Shutterfly (SFLY) Stock Up On Narrower-Than-Expected Q1 Loss
Zacks Investment Research | May 01, 2018 11:49PM ET
Shares of Shutterfly, Inc. (NASDAQ:SFLY) 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
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