| [July 30, 2008] |
 |
Shutterfly Announces Second Quarter 2008 Financial Results
REDWOOD CITY, Calif. --(Business Wire)-- Shutterfly, Inc. (NASDAQ:SFLY), an Internet-based social expression and personal publishing service, today announced second quarter 2008 financial results for the period ended June 30, 2008.
"We are beginning to achieve leverage in our business model with improved margins, despite a challenging economy," said president and chief executive officer Jeffrey Housenbold. "In addition, in the second quarter 2008 we launched several new service and technology enhancements, including the beta version of our Share 2.0 service that extends our customers' ability to tell and share their stories."
Second Quarter 2008 Financial Highlights
-- Net revenues totaled $35.4 million, a 19% year-over-year increase.
-- Personalized Products & Services revenues(2) were $19.7 million, a 26% year-over-year increase, and comprising 55% of total net revenues.
-- Print revenues totaled $15.8 million, an 11% year-over-year increase.
-- Net revenues from existing customers were 79% of total net revenues.
-- Gross profit margin was 51% of net revenues, as compared to 50% in Q2 2007.
-- Operating expenses, excluding $2.0 million of stock-based compensation, totaled $24.0 million
-- Adjusted EBITDA was $0.4 million, as compared to $(0.6) million in Q2 2007.
-- GAAP net loss was $(4.0) million, as compared to $(2.4) million in Q2 2007.
-- GAAP net loss per diluted share was $(0.16), as compared to $(0.10) in Q2 2007.
-- The Company ended the quarter with $40.6 million in cash and cash equivalents and $48.8 million of long-term investments in auction rate securities.
Second Quarter 2008 Operating Metrics
-- Orders totaled 1.6 million, a 7% increase over Q2 2007.
-- Transacting customers totaled 834,000, a 14% increase over Q2 2007.
-- Average order value was $22.70, an 11% increase over Q2 2007.
-- Average orders per day were approximately 17,200, as compared to 16,100 per day in Q2 2007.
Recent Operating Highlights
-- Launched the beta version of Shutterfly Share 2.0, a powerful yet simple, next-generation collaboration solution that enables customers to easily create secure personal websites for sharing stories, pictures, events and calendars with family members, sports teams and other social networking groups. Shutterfly Share 2.0 combines the power and benefits of photo-sharing, blogging, self-publishing, social-networking sites and a multi-level security layer into one easy-to-use experience.
-- Implemented several other key services and technology innovations, including a new media storage platform to enhance the Company's ability to store multiple media types, which provides greater scalability, performance and reliability of media storage; and Project Lightbox, to facilitate the product creation process for consumers.
-- Scored #5 in the Foresee Results' list of Top100 retailers in customer satisfaction.
-- Announced partnership with Big Picture Scrapbooking, to extend the Company's presence in the $3 billion scrapbooking market.
Business Outlook
The Company's current financial expectations for the third quarter and the full year 2008 are as follows:
Third Quarter 2008:
-- Net revenues to range from $33 million to $36 million, an increase of 2% to 10% as compared to the third quarter of 2007.
-- GAAP gross profit margins to range from 44% to 46% of net revenues. On a non-GAAP(3) basis, gross profit margins are expected to range from 46% to 48% of net revenues.
-- GAAP operating loss to range from a loss of ($14) million to a loss of $(16) million. On a non-GAAP basis, operating loss is expected to range from a loss of $(11) million to a loss of $(13) million.
-- Adjusted EBITDA to range from a loss of $(4) million to a loss of $(6) million.
-- GAAP diluted loss per share to range from ($0.15) to ($0.30). On a non-GAAP basis, diluted loss per share is expected to be ($0.25) to ($0.30).
-- GAAP effective tax rate of approximately 45% to 76%. On a non-GAAP basis, the effective tax rate is expected to range from 38% to 39%.
-- Weighted average diluted shares of approximately 25.1 million for EPS purposes.
