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Shutterfly Announces First Quarter 2015 Financial Results

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April 29, 2015 4:14 PM EDT
  • Net revenues increase 17% year-over-year to $160.0 million
  • GAAP net loss of ($1.19) per share
  • Adjusted EBITDA loss of ($0.9) million
  • 57th consecutive quarter of year-over-year net revenue growth

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Shutterfly, Inc. (NASDAQ: SFLY), the leading manufacturer and digital retailer of high-quality personalized products and services offered through a family of lifestyle brands, today announced financial results for the first quarter ended March 31, 2015.

“Shutterfly delivered a strong start to 2015, with key financial metrics ahead of our expectations and strong customer activity across our consumer brands and in our emerging enterprise business,” said Jeffrey Housenbold, President and CEO of Shutterfly. “Our teams are executing well and making good progress on our strategic imperatives to deliver a combination of innovation and operating scale that we believe will further enhance our competitive leadership and drive near- and long-term shareholder value.”

First Quarter 2015 Financial Highlights

  • Net revenues totaled $160.0 million, a 17% year-over-year increase.
  • First quarter 2015 represents the 57th consecutive quarter of year-over-year net revenue growth.
  • Consumer net revenues totaled $148.8 million, a 14% year-over-year increase.
  • Enterprise net revenues totaled $11.2 million, a 73% year-over-year increase.
  • Gross profit margin was 41% of net revenues, compared to 44% in the first quarter of 2014.
  • Consumer gross profit margin was 45.7% of net revenues. (1)
  • Enterprise gross profit margin was 11.6% of net revenues. (1)
  • Operating expenses, excluding $16.6 million of stock-based compensation, totaled $94.9 million.
  • GAAP net loss was ($45.1) million, compared to ($34.2) million in the first quarter of 2014.
  • GAAP net loss per diluted share was ($1.19), compared to ($0.89) in the first quarter of 2014.
  • Non-GAAP net loss per diluted share was ($1.11), compared to ($0.82) in the first quarter of 2014.
  • Adjusted EBITDA was a ($0.9) million loss, compared to $0.2 million in income in the first quarter of 2014.
  • At March 31, 2015, cash and investments totaled $324.3 million.

(1) Effective in the fourth quarter of 2014, the Company defined two reportable segments based on factors such as how management manages the operations and how the chief operating decision maker views results. The Company’s two reportable segments are Consumer and Enterprise. Refer to the Segment Disclosure table at the back of the release for segment level disclosures.

First Quarter 2015 Consumer Operating Metrics

  • Transacting customers totaled 3.2 million, a 25% year-over-year increase.
  • Orders totaled 5.2 million, a 33% year-over-year increase.
  • Average order value was $28.86, a decrease of 15% year-over-year.
  • Average order value without the impact of the Groovebook acquisition was $32.40, a decrease of 4% year-over-year.

Business Outlook

Second Quarter 2015:

  • Net revenues to range from $175.5 million to $179.5 million, a year-over-year increase of 10.3% to 12.8%.
  • GAAP gross profit margin to range from 43.7% to 44.4% of net revenues.
  • Non-GAAP gross profit margin to range from 45.4% to 46.1% of net revenues.
  • GAAP operating loss to range from ($44.5) million to ($39.9) million.
  • Non-GAAP operating loss to range from ($18.4) million to ($15.4) million.
  • GAAP effective tax rate to range from 10.0% to 16.0%.
  • GAAP net loss per share to range from ($1.10) to ($1.07).
  • Weighted average diluted shares of approximately 37.9 million.
  • Adjusted EBITDA to range from $5.5 million to $7.5 million.

