Shutterstock (SSTK) 6 Aug 24 2024 Q2 Earnings call transcript
AInvestTuesday, Aug 6, 2024 10:45 pm ET
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In Shutterstock's recent earnings call, the company provided a detailed overview of its financial performance for the second quarter of 2024. The call, led by CEO Paul Hennessy and CFO Jarrod Yahes, highlighted several key themes and trends that underscore the company's financial health and growth prospects.

Financial Performance

Shutterstock reported a strong financial performance for the second quarter, with revenue of $220 million, representing a 5.4% year-over-year growth. Adjusted EBITDA for the quarter stood at $62 million, reflecting a 28% margin. The company's Data, Distribution, and Services business experienced hyper growth, driven by its Data business, which continues to surprise with its rapid expansion.

Acquisition of Envato

The acquisition of Envato, a leading provider of digital creative assets and templates, was a significant highlight of the call. The transaction, which was completed successfully in July 2024, is expected to have a positive impact on Shutterstock's Content business, particularly in terms of subscriber counts and revenue from content types like video, audio, and 3D. The addition of Envato is seen as a strategic move to fill a void in Shutterstock's content product suite, with subscriber counts more than doubling to 1.15 million and subscription revenue as a percent of total content revenue increasing from 48% to 55%.

Investments in AI and Innovation

Shutterstock is investing heavily in AI capabilities, with the recent release of its GenAI 3D capabilities in conjunction with NVIDIA at SIGGRAPH 2024. This first-to-market innovation promises to significantly reduce the time and expense associated with 3D model creation, offering users the ability to generate 3D models using both text prompts and images. The company also entered into a partnership with Databricks to offer Shutterstock ImageAI, which generates customized high-fidelity trusted images that can be readily tailored to specific business needs.

Challenges in Content Business

The earnings call revealed that the Content business faced challenges, particularly in new customer acquisition. The company has been focusing on improving performance through marketing execution around SEO, normalizing levels of SEM spend, and driving improvements in funnel conversion. Despite these efforts, the improvement in content performance has not been as robust as expected. However, management remains committed to improving the business and is confident in its long-term growth prospects.

Outlook and Guidance

Looking ahead, Shutterstock is focused on achieving its long-term targets of $1.2 billion of revenues and $350 million of EBITDA by 2027. The company is investing in sales talent to support its accelerated growth in Data, Distribution, and Services. The acquisition of Envato, combined with its GenAI innovations, is expected to drive long-term sustainable growth for Shutterstock.

In conclusion, Shutterstock's earnings call provided a comprehensive overview of the company's financial performance and strategic initiatives. Despite facing challenges in its Content business, the company's strong financial position, strategic acquisitions, and investments in AI and innovation position it well for future growth.

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