Shutterstock, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed February 10, 2022. This is an annual report, not a standalone Q4 report. Shutterstock operates a global creative-content and workflow platform, licensing images, footage, music, 3D models, and design tools through e-commerce and enterprise channels.
Financial performance
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $773.4 million | $666.7 million | +16% reported; +15% constant currency |
| Operating income / margin | $108.1 million / 14% | $85.3 million / 13% | +27% |
| Net income / net margin | $91.9 million / 12% | $71.8 million / 11% | +28% |
| Diluted EPS | $2.46 | $1.97 | +25% |
| Operating cash flow | $216.4 million | $165.1 million | +31% |
| Free cash flow (non-GAAP) | $179.4 million | $144.2 million | +24% |
- E-commerce revenue was $490.2 million, up 19%; enterprise revenue was $283.2 million, up 11%. Enterprise represented approximately 37% of revenue.
- Paid downloads were 180.0 million, unchanged year over year; revenue per download rose 13% to $4.16. Subscribers increased 22% to 343,000, while subscriber revenue rose 20% to $317.5 million.
- Cash and cash equivalents were $314.0 million, down from $428.6 million. Current assets were $388.2 million and current liabilities were $333.8 million. The company reported no long-term borrowings at year-end.
- Total liabilities were $383.2 million; lease liabilities totaled $45.3 million. Operating lease and purchase obligations were $104.3 million combined, including $37.3 million due within one year.
- Quarterly dividends totaled $30.7 million in 2021 ($0.84 per share); $26.5 million was spent on share repurchases. The board declared a further $0.24-per-share dividend for payment in March 2022.
Material changes and notable items
- Revenue growth accelerated from 2% in 2020 to 16% in 2021. Growth reflected higher subscription revenue and the acquisitions of TurboSquid and PicMonkey; 2021 reported revenue included $25.9 million from TurboSquid and $8.9 million from PicMonkey.
- TurboSquid was acquired for approximately $77.3 million in February 2021; PicMonkey assets were acquired for approximately $109.4 million in September. AI-related asset acquisitions—Pattern89, Datasine, and Shotzr assets—cost approximately $35 million.
- Operating expenses rose 14%, slower than revenue growth. Sales and marketing increased 29% to $204.9 million, including higher performance, brand, and television advertising. Cost of revenue increased 7%.
- Net cash used in investing activities rose to $250.4 million, primarily reflecting $181.6 million for the TurboSquid and PicMonkey acquisitions, $31.6 million for AI-related asset acquisitions, and $28.1 million of capital expenditures.
- The effective tax rate fell to 12.3% from 19.8%, mainly due to discrete benefits from equity-based compensation and a capital-loss transaction. Excluding those discrete items, the company reported a 20.9% rate for 2021.
Outlook, risks, and contingencies
- Management said cash, cash equivalents, and operating cash flows should be sufficient for anticipated needs for at least 12 months. It expects to continue investing in product development, technology, customer acquisition, and new products, and expects cost of revenue to fluctuate with revenue and downloads. The filing provides no numeric revenue or earnings guidance.
- Management described continuing uncertainty from COVID-19 and its potential effects on customer marketing budgets, demand, contributor activity, collections, and operations. Seasonal customer usage may decline in Q3 and increase in Q4; results may also fluctuate with discretionary marketing spending.
- Key risks include intense competition and pricing pressure; dependence on attracting and retaining customers and contributors; acquisition integration and possible impairment of goodwill or intangibles; technology outages and cybersecurity incidents; privacy and intellectual-property regulation and claims; foreign exchange, international operations, and changing tax rules.
- The company reported no material active litigation and no material litigation reserves, while noting ordinary-course claims and the potential costs of disputes. Customer indemnification is generally capped, but certain products or arrangements may carry uncapped obligations.
- Goodwill increased to $219.8 million and intangible assets to $123.8 million following acquisitions. No goodwill or long-lived asset impairments were recorded in 2021. The auditor identified revenue recognition and PicMonkey customer-relationship valuation as critical audit matters; the audit opinion on the financial statements and internal controls was unqualified.
Investor verification checklist
- Assess how much reported growth came from acquired businesses versus organic subscription and enterprise growth, and whether acquisition integration produces expected returns.
- Track subscriber growth alongside subscriber revenue, revenue per download, paid downloads, and deferred revenue to evaluate monetization and demand quality.
- Reconcile cash-flow growth with acquisition spending, repurchases, dividends, capital expenditures, and the company’s ongoing cash commitments.
- Review the sustainability of the 2021 tax rate, including the discrete benefits, and monitor future tax examinations and international tax changes.
- Monitor acquisition-related intangible amortization and goodwill for impairment risk, as well as cybersecurity, privacy, content-rights, and indemnification exposures.