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Shutterfly (SFLY) Stock Up on Narrower-Than-Expected Q1 Loss
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Shares of Shutterfly, Inc. have gained 10.8% in after-hours trading yesterday, after the company incurred narrower-than-expected loss as well as a sales beat in first-quarter 2018. While the bottom line came ahead of the Zacks Consensus Estimate for the fifth straight quarter, the top line surpassed the same for the third consecutive quarter.
In the reported quarter, the company incurred adjusted loss of 73 cents per share narrower than the consensus estimate of a loss of 95 cents. In the year-ago quarter, Shutterfly had incurred adjusted loss of 84 cents per share. The figure was also better than the company’s guided range of a loss of 92-96 cents. Evidently, the improvement came on the back of a higher top line.
Net revenues of $199.7 million increased 4% year over year and surpassed the consensus mark of $192 million by 4%. The top line came well ahead of the guided range of $190-$194 million. In fact, the first-quarter earnings season marked the 69th consecutive quarter of year-over-year net revenue growth. This improvement can be attributed to organic growth and robust Shutterfly Business Solutions (SBS) segments performance.
Revenues in Detail
Revenues from the Consumers category came in at $152.1 million, down 5% year over year. Decline in revenues from the non-Shutterfly brand as a result of brand shutdowns significantly impacted the segment’s performance. However, the company witnessed growth in Shutterfly brand owing to robust performance at Photo Books and the Wedding Shop.
Shutterfly Business Solutions (SBS) segment’s revenues surged 52% year over year to $47.7 million. The uptick was driven by faster ramp up of a multi-year deal signed with an existing client.
Unique customers declined 4% year over year to 3.2 million and total orders decreased 8% year over year to 5.1 million primarily due to platform consolidation. On the flipside, average order value increased 3% to $29.96 backed by product mix.
Operating Performance
Adjusted gross margin contracted 200 basis points (bps) to 36.9% chiefly due to lower gross margins at Shutterfly Business Solutions.
Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) of $7.1 million grew $9 million year over year. The reported figure was above the company’s guided range of $3-$5 million backed by careful expense control.
Operating expenses totaled $107.8 million, down 13.3% year over year. As a percentage of net revenues, operating expenses declined 1080 bps year over year to 54%. The downturn can be attributed to platform consolidation.
Shutterfly, Inc. Price, Consensus and EPS Surprise
Shutterfly exited the first quarter with cash and cash equivalents of $419.4 million compared with $489.9 million in the previous quarter. Accounts receivables were $54.1 million, down from $82.3 million in the last report. Long-term debt totaled approximately $291.9 million.
Cash used form the operating activities were $124.3 million in the quarter under review. Moreover, Shutterfly has spent $13.2 million on capital expenditures.
Guidance
In 2018, Shutterfly expects overall profitability to increase owing to the acquisition of Lifetouch, which was closed on Apr 2, 2018. Additionally, the company envisions adjusted earnings in the range of $2.83-$3.28 per share, up from the prior guided range of $1.94-$2.38.
Net revenues are projected between $2.01 billion and $2.06 billion compared with $1.22 billion and $1.26 billion, anticipated earlier. Adjusted gross profit margin is estimated to be 62.4%. Adjusted EBITDA is expected to be in the band of $390-$410 million, sharply above the prior estimate of $260-$280 million. Operating income is envisioned in the $185 million to $206 million range. The company anticipates capital expenditures of $100 million.
Furthermore, Shutterfly Consumer revenues are expected to be in the band of $1.02-$1.05 billion, while Shutterfly Business Solutions revenues are projected between $210 million and $220 million. Also, Lifetouch consumer revenues are envisioned in the $780 million to $790 million range.
Zacks Rank & Stocks to Consider
Shutterfly carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include TheStreet, Inc. , Global Eagle Entertainment Inc. and Weibo Corporation (WB - Free Report) . While TheStreet sports a Zacks Rank #1 (Strong Buy), Global Eagle Entertainment and Weibo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TheStreet reported better-than-expected earnings in each of the trailing four quarters, with an average of 329.2%.
Shares of Global Eagle Entertainment have gained nearly 6% in a month.
Weibo’s earning surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 12.7%.