Full Year 2008:
-- Net revenues to range from $225 million to $240 million, an increase of 21% to 29% as compared to the full year 2007.
-- GAAP gross profit margins to range from 53% to 55% of net revenues. On a non-GAAP basis, gross profit margins are expected to range from 54% to 56% of net revenues.
-- GAAP operating income to range from a loss of ($1) million to income of $8 million. On a non-GAAP basis, operating income to range from $10 million to $19 million.
-- Adjusted EBITDA to range from 16% to 18% of net revenues.
-- GAAP diluted income per share to range from $0.01 to $0.20. On a non-GAAP basis, diluted income per share to range from $0.30 to $0.50.
-- Capital expenditures of approximately 15.0% of net revenues.
-- GAAP effective tax rate of approximately 45% to 76%. On a non-GAAP basis, the effective tax rate is expected to range from 38% to 39%.
-- Weighted average diluted shares of approximately 27.2 million for EPS purposes
Historically approximately half of the Company's net revenues and essentially all of its adjusted EBITDA profits occur during the seasonally strong fourth quarter, and, as a result, the Company's insights into performance may change throughout the course of the year.
The foregoing guidance supersedes any guidance previously issued by the Company. All such previous guidance should no longer be relied upon.
Second Quarter 2008 Conference Call
Management will review the second quarter 2008 financial results and its expectations for the third quarter and full year 2008 at a conference call on Wednesday, July 30, 2008 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call and view the accompanying slides, please visit http://www.shutterfly.com. In the Investor Relations area, found in the "About Us" section, click on the link provided for the webcast, or dial 719-325-4934. The webcast, as well as a podcast, will be archived and available at http://www.shutterfly.com. A replay of the conference call will be available through Tuesday, August 12, 2008. To hear the replay, please dial 719-457-0820, replay passcode 8546185.
About Non-GAAP Financial Information
The accompanying press release dated July 30, 2008 contains certain non-GAAP financial measures. Tables are provided in the press release that reconcile the non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP gross margins, non-GAAP operating income (loss) and the related operating income (loss) margins, non-GAAP income (loss) per share, adjusted EBITDA and free cash flows. When used in connection with historical results and forward-looking guidance, the non-GAAP financial measure Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation while the free cash flows are defined as net cash provided by operating activities less purchases of property and equipment. For more information, please see Shutterfly's SEC Filings.
To supplement the Company's consolidated financial statements presented on a GAAP basis, we believe that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results and trends and performance. Management uses these non-GAAP measures to evaluate the Company's financial results, develop budgets, manage expenditures, and determine employee compensation. The presentation of additional information is not meant to be considered in isolation or as a substitute for or superior to net income (loss) or net income (loss) per share determined in accordance with GAAP.
Notice Regarding Forward-Looking Statements
This media release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties. These forward-looking statements include all statements regarding the Company's financial expectations for the second quarter and full year 2008 set forth under the caption "Business Outlook." The Company's actual results may differ materially from those anticipated in these forward-looking statements. Factors that might contribute to such differences include, among others, our ability to expand our customer base; our ability to develop on a timely basis, as well as consumer acceptance of, new products and services; our ability to develop additional adjacent lines of business; our ability to retain and hire necessary employees, including seasonal personnel, and appropriately staff our operations; the impact of seasonality on our business; our management's broad discretion regarding the spending of the net proceeds from our public offering; unforeseen changes in expense levels; competition, which could lead to pricing pressure; and general economic conditions. For more information regarding the risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements, as well as risks relating to our business in general, we refer you to the "Risk Factors" sections of the Company's Form 10-Q for the quarter ended June 30, 2008, and the Company's other filings, which are available on the Securities and Exchange Commission's Web site at www.sec.gov. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information.
