Author Topic: Shuttrstock Q3 2024 results (Read 2122 times)

Jo Ann Snover · « **on:** October 29, 2024, 14:32 »

I haven't posted about SSTK performance or Shutterstock's financials in a while, but I do monitor what they're up to.

https://investor.shutterstock.com/news-releases/news-release-details/shutterstock-reports-third-quarter-2024-financial-results

Earnings call from earlier today:

https://seekingalpha.com/article/4730421-shutterstock-inc-sstk-q3-2024-earnings-call-transcript

You can find other investor-focused materials via their web site:

https://investor.shutterstock.com/

Lots of hand-waving, buzzwords and happy talk in the earnings call transcript, but from a contributor's perspective, it's hard to ignore the declines in paid downloads, subscribers and how stagnant the business seems to be if you look at the details versus the CEO's chit-chat.

They celebrated that the decline in "content" revenue was slowing - it only declined 7% this quarter versus 9% in Q2 and 10% in Q1

Paid downloads - that's how contributors make money - in Q3 2024 were 32.9 million, down from 33.4m in Q2, down from 36.4m in Q3 last year (2023). In Q3 2022 there were 42.8 million paid downloads.

They've changed now they report revenue - now it's Content and Data, Distribution & Services; they used to break out E-commerce (the web site) from Enterprise (corporate deals). And with various acquisitions - Pond5 last year and Envato this year - more revenue gets added to the totals, but it isn't doing much for growth. It's barely slowing the decline.

For Q3 2024 Content revenue included Envato for the first time. Take out Envato and they reported $166 million for the quarter, versus $233 million in 2023. Even in Q3 2022 and 2021 revenue was higher - $204 million and $194 million!!

Data revenue was supposed to be a huge growth area, although still small compared to content revenue. For Q3 2024 it was $47 million versus $54.5m in 2023.

During the earnings call and analyst asked about revenue from Giphy. More talk about huge increased views of GIFs (not about $$) and the note that revenue from Giphy was folded into the overall Data number and won't be broken out

The number of subscribers is down as well - 470k versus 551k for Q3 2023 (or 607k in Q3 2022)

An analyst asked if Envato's unlimited subscriptions were taking away from regular SS subscriptions and Hennessey said "...we’re seeing the work that they did on the customer experience, the work that they’ve done with the rebrand is driving new subs into the franchise. And so we’re more bullish today on the growth and the product market fit of Envato than we were when we acquired the company..."

An analyst asked for more detail on the content business beyond that the decline in that was slowing; when would it get back to growth? Hennessey said:

"On the Content business, look, I don’t know what day we cross over, but we’re making really good progress. The changes that we’ve made, everything from coming off the free trial to reintroducing our smaller packs, as I mentioned, and our core subscription product is getting traction. We’re seeing growth in the business and you start to see the level of the decline is shrinking. You mentioned a minus 10 to minus 9, minus 7, and we’re predicting that Q4 is better than that.

So we’re really like what we’re seeing. Then if you add in some of my commentary on the combination of AI in our Content business, we’re now seeing not only existing customers using the AI sub and maintaining their level of stock use, and in many instances, growing that. We’re also starting to see new customers come into the franchise for the AI product and start to use stock content.

So we really like this ecosystem that’s starting to happen of growth in both stock and AI for customer sets. So again, I can’t tell you exactly when we cross over, but I really like the hand that we’ve got, and the core business, ex-Envato, is improving."

I'd translate that to "Darned if I know!"

The only reason they can report "growth" is that they added revenue from acquisitions to their totals."Content" is 81% of their business. The other portion, Data is 19% but was also down 14% compared to a year ago.

SSTK was up today - upbeat guidance for the remainder of the year seems to have cheered investors, but they tend to be an emotionally volatile lot

Separately from the bad news for contributors to SS, it looks to me as if they're running out of road.

bennu99 · « **Reply #1 on:** October 29, 2024, 16:15 »

It’s a shame they managed to ruin what was once a great agency. Now, they’re dragging down as many as they can acquire along with them

stocker2011 · « **Reply #2 on:** October 29, 2024, 18:54 »

I wonder how long before they realize they've screwed up, people get fired, and then get back to basics again.

btw. Thanks Jo for always analyzing their quarterly performance and taking the time to break it all down for us.

zeljkok · « **Reply #3 on:** October 29, 2024, 20:49 »

Detail analysis indeed. But it is also a fact that after hours when earning were announced SSTK stock soared. Brief quote from Yahoo Finance article titled "Why is Shutterstock (SSTK) Stock Soaring Today":

Quote

Shares of stock photography and footage provider Shutterstock (NYSE:SSTK) jumped 13.3% in the afternoon session after the company reported a "beat and raise" quarter. Third-quarter results blew past analysts' revenue, EPS, and EBITDA expectations.

