Shares of global creative platform Shutterstock, Inc. (SSTK) were down nearly 12.7% during pre-market trading today after the company missed second-quarter estimates on top-line as well as bottom-line fronts.
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Driven by the PicMonkey and Pond5 acquisitions in the e-commerce vertical and momentum in the Enterprise sales vertical, coupled with the Splash News acquisition, SSTK’s total revenue rose 9% year-over-year to $206.9 million but fell short of estimates by about $2.3 million.
Earnings per share (EPS) at $0.83 fell short of consensus by $0.11. During the quarter, Shutterstock managed to grow its subscriber base by 15% to 368,000, increase revenue per download by 7% to $4.46, and boost image collection and footage collection by 9% and 18%, respectively.
Despite these improved unit metrics, the number of paid downloads dropped by 3% to 43.4 million. Furthermore, higher operating expenses meant income from operations dropped 24% to $25.4 million and free cash flow declined 65% to $21.6 million.
Furthermore, a higher investment outlay resulted in the company’s cash position dropping to $84 million from $258.1 million in the prior quarter.
Additionally, the company has announced a $0.24 dividend per share, which is payable on September 15 to investors on record as of September 1. This implies a dividend yield of 1.5% at a payout ratio of 25.67%.
SSTK CEO’s Comments
Nonetheless, CEO Paul Hennessy exuded optimism and said, “With the acquisitions of Pond5 and Splash News and the release of our Creative Flow suite of workflow applications and the Creative Flow+ subscription product offering during the quarter, we made significant progress on our journey towards becoming a creative platform that allows our customers to create with confidence.”
Analysts’ Take on SSTK
In the meantime, Wall Street has a Strong buy consensus on Shutterstock alongside an average price target of $106, implying a massive 79.42% potential upside.
Closing Note
Although higher operating expenses impacted Shutterstock’s bottom line in Q2, its recent acquisitions put the company in good stead and a further improvement in unit metrics may be expected.
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