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Shutterfly Announces First Quarter 2014 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 first quarter ended March 31, 2014.

“Q1 was a strong start to the fiscal year, with solid growth in our consumer business,” said Jeffrey Housenbold, president and CEO. “Leveraging our integrated marketing approach and data driven pricing and promotional strategies, we were able to improve our brand awareness and customer engagement and drive healthy increases in customers, orders and average order value. I am pleased with our sustained high level of execution and remain confident in our strategy and ability to transform the multi-billion dollar memories, social expression and personalized products markets from offline to online.”

First Quarter 2014 Financial Highlights

  • Net revenues totaled $137.1 million, a 17.5% year-over-year increase.
  • First quarter 2014 represents the 53 rd consecutive quarter of year-over-year net revenue growth.
  • Consumer net revenues totaled $130.6 million, a 19% year-over-year increase.
  • Enterprise net revenues totaled $6.5 million, a 6% year-over-year decrease.
  • Gross profit margin was 44.3% of net revenues, compared to 47.0% in the first quarter of 2013.
  • Operating expenses, excluding $15.0 million of stock-based compensation, totaled $84.4 million.
  • GAAP net loss was ($34.2) million, compared to ($12.4) million in the first quarter of 2013.
  • GAAP net loss per share was ($0.89), compared to ($0.33) in the first quarter of 2013.
  • Adjusted EBITDA was $0.2 million, compared to $3.3 million in the first quarter of 2013.
  • At March 31, 2014, cash and cash equivalents and investments totaled $370.3 million.

First Quarter 2014 Operating Metrics

  • Transacting customers totaled 2.6 million, a 14% year-over-year increase.
  • Orders totaled 3.9 million, a 13% year-over-year increase.
  • Average order value was $33.76, an increase of 5% year-over-year.

Business Outlook

Second Quarter 2014:

  • Net revenues to range from $154.0 million to $158.0 million, a year-over-year increase of 15.4% to 18.4%.
  • GAAP gross profit margin to range from 46.0% to 47.0% of net revenues.
  • Non-GAAP gross profit margin to range from 48.4% to 49.3% of net revenues.
  • GAAP operating loss to range from ($32.9) million to ($33.2) million.
  • Non-GAAP operating loss to range from ($8.2) million to ($9.0) million.
  • GAAP effective tax rate to range from 22.0% to 25.0%.
  • GAAP net loss per share to range from ($0.72) to ($0.75).
  • Weighted average shares of approximately 38.5 million.
  • Adjusted EBITDA to range from $6.0 million to $7.0 million.

Full Year 2014:

  • Net revenues to range from $903.0 million to $920.0 million, a year-over-year increase of 15.2% to 17.4%.
  • GAAP gross profit margin to range from 52.0% to 53.0% of net revenues.
  • Non-GAAP gross profit margin to range from 53.6% to 54.6% of net revenues.
  • GAAP operating income/(loss) to range from ($0.6) million to $9.2 million.
  • Non-GAAP operating income to range from $96.7 million to $109.1 million.
  • GAAP effective tax rate to range from 15% to 23%.
  • GAAP net loss per share to range from ($0.38) to ($0.15).
  • Weighted average shares of approximately 38.6 million.
  • Adjusted EBITDA to range from $160.6 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 First 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.

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