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Shutterfly Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:
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10qk

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Shutterfly Inc. (SFLY) filed Quarterly Report for the period ended 2012-09-30.

Shutterfly, Inc. has a market cap of $1.06 billion; its shares were traded at around $27.42 with a P/E ratio of 65.6 and P/S ratio of 2.3. Shutterfly, Inc. had an annual average earning growth of 10.3% over the past 5 years.

Highlight of Business Operations:

Our sales and marketing expense increased $4.3 million, or 17%, in the three months ended September 30, 2012 compared to the same period in 2011. The increase in sales and marketing expense was primarily due to an increase of $1.8 million related to expanded online marketing campaigns and advertising. The increase is also attributable to an increase of $1.7 million in personnel and related costs associated with the expansion of our internal marketing team and an increase of $1.6 million in intangible asset amortization primarily from the Kodak Gallery customer list. These factors were partially offset by a decrease of $0.6 million of stock-based compensation. As a percentage of net revenues, total sales and marketing expense decreased to 30% in the three months ended September 30, 2012 from 33% for the same period in 2011.

Our general and administrative expense increased $1.8 million, or 13%, in the three months ended September 30, 2012 as compared to the same period in 2011. As a percentage of net revenues, general and administrative expense decreased to 16% in the three months ended September 30, 2012 from 19% for the comparable period in 2011. The increase in general and administrative expense is primarily due to an increase in personnel related costs of $0.8 million as a result of increased headcount, an increase in credit card fees of $0.4 million which was driven by the increase in Consumer net revenues as compared to the prior year, an increase in depreciation of $0.2 million and an increase in stock-based compensation of $0.2 million.

Net revenues increased $79.3 million, or 38%, for the nine months ended September 30, 2012 as compared to the same period in 2011. Consumer net revenues increased $69.3 million, or 35%, in the nine months ended September 30, 2012 compared to the same period in 2011. The increase in Consumer net revenues is primarily a result of increased sales of greeting and stationery cards and photo books as well as the addition of Tiny Prints sales during the nine months ended September 30, 2012 while the nine months ended September 30, 2011 only included Tiny Prints sales from April 25 to September 30, 2011. Enterprise revenues increased $10.0 million, or 112%, in the nine months ended September 30, 2012 compared to the same period in 2011.

Our sales and marketing expense increased $22.2 million, or 34%, in the nine months ended September 30, 2012 compared to the same period in 2011. As a percentage of net revenues, total sales and marketing expense decreased to 30% for the nine months ended September 30, 2012 from 31% for the same period in 2011. The increase in sales and marketing expense was primarily due to an increase of $11.0 million related to expanded online marketing campaigns and advertising. The increase is also attributable to an increase of $5.8 million in personnel and related costs associated with the expansion of our internal marketing team including the addition of Tiny Prints headcount, and an increase of $5.5 million in intangible asset amortization primarily from the Tiny Prints acquisition and the Kodak Gallery customer list acquisition. This increase was partially offset by a decrease of $0.3 million in stock-based compensation.

Our general and administrative expense increased $3.0 million, or 7%, in the nine months ended September 30, 2012 as compared to the same period in 2011. As a percentage of net revenues, general and administrative expense decreased to 16% in the nine months ended September 30, 2012 from 20% for the comparable period in 2011. The increase in general and administrative expense is primarily due to an increase in personnel related costs of $2.5 million as a result of increased headcount. We also incurred an increase in credit card fees of $1.2 million which was driven by the increase in Consumer net revenues as compared to the prior year, an increase in facilities costs of $0.5 million, an increase of $0.5 million in depreciation expense, and an increase in stock-based compensation of $0.4 million. These increases were partially offset by a decrease in professional fees of $1.7 million which was largely due to transaction costs related to our acquisition of Tiny Prints incurred in the nine months ended September 30, 2011 and gain on disposition of assets of $0.7 million.

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