Full Year 2015:

  • Net revenues to range from $1.045 billion to $1.060 billion, a year-over-year increase of 13.4% to 15.0%.
  • GAAP gross profit margin to range from 49.0% to 50.5% of net revenues.
  • Non-GAAP gross profit margin to range from 50.1% to 51.6% of net revenues.
  • GAAP operating income/(loss) to range from ($0.4) million to $10.8 million.
  • Non-GAAP operating income to range from $96.6 million to $106.9 million.
  • GAAP effective tax rate to range from 10.0% to 16.0%.
  • GAAP net loss per share to range from ($0.46) to ($0.23).
  • Weighted average diluted shares of approximately 37.7 million.
  • Adjusted EBITDA to range from $185.0 million to $192.9 million, or 17.7% to 18.2% of net revenues.
  • Capital expenditures to range from 8.6% to 9.2% of net revenues.

Notes to the First Quarter 2015 Financial Results and Business Outlook

Adjusted EBITDA is a non-GAAP financial measure that the Company defines as earnings before interest, taxes, depreciation, amortization and stock-based compensation.

Free cash flow is a non-GAAP financial measure that the Company defines as adjusted EBITDA less purchases of property, plant, and equipment and capitalization of software development costs.

Non-GAAP earnings per share is defined as non-GAAP net income (loss), which excludes interest expense related to the Company’s issuance of 0.25% convertible senior notes in May 2013, divided by diluted non-GAAP shares outstanding, which is GAAP diluted weighted average shares outstanding less any shares issuable under the Company’s convertible senior notes.

Consumer segment includes net revenues from stationery and greeting cards, photo books, calendars and photo-based merchandise, photo prints, and the related shipping revenues and rental revenue. Consumer also includes net revenues from advertising and sponsorship programs.

Enterprise segment includes net revenues primarily from variable, four-color direct marketing collateral manufactured and fulfilled for business customers.

Average Order Value (AOV) is defined as total net revenues (excluding Enterprise) divided by total orders.

The foregoing financial guidance replaces any of the Company’s previously issued financial guidance which should no longer be relied upon.

First Quarter 2015 Conference Call

Management will review the first quarter 2015 financial results and its expectations for the second quarter and full year 2015 on a conference call on Wednesday, April 29, 2015 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call and view the accompanying slides, please visit http://www.shutterflyinc.com. In the Investor Relations area, click on the link provided for the webcast, or dial 970-315-0490. The webcast, as well as a podcast, will be archived and available at http://www.shutterflyinc.com. A replay of the conference call will be available through Wednesday, May 13, 2015. To hear the replay, please dial 855-859-2056 or 404-537-3406, replay passcode 26836575.

Non-GAAP Financial Information

This press release contains non-GAAP financial measures. Tables are provided at the end of this press release that reconcile the non-GAAP financial measures that the Company uses to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP gross profit margin, non-GAAP operating income (loss) and operating margin, adjusted EBITDA, free cash flow, and non-GAAP net income (loss) per share. The method the Company uses to produce non-GAAP financial measures is not computed according to GAAP and may differ from methods used by other companies.

To supplement the Company's consolidated financial statements presented on a GAAP basis, we believe that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results and trends and performance. Management uses these non-GAAP measures to evaluate the Company's financial results, develop budgets, manage expenditures, and determine employee compensation. The presentation of additional information is not meant to be considered in isolation or as a substitute for or superior to gross margins, operating income (loss), net income (loss) or net income (loss) per share determined in accordance with GAAP. For more information, please see Shutterfly's SEC Filings, including the most recent Form 10-K and Form 10-Q, which are available on the Securities and Exchange Commission's Web site at www.sec.gov.

Notice Regarding Forward-Looking Statements

This media release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These forward-looking statements include statements regarding the Company's growth and financial expectations for the second quarter and full year 2015 set forth under the caption "Business Outlook," and statements about historical results that may suggest trends for our business. The Company's actual results may differ materially from those anticipated in these forward-looking statements. Factors that might contribute to such differences include, among others, economic downturns and the general state of the economy; changes in consumer discretionary spending as a result of the macroeconomic environment; the loss of sales partners for our products; our ability to expand our customer base, increase sales to existing customers and meet production requirements; our ability to successfully integrate acquired businesses and assets; our ability to retain and hire necessary employees, including seasonal personnel, and appropriately staff our operations; the impact of seasonality on our business; our ability to develop innovative, new products and services on a timely and cost-effective basis; consumer acceptance of our products and services; our ability to develop additional adjacent lines of business; unforeseen changes in expense levels; and competition and the pricing strategies of our competitors, which could lead to pricing pressure. For more information regarding the risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements, as well as risks relating to our business in general, we refer you to the "Risk Factors" section of the Company's most recent Form 10-K and Form 10-Q, and the Company's other filings, which are available on the Securities and Exchange Commission's Web site at www.sec.gov. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information.

