Shutterstock, Inc. Q1 FY2023 earnings call

• Shutterstock delivered $215 million revenue, up 8% YOY, with EBITDA at record levels ($70 million, 32% margin). • Enterprise channel led growth with 33% revenue growth, subscription bookings up 20% (34% of total bookings), and churn down 4%. • Aggressively investing in generative AI: over 1 million users created over 20 million assets in three months since AI image generation launch; partnership with NVIDIA for generative 3D capabilities. • Expanding data partnerships: signed two data partnerships, including a six-year renewal and a new five-year relationship with a social media platform, with total contract values in high seven and eight figures. • End-to-end creative platform vision, leveraging creative and data engines to transform the business.

Shutterstock generated $215 million in revenue, growing 8% year-on-year. The enterprise sales channel saw 33% revenue growth, driven by subscription bookings for content, data partnerships, and momentum at Shutterstock Studios and Editorial. The ecommerce sales channel declined by 6% due to continued weak demand in Europe. Enterprise revenue contributed significantly, with subscription bookings growing 20% and representing 34% of total bookings, up from 28% a year ago. Ecommerce's revenue contribution was negatively impacted by European weakness.

• Raised 2023 guidance to 2% to 3% revenue growth and 50 to 75 basis points of year-over-year EBITDA margin expansion. • Anticipate 2023 to be the fourth consecutive year of margin profile expansion. • Revenue growth expected to be first half loaded, with caution on ecommerce demand improvement until seen.

• Macro headwinds impacting ecommerce demand in Europe. • Uncertainty in generative AI's revenue potential in the early stages. • Dependence on successful integration of acquisitions and partnerships for future growth.

Q: Lauren Schenk asked about the number of companies in the pipeline for data partnerships and contract sizes.

A: Paul Hennessy said they're not commenting on specific numbers but seeing a growing pipeline around AI and data training. On contract sizes, depends on partner size but sees growth and longer-term relationships.

Q: Bernie McTernan asked about Computer Vision deals and company needs for AI generative models.

A: Jarrod Yahes said companies want to own AI generative model IP, with a broadening desire, playing to Shutterstock's strength.

Q: Youssef Squali asked about organic growth ex Pond5 and enterprise segment weakness.

A: Jarrod Yahes mentioned Pond5's approximate quarterly contribution and emphasized enterprise channel health with strong bookings and subscription growth.

Q: Andrew Boone asked about ecommerce and generative AI impact.

A: Paul Hennessy said there's a surge in traffic and account creation from generative AI, optimistic about leveraging it, but sees ecommerce issues as macro-driven.

Q: Nick Delfas asked about gross margin impacts from AI.

A: Jarrod Yahes said royalty reset in Q1 is normal, and gross margin could improve with success in pure tool offerings.

Q: Nat Schindler asked about AI usage for commercial purposes.

A: Paul Hennessy said early days, seeing all types of usage from experimentation to commercial, excited about high engagement and potential for leveraging into content management.