The leading manufacturer and digital retailer of personalized
products and services,
), posted second-quarter 2013 loss of 29 cents per share. The
loss was substantially narrower than the Zacks Consensus Estimate
of 54 cents loss per share, but wider than the year-ago loss of
27 cents a share. However, the company's loss per share was
better than the management's guidance range of a loss of 55-58
cents. Higher operating costs led to the wider year-over-year
loss in the quarter.
In the quarter under review, net revenue increased 34.8% year
over year to $133.5 million, which was ahead of the Zacks
Consensus Estimate of $122.0 million by 9.4%. Revenues in the
quarter benefited from the company's strong Consumer and
Enterprise segments and increase in both customers and
transactions. Revenues also beat management's guidance range of
Shutterfly's business is highly seasonal and the company posts
losses in the first three quarters of the year.
Behind the Headline Numbers
Revenues from the Consumers category were $124.9 million in
the quarter, up 32.0% over the prior-year quarter. The category
received a boost from the increased selling across all of its
five brands as well as core products like photo books and cards
during gift-giving ceremonies like Mother's Day, Father's Day and
Net Enterprise revenues grew 86% to $8.6 million in the
quarter, driven by higher client orders.
In the quarter, the total number of customers was 2.3 million,
reflecting an increase of 24.0% from the prior-year quarter.
Total orders generated were 3.6 million, up 20% year over year.
Average order value was $34.96, up 10% year over year.
Shutterfly's promotional and pricing strategies and its wide
range of premium services helped augmenting average order
Adjusted gross profit margin contracted 300 basis points (bps)
from the prior-year quarter to 49.0%, mainly due to the rise in
depreciation and equipment expenses, higher customer service
costs from the company's latest Fort Mill facility and change in
the product mix.
Shutterfly acquired one of the major players in the photo book
industry, MyPublisher, in the second quarter and integrated the
latter's photo book technology and highly specialized
manufacturing capabilities with its business.
For the third quarter of 2013, Shutterfly expects net revenue
in the range of $115.5-$117.5 million. The company expects to
incur a loss of 58-62 cents per share in the upcoming
For fiscal 2013, Shutterfly raised its expectation for net
revenue in the range of $776.0-$781.0 million from prior
expectations of $766.0-$771.0 million. Earnings are estimated
between 23 cents and 33 cents per share.
Shutterfly continued to post strong results in the second
quarter of 2013, beating estimates for seven consecutive
quarters. Solid growth across Consumer as well as Enterprise
categories seems to be the reason behind the company's increased
revenue guidance for 2013.
This Zacks Rank #2 (Buy) company has been very active on the
acquisition front. The MyPublisher acquisition is expected to
benefit the company in the long term.
Internet content companies that warrant a look include
). While Brightcove carries a Zacks Rank #1 (Strong Buy),
TripAdvisor and SINA Corp have a Zacks Rank #2 (Buy).
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