About Shutterfly
Founded in 1999, Shutterfly, Inc. is an Internet-based social expression and personal publishing service. Shutterfly provides high quality products and world class services that make it easy, convenient and fun for consumers to preserve their digital photos in a creative and thoughtful manner. Shutterfly's flagship product is its award-winning Photo Book line, which helps consumers celebrate memories and tell their stories in professionally bound coffee table books. More information about Shutterfly (NASDAQ:SFLY) is available at www.shutterfly.com. Shutterfly and Shutterfly.com are trademarks of Shutterfly, Inc.
(1) Adjusted EBITDA is a non-GAAP financial measure that the Company defines as earnings before interest, taxes, depreciation, amortization and stock-based compensation.
(2) Personalized Products and Services revenues include, primarily, photo books, folded greeting cards, calendars and photo-based merchandise.
(3) "Non-GAAP" metrics exclude stock-based compensation and purchase accounting amortization, and the related tax impact of these adjustments.
Shutterfly, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net revenues $ 35,447 $ 29,877 $ 69,785 $ 56,582
Cost of net revenues (1) 17,380 14,832 35,309 27,866
--------- --------- --------- ---------
Gross profit 18,067 15,045 34,476 28,716
--------- --------- --------- ---------
Operating expenses (1):
Technology and development 9,833 6,641 18,997 12,455
Sales and marketing 8,619 7,199 16,675 12,379
General and administrative 7,554 6,741 15,174 12,705
--------- --------- --------- ---------
Total operating expenses 26,006 20,581 50,846 37,539
--------- --------- --------- ---------
Loss from operations (7,939) (5,536) (16,370) (8,823)
Interest expense (57) (39) (85) (93)
Interest income 712 1,415 2,059 2,902
--------- --------- --------- ---------
Loss before income taxes (7,284) (4,160) (14,396) (6,014)
Benefit from income taxes 3,267 1,721 6,740 2,514
--------- --------- --------- ---------
Net loss $ (4,017) $ (2,439) $ (7,656) $ (3,500)
========= ========= ========= =========
Net loss per share - basic
and diluted $ (0.16) $ (0.10) $ (0.31) $ (0.15)
========= ========= ========= =========
Weighted-average shares
outstanding - basic and
diluted 25,045 24,136 24,995 24,034
========= ========= ========= =========
(1) Stock-based compensation
is allocated as follows:
Cost of net revenues $ 92 $ 39 $ 175 $ 77
Technology and development 538 192 929 456
Sales and marketing 504 139 915 314
General and administrative 954 553 1,887 938
--------- --------- --------- ---------
$ 2,088 $ 923 $ 3,906 $ 1,785
========= ========= ========= =========
Shutterfly, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value amounts)
(Unaudited)
June 30, December 31,
2008 2007
-------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 40,635 $ 122,582
Short-term investments - 3,002
Accounts receivable, net 3,106 4,480
Inventories 3,533 4,788
Deferred tax asset, current portion 2,212 1,677
Prepaid expenses and other current
assets 5,363 4,510
-------------- --------------
Total current assets 54,849 141,039
Long-term investments 48,811 -
Property and equipment, net 51,683 48,416
Goodwill and intangible assets, net 15,088 3,859
Deferred tax asset, net of current
portion 17,758 13,294
Other assets 2,086 2,162
-------------- --------------
Total assets $ 190,275 $ 208,770
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,194 $ 8,783
Accrued liabilities 9,824 18,724