Looking ahead, full-year revenue and EPS guidance were both raised, which is always encouraging. Notably, the company completed the acquisition of Envato, which provides the opportunity to onboard more subscribers and accelerate topline growth; overall, this quarter was solid.

Full article https://finance.yahoo.com/news/why-shutterstock-sstk-stock-soaring-181023332.html

I tend to look in stock chart before anything else. SSTK has been in steady decline since mid 21/22, when they reached their all time high. If I was playing the stock market I'd actually be inclined to buy right now, although it would be very risky move.

cobalt · « **Reply #4 on:** October 29, 2024, 22:20 »

The stockmarket is heavily manipulated and shortterm moves up or down are often not very logical.

What is it in these numbers that would make you want to buy?

Inspite of aquiring so many different companies, their revenue and their customer base is shrinking dramatically.

How do you even do that?

They are buying customer contracts for millions of dollars. You are then supposed to lower costs by merging teams and your sales team is supposed to increase your business by having a new group of clients they upsell things to.

But they don’t know how to do that, they are in a drastic decline.

And even their buzzword heavy ai project is now shrinking. Because of course what are they even offering that Adobe cannot do better?

Imagine for a moment they had not made all those drastic changes. They still paid out like before, still had a forum and a huge positive producer client community.

The best content always going to them first.

And then all the money they spent buying companies had been invested in sensible marketing instead?

Seeing producers as partners, not as useless uploaders only.

Their demise is their own doing.

Until they reopen forums and invest in the designer producer interactions like Adobe does, where is the growth supposed to come from?

Adobe changes nothing and gets their clients.

But it will have to get much worse before it gets better.

Unfortunately it probably means producers will keep earning less and less because it is obvious the customers are leaving.

Sad, used to be my favorite place after I left istock. And for balance in the industry, I would very much prefer to see them grow, even if they killed my port.

Looks like Adobe will dominate completely without even doing anything differently.

Thank you Jo Ann for your analysis. If they still had the old team, they would reach out to people like you for suggestions to get back on track.

But as long as they are negative about the designer producer sommunity, which is also their client base, nothing will improve.

Business 101 always be friendly and communicate well. Make your business a win win win for everyone.

Treating people badly makes you lose business.

zeljkok · « **Reply #5 on:** October 29, 2024, 23:03 »

Quote from: cobalt on October 29, 2024, 22:20

The stockmarket is heavily manipulated and shortterm moves up or down are often not very logical.

What is it in these numbers that would make you want to buy?

Yes, stock market moves on short term are often not logical. But one of main laws is, if business is sound, stock chart is wave - up/down/up. I do believe SSTK business is sound in its core. Don't be fooled by what you think you know from contributor standpoint. SSTK stock has been in extended downturn, earnings is good & investors seem to like it. I fully expect rebound, at least in short term.

Mark this conversation and we can revisit say June/July next year. I will bet you SSTK will be 25-30% higher from what it is today. Of course I could be dead wrong, this is why I said buying SSTK is very risky. Upcoming US election is also huge risk factor. But you can't gain much with 1% guaranteed investments.

(As for beloved Adobe, they are also down YTD almost 20% btw)

Camillo · « **Reply #6 on:** October 30, 2024, 02:14 »

Great work! amazing research. I stopped uploading to SS in 2020 when 10 cts happned. I had in 2019 invested in video heavy and wanted to go all in on SS. I never made any money at the time on Adobe although I uploaded regularly. Never would I have imagined SS to go so bad and I knew it was over for them. During the pandemic my Adobe account started to pick up and has steadily continued to grow. I will never forget SS, the 10 cts and how the y deleted the old forum that we had. There people there that dissapeared shortly before the SS forum was deleted that I now undestand were SS employees fake accounts like that of a Larry from beverly hills that cheered and got people to keep submitting no matter how aweful it was.

