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Shutterfly Announces Second Quarter 2012 Financial Results

Shutterfly, Inc. (NASDAQ:SFLY), a leading Internet-based social expression and personal publishing service, today announced financial results for the second quarter ended June 30, 2012.

“We continued our financial momentum during the second quarter across our Consumer and Enterprise businesses through robust organic growth, strategic partnerships, and disciplined acquisitions,” said President and Chief Executive Officer Jeffrey Housenbold. “We are building four trusted lifestyle brands (Shutterfly, TinyPrints, Wedding Paper Divas & Treat) that leverage Shutterfly’s cloud based ecommerce and print on demand platforms to help millions of people stay connected and deepen their personal relationships by transforming their more than 15 billion photos into personalized products and gifts.”

Second Quarter 2012 Financial Highlights

  • Net revenues totaled $99.0 million, a 31% year-over-year increase.
  • Second quarter 2012 represents the 46th consecutive quarter of year-over-year net revenue growth.
  • Consumer net revenues totaled $94.4 million, a 29% year-over-year increase.
  • Enterprise net revenues totaled $4.6 million, a 68% year-over-year increase.
  • Gross profit margin was 48.8% of net revenues, compared to 47.4% in the second quarter of 2011.
  • Operating expenses, excluding $9.1 million of stock-based compensation, totaled $57.0 million.
  • GAAP net loss was ($9.5) million, compared to ($3.7) million in the second quarter of 2011.
  • GAAP net loss per diluted share was ($0.27), compared to ($0.11) in the second quarter of 2011.
  • Adjusted EBITDA was $3.6 million, compared to a loss of ($0.3) million in the second quarter of 2011.
  • At June 30, 2012, cash and cash equivalents totaled $118.1 million.

Second Quarter 2012 Consumer Metrics
  • Transacting customers totaled 1.9 million, a 14% pro forma year-over-year increase.
  • Orders totaled 3.0 million, a 15% pro forma year-over-year increase.
  • Average order value was $31.70, a pro forma increase of 5% year-over-year.
  • Average order value, excluding Treat, was $33.30, a pro forma increase of 3% year-over-year.

Recent Operating Highlights

  • Completed the acquisition of Kodak Gallery customers and their photos. Began migrating Kodak Gallery customers and their photos to Shutterfly in July.
  • Completed the acquisition of Photoccino Ltd., a company which has developed ground breaking image analysis and selection technologies.
  • Introduced double spread layouts for Photo Books.
  • Added Sorority cards to our Tiny Prints graduation product line.
  • Added Instagram as a picture source for Photo Books.
  • Added a Store page for all newly created Shutterfly share sites.
  • Introduced new personalized plates, cups and water bottles to our Photo Gift product line.
  • Added hundreds of new card designs across Shutterfly and Tiny Prints.
  • Launched Same Sex Collection and Religious/Ethnic Collection at Wedding Paper Divas.
  • Added the ability to compare products across multiple sessions.
  • Added hundreds of Hallmark designs, styles and sentiments to our Treat product line.
  • Partnered with other leading brands such as Coke, Hallmark, Disney, Post, Kimberly-Clark, Symantec, Leapfrog and Great Wolf Lodge to increase the awareness and trial of our products.

Business Outlook

Third Quarter 2012:

  • Net revenues to range from $89.5 million to $91.5 million, a year-over-year increase of 17% to 20%.
  • GAAP gross profit margin to range from 45% to 46% of net revenues.
  • Non-GAAP gross profit margin to range from 47.5% to 48.5% of net revenues.
  • GAAP operating loss to range from ($28.8) million to ($30.3) million.
  • Non-GAAP operating loss to range from ($14.2) million to ($15.7) million.
  • GAAP effective tax rate to be approximately 48%.
  • GAAP net loss per diluted share to range from ($0.41) to ($0.44).
  • Weighted average diluted shares of approximately 36.0 million.
  • Adjusted EBITDA loss to range from ($6.0) million to ($7.5) million.

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