Shutterfly (NASDAQ:SFLY) released its earnings for Q4 2015 on Wednesday. The company managed to beat analyst estimates in regard to revenues, however earnings per share fell short by one cent. For the full year, the company surpassed the $1 billion mark for the first time in its history. This makes it the first company amongst its competitors to achieve this milestone. Its consumer business saw solid growth, while enterprise revenue more than doubled. Additionally, the company also achieved record sales in the year. Futhermore, Shutterfly 3.0 is also on track and should be released by mid-2016. All this suggests a positive outlook of what’s to come and is reaffirmed by the company’s guidance for the new financial year.
- In the quarter, the company posted revenues of $548.1 million, an increase of about 13% when compared to the same period in the year prior. This beat the consensus revenue estimate of $544 million.
- As mentioned previously, the company missed the consensus earnings estimate by 1 cent. This brings the number to $3.57 earnings per share.
- Adjusted EBITDA for the quarter came in at around $183.5 million (excluding severance charges) and represents a 10% increase year over year. 
Going forward, Shutterfly expects earnings for the next year to lie between $0.26 and $0.64. In terms of revenues, the company hopes to rake in anywhere between $1.12 billion to $1.16 billion.
Consumer and Enterprise (SBS) Segments Drove Revenues in the Holiday Quarter
In the quarter, Shutterfly experienced record volumes and the company managed to deliver 100% without many glitches or delays. This is thanks to amazing production efficiencies witnessed at Shutterfly’s three new state-of-the-art facilities that the company had opened over the last three years (with the most recent one opening in June in Tempe, Arizona). In addition, almost 75% of the business was generated by returning customers, showcasing great loyalty to the brand.
During the quarter, the company witnessed increased market share and growth at three of its top brands — namely Shutterfly (recording double digit growth), Tiny Prints and Wedding Paper Divas. This helped increase Consumer revenues in the quarter to $503.3 million, which reflects a 9% growth year over year. Holiday sales increased and attracted new customers primarily because of new products and services that were added to the holiday catalogue. For example, the company’s foil and glitter cards seemed to be extremely popular with customer, while a new service, Make My Book, also saw great demand.
In addition, the Enterprise segment completely outperformed in the quarter to post a revenue increase of about 119% year over year to reach about $44.7 million. This was primarily because of the a new $350 million deal that was signed with a Fortune 50 company earlier in the year. Furthermore, this performance was achieved through better scope and scale efficiencies, automation and a more focused sales approach. The company is also in the process of improving their Enterprise platform which will further enable customer additions while making the process more seamless for existing customers going forward.
Throughout the holiday season, despite heavy demand, the company managed to minimize glitches on the website and ensured an efficient ordering process for customers. Additionally, the company’s integrated marketing strategy helped garner greater levels of brand awareness and engagement through a balance of direct response and brand awareness activities. The company added a television campaign in the quarter, while starting a first-time radio campaign in several major metro markets. Furthermore, in Q4, total unique customers grew 8.2% to 6.1 million. This resulted in almost 10.3 million orders being generated across the Shutterfly’s portfolio of premium lifestyle brands.
All in all, it seems like Shutterfly has ended this year on a high note and has placed itself in a position to achieve greater growth in the year to come. Shutterfly 3.0 is slated to be launched mid-2016 and this is bound to have a positive impact on revenues as the company anticipates an acceleration in Consumer growth. Only time will tell where the company is headed, but so far things are looking up.