https://investor.shutterstock.com/news-releases/news-release-details/shutterstock-reports-second-quarter-2023-financial-results

I haven't found a freely-available transcript of this morning's earnings call, but I'll update this if I do.

This article gives an overview of why investors weren't happy with the results:

https://stockstory.org/nyse/sstk/earnings/shutterstock-nysesstk-misses-q2-revenue-estimates

"Stock photography and footage provider Shutterstock (NYSE:SSTK) missed analysts' expectations in Q2 FY2023, with revenue flat year on year at $208.8 million"

"Shutterstock's revenue growth over the last three years has been unremarkable, averaging 9.53% annually. This quarter, Shutterstock reported rather lacklustre 0.95% year-on-year revenue growth, missing analysts' expectations."

" In addition, the company's gross margin also deteriorated."

Bear in mind that the crowing about subscriber growth omits mentioning what's noted in the detailed statements: Pond5 numbers were included for the first time in Q2 2023. I also think there's been conversion of existing customers from credit packs to subscriptions, which means it can be counted as subscriber growth, but it isn't really customer growth.

See all the charts in the appendix at the bottom of this investor page

https://content.shutterstock.com/investor-report/index.html

One number that stood out to me was the number of paid downloads had dropped 38.5 million, down from 42.7 million in Q1 2023 and 43.4 million in Q2 2022. Enterprise revenue was up, but E-commerce revenue was down - 12% lower than the same quarter in 2022.

"The decline in E-commerce revenue was primarily driven by continued weakness in new customer acquisition"

Enterprise revenue is still smaller than E-commerce and includes "...$17.3 million and $2.2 million, related to our computer vision data partnerships, for the three months ended June 30, 2023 and 2022..." Not sure what those partnerships are, but if they aren't royalty bearing activities, then contributors don't benefit from that type of growth.

"The increase in Enterprise revenues was primarily driven by growth in our computer vision data partnerships which generated $17.3 million during the second quarter..."

So I take that to mean that income from its stock licensing business was essentially flat and paid downloads were declining - hence the stock price dropping, I guess.

Well from an income perspective, based on the chart at the right, SS has dropped to third place....maybe that goes hand in hand with how they are doing financially as a company.

The SeekingAlpha transcript is behind a paywall - I see "Unlock this article with Premium - Capture the upside. Keep reading with Premium." covering everything except the headline. I used to be able to access their stuff (logged in to a free account), but possibly after a certain number of items they stop allowing that?)

But to answer your question, yes, that it was I was looking for. Sometimes other services will pick up the transcript, but yesterday the only ones I found were all paid (and I'm not paying to read bucket-loads of corporate speak )

And the stock was as low as $42.68 today - closed at $42.90

Thanks for providing that access.

I thought it was interesting that they will now be providing details on money earned from their (contributors') data:

"In addition, beginning today we will be breaking out the revenue derived from our data engine. As a reminder, our data offering is driven by our ability to monetize our unique repository of metadata which customers license for model training purposes. This includes our multi-year partnerships with large tech companies such as OpenAI, LG, Meta, NVIDIA and now our newly announced transformational partnership with Google. With this new disclosure, we believe that investors will have greater visibility into the scale and trajectory of a major growth driver of our business."

I've looked at both Alphabet's press release page and Shutterstock's; done a Google search and looked on Yahoo Finance. I cannot find anything recent about a Google partnership (there were earlier deals in 2016 and 2021). The only detail comes from the transcript:

"In the second quarter, we signed a strategic partnership with Google that includes a five-year content and data partnership across Google products and services. Google selected Shutterstock for our global coverage of digital media to enhance product, and user experiences across Google."

Getting back to revenue. Their Q2 revenue was $111.903m from E-commerce, $79.637m from Enterprise and $17.3m from data. In other words the E-commerce segment (stock licensing via the web site) is their primary business, at least for now. Hennessy was careful to sound optimistic about future AI-fueled growth, once the photo-realistic content was good enough "...we strongly believe Shutterstock is positioned to be a winner in this new content type"

As you said, lots of chat about Giphy, but no detail about how SS could "...monetize [the] massive mobile audience base". I don't doubt the size of the audience, but his blather about "... moment marketing with real time conversations..." as a future growth area seems very vague and more wishing than planning. In any event I don't think contributors would benefit from this business at all unless content is used to create GIFs

Hennessy said that "...Shutterstock [is] benefiting from a dramatic uptick in customer demand and accelerating data supply from our contributor community." I watched a YouTube video this afternoon explaining how to upload AI generated content to SS even though it's not allowed and get it accepted - something the person claimed (he showed screen shots) to have done. Not sure how good it is if your increase in supply by contributors is of stuff you've explicitly said you don't want.