Deferred revenue 9,034 8,699
Current portion of capital lease
obligations 568 808
-------------- --------------
Total current liabilities 22,620 37,014
Other liabilities 1,170 1,083
Capital lease obligations, less current
portion 24 107
-------------- --------------
Total liabilities 23,814 38,204
-------------- --------------
Commitments and contingencies
Stockholders' equity
Undesignated preferred stock, $0.0001
par value; 5,000 shares authorized;
no shares issued and outstanding - -
Common stock, $0.0001 par value;
100,000 shares authorized; 25,065
and 24,805 shares issued and
outstanding on June 30, 2008 and
December 31, 2007, respectively 2 2
Additional paid-in-capital 196,595 190,849
Accumulated other comprehensive loss (2,235) (12)
Deferred stock-based compensation - (28)
Accumulated deficit (27,901) (20,245)
-------------- --------------
Total stockholders' equity 166,461 170,566
-------------- --------------
Total liabilities and
stockholders' equity $ 190,275 $ 208,770
============== ==============
Shutterfly, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2008 2007
--------- ---------
Cash flows from operating activities:
Net loss $ (7,656) $ (3,500)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 11,237 7,468
Amortization of intangible assets 914 77
Stock-based compensation, net of cancellations 3,906 1,785
Loss on disposal property and equipment 291 -
Deferred income taxes (5,813) (2,887)
Changes in operating assets and liabilities:
Accounts receivable, net 1,374 456
Inventories 1,255 456
Prepaid expenses and other current assets (853) (279)
Other assets 88 (164)
Accounts payable (5,589) (6,206)
Accrued and other liabilities (8,839) 4,541
Deferred revenue 335 465
--------- ---------
Net cash used in operating activities (9,350) 2,212
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (11,770) (14,577)
Capitalization of software and website
development costs (2,258) (1,492)
Acquisition of business and intangibles, net of
cash acquired (10,098) (1,632)
Proceeds from sale of equipment 6 -
Proceeds from sale of short-term investments 3,002 -
Purchase of auction rate securities (52,250) -
--------- ---------
Net cash used in investing activities (73,368) (17,701)
--------- ---------
Cash flows from financing activities:
Principal payments of capital lease obligations (323) (1,306)
Proceeds from issuance of common stock upon
exercise of stock options 1,094 1,755
--------- ---------
Net cash provided by financing
activities 771 449
--------- ---------
Net decrease in cash and cash equivalents (81,947) (15,040)
Cash and cash equivalents, beginning of period 122,582 119,051
--------- ---------
Cash and cash equivalents, end of period $ 40,635 $104,011
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 28 $ 114
Cash paid during the period for income taxes 444 760
Shutterfly, Inc.
User Metrics Disclosure
-----------------------------
June 30, June 30,
2008 2007
-------------- --------------
User Metrics
Customers 833,786 731,384
year-over-year growth 14% 41%
Orders 1,561,877 1,461,804
year-over-year growth 7% 40%
Average order value $22.70 $20.44
year-over-year growth 11% 8%
Average orders per day 17,163 16,064
year-over-year growth 7% 40%
Average orders per customer 1.9x 2.0x
Shutterfly, Inc.
Reconciliation of Forward-Looking Guidance for Non-GAAP Financial
Measures to GAAP Measures
(In millions, except per share amounts)
Forward-Looking Guidance
-----------------------------------------
GAAP
Range of Estimate Adjustments
