Shutterfly Inc. (NASDAQ:SFLY), a leading Internet-based social
expression and personal publishing service, today announced financial
results for the third quarter ended September 30, 2012.
"Shutterfly continued to distinguish itself from our competition by delivering robust customer and order growth and very solid revenue growth across our Consumer and Enterprise businesses," said President and Chief Executive Officer Jeffrey Housenbold. "We continue to execute at a very high level and believe our results through the first nine months of this year validate that our long-term strategy remains on target, that our market opportunity remains significant and that the strategies that have enabled us to emerge as the online market share leader will continue to distinguish us from our competition."
Third Quarter 2012 Financial Highlights
Net revenues totaled $98.5 million, a 29% year-over-year increase.
Third quarter 2012 represents the 47th consecutive quarter of year-over-year net revenue growth.
Consumer net revenues totaled $90.4 million, a 24% year-over-year increase.
Enterprise net revenues totaled $8.1 million, a 109% year-over-year increase.
Gross profit margin was 44.1% of net revenues, compared to 45.6% in the third quarter of 2011.
Operating expenses, excluding $7.9 million of stock-based compensation, totaled $59.2 million.
GAAP net loss was ($10.5) million, compared to ($10.0) million in the third quarter of 2011.
GAAP net loss per diluted share was ($0.29), in line with the third quarter of 2011.
Adjusted EBITDA was a loss of ($3.1) million, compared to a loss of ($3.3) million in the third quarter of 2011.
At September 30, 2012, cash and cash equivalents totaled $90.0 million.
Third Quarter 2012 Consumer Metrics
Transacting customers totaled 2.2 million, a 40% year-over-year increase.
Orders totaled 3.6 million, a 40% year-over-year increase.
Average order value was $25.06, a decrease of 11% year-over-year.
Fourth Quarter 2012:
Net revenues to range from $300.0 million to $310.0 million, a year-over-year increase of 14% to 18%.
GAAP gross profit margin to range from 56.0% to 57.5% of net revenues.
Non-GAAP gross profit margin to range from 56.5% to 58.0% of net revenues.
GAAP operating income to range from $71.6 million to $78.1 million.
Non-GAAP operating income to range from $87.7 million to $94.2 million.
GAAP effective tax rate to be approximately 49%.
GAAP net income per diluted share to range from $0.94 to $1.02.
Weighted average diluted shares of approximately 38.8 million.
Adjusted EBITDA to range from $96.5 million to $103.0 million.
Full Year 2012:
Net revenues to range from $589.0 million to $599.0 million, a year-over-year increase of 24% to 27%.
GAAP gross profit margin to range from 51.0% to 52.0% of net revenues.
Non-GAAP gross profit margin to range from 52.5% to 53.5% of net revenues.
GAAP operating income to range from $11.0 million to $17.6 million.
Non-GAAP operating income to range from $69.5 million to $76.1 million.
GAAP effective tax rate to be approximately 47%.
GAAP net income per diluted share to range from $0.14 to $0.24.
Weighted average diluted shares of approximately 38.3 million.
Adjusted EBITDA to range from $97.5 million to $104.0 million, or 16.6% to 17.4% of net revenues.
Capital expenditures to range from 9.7% to 10.2% of net revenues.
Share Repurchase Program
The company also announced that its Board of Directors has authorized and its Audit Committee has approved a share repurchase program granting the company authority to repurchase up to $60 million of outstanding Shutterfly common stock. The company intends to finance the share repurchases with cash on hand. The repurchase program authorizes Shutterfly to buy its common stock from time to time through open market, privately negotiated or other transactions, including pursuant to trading plans established in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, or by a combination of such methods. The share repurchase program is subject to prevailing market conditions and other considerations; does not require the company to repurchase any dollar amount or number of shares; and may be suspended or discontinued at any time.
"This new share repurchase program emphasizes our continued commitment to build long-term shareholder value and illustrates our confidence in the growth potential of the company," said Chief Financial Officer Brian Regan.
Notes to the Third Quarter 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.
Free cash flow is a non-GAAP financial measure that the Company defines as Adjusted EBITDA less purchases of property, plant, and equipment and capitalization of software development costs.
Consumer category includes net revenues from stationery and greeting cards, photo books, calendars and photo-based merchandise, photo prints, and the related shipping revenues. Consumer also includes net revenues from advertising and sponsorshipprograms.
Enterprise category includes net revenues primarily from variable, four-color direct marketing collateral manufactured and fulfilled for business customers.
Average Order Value (AOV) is defined as total net revenues (excluding Enterprise) divided by total orders.
The foregoing financial guidance replaces any of the Company's previously issued financial guidance which should no longer be relied upon.
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