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Shutterfly (SFLY) Stock Up on Narrower-Than-Expected Q1 Loss
Shares of Shutterfly, Inc. have gained 10.8% in after-hours trading yesterday, after the company incurred narrower-than-expected loss as well as a sales beat in first-quarter 2018. While the bottom line came ahead of the Zacks Consensus Estimate for the fifth straight quarter, the top line surpassed the same for the third consecutive quarter.
In the reported quarter, the company incurred adjusted loss of 73 cents per share narrower than the consensus estimate of a loss of 95 cents. In the year-ago quarter, Shutterfly had incurred adjusted loss of 84 cents per share. The figure was also better than the company’s guided range of a loss of 92-96 cents. Evidently, the improvement came on the back of a higher top line.
Net revenues of $199.7 million increased 4% year over year and surpassed the consensus mark of $192 million by 4%. The top line came well ahead of the guided range of $190-$194 million. In fact, the first-quarter earnings season marked the 69th consecutive quarter of year-over-year net revenue growth. This improvement can be attributed to organic growth and robust Shutterfly Business Solutions (SBS) segments performance.
Revenues in Detail
Revenues from the Consumers category came in at $152.1 million, down 5% year over year. Decline in revenues from the non-Shutterfly brand as a result of brand shutdowns significantly impacted the segment’s performance. However, the company witnessed growth in Shutterfly brand owing to robust performance at Photo Books and the Wedding Shop.
Shutterfly Business Solutions (SBS) segment’s revenues surged 52% year over year to $47.7 million. The uptick was driven by faster ramp up of a multi-year deal signed with an existing client.
Unique customers declined 4% year over year to 3.2 million and total orders decreased 8% year over year to 5.1 million primarily due to platform consolidation. On the flipside, average order value increased 3% to $29.96 backed by product mix.
Operating Performance
Adjusted gross margin contracted 200 basis points (bps) to 36.9% chiefly due to lower gross margins at Shutterfly Business Solutions.
Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) of $7.1 million grew $9 million year over year. The reported figure was above the company’s guided range of $3-$5 million backed by careful expense control.
Operating expenses totaled $107.8 million, down 13.3% year over year. As a percentage of net revenues, operating expenses declined 1080 bps year over year to 54%. The downturn can be attributed to platform consolidation.
Shutterfly, Inc. Price, Consensus and EPS Surprise
Shutterfly, Inc. Price, Consensus and EPS Surprise | Shutterfly, Inc. Quote
Balance Sheet
Shutterfly exited the first quarter with cash and cash equivalents of $419.4 million compared with $489.9 million in the previous quarter. Accounts receivables were $54.1 million, down from $82.3 million in the last report. Long-term debt totaled approximately $291.9 million.
Cash used form the operating activities were $124.3 million in the quarter under review. Moreover, Shutterfly has spent $13.2 million on capital expenditures.
Guidance
In 2018, Shutterfly expects overall profitability to increase owing to the acquisition of Lifetouch, which was closed on Apr 2, 2018. Additionally, the company envisions adjusted earnings in the range of $2.83-$3.28 per share, up from the prior guided range of $1.94-$2.38.
Net revenues are projected between $2.01 billion and $2.06 billion compared with $1.22 billion and $1.26 billion, anticipated earlier. Adjusted gross profit margin is estimated to be 62.4%. Adjusted EBITDA is expected to be in the band of $390-$410 million, sharply above the prior estimate of $260-$280 million. Operating income is envisioned in the $185 million to $206 million range. The company anticipates capital expenditures of $100 million.
Furthermore, Shutterfly Consumer revenues are expected to be in the band of $1.02-$1.05 billion, while Shutterfly Business Solutions revenues are projected between $210 million and $220 million. Also, Lifetouch consumer revenues are envisioned in the $780 million to $790 million range.
Zacks Rank & Stocks to Consider
Shutterfly carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include TheStreet, Inc. , Global Eagle Entertainment Inc. and Weibo Corporation (WB - Free Report) . While TheStreet sports a Zacks Rank #1 (Strong Buy), Global Eagle Entertainment and Weibo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TheStreet reported better-than-expected earnings in each of the trailing four quarters, with an average of 329.2%.
Shares of Global Eagle Entertainment have gained nearly 6% in a month.
Weibo’s earning surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 12.7%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>