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Shutterfly Announces Fourth Quarter And Full Year 2013 Financial Results

Stocks in this article: SFLY

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, 2013.

“Q4 was a strong finish to another outstanding year at Shutterfly resulting in record revenue, adjusted EBITDA and free cash flow,” said President and Chief Executive Officer Jeffrey Housenbold. “We executed well against our 2013 strategic plan while simultaneously focusing on the long-term through smart investments in consumer facing programs and back-end infrastructure projects that will provide future scale and scope efficiencies.”

Fourth Quarter 2013 Financial Highlights

  • Net revenues totaled $410.8 million, a 17% year-over-year increase.
  • Fourth quarter 2013 represents the 52 nd consecutive quarter of year-over-year net revenue growth.
  • Consumer net revenues totaled $398.6 million, a 16% year-over-year increase.
  • Enterprise net revenues totaled $12.2 million, a 48% year-over-year increase.
  • Gross profit margin was 59.9% of net revenues, compared to 60.5% in the fourth quarter of 2012.
  • Operating expenses, excluding $14.7 million of stock-based compensation, totaled $126.8 million.
  • GAAP net income was $43.6 million, compared to $53.0 million in the fourth quarter of 2012.
  • GAAP net income per diluted share was $1.10, compared to $1.40 in the fourth quarter of 2012.
  • Non-GAAP net income per diluted share was $1.20, compared to $1.40 in the fourth quarter of 2012.
  • Adjusted EBITDA was $141.9 million, compared to $127.2 million in the fourth quarter of 2012.
  • At December 31, 2013, cash and cash equivalents totaled $499.1 million.

Full Year 2013 Financial Highlights

  • Net revenues totaled $783.6 million, a 22% year-over-year increase.
  • Consumer net revenues totaled $746.0 million, a 22% year-over-year increase.
  • Enterprise net revenues totaled $37.7 million, a 39% year-over-year increase.
  • Gross profit margin was 52.8% of net revenues, compared to 54.0% in 2012.
  • Operating expenses, excluding $51.0 million of stock-based compensation, totaled $340.9 million.
  • GAAP net income was $9.3 million, compared to $23.0 million in 2012.
  • GAAP net income per diluted share was $0.24, compared to $0.61 in 2012.
  • Non-GAAP net income per diluted share was $0.38, compared to $0.61 in 2012.
  • Adjusted EBITDA was $150.4 million, compared to $128.1 million in 2012.

Fourth Quarter 2013 Operating Metrics

  • Transacting customers totaled 4.7 million, a 10% year-over-year increase.
  • Orders totaled 7.7 million, a 12% year-over-year increase.
  • Average order value was $51.80, an increase of 4% year-over-year.

Full Year 2013 Operating Metrics

  • Transacting customers totaled 8.1 million, a 15% year-over-year increase.
  • Orders totaled 18.6 million, a 14% year-over-year increase.
  • Average order value was $40.19, an increase of 7% year-over-year.

Business Outlook

First Quarter 2014:

  • Net revenues to range from $132.0 million to $135.0 million, a year-over-year increase of 13.1% to 15.7%.
  • GAAP gross profit margin to range from 44.5% to 45.0% of net revenues.
  • Non-GAAP gross profit margin to range from 47.4% to 47.9% of net revenues.
  • GAAP operating loss to range from ($41.5) million to ($43.5) million.
  • Non-GAAP operating loss to range from ($14.9) million to ($16.9) million.
  • GAAP effective tax rate to range from 18.8% to 20.2%.
  • GAAP net loss per diluted share to range from ($0.93) to ($0.99).
  • Non-GAAP net loss per diluted share to range from ($0.86) to ($0.92).
  • Weighted average diluted shares of approximately 38.7 million.
  • Adjusted EBITDA to range from a loss of ($1.5) million to income of $0.5 million.

Full Year 2014:

  • Net revenues to range from $900.0 million to $920.0 million, a year-over-year increase of 14.8% to 17.4%.
  • Net revenue guidance reflects a reduction of $15 million due to the termination of the Costco relationship.
  • GAAP gross profit margin to range from 52.0% to 53.0% of net revenues.
  • Non-GAAP gross profit margin to range from 53.7% to 54.6% of net revenues.
  • GAAP operating income/(loss) to range from a loss of ($11.5) million to income of $1.7 million.
  • Non-GAAP operating income to range from $94.5 million to $109.1 million.
  • GAAP effective tax rate to range from 18% to 23%.
  • GAAP net loss per diluted share to range from ($0.27) to ($0.55).
  • Non-GAAP net loss per diluted share to range from ($0.02) to ($0.28).
  • Net loss per share guidance reflects the impact of a full year of depreciation from our expanded and acquired manufacturing facilities and acquired rental assets, increased stock based compensation, and a full year of intangible amortization from 2013 acquisitions.
  • Weighted average diluted shares of approximately 40.8 million.
  • Adjusted EBITDA to range from $160.2 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 Fourth Quarter 2013 and Full Year 2013 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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