Shutterstock, Inc. (SSTK)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $242.6M (+13% YoY) with diluted EPS of $0.53 and adjusted EPS of $1.03; sequentially, revenue declined from $250.3M in Q4 2024 while margins remained healthy (net income margin 7.7%; adjusted EBITDA margin 26.1%) .
• Content revenue grew 17% YoY to $202.9M (84% of total), while Data, Distribution & Services (DDS) declined 2% YoY to $39.7M; FX was a ~1% headwind to growth .
• Versus Wall Street consensus, revenue ($249.4M*) and adjusted EPS ($1.045*) were slightly below actuals ($242.6M and $1.03), a modest miss likely tied to DDS softness and merger-related cost focus; EBITDA consensus was $64.7M* (actual adjusted EBITDA $63.4M) .
• No earnings call or guidance due to the pending merger with Getty Images; both companies received a DOJ “Second Request” in April, extending the HSR waiting period—merger milestones and regulatory updates are near-term stock catalysts .

Consensus values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• Content strength: Content revenue rose 17% YoY to $202.9M, now 84% of total revenue; management cited Envato contribution and product improvements driving performance . “I am pleased to report that Shutterstock started the year strong, with a first quarter that achieved year over year Content revenue growth of 17%...” — CEO Paul Hennessy .
• Cash generation: Adjusted free cash flow increased to $23.4M (+$12.1M YoY), supported by $25.2M operating cash flow despite merger-related cash costs .
• Margin resilience: Adjusted EBITDA was $63.4M (+13% YoY) with adjusted EBITDA margin steady at 26.1%, underscoring operating discipline amid integration .

What Went Wrong

• DDS softness: DDS revenue fell 2% YoY to $39.7M; FX reduced overall growth by ~1% for the quarter .
• Sequential revenue dip and higher interest: Revenue fell to $242.6M from $250.3M in Q4 2024; interest expense rose by $3.7M due to debt for the Envato acquisition, weighing on GAAP earnings .
• Merger costs and lack of guidance: The company incurred $11.9M of professional fees tied to the Getty Images merger and did not hold a call or issue guidance, limiting near-term visibility for investors .

Financial Results

Segment revenue breakdown:

Key KPIs:

Notes: 2025 KPIs include Envato and Backgrid impacts per methodology; 2024 figures exclude Envato/Backgrid as disclosed .

Guidance Changes

Earnings Call Themes & Trends

No Q1 2025 call was held due to the pending Getty Images merger . Themes tracked across prior quarters and current period:

Management Commentary

• “I am pleased to report that Shutterstock started the year strong, with a first quarter that achieved year over year Content revenue growth of 17%, as well as improvements across many of our key financial metrics. As we continue to generate strong free cash flow at attractive margins, we remain committed to growth in both the Content and Data, Distribution and Services businesses in 2025.” — Paul Hennessy, CEO .
• Management attributed EPS and net income improvement to Envato profitability, offset by $3.7M higher interest expense and $11.9M professional fees tied to the Getty Images merger .
• Adjusted EBITDA margin held at 26.1% in Q1 2025 (flat YoY), reflecting disciplined operations during ongoing integration .

Q&A Highlights

No Q1 2025 Q&A (no call) . Key Q3 2024 Q&A themes to contextualize trajectory:

• GIPHY monetization: Run-rate ~$20M at acquisition; sequential growth; TikTok partnership expected to aid monetization (specifics undisclosed) .
• Content ex-Envato: Sequential improvement in declines (-10% to -7%) with pricing/product changes and Generative Plus driving additive behavior; path toward organic growth discussed .
• Data pipeline/visibility: Lumpy bookings; strong land-and-expand with existing customers (refresh data, new modalities, metadata enhancement); limited long-term visibility acknowledged .

Estimates Context

Consensus values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Content is the key growth engine (+17% YoY to $202.9M), validating product changes and contributions from Envato; this helped preserve margins despite merger costs .
• DDS softness (-2% YoY) and FX (-1% impact) drove a modest top-line miss versus consensus, a focal point for near-term estimate risk .
• Non-GAAP adjustments were material (e.g., $11.861M merger-related costs excluded; Giphy non-recurring retention expenses), and adjusted margins remained strong at 26.1% — monitor ongoing M&A-related expenses and integration progress .
• Cash discipline intact: Adjusted free cash flow of $23.4M and continued $0.33 dividend declaration support capital return while integration proceeds .
• No guidance and no call due to merger; regulatory timeline risk elevated after DOJ Second Request — transaction milestones and regulatory newsflow are primary stock catalysts in the near term .
• Sequential revenue decline from Q4 to Q1 (~$7.7M) and higher interest expense reflect acquisition funding dynamics; medium-term thesis hinges on Envato synergy realization and DDS monetization (incl. GIPHY) .
• For positioning: Favorable long-term set-up if Envato-driven subscriber growth and AI/data deals re-accelerate DDS; near term, expect investor focus on merger progress and any updates to guidance or segment trajectories .

Additional Data and Disclosures

• Net cash provided by operating activities in Q1 2025 was $25.2M; adjusted free cash flow was $23.4M (reflecting capital expenditures, content acquisition, Giphy retention reimbursement, and merger cash costs) .
• Dividend: $0.33 per share declared April 21, 2025, payable June 19, 2025; $11.5M paid in Q1 for the prior declaration .
• Balance sheet: Cash and equivalents $112.2M at March 31, 2025; total debt $276.965M (current $158.107M; long-term $118.858M) .