Internet IPO: Shutterfly Files an S-1 (SFLY)

Abbi Adest submits: Shutterfly, the popular online photprocessing company, filed an S-1 last Thursday. The proposed ticker will be (NASDAQ: SFLY) The following are key details from the filing:

Previous Posting on SeekingAlpha: A Snapshot of Shutterfly on Its IPO

Company Description:

We are a leading Internet-based social expression and personal publishing service that enables consumers to share, print and preserve their memories by leveraging our technology-based platform and manufacturing processes. Our vision is to make the world a better place by helping people share life’s joy. Our mission is to build an unrivaled service that enables deeper, more personal relationships between our customers and those who matter most in their lives. Today, with the evolution of digital cameras and technology, millions of people around the world are capturing their memories and communicating in more meaningful ways. We provide a full range of products and services that make it easy, convenient and fun for consumers to upload, edit, enhance, organize, find, share, create, print and preserve their digital photos in a creative and thoughtful manner.

Key Financial Details:

Net Revenues: Net revenues increased $29.4 million, or 54%, from 2004 to 2005, attributable to the increase in both print and non-print revenues. Print revenues increased from $35.6 million in 2004 to $48.7 million in 2005, an increase of $13.1 million or 37%. Print revenues were positively affected by increased 4×6 print sales and negatively affected by a decrease in 4×6 print average selling prices due to competitive pricing pressures. Non-print revenues increased from $18.9 million in 2004 to $35.2 million in 2005, an increase of $16.3 million, or 86%. 2005 represented the first full year of photo book sales, and we also added photo-based merchandise to our product offering. Total orders increased from 2,618,000 in 2004 to 3,650,000 in 2005, or 39%. The overall growth during the period was driven by increases in average order sizes. Average order size increased from approximately $21 per order in 2004 to $23 per order in 2005.

Net revenues increased $3.7 million, or 28%, from the three months ended March 31, 2005 to the three months ended March 31, 2006. Revenue growth was attributable to the increase in both print and non-print revenues. Print revenues increased from $9.3 million for the three months ended March 31, 2005 to $10.5 million for the three months ended March 31, 2006, an increase of $1.2 million, or 13%.

Notable Issues to Watch For:

If affordable broadband access does not become widely available to consumers, our revenue growth will likely suffer: Because our business currently involves consumers uploading and downloading large data files, we are highly dependent upon the availability of affordable broadband access to consumers. Many areas of the country still do not have broadband access, and the cost of broadband access may be too expensive for many potential customers. To the extent that broadband access is not available or not adopted by consumers due to cost, our revenue growth would likely suffer.

Underwriters: Goldman Sachs, J.P. Morgan, Piper Jaffray

Select Competitors: Kodak EasyShare Gallery (formerly known as Ofoto) (EK), Snapfish, which is a service of Hewlett-Packard (HPK), Sony’s ImageStation (SNE)