Shutterstock: Enterprise Growth Is Gone

The Prospector profile picture
The Prospector
959 Followers

Summary

  • Shutterstock reported an OK Q3, but revenue growth in its enterprise segment continues to struggle.
  • Enterprise was once a source of torrid revenue growth.
  • CEO John Oringer couldn't explain why rival Adobe Stock saw recent 30% revenue growth vs. Shutterstock's 5% revenue growth.
  • The company continued to add to its cash pile.
  • Despite the cash pile, Shutterstock has growth problems that may continue.

Thesis

Revenue growth concerns for Shutterstock (NYSE:SSTK) leveled off in Q3-19. Overall revenue growth was up 5%, but enterprise sales - once a source of strong growth for the company - were flat.

Rival Adobe (ADBE), which launched its competing stock photo business, Adobe Stock, in 2015, saw its revenue grow 30% recently. Shutterstock's CEO couldn't explain why Adobe's revenue growth was higher than Shutterstock's, maintaining that Shutterstock still has a competitive advantage in the market.

The company is maintaining full-year revenue growth guidance of 3-7 percent, which is dramatically lower than what the company expected when the year began. Though the company is sitting on a sizable cash pile, this is one of the lone bright spots, and it appears Shutterstock may be losing share to Adobe. Shutterstock does not look like a promising investment.

Source

Q3-19: Revenue Growth Levels Off, But Costs Rise

Revenue growth in Q3 was 5%. The company's e-commerce segment - sales to individuals - was up 8%. But the enterprise segment - sales to business - saw flat revenue growth.

The enterprise sales drop-off continues to be a problem. The company is ramping up sales efforts to reverse the shifting tide in enterprise. One of the bright spots in recent years was Shutterstock's enterprise business. A year ago, enterprise sales growth was through the roof. Enterprise sales growth had consistently hit quarterly growth rates in 2017 and 2018 that exceeded 30%. But those torrid enterprise growth rates are gone.

Between 2011 and 2015, Shutterstock, overall, had an impressive revenue growth rate that fluctuated between 36% and 45%. Growth began to rapidly decelerate in 2015 and had leveled off to a 12% growth rate in 2017 and 2018. When 2019 began, the company had expected full-year revenue growth of at least 10%. But the company guided that number down dramatically last quarter to 3-7% last

This article was written by

The Prospector profile picture
959 Followers
Long-term focus, with some exceptions. Self-taught investor. I started investing my own money in 2010 and have outperformed the S&P 500 in the years since.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long ADBE.

Recommended For You

Comments (1)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.