Image source: Shutterstock.

Anyone who's part of the digital communities knows the value that photos and video can add to a website, and Shutterstock (NYSE:SSTK) has made it its mission to supply customers with the imagery they need in order to supplement their web presence. Given the rise of services like Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) YouTube, more customers are looking for a video presence as well as the still shots that initially made up most of Shutterstock's portfolio.

Yet challenging conditions for Shutterstock have sent its share price to levels not seen since early 2013, and coming into Thursday's third-quarter financial report, Shutterstock investors expected to see solid revenue growth that could confirm the company's importance in the budding industry. Shutterstock's results showed the ongoing challenges it faces in getting more of its revenue growth down to the bottom line in the form of net income. Let's look more closely at how Shutterstock did this quarter and whether it has the capacity to to see whether shareholders are right to be nervous.

Shutterstock touches up its results
Shutterstock's third-quarter financials once again highlighted how the company's sales performance hasn't always led to impressive profit growth. Sales rose 28% to $107.3 million, which edged above expectations for growth rates of around 27%. Yet GAAP net income fell year over year by more than a fifth, and even after allowing for equity-based compensation and extraordinary items, adjusted net income only rose 5% and earnings of $0.28 per share were just a penny higher than they were a year ago.

From an operational standpoint, Shutterstock is still doing extremely well. Growth in paid downloads accelerated by 22% to 38.1 million. The rise in revenue per download slowed from previous quarters, but the company still saw a rise of $0.11 per download to $2.76. Shutterstock's image collection continued to grow, soaring by almost half to 63.7 million by the end of the quarter.

Acquisitions have played an important role in Shutterstock's growth, but the company remains healthy even taking them out. When you remove the impact of acquisitions of music and sound effects specialist PremiumBeat and European photographic press agency Rex Features, as well as foreign currency impacts, adjusted revenue growth remained solid at 25%.

Shutterstock CEO Jon Oringer had good things to say about the latest results, arguing that they "reflect the sustained operating performance we are delivering across our diverse platforms as both new and existing customers further recognize the value of our high-quality content." Oringer also took pride in Shutterstock's ability to cater to image providers and users, noting that "each side of our marketplace continues to grow consistently as we remain focused on delivering the best user experience to our customers and contributors."

Can Shutterstock truly bounce back?
The real key for Shutterstock is to find ways to turn more of its sales into profits. The company's full-year 2015 guidance shows some success in moving in that direction, but it leaves more room for improvement. In total, Shutterstock expects revenue to finish the year between $425 million and $430 million, which would represent growth of around 30% compared to 2014. Growth in adjusted EBITDA, on the other hand, will be much slower, in a projected range of 16% to 20%. Bridging that gap will be critical for Shutterstock.

Video could be one way to bolster future growth and profitability. The success of Alphabet's YouTube has led many potential Shutterstock clients to seek ways to promote themselves using video, and Alphabet's dominance of the video space makes it a likely place for those customers to land. If Shutterstock can make it easier for its customers to use YouTube, then both it and Alphabet could benefit.

In response to its flagging share price, Shutterstock has joined the ranks of companies implementing stock buybacks. Its board authorized up to $100 million in repurchases, which would equate to roughly 10% of its current market capitalization.

Shutterstock has done well with its growing library of content, but it needs to work harder to be more profitable. If it can do so, then the drop in its stock recently could easily end up looking like a bargain opportunity.

Dan Caplinger owns shares of Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A and C shares). The Motley Fool recommends Shutterstock. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.