Later on Hennessy says " We went from 2.4 million in Q1 to 2.7 million contributors in Q2. This is the largest uptick we have ever had in contributors in the 20-plus year history of Shutterstock." I think that must be a flood of new contributors with AI stars in their eyes - where else would there be that many new illustrators, photographers, videographers wanting to sign up?

Apparently data licensing customers are coming back for more "Customers are also consuming refreshes of our training data, and there is an opportunity to provide them ongoing Metadata enrichment." Hennessy says "Looking ahead, we have a robust pipeline of data partnerships for the second half, also we have won over $85 million in bookings in calendar 2023". I assume the $17.3 million they declared for Q2 is part of that $85 million?

The CFO mentioned the softness in the E-commerce segment "While our E-commerce channel has been softer than expected, our rapid growth in data partnerships is more than making up for it..." From a contributor perspective, I think the problem is that they make much more money from licensing content than from the contributor fund. And the CFO also said "Our guidance assumes no recovery in E-commerce revenue growth rates this year"

As far as the data revenue, he explicitly said that the Q2 data numbers did not include any Google revenue, so that will come in the second half of the year

One of the analysts asked about future revenue from data licensing - if you make money this year, what does that mean if anything for recurring revenue in 2024 and beyond. The answer was long, circuitous and pretty vague:

"...our ability to grow this business year-on-year is really going to be a function of our ability to, one, expand our existing relationships and, two, bring new clients into the pipeline."

The investors want to know where the growth will be coming from and appear not to be sure if that can be data licensing if stock content isn't it any more.

You are correct but this is only provisional. Once the AI have the data they need it will be basically 0 to SS and they will have everything that is needed to snatch the throne of the stock industry from the traditional players like Getty and Shutter. Adobe will survive because they have identified the issue and will create their own image generation stock possibilities. But SS and Getty . Those two big stocks will be dimes in the stock market in the next few years. Worst investment you could do at this time. There is the same shift that was from analog photography companies like Kodak to digital ones. Fuji survived. Same will be true with Adobe.

Overall it sounds like they have no real ideas how to grow the stock business, but have glowing eyes when it comes to data licensing.

How much will producers earn from that?

And will all those new contributors enjoy uploading material for data sets?

eta:

They are making roughly 80 million in the quarter with stock sales and already 17 million with data set sales.

I don�t think the artists are getting an additional one third of their income from data sets on ss, right?

So selling data sets for training is extremely more profitable for them than regular stock licensing.

On the subject of SS adding 300k contributors in Q2 - what they said was "...the largest uptick we have ever had in contributors in the 20-plus year history of Shutterstock"...

I had a look at new uploads on SS and saw a lot of work I'd bet was genAI created. Here's one example of a new portfolio with a small number of items, almost all labeled "oil painting" (a couple are "acrylic"). They don't appear to be oil paint on canvas to my eye, and hands (Queen Victoria and the dancing girl in orange) look very genAI.

https://www.shutterstock.com/g/Nida+Artist?sort=newest

Perhaps they are really naive enough to believe they aren't getting any genAI content uploaded by contributors. Perhaps they want it, but want plausible deniability in case they're sued.

Look at these fingers - SS has contributor-uploaded genAI content in the library...

Are the dollar signs are a mistake in the transcript, where it says, "The average number of new contributors every month has also doubled over last year. We went from $2.4 million in Q1 to $2.7 million contributors in Q2. This is the largest uptick we have ever had in contributors in the 20-plus year history of Shutterstock. As a result, our content library is now at $784 million licensable assets making Shutterstock the world's largest licensable and ethically sourced creative content marketplace." ?

Looks like they are trying that. As little direct human contact as possible, automate as much as you can. No forums, no staff to reach out to suppliers directly. Probably also downsized the sales teams as well.

They admit that their ai project is a complete failure, millions of files prompting and hardly anyone downloads. And they just shrug it off as something that will eventually fix itself.

At the same time Adobe already has a huge ai collection for customers to choose content from, plus they have learned a lot from what customers like to buy, what producers can produce and now they can integrate that in their own ai engine.

The key element about media is people.

Visual communication, news reporting�it is all about people.

Licensing files for ai projects, is something any agency can do. They have no advantage there.

And the Getty library has much better content in photos.

They currently have the advantage in video because they bought p5.

But if they touch the p5 royalty system, what will happen then?

Interesting times.

What will happen if Adobe or Getty start sharing a real revenue stream for data licensing?

If 33% of the Adobe licensing deals is shared with contributors, we really could get some interesting money.

SS is showing us that there is a huge demand for these deals. Well, other agencies can do that as well.