From To From To
------------------- -----------------
Three Months Ending
September 30, 2008
Net revenues $ 33.0 $ 36.0 - -
Gross profit margin 44% 46% 2% (a)
Operating loss ($16) ($14) $ 3 (b)
Operating loss margin (48%) (39%) (9%) (8%)(b)
Stock-based
compensation $ 2.8 $ 2.8 $ 2.8 $ 2.8
Amortization of
intangible assets $ 0.5 $ 0.5 $ 0.5 $ 0.5
Adjusted EBITDA(1)
Diluted net loss per
share ($0.15) ($0.30) ($0.15) $0.05 (c)
Diluted shares 25.1 25.1 - -
Effective tax rate 76% 45% 38% 6% (d)
Twelve Months Ending
December 31, 2008
Net revenues $ 225.0 $ 240.0 - -
Gross profit margin 53% 55% 1% (e)
Operating income (loss) ($1) $ 8 $ 11 (f)
Operating margin (1%) 3% (5%) (5%)(f)
Stock-based
compensation $ 9.7 $ 9.7 $ 9.7 $ 9.7
Amortization of
intangible assets $ 1.9 $ 1.9 $ 1.9 $ 1.9
Adjusted EBITDA(1)
Adjusted EBITDA(1)
margin
Diluted earnings per
share $ 0.01 $ 0.20 $ 0.29 $0.30 (g)
Diluted shares 27.2 27.2 - -
Effective tax rate 76% 45% 38% 6% (h)
Capital expenditures as
% of net revenues 15.0%
Non-GAAP
Range of Estimate
From To
--------- ---------
Three Months Ending September 30, 2008
Net revenues $ 33.0 $ 36.0
Gross profit margin 46% 48%
Operating loss ($13) ($11)
Operating loss margin (39%) (31%)
Stock-based compensation - -
Amortization of intangible assets - -
Adjusted EBITDA(1) ($6.0) ($4.0)
Diluted net loss per share ($0.30) ($0.25)
Diluted shares 25.1 25.1
Effective tax rate 38% 39%
Twelve Months Ending December 31, 2008
Net revenues $ 225.0 $ 240.0
Gross profit margin 54% 56%
Operating income (loss) $ 10 $ 19
Operating margin 4% 8%
Stock-based compensation - -
Amortization of intangible assets - -
Adjusted EBITDA(1) $ 35 $ 44
Adjusted EBITDA(1) margin 16% 18%
Diluted earnings per share $ 0.30 $ 0.50
Diluted shares 27.2 27.2
Effective tax rate 38% 39%
Capital expenditures as % of net revenues 15.0%
(1) Adjusted EBITDA is a non-GAAP financial measure defined as
earnings before interest, taxes, depreciation, amortization and
stock-based compensation.
(a) Reflects estimated adjustments for stock-based compensation
expense of approximately $100k and amortization of purchased
intangible assets of approximately $500k.
(b) Reflects estimated adjustments for stock-based compensation
expense of approximately $2.8 million and amortization of
purchased intangible assets of approximately $500k.
(c) Reflects the estimated adjustments in item (b) and the income tax
impact related to these adjustments.
(d) Reflects the estimated adjustments to the effective tax rate
based on the adjustments in item (b).
(e) Reflects estimated adjustments for stock-based compensation
expense of approximately $400k and amortization of purchased
intangible assets of approximately $1.9 million.
(f) Reflects estimated adjustments for stock-based compensation
expense of approximately $9.7 million and amortization of
purchased intangible assets of approximately $1.9 million.
(g) Reflects the estimated adjustments in item (f) and the income tax
impact related to these adjustments.
(h) Reflects the estimated adjustments to the effective tax rate
based on the adjustments in item (f).
Shutterfly, Inc.
Reconciliation of GAAP Gross Profit
Margin to Non-GAAP Gross Profit
Margin
(In thousands)
(Unaudited)
---------------------------------
Jun. 30, Sept. 30, Dec. 31,
2007 2007 2007
---------- ---------- ---------
GAAP gross profit $ 15,045 $ 15,362 $ 58,538
Stock-based compensation expense
within cost of net revenues 39 46 66
Amortization of intangible assets
