Companies across the economy have had to find ways to create a digital presence on the internet and via mobile devices. Many of them have turned to Shutterstock (NYSE:SSTK) to get the digital images, videos, and other content that they need in order to join the digital revolution and stand out from their competitors. Yet the digital content space itself has become more competitive, putting pressure on players throughout the industry.

Coming into Thursday's fourth-quarter financial report, Shutterstock investors were expecting pressure on the company's bottom line to persist. The company did indeed see its net income fall, but it remains optimistic about future prospects. Let's take a closer look at Shutterstock and what its latest results say about what it sees coming down the pike in 2018.

Silver laptop computer with Shutterstock editor program on display.

Image source: Shutterstock.

Shutterstock tries to focus

Shutterstock's fourth-quarter financials were once again mixed. Sales were strong, with a 17% rise to $151.8 million proving substantially larger than what most investors had expected from the company. Yet adjusted net income was down about 30% from year-ago levels, and adjusted earnings of $0.30 per share missed the consensus forecast among those following the stock for $0.34 per share.

Shutterstock said that its sales gains came from several avenues. Growth in enterprise as well as greater customer acquisition from the digital specialist's e-commerce platform combined to bring in more revenue, with direct sales to enterprise customers jumping 26% and e-commerce-related revenue rising almost 10%. The company did a good job of capturing sales from various application program interfaces, soaring 60% and now making up about 5% of total revenue.

Shutterstock also saw its key operating metrics continue to climb. The number of paid downloads rose 4% to 43.9 million, accelerating from their pace of growth last quarter. Revenue per download climbed 11% to $3.33, continuing a nice double-digit percentage run higher. The company now sports more than 170 million images and 9.1 million videos in its collection, sustaining growth rates near 50% for both metrics.

The reason for the disparity between Shutterstock's top and bottom lines is that the company continues to invest in improving its technology platform and operations. Increased compensation costs for employees contributed to a 47% rise in overhead expenses, but Shutterstock is also spending more on product development and sales and marketing costs. A big one-time charge related to revaluation of deferred tax assets under new tax reform laws also hurt the company's GAAP figures, although they weren't reflected in the adjusted numbers above.

CEO Jon Oringer kept his eyes on the long-term goal for Shutterstock. "Through our innovation and execution," Oringer said, "we continue to attract new customers and expand our workflow product offerings and penetrate deeper into international markets." The CEO also noted that Shutterstock reached the milestone of 1 billion licenses to date earlier this year.

What's ahead for Shutterstock?

Shutterstock is optimistic for its future. As Oringer put it, "Our investments in our technology and products, combined with pricing and packaging optimization across our entire platform, are enabling our customers to search, discover, and license the perfect content to meet their needs better and faster than ever before."

The digital content specialist expects continued growth in 2018. Guidance includes calls for $625 million to $635 million in revenue for the full year, which would be up 15% to 17% from 2017 levels. Adjusted pre-tax operating earnings should come in at $105 million to $110 million, representing growth of 19% to 25% from the past year.

Shutterstock hopes that its latest strategic moves will help put it in better position to grow. In January, the company made a $15 million investment in Chinese e-commerce platform provider Zcool Network Technology that it hopes will enhance its exposure to the fast-growing market in China. Earlier in February, Shutterstock decided to sell off its Webdam digital asset management business for $49 million, helping it focus on higher-priority opportunities.

Shutterstock investors weren't completely pleased with the company failing to meet their earnings expectations, and the stock dropped 2% shortly after the market opened on Thursday morning following the announcement. In the long run, Shutterstock will have to start seeing its profits keep pace with its sales in order to satisfy shareholders fully.