Quote from: Jo Ann Snover on October 29, 2024, 14:32

I haven't posted about SSTK performance or Shutterstock's financials in a while, but I do monitor what they're up to.

https://investor.shutterstock.com/news-releases/news-release-details/shutterstock-reports-third-quarter-2024-financial-results

Earnings call from earlier today:

https://seekingalpha.com/article/4730421-shutterstock-inc-sstk-q3-2024-earnings-call-transcript

You can find other investor-focused materials via their web site:

https://investor.shutterstock.com/

Lots of hand-waving, buzzwords and happy talk in the earnings call transcript, but from a contributor's perspective, it's hard to ignore the declines in paid downloads, subscribers and how stagnant the business seems to be if you look at the details versus the CEO's chit-chat.

They celebrated that the decline in "content" revenue was slowing - it only declined 7% this quarter versus 9% in Q2 and 10% in Q1

Paid downloads - that's how contributors make money - in Q3 2024 were 32.9 million, down from 33.4m in Q2, down from 36.4m in Q3 last year (2023). In Q3 2022 there were 42.8 million paid downloads.

They've changed now they report revenue - now it's Content and Data, Distribution & Services; they used to break out E-commerce (the web site) from Enterprise (corporate deals). And with various acquisitions - Pond5 last year and Envato this year - more revenue gets added to the totals, but it isn't doing much for growth. It's barely slowing the decline.

For Q3 2024 Content revenue included Envato for the first time. Take out Envato and they reported $166 million for the quarter, versus $233 million in 2023. Even in Q3 2022 and 2021 revenue was higher - $204 million and $194 million!!

Data revenue was supposed to be a huge growth area, although still small compared to content revenue. For Q3 2024 it was $47 million versus $54.5m in 2023.

During the earnings call and analyst asked about revenue from Giphy. More talk about huge increased views of GIFs (not about $$) and the note that revenue from Giphy was folded into the overall Data number and won't be broken out

The number of subscribers is down as well - 470k versus 551k for Q3 2023 (or 607k in Q3 2022)

An analyst asked if Envato's unlimited subscriptions were taking away from regular SS subscriptions and Hennessey said "...we’re seeing the work that they did on the customer experience, the work that they’ve done with the rebrand is driving new subs into the franchise. And so we’re more bullish today on the growth and the product market fit of Envato than we were when we acquired the company..."

An analyst asked for more detail on the content business beyond that the decline in that was slowing; when would it get back to growth? Hennessey said:

"On the Content business, look, I don’t know what day we cross over, but we’re making really good progress. The changes that we’ve made, everything from coming off the free trial to reintroducing our smaller packs, as I mentioned, and our core subscription product is getting traction. We’re seeing growth in the business and you start to see the level of the decline is shrinking. You mentioned a minus 10 to minus 9, minus 7, and we’re predicting that Q4 is better than that.

So we’re really like what we’re seeing. Then if you add in some of my commentary on the combination of AI in our Content business, we’re now seeing not only existing customers using the AI sub and maintaining their level of stock use, and in many instances, growing that. We’re also starting to see new customers come into the franchise for the AI product and start to use stock content.

So we really like this ecosystem that’s starting to happen of growth in both stock and AI for customer sets. So again, I can’t tell you exactly when we cross over, but I really like the hand that we’ve got, and the core business, ex-Envato, is improving."

I'd translate that to "Darned if I know!"

The only reason they can report "growth" is that they added revenue from acquisitions to their totals."Content" is 81% of their business. The other portion, Data is 19% but was also down 14% compared to a year ago.

SSTK was up today - upbeat guidance for the remainder of the year seems to have cheered investors, but they tend to be an emotionally volatile lot

Separately from the bad news for contributors to SS, it looks to me as if they're running out of road.

cobalt · « **Reply #7 on:** October 30, 2024, 04:50 »

Quote from: zeljkok on October 29, 2024, 23:03

Quote from: cobalt on October 29, 2024, 22:20
The stockmarket is heavily manipulated and shortterm moves up or down are often not very logical.

What is it in these numbers that would make you want to buy?

Yes, stock market moves on short term are often not logical. But one of main laws is, if business is sound, stock chart is wave - up/down/up. I do believe SSTK business is sound in its core. Don't be fooled by what you think you know from contributor standpoint. SSTK stock has been in extended downturn, earnings is good & investors seem to like it. I fully expect rebound, at least in short term.

Mark this conversation and we can revisit say June/July next year. I will bet you SSTK will be 25-30% higher from what it is today. Of course I could be dead wrong, this is why I said buying SSTK is very risky. Upcoming US election is also huge risk factor. But you can't gain much with 1% guaranteed investments.

