Shutterstock (SSTK 0.52%) is slated to report its second-quarter 2021 results before the market open on Tuesday, July 27. A conference call with analysts is scheduled to follow at 8:30 a.m. EDT.
Investors will probably be approaching the multimedia digital content provider's report with optimism. The company has beaten Wall Street's earnings estimates in four of the last four quarters, with all the beats ranging from comfortable to very big.
Investors have certainly taken notice, driving the mid-cap stock (a stock with a market cap of $2 billion to $10 billion) up 174% over the one-year period through Friday, July 2. The S&P 500 returned 41.2% over this period. (Stock chart follows below.)
I wonder what tune the pineapple is listening to. Image source: Shutterstock.
Shutterstock's key numbers
Below are the company's results from the year-ago period and Wall Street's consensus estimates to use as benchmarks.
| Metric |
Q2 2020 Result |
Wall Street's Q2 2021 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|
|
Revenue |
$159.2 million |
$179.5 million |
13% |
|
Adjusted earnings per share (EPS) |
$0.62 | $0.70 | 13% |
Data sources: Shutterstock and Yahoo! Finance.
The company didn't provide second-quarter guidance.
For context, in the first quarter, Shutterstock's revenue rose 14% year over year to $183.3 million. Revenue growth was driven by a 19% increase in the e-commerce sales channel, to $118.4 million. Revenue in the enterprise sales channel -- which has been hurt during the COVID-19 pandemic -- edged up 5% to $64.9 million.
Revenue growth wasn't entirely organic, as sales got a boost from an acquisition (TurboSquid) that closed on Feb. 1. TurboSquid has a "blue-chip customer base" and an "extensive network of 3D [content] contributors," Shutterstock CEO Stan Pavlovsky said in the company's full-year 2020 earnings release.
First-quarter net income based on generally accepted accounting principles (GAAP) landed at $29.5 million, which translated to earnings per share (EPS) skyrocketing 558% to $0.79. Adjusted for one-time items, EPS increased nearly fourfold to $0.98, easily topping the Street's consensus estimate of $0.70.
Cash generated from operations soared 419% year over year to $35.8 million, and free cash flow rocketed 332%. The company ended the first quarter with $363.9 million in cash and cash equivalents.
Subscriber count and subscription revenue
Shutterstock is focused on growing its subscription business. This is a positive, as subscription-based businesses generate recurring revenue.
Investors will want to focus on two key operating metrics: the number of subscribers and subscription revenue. In the first quarter, the number of subscribers surged 46% year over year to 306,000. Subscription revenue jumped 20% to $76.5 million, accounting for about 42% of total revenue.
Data by YCharts.
Guidance
Citing the company's strong start to the year, in the last quarter management raised its full-year 2021 guidance as follows:
- Revenue of $720 million to $730 million, representing annual growth of 8% to 9.5%. The prior outlook was for a top line of $708 million to $722 million.
- Adjusted EPS of $2.78 to $2.93, representing annual growth of 6.1% to about 12%. The previous bottom-line guidance was $2.75 to $2.90 per share.
Management probably won't provide an outlook for the third quarter. However, it could revise its full-year guidance. A solid increase could provide a tailwind for the stock, while a decrease of any magnitude will almost certainly send the stock plunging.
