Shutterstock, Inc. Q2 FY2023 earnings call

• Shutterstock is thriving with record YTD revenue and EBITDA, and has raised full-year guidance. - E-commerce is facing challenges but is running more experiments to improve conversion funnel. - Enterprise is seeing consistent growth with editorial subscriptions well received and generative AI indemnification offering for enterprise clients. - Creative engine is expanding with Giphy acquisition, and Shutterstock Studios has delivered numerous productions. - Data engine is growing with strategic partnerships like Google, increased contributor submissions (YTD up almost 30%), and larger deal sizes.

Shutterstock delivered $209 million in revenue and $60 million in EBITDA (29% margin) in Q2 2023. Enterprise channel was up 22% in Q2, driven by data engine revenue reaching $70 million in Q2 2023, a record. Data engine revenue has grown from $4 million in 2021 to $34 million YTD 2023. E-commerce channel was down 12% in Q2 due to weak new customer acquisition. Enterprise growth was aided by editorial, SMB subscription products, and the data engine. Creative engine, including Giphy acquisition, is growing with Shutterstock Studios delivering ~50,000 unique productions for global brands across 40 countries.

• Raised full-year revenue guidance to 3%-5% growth, $852 million to $869 million. - Raised full-year adjusted EBITDA guidance to $227 million to $235 million. - Data revenue in the second half expected to be higher than first half. - Giphy ad platform expected to be in market by end of 2023 with potential for significant advertising revenue in the long term.

• Concerns about indemnification and intellectual property holding back widespread adoption of generative content for marketing campaigns. - Macro environment weakness and robust competitive landscape impacting E-commerce. - Integration risks with acquisitions, including challenges in fully monetizing Giphy and managing data partnerships effectively.

Q: Clarification on data revenue recognition for Computer Vision deals and if the Google deal has impacted revenue yet A: Jarrod Yahes stated that only inked deals are included in guidance, Google deal didn't contribute to Q2 revenue, and data deals are recurring with ongoing refreshes over multi-year contracts Q: Early progress on conversations with enterprises on new indemnification product and its impact on guidance A: Jarrod Yahes said indemnification product launch is recent, conversations are underway but not part of 2023 guidance Q: Commentary on leaning in on sales and marketing in second half for E-commerce A: Paul Hennessy mentioned experimentation engine is rolling, aiming to expand marketing judiciously to hit ROI targets Q: Ballpark potential of advertising for Giphy business A: Paul Hennessy said long-term advertising opportunity for Giphy is in the hundreds of millions of dollars Q: Details on Editorial and Studios traction A: Jarrod Yahes mentioned Editorial has strong beachhead with subscriptions and Splash News acquisition, Studios is delivering unique productions for global brands