(As for beloved Adobe, they are also down YTD almost 20% btw)

There are plenty of other stocks to buy with much better numbers.

The main problem is currently the corruption on the US stock market. Until the phantom fake shares the market makers keep printing and pushing into the markets have been removed I am staying away from the markets.

The SSTK numbers are very bad, they are buying customer contracts and still losing clients and business. And this problem has been happening for over two years now.

Cutting costs cannot work forever and now even their ai business is going down.

And as a contributor you are directly plugged into their stock sales. If they were growing market share and attracting new customers we would see a general rise in sales.

But people are reporting significant drop in sales, some even 90% compare to 2-3 years ago while at the same time their income is going up on Adobe.

And that even though Shutterstock has been buying up customer contracts like crazy, and yet their income from stock is declining rapidly.

They need a new management with real vision to keep customers happy. So if I was going to invest I would watch interviews with the team and any roadmap plans.

But in principle there are much better companies in other industries to invest in.

synthetick · « **Reply #8 on:** October 30, 2024, 06:19 »

Quote from: Jo Ann Snover on October 29, 2024, 14:32

I haven't posted about SSTK performance or Shutterstock's financials in a while, but I do monitor what they're up to.

Thanks, I appreciate your insights!

Uncle Pete · « **Reply #9 on:** October 30, 2024, 12:31 »

$33 is around where SSTK should be. I've always said it was a valid $30 stock. The crazy boom when it was up to over $120 was the people who jump on a hot stock and drive it up and up. Institutions, tips for Granny, growth and new. The shine has worn off and now it's back to reality or some new, hot stock. Probably AI or whatever is trending in the news.

"...the level of the decline is shrinking." There's the statement.

In other words, things are still sinking, just not as fast. For our side, leveling off and the flat line, which I hope isn't death flat-line, would be nice. But personally, the level of decline, "shrinking" doesn't make for anything positive or hopeful.

SS I make in a year, what I used to make in a month. Same images and more. That tells me what I need to know. And SS admits, things are still in a decline.

everest · « **Reply #10 on:** October 30, 2024, 13:09 »

Thank you for your clear analysis that I think is spot on. They will continue to fall and if i am not wrong that fall will be every year faster and more dramatic. Their share price is low as ever.
About the content you can already see that what is supplied is for very and I mean very low quality.

The stock creative business is going down and the rulers of the game is what we always thought would be....Google, Microsoft, Adobe , Nvidia are going to rule it with IA creation...... The editorial business is here to stay but this one will make all these companies that relied on creative assets from music to images and videos much smaller than they are today.

Shutterstock and Getty are specially despised by contributors for a lot of reasons. Most of them will not share a single tear as they are slowly going under.

stocker2011 · « **Reply #11 on:** October 31, 2024, 13:10 »

Quote from: everest on October 30, 2024, 13:09

About the content you can already see that what is supplied is for very and I mean very low quality.

I've noticed this as well, another part of their strategy is to now accept anything by allowing they're quality threshold to be reduced. They also now allow too many similars, where a contributor uploads 20 slightly different versions of the same video - what's the point? They're only bloating the system.

Also, I can easily spot AI produced images and videos in the search results, so if I can see this how can't a SS reviewer? And if they're allowing AI images through the gate how does that work out when they're training or selling our media to other companies for AI training? Can you train AI to produce media from other AI media? Won't that reduce the quality of the model?

zeljkok · « **Reply #12 on:** October 31, 2024, 20:00 »

Quote from: cobalt on October 30, 2024, 04:50

But in principle there are much better companies in other industries to invest in.

That I will fully agree with. Long-term AAPL investment is perfect example.

Jo Ann Snover · « **Reply #13 on:** December 16, 2024, 13:16 »

Thought it worth adding an article from early November that talked about the problems with Shutterstock's acquisition spree and suggesting it was an interesting short opportunity for investors:

https://finance.yahoo.com/news/shutterstock-inc-sstk-bear-case-162730125.html

"SSTK’s top-line growth has largely been driven by acquisitions, a trend that may not continue . . . This reliance on acquisitions, combined with a gradual decline in subscriber numbers and revenue per subscriber metrics, signals a troubling trend that management has not adequately addressed."

