Shutterstock, Inc. Q4 FY2022 earnings call

• Shutterstock closed 2022 with $828 million in revenue and $218 million in EBITDA. Europe had negative 4% growth in 2022, with E-commerce up 2% and enterprise up 15%.
• Launched Shutterstock AI image generator, integrated with Creative Flow for E-commerce. Early engagement: ~75% new customers, 25% existing, over 3 million generative assets created in two weeks since launch.
• John Kane joined as Global Head of E-commerce, with focus on driving E-commerce growth.
• Enterprise channel sustained growth with high customer retention (mid 90s), subscription bookings up 27%, large enterprise deals up 24%. Examples include partnerships with AWS, Allergan, Meta, use in studios, editorial, and Computer Vision.
• Acquisitions of Pond5 and Splash contribute to enterprise growth, with products and business lines in enterprise growing over 20% to 60%.

Shutterstock's 2022 results showed distinct performance in segments. The E-commerce channel had 2022 revenue up 2%, with North America growth offsetting declines in Europe and rest of world. In the fourth quarter, E-commerce revenue was down 5% on a reported basis and 2% on a constant currency basis. The enterprise channel grew 15% in 2022, a second consecutive year of double-digit growth. In the fourth quarter, enterprise revenue grew 25% on a reported basis and 30% on a constant currency basis, driven by multi-asset flex product offerings, Computer Vision deals, studios, editorial, and contributions from acquisitions of Pond5 and Splash.

For 2023, revenue is expected to be $836 million to $853 million (1%-3% annual growth). Adjusted EBITDA is $220 million to $228 million, with margins flat to up 50 basis points. Adjusted EPS is between $3.90 to $4.05 per share. Revenue guidance factors in FX headwind of 1% and Pond5 contribution of 2%. No upside from Gen AI rollout or additional Computer Vision partnerships is factored in yet.

• Macro economic challenges, particularly weakness in Europe affecting E-commerce.
• Uncertainty around the sustainability of generative AI engagement and monetization.
• Risks associated with integrating acquisitions and new partnerships, and uncertainty in forecasting large Gen AI and Computer Vision deals.

Q: Break down enterprise growth drivers, Computer Vision pipeline, licensing beyond Gen AI A: Enterprise growth from multi-asset flex, Computer Vision deals, studios, editorial. Computer Vision deals are long-term with ongoing value addition. Licensing beyond Gen AI includes using metadata for model training.

Q: 75% new customers using Gen AI, verticals, subscriber decline A: 75% new customers, verticals not specified yet. Subscriber decline due to E-commerce weakness, especially in Europe Q: E-commerce growth plan, Gen AI money flow A: Focus on process, product, content for E-commerce. Gen AI money flow from metadata licensing for model training Q: Meta, LG partnerships, Gen AI industry impact A: Meta, LG deals positively impact Q4 and future. Gen AI changing industry with early use cases, still early days, Shutterstock well-positioned Q: Pond5 impact, subscriber recovery timeframe A: Pond5 contributes ~3% annual revenue, more E-com tilted. Subscriber recovery depends on Europe trends, focus on improving E-commerce