REDWOOD CITY, Calif., Oct 30, 2007 -- Shutterfly, Inc., an Internet-based social expression and personal publishing service, today announced third quarter 2007 financial results for the period ended September 30, 2007.
"Another strong quarter of execution resulted in robust growth in revenues, customers and orders," said president and chief executive officer Jeffrey Housenbold. "Shutterfly continues to increase awareness of our premium brand, while we invest in our business to take advantage of the rapidly-expanding markets for social expression and personal publishing."
Third Quarter 2007 Financial Highlights
-- Total revenues were $32.6 million, an increase of 54% over the third quarter 2006, and the twenty-seventh consecutive quarter of year-over-year revenue growth.
-- Personalized Products & Services Revenues(1) were $14.6 million, a 90% increase over the third quarter 2006, and comprising 45% of total revenues.
-- Revenues from existing customers were 76% of total, as compared to 78% of total for the third quarter 2006.
-- Gross profit margins were 47% of revenues, as compared to 49% of revenues for the third quarter 2006.
-- Total operating expenses were $22.0 million, as compared to $15.4 million for the third quarter 2006.
-- Adjusted EBITDA(2) was a loss of approximately ($698,000), as compared to a loss of ($715,000) in the third quarter 2006.
-- GAAP net loss was ($3.3 million), as compared to a loss of ($2.7 million) for the third quarter 2006.
-- GAAP net loss per share was ($0.14), as compared to a net loss per share of ($0.70) for the third quarter 2006.
-- The Company ended the third quarter of 2007 with $94.6 million in cash, cash equivalents and short-term investments.
Third Quarter 2007 Operating Metrics
-- Orders for the quarter totaled 1.7 million - a 33% increase over the third quarter 2006.
-- Transacting customers for the quarter totaled 844,000 - a 35% increase over the third quarter 2006.
-- Average order value for the quarter was $19.63, as compared to $17.00 for the third quarter 2006, a year-over-year increase of 15%.
-- Average orders per day were approximately 18,100 for the third quarter 2007, as compared to 13,500 for the third quarter of 2006, a year-over-year increase of 34%.
Recent Operating Highlights
-- Launched its Halloween-themed party invitations, greeting cards and photo books.
-- Expanded its holiday greeting card offering with new formats, styles and form factors, including a line of premium cards from leading designers.
-- Launched a Martha Stewart designed photo book and holiday cards, available exclusively at Shutterfly.
-- Announced the availability of digital scrapbooking holiday card templates and new scrapbook page form-factors, extending Shutterfly's position as the premium printing source for digital scrapbookers.
-- Announced an exclusive partnership with Sony, to welcome Sony ImageStation customers to the Shutterfly service.
-- Announced a partnership with Delta Airlines that enables Delta SkyMiles members to turn their photo memories into frequent flier miles at Shutterfly.
"We're pleased by our continued execution in the third quarter," said Stephen Recht, chief financial officer of Shutterfly. "We're confident that investments in our brand, in new products and services, in manufacturing and in infrastructure will contribute to strong execution during the high volume fourth quarter."
The Company's financial expectations for the fourth quarter and the full year 2007, and preliminary expectations for full year 2008 are as follows:
Fourth Quarter 2007:
-- Revenues within the range of $90.5 million to $93.5 million, an increase of 38% to 42% as compared to the fourth quarter of 2006.
-- Gross margins within the range of 58% to 60% of revenues.
-- Adjusted EBITDA between 32% and 34% of revenues.
-- Effective tax rate approximately 38%.
-- Weighted average shares outstanding approximately 26.8 million for diluted EPS purposes.
Full Year 2007:
-- Revenues within the range of $180 million to $183 million, an increase of 46% to 48% as compared to the full year 2006.
-- Gross margins within the range of 54% to 56% of revenues.
-- Adjusted EBITDA to range from 16% to 17.5% of revenues.
-- Capital expenditures of approximately 19% to 19.5% of revenues.
-- Effective tax rate approximately 37%.
-- Weighted average shares outstanding to be approximately 26.6 million for diluted EPS purposes.
The foregoing guidance supersedes any guidance previously issued by the Company for the fiscal year ending December 31, 2007. All such previous guidance should no longer be relied upon.
Preliminary Guidance for 2008:
-- Revenues within the range of $240 million to $255 million.
-- Adjusted EBITDA to range from 16% to 18% of revenues.
Note that since historically approximately half of the Company's revenue and most of its Adjusted EBITDA margins occur during the seasonally strong fourth quarter, the Company's insights into performance may change throughout the course of the year, as it obtains additional visibility into future performance.
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