"Furthermore, data from ALTD shows a notable decline in e-commerce sales that contradicts management's assertions, further validating the bearish thesis. Concerns regarding management integrity are heightened by prior misrepresentations about the performance of their e-commerce segment, which raises questions about the reliability of their segment reporting and overall transparency. "

That second quote is intriguing. It would be a big deal if the reports weren't accurate

cobalt · « **Reply #14 on:** December 16, 2024, 13:22 »

So the vultures have started to circle...now they are trying to artificially boost their income by cutting royalties from contributors.

But the shortsellers will figure this out. Managers trying to hide their problems is what they do all day.

bennu99 · « **Reply #15 on:** December 16, 2024, 14:43 »

I wouldn’t be surprised if, not too far down the line, a name change occurs—that’s what Ponzi schemes typically do to circumvent further downfall. Once a liar, always a liar.

gnirtS · « **Reply #16 on:** December 16, 2024, 17:45 »

Not sure running out of road as such - more like they're driving it off the road.

Good detail above. A few things tally with that, if you look at TrustPilot and other buyer chats they're all uniformly awful about their service. One thing that stands out of their free trial/subscription things are seen as scams and MOST now sign up for the 2 image pack and then want to leave to avoid getting tied in.
In other words, far fewer see subscriptions as value for money. This also ties up with what i see as a contributor in that 90% by volume USED to be subs, now its SODs and subs are much lower. So i guess they're losing this lucrative, monthly renewing revenue stream rapidly. Lots of complaints of low quality, mislabelled and AI images in there too.

Not sure where they go from here - their reputation with buyers is trash, the reputation with contributors is trash. There seems to be no self-awareness here. Its not even considered.
They've bought up most of the competitors they're likely able to. Where do they go from here? They cant cut further and dont seem to have a club or seemingly any ambition to improve the reputation and offerings other than "make it cheaper and free trials". Quality and service doesnt seem to factor in.

cobalt · « **Reply #17 on:** December 16, 2024, 18:18 »

So that is why so many people are reporting an increase in not sub sales.

They seem hellbent on pretending their agency is something like ebay. Anyone can sign up and sell their wares, no specialized knowledge required, buyers and sellers never interact via a community or common industry.

Whereas agencies are more like online community workplaces. Both buyers and sellers often refer to the place all day long, while they are working on their design projects or researching needed content or processing and uploading files.

Reliability is extremely important and stress is not good for creativity.

They are actively driving both groups away.

Adobe changes nothing and keeps getting fresh customers and the newest content, not the outtakes or leftovers.

SS was such a fantastic company before all the changes. Great team of people, very modern, very flexible.

So many people only uploading to them, because it was such a reliable and supportive, creative environment.

wds · « **Reply #18 on:** December 16, 2024, 22:53 »

Quote from: cobalt on December 16, 2024, 13:22

So the vultures have started to circle...now they are trying to artificially boost their income by cutting royalties from contributors.

But the shortsellers will figure this out. Managers trying to hide their problems is what they do all day.

Good points, but when were they ever not "cutting royalties from contributors"!? A very frustrating agency.

cobalt · « **Reply #19 on:** December 17, 2024, 00:51 »

they kept royalties steady for 15 years or so.

That was the time they thrived and were probably the most favorite agency.

They had a great and very innovative team.

All this changed abruptly in 2020.

And the income has been downhill since.

Not just because of the royalties, but they keep losing customers although spent hundreds of millions of dollras buying up contracfs.

But as soon as they takeover, the customers seem to leave.

Jo Ann Snover · « **Reply #20 on:** December 17, 2024, 00:54 »

Quote from: wds on December 16, 2024, 22:53

….when were they ever not "cutting royalties from contributors"!?

Believe it or not, back in the beginning they did steadily increase royalties - from 20 cents to 23 (for those of us around during the buggy start of FTP uploads) to 25 cents and then the tiered system that paid 38 cents.

All the agencies were much more reasonable when they didn’t have content and were afraid to lose us…

zeljkok · « **Reply #21 on:** December 17, 2024, 15:31 »

Quote from: Jo Ann Snover on December 17, 2024, 00:54

All the agencies were much more reasonable when they didn’t have content and were afraid to lose us…

And that simple fact really sums it all. Supply up, demand constant --> microstock = down

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Author Topic: Shuttrstock Q3 2024 results (Read 2122 times)

Jo Ann Snover

bennu99

stocker2011

zeljkok

cobalt

zeljkok

Camillo

cobalt

synthetick

Uncle Pete

everest

stocker2011

zeljkok

Jo Ann Snover

cobalt

bennu99

gnirtS

cobalt

wds

cobalt

Jo Ann Snover

zeljkok

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