The digital revolution has made it essential for companies to put their best foot forward in the marketplace, and having attractive imagery on websites is a critical component of how companies position themselves on the Internet. Digital image provider Shutterstock (NYSE:SSTK) has aimed at capitalizing on that need, having put together a huge array of images and video clips for clients to use for a variety of purposes. Coming into Thursday morning's release of Shutterstock's first-quarter financial results, investors hoped that the company could maintain some of the positive momentum it had in its previous results, and Shutterstock did a good job of surpassing investor expectations for the quarter. Let's look more closely at Shutterstock's latest results and what could come next for the company in the future.
Shutterstock makes its financials prettier
Shutterstock's kept up its solid growth pace during the first quarter, with revenue climbing 34% to $97.5 million and beating out the 31% growth that most of those following the stock had expected. Adjusted operating earnings climbed 33%, and earnings of $0.25 per share topped the estimate by a penny.
Looking more closely at the source of Shutterstock's growth, the image provider got contributions throughout its business. Revenue per download climbed by 17%, adding to gains from paid-download counts rising by 12%. The number of images in Shutterstock's collection topped the 50 million mark, growing 46% since last year and including 2.6 million video clips as well.
New acquisitions also added to the company's results. Shutterstock specifically referred to contributions from music and sound effects specialist PremiumBeat and European photographic press agency Rex Features as helping to bolster its overall sales gains. Yet even without the new acquisitions, organic growth was around 30%, demonstrating the fundamental health of the core business.
Founder and CEO Jon Oringer believes that Shutterstock has plenty of room to move forward from here. "Our robust first quarter results illustrate the inherent strength of our business mode, that allows us to invest appropriately while delivering consistent financial growth," Oringer said. The company's founder also thinks Shutterstock can keep expanding and develop cutting-edge technology to maximize its value over the long run.
Can Shutterstock deliver a money shot in the future?
Shutterstock gave guidance for the second quarter and updated its projections for the full 2015 year. For the second quarter, revenue of $104 million to $106 million was on the low end of what investors expect, but adjusted operating earnings of $19.5 million to $20.5 million would represent a solid sequential boost compared to the first quarter. Shutterstock essentially maintained its previous 2015 guidance, repeating full-year revenue calls for $436 million to $444 million and for continued adjusted operating earnings growth.
One big question Shutterstock shareholders will have is how well recent acquisitions will integrate into the overall company. January's announcement concerning PremiumBeat highlighted the desire to build out the Shutterstock Music service, with the intent of helping both new and existing clients use music to flesh out their visual offerings and create a seamless presentation that resonates with end-customers. As video has become a more pervasive medium for communication, the need for audio content that fits with the message of any given video topic has only increased. Similarly, buying Rex Features added not only a multidecade archive of images and video but also an entry-point into the editorial world. As news services recognize the desirability of imagery, Shutterstock could open up an entirely new market.
Despite the growth, Shutterstock shares fell 5% in the opening minutes of the regular trading session following the announcement. Even so, long-term investors can remain encouraged by Shutterstock's ability to keep growing, and the ongoing interest in its content should help the company keep doing better for the rest of the year and beyond.