Shutterstock (SSTK) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $220.1 million, up 5.4% year-over-year, driven by 129% growth in Data, Distribution, and Services, while content revenue declined 9%.

• Adjusted EBITDA was $62.1 million with a 28.2% margin, exceeding expectations; net income was $3.6 million, down from $50.0 million last year due to a prior one-time gain.

• Envato acquisition completed in July 2024 for $250 million, expected to contribute $75 million to 2024 revenue and enhance content sustainability and subscription offerings.

• Gen AI innovations launched, including 3D model generation with NVIDIA and Image AI with Databricks, positioning the company at the forefront of generative AI.

• Backgrid acquisition completed in February 2024, expanding editorial content and customer base.

Financial highlights

• Adjusted EBITDA margin was 28.2% for Q2, with adjusted net income of $35.9 million and adjusted EPS of $1.00.

• Free cash flow conversion was 36%; adjusted free cash flow was $36.2 million, up $2.8 million year-over-year.

• Cash and cash equivalents at June 30, 2024, were $74.9 million, up $3.1 million sequentially.

• $20 million in share repurchases executed in Q2; $10.7 million in dividends paid.

• Revenue per download increased to $5.09 in Q2 2024 from $4.71 in Q2 2023.

Outlook and guidance

• 2024 revenue guidance raised to $927–$936 million, representing 6–7% year-over-year growth, with DDS up 27% and content down 8% (excluding Envato).

• Envato to be included in content revenue from Q3, resulting in a 2.5% full-year content revenue increase on a reported basis.

• Adjusted net income per diluted share guidance maintained at $4.18–$4.32; adjusted EBITDA guidance at $245–$248 million, including $7.5 million in one-time M&A costs.

• Management expects cost of revenue and sales and marketing expenses to fluctuate with revenue and investments.

• 2027 targets reaffirmed: $1.2 billion in revenue and $350 million in EBITDA.