How much will the creators earn? That will determine where the high quality uploads go.

If you do a search for a sparrow and sort by newest uploads, this is what you get:

https://www.shutterstock.com/de/search/sparrow?sort=newest

eagle

https://www.shutterstock.com/de/search/sparrow?sort=newest

lemon cake

https://www.shutterstock.com/de/search/lemon-cake?sort=newest&page=2

Other searches are not that bad, but you can see the problem.

They have a keyword spamming problem, which longterm might render their library unusable.

Perhaps their algorithms can filter out the spam quickly through client interactions for the other search types.

But a customer looking at newest uploads must look at loads of files they cannot use. Basically they are now doing the keyword quality control.

ETA:

For comparison, here is the search for sparrow on istock sorted by new

https://www.istockphoto.com/de/search/2/image-film?phrase=sparrow&sort=newest

no wolves, cats, dogs, paprika, rabbits, brick walls, buildings, parrots or owls

If i was working on the sales team of any other agency I would obviously use these searches as examples to sway people to sign up with me.

"Oh, you are thinking of signing up for a plan with Shutterstock? Have you done a few test searches and sorted by newest content? Why not just try it now with the keyword sparrow? See? Now do that on our site. How does that look? Do you really want to give your money to a place that expects you the customer to do their keyword quality control?...and today we have this extra special discount just for you..."

If you do a search for a sparrow and sort by newest uploads, this is what you get:

https://www.shutterstock.com/de/search/sparrow?sort=newest

eagle

https://www.shutterstock.com/de/search/sparrow?sort=newest

lemon cake

https://www.shutterstock.com/de/search/lemon-cake?sort=newest&page=2

Other searches are not that bad, but you can see the problem.

They have a keyword spamming problem, which longterm might render their library unusable.

Shutterstock always had a big problem with this, probably why new content hardly sells. Customers use the "top image" search rather than clicking throug pages and pages of irrelevant images when using the "new image" serach. So they same old images that made it to the top of a search 10 years ago keep on selling and new imges hardly have a chance to ever make it there.

It doen't matter what keyword you try, it's always bad.

Try "cat": I get: a Monkey, fantasy animal, tigers (debatable, but not what I want when I enter "cat") , some abstract background, Doraemon (what?), a bulldog, leopard print patterns, a lizard, frog, eagle, bull, fox, elehant.... Like 25% of the results are not cats.
https://www.shutterstock.com/de/search/cat?sort=newest

And there are some users that missuse keywors MASSIVELY, like here this ElVehhab guy in the cat image results. I am 95% sure his images are Ai generated and he just uses every animal possible in the keywords of all his images.



Try dog and you get a bunch of (again 95% sure) Ai generated wolf images:



SS really gave up carying about  accurate keywords a long time ago. The search results when seraching for newest images have always been bad and not accurate as long as I remember and now they also do not care about people flooding their database with very obvious AI images even though it's not allowed.

Are the dollar signs are a mistake in the transcript, where it says, "The average number of new contributors every month has also doubled over last year. We went from $2.4 million in Q1 to $2.7 million contributors in Q2. This is the largest uptick we have ever had in contributors in the 20-plus year history of Shutterstock. As a result, our content library is now at $784 million licensable assets making Shutterstock the world's largest licensable and ethically sourced creative content marketplace." ?

Yeah, and 90% of these new "contributors" are just scammers who flood shutterstock with AI generated images:
https://www.shutterstock.com/de/g/Elena_Zakhariya?q=wolf
You cannot tell me this isn't a person just hitting the recreate button on midjourney over and over again. Look through all the pages. There are always like a zillion similar looking images with the same stye, and then suddenly the art style changes completely and there are again a zillion images with the new art style and so on.... Shutterstock's database is FULL of these accounts now. So much for their "new contributors".

If all they want is data and they don't care about quality control, maybe they should buy eyeem.

Millions of files with descriptions ready for ai data harvesting.

Eyeem has a lot of content other agencies don't have.

Today I sent an email to [email protected] to report this portfolio of AI images: https://www.shutterstock.com/g/Bunto_Artist

I will report back about what response I get.

Also, about the keyword thing, I was submitting some content several weeks ago and I kept noticing that the keyword suggestions on the file upload page were vastly inaccurate. It was like they were the keyword suggestions for some other image entirely. There was absolutely zero relationship to my images, whereas normally I would see at least some accuracy but this was very unusual. It wasn't a big deal for me as I write my own keywords but as I found it highly unusual, I tried to send a support ticket about this bug but there was a technical issue and my query couldn't be sent. By the time I was next uploading content, about a week later, the keyword suggestions were back to normal.