What do Shutterfly
Shutterfly, which historically generates half of its revenue and all of its profitability during the holiday quarter, posted its seasonally forgettable second-quarter results Wednesday night.
Christmas in July? Of course not. The company's loss widened to $0.16 a share, as the profitless revenue grew by 19% to $35.4 million. Wall Street figured that Shutterfly would lose $0.17 a share, but on a 21% increase in the top line.
So why are we even unwrapping Shutterfly at the polar opposite of the point on the calendar when the company actually matters? Well, as investors, we can begin to spot trends that will make or break the results for the holiday quarter.
Shutterfly is actually impressive on that front. The number of orders was up by 7% to 1.6 million during the second quarter. How did revenue growth fare so much better? The missing variable, of course, is the size of the order. The average order was $22.70, an 11% spike over last year's quarter. Obviously, having bigger orders is a testament to the company's creative ways to spin consumers' snapshots into marketable products.
Yes, Shutterfly is more than just a place to get photo finishing done on your digital pictures. It even refers to itself as an "an Internet-based social expression and personal publishing service." It's hokey, but it's accurate. There's no point in trying to compete on price against rival printsmiths like Hewlett-Packard's
Shutterfly's emphasis is on higher-end products like hardcover photo books, scrapbooks, and other custom-photo products like personalized storybooks and T-shirts. Recent initiatives find Shutterfly pushing into more social and photo-sharing features, but the company doesn't necessarily want to become the next Yahoo!
For all of 2008, Shutterfly expects revenue to grow 21% to 29%. It is looking to earn $0.01 to $0.20 a share, though the adjusted profit likely will clock in between $0.30 and $0.50 a share.
The important takeaways from the quarter, even as we're still months away from the holidays, are that orders are climbing, the average order amount is rising, and the number of customers -- at 834,000, up 14% over last year -- is also going in the right direction. This will all make a lot more sense in two quarters. For now, it's OK to doubt Shutterfly, Santa, and the dejected quarterback as he enters the tunnel at halftime. They'll all come back in the final quarter. Have your cameras ready.
Three more related snapshots:
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Longtime Fool contributor Rick Munarriz has never tried to shake it like a Polaroid picture. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.