Stock photography and footage provider Shutterstock (NYSE:SSTK) reported Q2 CY2024 results topping analysts' expectations, with revenue up 5.4% year on year to $220.1 million. The company's full-year revenue guidance of $931.5 million at the midpoint also came in 1.2% above analysts' estimates. It made a non-GAAP profit of $1 per share, down from its profit of $1.07 per share in the same quarter last year.
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Shutterstock (SSTK) Q2 CY2024 Highlights:
- Revenue: $220.1 million vs analyst estimates of $213.4 million (3.1% beat)
- EPS (non-GAAP): $1 vs analyst expectations of $1 (in line)
- The company slightly lifted its revenue guidance for the full year from $929.5 million to $931.5 million at the midpoint
- Gross Margin (GAAP): 58.5%, down from 60.9% in the same quarter last year
- EBITDA Margin: 28.2%, in line with the same quarter last year
- Free Cash Flow of $36.18 million, up from $11.25 million in the previous quarter
- Paid Downloads: 33.4 million, down 5.1 million year on year
- Market Capitalization: $1.36 billion
Commenting on the Company's performance, Paul Hennessy, the Company's Chief Executive Officer, said, "Shutterstock's second quarter results exceeded our expectations for revenue and adjusted EBITDA driven by exceptional growth in Data, Distribution and Services. We are thrilled to have closed the Envato acquisition and added a value-packed unlimited subscription to enhance our Content business. And our innovation around GenAI continues with our launches of Gen3D and ImageAI models trained exclusively on Shutterstock data."
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE:SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Online Marketplace
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales Growth
Shutterstock's revenue growth over the last three years has been unimpressive, averaging 7.3% annually. This quarter, Shutterstock beat analysts' estimates but reported mediocre 5.4% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 11.8% over the next 12 months.
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Usage Growth
As an online marketplace, Shutterstock generates revenue growth by increasing both the number of requests on its platform and the average order size in dollars.
Shutterstock has been struggling to grow its service requests, a key performance metric for the company. Over the last two years, its requests have declined 10.9% annually to 33.4 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q2, Shutterstock's service requests decreased by 5.1 million, a 13.2% drop since last year.
Revenue Per Request
Average revenue per request (ARPR) is a critical metric to track for consumer internet businesses like Shutterstock because it measures how much the company earns in transaction fees from each request. Furthermore, ARPR gives us unique insights as it's a function of a user's average order size and Shutterstock's take rate, or "cut", on each order.
Shutterstock's ARPR growth has been strong over the last two years, averaging 11.5%. Although its service requests have shrunk during this time, the company's ability to successfully increase prices demonstrates its platform's enduring value for existing requests. This quarter, ARPR grew 39.9% year on year to $6.59 per request.
Key Takeaways from Shutterstock's Q2 Results
It was great to see Shutterstock beat analysts' revenue expectations this quarter. We were also glad it slightly raised its full-year revenue guidance. On the other hand, its paid downloads declined and fell short of Wall Street's estimates. Overall, this quarter was decent because of the brighter outlook. The stock traded up 2.7% to $39 immediately after reporting.
So should you invest in Shutterstock right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.