Leading manufacturer and digital retailer of personalized
products and services,
) third-quarter 2013 loss of 24 cents per share was substantially
narrower than the Zacks Consensus Estimate of 62 cents loss per
share as well as the year-ago loss of 29 cents a share. Also, the
company's loss per share was much narrower than management's
guidance range of a loss of 58-62 cents.
In the quarter under review, net revenue increased 25.0% year
over year to $122.7 million, which was ahead of the Zacks
Consensus Estimate of $118.0 million by about 4.0%. Revenues in
the quarter benefited from the strong performance of the Consumer
and Enterprise segments. Revenues also beat management's guidance
range of $115.5-$117.5 million.
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 $112.7 million in
the quarter, up 25.0% over the prior-year quarter. The category
received a boost from increased selling across all of its brands
as well as core products like photo books and cards.
Net Enterprise revenues grew 22% to $10.0 million in the
quarter thanks to organic growth from existing clients as well as
decent contribution from R&R images.
In the quarter, the total number of customers was 2.4 million,
reflecting an increase of 6.0% from the prior-year quarter. Total
orders generated were 3.9 million, up 8% year over year. Average
order value was $29.07, up 16% year over year.
Adjusted gross profit margin contracted 100 basis points (bps)
from the prior-year quarter to 45.0%, mainly due to the rise in
depreciation and customer service costs from the company's latest
Fort Mill facility and adverse product mix.
For the fourth quarter of 2013, Shutterfly expects net revenue
in the range of $392.1-$405.1 million. The company expects
earnings in the range of 95 cents-$1.11 per share in the upcoming
quarter. Prior to the release, the Zacks Consensus Estimate for
fourth quarter was much higher at $1.42 per share.
For fiscal 2013, Shutterfly lowered its expectation for net
revenue to the range of $765.0-$778.0 million, from the prior
expectation of $776.0-$781.0 million. Notably, in the preceding
quarter the company had raised its expectation for revenue from
earlier expectations of $766.0-$771.0 million.
Adjusted earnings guidance range was widened to 20 to 35 cents
from the prior projection of 23 to 33 cents per share.
Despite posting a loss owing to the seasonal nature of its
business, Shutterfly managed to beat the Zacks Consensus Estimate
and maintain the momentum of the past few quarters. Shutterfly
remains a solid growth vehicle.
Apart from focusing on its core business, the company has been
very active on the acquisition front. However, just one spot in
its otherwise clean performance is the trimmed revenue guidance
for the full year. Shutterfly currently carries a Zacks Rank #3
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