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Shutterfly Announces Fourth Quarter And Full Year 2012 Financial Results

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 fourth quarter and full year-ended December 31, 2012.

“Our unwavering commitment to innovation, outstanding product quality, stylish designs, exceptional customer service and overall value, combined with our focus on strong execution led to another year of record revenues, adjusted EBITDA, and free cash flows,” said President and Chief Executive Officer Jeffrey Housenbold. “Our singular focus on addressing the ever increasing challenges that consumers face as they try to do more with their photos and memories, has enabled Shutterfly to emerge as the market leader. We remain confident in our strategy and in the early and large markets in which we operate.”

Fourth Quarter 2012 Financial Highlights

  • Net revenues totaled $351.8 million, a 33% year-over-year increase, and the 48th consecutive quarter of year-over-year net revenue growth.
  • Consumer net revenues totaled $343.5 million, a 33% year-over-year increase.
  • Enterprise net revenues totaled $8.3 million, a 79% year-over-year increase.
  • Gross profit margin was 60.5% of net revenues, compared to 58.9% in the fourth quarter of 2011.
  • Operating expenses, excluding $9.4 million of stock-based compensation, totaled $102.0 million.
  • GAAP net income was $53.0 million, compared to $35.4 million in the fourth quarter of 2011.
  • GAAP net income per diluted share was $1.40, compared to $0.97 in the fourth quarter of 2011.
  • Adjusted EBITDA was $127.2 million, compared to $89.3 million in the fourth quarter of 2011.
  • At December 31, 2012, cash and cash equivalents totaled $245.1 million.

Full Year 2012 Financial Highlights

  • Net revenues totaled $640.6 million, a 35% year-over-year increase.
  • Consumer net revenues totaled $613.4 million, a 33% year-over-year increase.
  • Enterprise net revenues totaled $27.2 million, a 101% year-over-year increase.
  • Gross profit margin was 54.0% of net revenues, compared to 53.6% in 2011.
  • Operating expenses, excluding $35.6 million of stock-based compensation, totaled $269.4 million.
  • GAAP net income was $23.0 million, compared to $14.0 million in 2011.
  • GAAP net income per diluted share was $0.61, compared to $0.40 in 2011.
  • Adjusted EBITDA was $128.1 million, compared to $83.7 million in 2011.

Fourth Quarter 2012 Consumer Metrics

  • Transacting customers totaled 4.2 million, a 30% year-over-year increase.
  • Orders totaled 6.9 million, a 33% year-over-year increase.
  • Average order value was $49.80, flat compared to the fourth quarter 2011.

Full Year 2012 Consumer Metrics

  • Transacting customers totaled 7.1 million, a 31% year-over-year increase.
  • Orders totaled 16.3 million, a 29% year-over-year increase.
  • Average order value was $37.58, a decrease of 2% year-over-year.

Business Outlook

First Quarter 2013:

  • Net revenues to range from $107.2 million to $110.0 million, a year-over-year increase of 17.4% to 20.5%.
  • GAAP gross profit margin to range from 43.0% to 44.0% of net revenues.
  • Non-GAAP gross profit margin to range from 44.8% to 45.8% of net revenues.
  • GAAP operating loss to range from ($26.8) million to ($27.8) million.
  • Non-GAAP operating loss to range from ($9.4) million to ($10.4) million.
  • GAAP effective tax rate to range from 45% to 46%.
  • GAAP net loss per diluted share to range from ($0.39) to ($0.42).
  • Weighted average diluted shares of approximately 36.8 million.
  • Adjusted EBITDA loss to range from ($2.5) million to ($3.5) million.

Full Year 2013:

  • Net revenues to range from $739.7 million to $746.0 million, a year-over-year increase of 15.5% to 16.5%.
  • GAAP gross profit margin to range from 52.0% to 53.0% of net revenues.
  • Non-GAAP gross profit margin to range from 53.3% to 54.3% of net revenues.
  • GAAP operating income to range from $25.0 million to $35.0 million.
  • Non-GAAP operating income to range from $91.7 million to $101.7 million.
  • GAAP effective tax rate to range from 40% to 42%.
  • GAAP net income per diluted share to range from $0.38 to $0.51.
  • Weighted average diluted shares of approximately 38.4 million.
  • Adjusted EBITDA to range from $133.1 million to $141.7 million, or 18% to 19% of net revenues.
  • Capital expenditures to range from 9.4% to 10.4% of net revenues.

Notes to the Fourth Quarter 2012 and Full Year 2012 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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