Shutterstock (SSTK)

Stock photography and footage provider Shutterstock (NYSE:SSTK) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 3.8% year on year to $260.1 million. Its non-GAAP profit of $0.99 per share was 13.9% below analysts’ consensus estimates.

Company Overview

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.

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.

Competitors offering visual content include Adobe (NYSE:ADBE), Getty Images (NYSE:GETY), and Alphabet (NASDAQ:GOOGL).

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Shutterstock’s 7.7% annualized revenue growth over the last three years was tepid. This was below our standard for the consumer internet sector and is a rough starting point for our analysis.

This quarter, Shutterstock reported modest year-on-year revenue growth of 3.8% but beat Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

Request Growth

As an online marketplace, Shutterstock generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.

Over the last two years, Shutterstock’s paid downloads, a key performance metric for the company, increased by 79.5% annually to 111.7 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

Unfortunately, Shutterstock’s paid downloads were flat year on year in Q3. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t moving the needle for requests yet.

Revenue Per Request

Average revenue per request (ARPR) is a critical metric to track because it measures how much the company earns in transaction fees from each request. ARPR also gives us unique insights into a user’s average order size and Shutterstock’s take rate, or "cut", on each order.

Shutterstock’s ARPR fell over the last two years, averaging 13.8% annual declines. This isn’t great, but the increase in paid downloads is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Shutterstock tries boosting ARPR by taking a more aggressive approach to monetization, it’s unclear whether requests can continue growing at the current pace.

This quarter, Shutterstock’s ARPR clocked in at $2.33. It declined 60% year on year, worse than the change in its paid downloads.

For online marketplaces like Shutterstock, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include payment processing, hosting, and bandwidth fees in addition to the costs necessary to onboard buyers and sellers, such as identity verification.

Shutterstock’s unit economics are higher than the typical consumer internet business and signal that it has competitive products and services. As you can see below, it averaged a decent 58.5% gross margin over the last two years. Said differently, Shutterstock paid its providers $41.48 for every $100 in revenue.

In Q3, Shutterstock produced a 60.6% gross profit margin, marking a 2.2 percentage point increase from 58.3% in the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs have been stable and it isn’t under pressure to lower prices.

Consumer internet businesses like Shutterstock grow from a combination of product virality, paid advertisement, and incentives (unlike enterprise software products, which are often sold by dedicated sales teams).

Shutterstock is efficient at acquiring new users, spending 38.4% of its gross profit on sales and marketing expenses over the last year. This efficiency indicates relatively solid competitive positioning, giving Shutterstock the freedom to invest its resources into new growth initiatives.

Shutterstock has been a well-oiled machine over the last two years. It demonstrated elite profitability for a consumer internet business, boasting an average EBITDA margin of 27%.

Looking at the trend in its profitability, Shutterstock’s EBITDA margin rose by 3.5 percentage points over the last few years, as its sales growth gave it operating leverage.

This quarter, Shutterstock generated an EBITDA margin profit margin of 30.5%, up 2.6 percentage points year on year. The increase was encouraging, and because its EBITDA margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Diving into the nuances of Shutterstock’s earnings can give us a better understanding of its performance. A three-year view shows Shutterstock has diluted its shareholders, growing its share count by 1%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Shutterstock reported adjusted EPS of $0.99, down from $1.31 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Shutterstock’s full-year EPS of $3.88 to grow 9.8%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Shutterstock has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6% over the last two years, slightly better than the broader consumer internet sector.

Taking a step back, we can see that Shutterstock’s margin dropped by 3.5 percentage points over the last few years. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal increasing investment needs and capital intensity.

Shutterstock’s free cash flow clocked in at $75.22 million in Q3, equivalent to a 28.9% margin. Its cash flow turned positive after being negative in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

Shutterstock reported $165.5 million of cash and $294.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $284.1 million of EBITDA over the last 12 months, we view Shutterstock’s 0.5× net-debt-to-EBITDA ratio as safe. We also see its $3.71 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Shutterstock blew past analysts’ EBITDA expectations this quarter. We were also excited its number of paid downloads outperformed Wall Street’s estimates by a wide margin. On the other hand, its number of requests was disappointing. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 6.1% to $23.05 immediately after reporting.

Updated: December 4, 2025 at 9:35 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Shutterstock.

Shutterstock isn’t a terrible business, but it doesn’t pass our bar. To kick things off, its revenue growth was uninspiring over the last three years, and analysts expect its demand to deteriorate over the next 12 months. And while its impressive EBITDA margins show it has a highly efficient business model, the downside is its ARPU has declined over the last two years. On top of that, its disappointing EPS growth over the last three years shows it’s failed to produce meaningful profits for shareholders.

Shutterstock’s EV/EBITDA ratio based on the next 12 months is 2.7x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $27.57 on the company (compared to the current share price of $18.95).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.