
• Average order value was $43.05, a decrease of 3% year-over-year.

TinyPrints

• Transacting customers totaled 465 thousand, a 25% year-over-year increase.
• Orders totaled 617 thousand, a 33% year-over-year increase.
• Average order value, excluding 1:1 Greeting Cards, was $116.81, a 10% year-over-year increase.

Full Year 2011 Operating Metrics Shutterfly

• Transacting customers totaled 4.9 million, a 20% year-over-year increase.
• Orders totaled 11.3 million, a 22% year-over-year increase.
• Average order value was $32.57, a decrease of 1% year-over-year.

TinyPrints (Pro Forma)

• Transacting customers totaled 1.0 million, a 36% year-over-year increase.
• Orders totaled 1.4 million, a 54% year-over-year increase.
• Average order value, excluding 1:1 Greeting Cards, was $110.63, an 8% year-over-year increase.

Business Outlook First Quarter 2012:

• Net revenues to range from $83 million to $85 million, a year-over-year increase of 45% to 49%.
• GAAP gross profit margin to range from 42% to 43% of net revenues.
• Non-GAAP gross profit margin to range from 44.5% to 45.5% of net revenues.
• GAAP operating loss to range from ($25) million to ($28) million.
• Non-GAAP operating loss to range from ($12) million to ($15) million.
• GAAP effective tax rate to range from 45% to 55%.
• GAAP diluted net loss per share to range from ($0.31) to ($0.43).
• Weighted average diluted shares of approximately 35.9 million.
• Adjusted EBITDA to range from ($6.5) million to ($8.0) million.

Full Year 2012:

• Net revenues to range from $550 million to $560 million, a year-over-year increase of 16% to 18%.
• GAAP gross profit margin to range from 52% to 54% of net revenues.
• Non-GAAP gross profit margin to range from 53% to 56% of net revenues.
• GAAP operating income to range from $17 million to $24 million.
• Non-GAAP operating income to range from $64 million to $71 million.
• GAAP effective tax rate to range from 45% to 55%.
• GAAP diluted net income per share to range from $0.25 to $0.28.
• Weighted average diluted shares of 38.9 million.
• Adjusted EBITDA to range from 17% to 18% of net revenues.
• Capital expenditures to range from 7.0% to 7.5% of net revenues.

Notes to the Fourth Quarter and Full Year 2011 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.

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