Personalized products and service provider,
) fourth-quarter 2013 earnings per share of $1.20 beat the Zacks
Consensus Estimate of $1.09 per share by 10.0%. Though the bottom
line declined 14.3% year over year, it was significantly above
management's expectation of 95 cents to $1.00 per share. Earnings
were higher than management's expectation owing to an improvement
in the top line.
In the quarter under review, net revenue increased 16.8% year
over year to $410.8 million and was ahead of the Zacks Consensus
Estimate of $408.0 million by approximately 0.68%. Revenues
benefited from the strong performance of the Consumer and
Enterprise segments. Revenues also beat management's guidance
range of $392.1million-$405.1 million.
Behind the Headline Numbers
Revenues from the Consumers category were $398.6 million in the
quarter, up 16.0% year over year. The category received a boost
from increased selling across all of its brands as well as core
products like photo books and cards.
Enterprise segment revenues grew 48.0% to $12.2 million in the
quarter, thanks to organic growth from existing clients as well
as a decent contribution from R&R image, which was acquired
in Aug 2013.
In the quarter, the total number of customers was 4.7 million,
reflecting an increase of 10.0% from the prior-year quarter.
Total orders generated were 7.7 million, up 12.0% year over year.
Average order value was $51.80, up 4.0% year over year driven by
promotional strategies and integrated marketing campaigns adopted
by the company.
Excluding stock-based compensation and amortization, sales and
marketing expense increased 26.0% year over year to $14.0 million
due to increased investments in integrated marketing campaigns
and a modest increase in headcount.
Adjusted EBITDA was $141.9 million, up 11.6% year over year,
driven by healthy revenue growth and operational efficiencies.
Full Year 2013 Highlights
Adjusted earnings per share in full year 2013 were 38 cents,
which beat the Zacks Consensus Estimate of 23 cents by 65.2%.
Though earnings declined 37.8% year over year, they were above
management's expectation of 20 cents to 35 cents per share.
Revenues increased 22.0% year over year to $783.6 million and
beat the Zacks Consensus Estimate of $758.0 million by 33.8%.
Revenues were also above management's expectation of
Shutterfly's business is highly seasonal and the company posts
losses in the first three quarters of the year.
For the first quarter of 2013, Shutterfly expects net revenue in
the range of $132.0-$135.0 million, up 13.1% to 15.7% year over
year. The company expects loss per share in the range of 86
cents-92 cents per share in the upcoming quarter. The Zacks
Consensus Estimate is pegged at a loss of 41 cents per share for
Soft 2014 Outlook
For full year 2014, Shutterfly expects net revenue in the range
of $900.0-$920.0 million, up 14.8% to 17.4% year over year. It
expects loss per share in the range of 2 cents to 28 cents for
2014, which represents a decline from 2013 levels. Also the
guidance range falls short of the Zacks Consensus Estimate of
earnings of 36 cents per share.
We believe that the earnings outlook for 2014 is relatively weak.
It reflects the termination of the Costco partnership, which is
expected to negatively impact results by $15.0 million in 2014.
Though the company intends to reinvest funds elsewhere, it does
not expect to generate the same efficiencies in other channels as
in the Costco partnership.
Depreciation, labor, and equipment costs incurred for expansion
and acquisition of manufacturing facilities are also expected to
adversely impact profitability in 2014.
Other Stocks to Consider
Shutterfly currently carries a Zacks Rank #1 (Strong Buy). Some
other stocks worth considering in the sector include
Angie's List, Inc.
Giant Interactive Group, Inc.
). While YY Inc. holds a Zacks Rank #1 (Strong Buy), Angie's List
and Giant Interactive Group carry a Zacks Rank #2 (Buy).
ANGIES LIST INC (ANGI): Free Stock Analysis
GIANT INTERACTV (GA): Free Stock Analysis
SHUTTERFLY INC (SFLY): Free Stock Analysis
YY INC-ADR (YY): Free Stock Analysis Report
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