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October 12, 2012

Shutterstock Shares Rise with Initial Public Offering

By Shankar Pandiath, TMCnet Contributor

Shutterstock Inc., soared 34 percent in its market debut, valuing the company at more than $700 million, as investors bet on strong demand for the company's stock images from multimedia customers, especially online.

The shares are trading on the New York Stock Exchange under the "SSTK" ticker symbol. They gained $4.66, or 27.4 percent, to close at $21.66 Thursday (October 11, 2012) after peaking at $22.90 earlier in the session.

Image via Shutterstock

Shares of Shutterstock jumped nearly 30 percent in their first hours of trading, after the Internet provider of stock photos and videos helped the company raise $76.5 million at $17 per share, 21 percent above the midpoint of the expected range.

Shutterstock said in its IPO filing, that a sponsored study showed that the market for pre-shot commercial digital photographs would grow by nearly 50 percent to $6 billion in 2016.

The New York company, which was one of four IPOs to price on Thursday, sold 4.5 million shares for $17 each, above the expected range of $13 to $15. The pricing indicated there was already strong demand for its stock.

Chief executive Jonathan Oringer, who founded Shutterstock in 2003, will now hold about 57 percent of the company following the offering. Private equity and venture capital firm Insight Venture Partners will own 21 percent.

Shutterstock, which has over 35,000 approved image contributors, offers more than 20 million photographs and illustrations that customers can license and download through subscriptions. Shutterstock had over half a million active, paying users that contributed to its 2011 revenue, marking over 70 percent increase from the prior year. Subscription-based users accounted for nearly 60 percent of the recent year's revenue.

Shutterstock delivered over 58 million paid downloads to customers for the year ended December 31, 2011. The company reported 2011 net income of nearly $22 million on revenue of over $120 million. This compares with 2010 net income of nearly $19 million and revenue of $83 million.

Shutterstock competes with other online providers of images such as iStockphoto, Fotolia, Dreamstime, Getty Images and Corbis Corp. Growing demand for online images has raised interest in companies that provide such services, with Carlyle Group LP (CGO) snapping up Getty Images for $3.3 billion in August.

Jon Oringer said that it’s been a few years that they have been thinking to go public. He said that it took a while to get everything in place and go through the whole SEC (News - Alert) process, although it was worth it in the end. He felt that now that they are a publicly listed company, it would give them a good market positioning as it would mean they have a strong balance sheet and will be around for awhile.

He did not want the IPO to be compared with that of Facebook’s (News - Alert), as he was not an expert on Facebook and added that in this market, all you really need to have is a product and a model that make sense.

He also indicated that he was going to be involved with the operational side of the company and the IPO would not change any of that. He said that he would be involved in product and marketing just like before. He also added that now he has a team of people around him and who have been through this and they would know exactly what the future would be for the company.

Edited by Brooke Neuman
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