within cost of net revenues 45 111 112
---------- ---------- ---------
Non-GAAP gross profit $ 15,129 $ 15,519 $ 58,716
========== ========== =========
Non-GAAP gross profit margin 51% 48% 60%
---------- ---------- ---------
Reconciliation of GAAP Operating
Margin to Non-GAAP Operating Margin
(In thousands)
(Unaudited)
---------------------------------
Jun. 30, Sept. 30, Dec. 31,
2007 2007 2007
---------- ---------- ---------
GAAP operating income (loss) $ (5,536) $ (6,611) $ 26,495
Stock-based compensation expense 923 1,024 1,192
Amortization of intangible assets 45 139 196
---------- ---------- ---------
Non-GAAP operating income (loss) $ (4,568) $ (5,448) $ 27,883
========== ========== =========
Non-GAAP operating margin (15%) (17%) 29%
---------- ---------- ---------
Reconciliation of GAAP Net Income to
Non-GAAP Net Income
(In thousands)
(Unaudited)
---------------------------------
Jun. 30, Sept. 30, Dec. 31,
2007 2007 2007
---------- ---------- ---------
GAAP net income (loss) $ (2,439) $ (3,314) $ 16,908
Stock-based compensation expense 923 1,024 1,192
Amortization of intangible assets 45 139 196
Income taxes associated with
certain non-GAAP entries (556) (486) 190
---------- ---------- ---------
Non-GAAP net income (loss) $ (2,027) $ (2,637) $ 18,486
========== ========== =========
Diluted net income per share:
GAAP ($0.10) ($0.14) $ 0.63
========== ========== =========
Non-GAAP ($0.08) ($0.11) $ 0.69
========== ========== =========
Shares used in GAAP and non-GAAP
diluted net income per-share
calculation 24,136 24,425 26,864
---------- ---------- ---------
Reconciliation of GAAP to Non-GAAP
Effective Tax Rate
(In thousands)
(Unaudited)
---------------------------------
Jun. 30, Sept. 30, Dec. 31,
2007 2007 2007
---------- ---------- ---------
GAAP benefit (provision) for income
taxes $ 1,721 $ 2,001 $(10,817)
Income taxes associated with
certain non-GAAP entries (556) (486) 190
---------- ---------- ---------
Non-GAAP provision for income taxes $ 1,165 $ 1,515 $(10,627)
========== ========== =========
GAAP income (loss) before income
taxes $ (4,160) $ (5,315) $ 27,726
Stock-based compensation expense 923 1,024 1,192
Amortization of intangible assets 45 139 196
---------- ---------- ---------
Non-GAAP income (loss) before income
taxes $ (3,192) $ (4,152) $ 29,114
========== ========== =========
GAAP Effective tax rate 41% 38% 39%
---------- ---------- ---------
Non-GAAP effective tax rate 36% 36% 37%
---------- ---------- ---------
Shutterfly, Inc.
Reconciliation of Non-GAAP Adjusted
EBITDA
(In thousands)
(Unaudited)
---------------------------------
Jun. 30, Sept. 30, Dec. 31,
2007 2007 2007
---------- ---------- ---------
Income (loss) from Operations $ (5,536) $ (6,611) $ 26,495
Add back:
Depreciation and amortization 4,029 4,889 5,361
Stock-based compensation expense 923 1,024 1,193
---------- ---------- ---------
Non-GAAP Adjusted EBITDA $ (584) $ (698) $ 33,049
========== ========== =========
Reconciliation of Operating Cash
Flows to Free Cash Flows
(In thousands)
(Unaudited)
---------------------------------
Jun. 30, Sept. 30, Dec. 31,
2007 2007 2007
---------- ---------- ---------
Net cash provided by operating
activities $ 6,487 $ 5,392 $ 34,615
Less: Purchases of property and
equipment (as reported) (11,820) (14,849) (4,075)
Plus: Capitalized technology &
development costs(1) 854 847 773
---------- ---------- ---------
Free cash flows $ (4,479) $ (8,610) $ 31,313
========== ========== =========
Shutterfly, Inc.
Reconciliation of GAAP Gross Profit
Margin to Non-GAAP Gross Profit Margin
(In thousands)
(Unaudited)
Year
Ended
---------------------
Mar. 31, Jun. 30, Dec. 31,
2008 2008 2007
----------- --------- ---------
GAAP gross profit $ 16,409 $18,067 $102,616
Stock-based compensation expense
within cost of net revenues 84 92 189
Amortization of intangible assets
within cost of net revenues 367 367 300
----------- --------- ---------
Non-GAAP gross profit $ 16,860 $18,526 $103,105
=========== ========= =========
Non-GAAP gross profit margin 49% 52% 55%
----------- --------- ---------
Reconciliation of GAAP Operating Margin
to Non-GAAP Operating Margin
(In thousands)
(Unaudited) Year
Ended
---------------------
Mar. 31, Jun. 30, Dec. 31,
2008 2008 2007
----------- --------- ---------
GAAP operating income (loss) $ (8,431) $(7,939) $ 11,061
Stock-based compensation expense 1,818 2,088 4,001
Amortization of intangible assets 457 457 412
----------- --------- ---------
Non-GAAP operating income (loss) $ (6,156) $(5,394) $ 15,474
=========== ========= =========
Non-GAAP operating margin (18%) (15%) 8%
----------- --------- ---------
Reconciliation of GAAP Net Income to
Non-GAAP Net Income
(In thousands)
(Unaudited) Year
Ended
---------------------
Mar. 31, Jun. 30, Dec. 31,
2008 2008 2007
----------- --------- ---------
GAAP net income (loss) $ (3,639) $(4,017) $ 10,095
Stock-based compensation expense 1,818 2,088 4,001
Amortization of intangible assets 457 457 412
Income taxes associated with certain
non-GAAP entries (1,587) (1,419) (1,296)
----------- --------- ---------
Non-GAAP net income (loss) $ (2,951) $(2,891) $ 13,212
=========== ========= =========
Diluted net income per share:
GAAP ($0.15) ($0.16) $ 0.38
=========== ========= =========
Non-GAAP ($0.12) ($0.12) $ 0.50
=========== ========= =========
Shares used in GAAP and non-GAAP
diluted net income per-share
calculation 24,949 25,045 26,273
----------- --------- ---------
Reconciliation of GAAP to Non-GAAP
Effective Tax Rate
(In thousands)
(Unaudited) Year
Ended
---------------------
Mar. 31, Jun. 30, Dec. 31,
2008 2008 2007
----------- --------- ---------
GAAP benefit (provision) for income
taxes $ 3,473 $ 3,267 $ (6,302)
Income taxes associated with certain
non-GAAP entries (1,587) (1,419) (1,296)
----------- --------- ---------
Non-GAAP provision for income taxes $ 1,886 $ 1,848 $ (7,597)
=========== ========= =========
GAAP income (loss) before income taxes $ (7,112) $(7,284) $ 16,397
Stock-based compensation expense 1,818 2,088 4,001
Amortization of intangible assets 457 457 412
----------- --------- ---------
Non-GAAP income (loss) before income
taxes $ (4,837) $(4,739) $ 20,810
=========== ========= =========
GAAP Effective tax rate 49% 45% 38%
----------- --------- ---------
Non-GAAP effective tax rate 39% 39% 37%
----------- --------- ---------
Shutterfly, Inc.
Reconciliation of Non-GAAP Adjusted
EBITDA
(In thousands)
(Unaudited)
Year
Ended
---------------------
Mar. 31, Jun. 30, Dec. 31,
2008 2008 2007
----------- --------- ---------
Income (loss) from Operations $ (8,431) $(7,939) $ 11,061
Add back:
Depreciation and amortization 5,885 6,266 17,796
Stock-based compensation expense 1,818 2,088 4,001
----------- --------- ---------
Non-GAAP Adjusted EBITDA $ (728) $ 415 $ 32,858
=========== ========= =========
Reconciliation of Operating Cash Flows
to Free Cash Flows
(In thousands)
(Unaudited) Year
Ended
---------------------
Mar. 31, Jun. 30, Dec. 31,
2008 2008 2007
----------- --------- ---------
Net cash provided by operating
activities $(12,030) $ 2,680 $ 42,219
Less: Purchases of property and
equipment (as reported) (8,778) (5,250) (34,993)
Plus: Capitalized technology &
development costs(1) 848 1,410 3,112
----------- --------- ---------
Free cash flows $(19,960) $(1,160) $ 10,338
=========== ========= =========
1) Capitalized costs associated with software development or obtained
for internal use in accordance with AICPA Statement of Position 98-1,
Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use have previously been reported in the Purchases of
Property and Equipment on the Consolidated Statement of Cash Flows.
Going forward, these capitalized costs will be presented separately
in the Cash Flows from Investment Activities section on the
Consolidated Statement of Cash Flows and are excluded from the
definition of Free Cash Flows.
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