About Shutterfly, Inc.

Shutterfly, Inc. is the leading manufacturer and digital retailer of high-quality personalized products and services offered through a family of lifestyle brands. Founded in 1999, the Shutterfly, Inc. family of brands includes Shutterfly, where your photos come to life in photo books, cards and gifts; Tiny Prints, premium cards and stationery for all life’s occasions; Wedding Paper Divas, wedding invitations and stationery for every step of the planning process; MyPublisher, one of the pioneers in the photo book industry and creator of easy-to-use photo book-making software; ThisLife, a private, cloud-based solution that makes it easy for consumers to find, share and enjoy their photos and videos, all in one place; and BorrowLenses, the premier online marketplace for photographic and video equipment rentals. For more information about Shutterfly, Inc. (NASDAQ: SFLY), visit www.shutterflyinc.com.

Shutterfly, Inc.

Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
      Three Months Ended
March 31,
2015       2014
 
Net revenues $ 159,978 $ 137,099
Cost of net revenues   94,707     76,343  
Gross profit   65,271     60,756  
Operating expenses:
Technology and development 37,360 31,483
Sales and marketing 44,530 42,133
General and administrative   29,605     25,751  
Total operating expenses   111,495     99,367  
Loss from operations (46,224 ) (38,611 )
Interest expense (4,736 ) (3,947 )
Interest and other income, net   102     227  
Loss before income taxes (50,858 ) (42,331 )
Benefit from income taxes   5,755     8,117  
Net loss $ (45,103 ) $ (34,214 )
 
 
 
Net loss per share - basic and diluted $ (1.19 ) $ (0.89 )
 
 
Weighted-average shares outstanding - basic and diluted   37,968     38,503  
 
Stock-based compensation is allocated as follows:
 
Cost of net revenues $ 1,192 $ 1,002
Technology and development 1,992 2,424
Sales and marketing 6,219 5,628
General and administrative   8,357     6,938  
$ 17,760   $ 15,992  
 
Shutterfly, Inc.
Consolidated Balance Sheets
(In thousands, except par value amounts)
(Unaudited)
           
March 31, December 31,
2015 2014
 
ASSETS
Current assets:
Cash and cash equivalents $ 238,164 $ 380,543
Short-term investments 65,429 64,866
Accounts receivable, net 20,177 31,105
Inventories 12,004 13,016
Deferred tax asset, current portion 27,680 34,645
Prepaid expenses and other current assets   53,786     24,983  
Total current assets 417,240 549,158
Long-term investments 20,723 29,928
Property and equipment, net 258,076 241,742
Intangible assets, net 80,530 87,950
Goodwill 408,975 408,975
Deferred tax asset, net of current portion 549 549
Other assets   13,253     13,976  
Total assets $ 1,199,346   $ 1,332,278  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 12,939 $ 30,086
Accrued liabilities 60,724 135,485
Deferred revenue   31,797     31,415  
Total current liabilities 105,460 196,986
Convertible senior notes, net 258,253 255,218
Deferred tax liability 42,712 48,090

Other liabilities

  88,160     74,178  
Total liabilities   494,585     574,472  
 
Stockholders' equity:

Common stock, $0.0001 par value; 100,000 shares authorized;37,891 and 37,906 shares issued and outstanding at March 31, 2015and December 31, 2014, respectively

4 4
Additional paid-in-capital 875,488 838,313

Accumulated other comprehensive income/(loss)

25 (53 )

Accumulated deficit

  (170,756 )   (80,458 )
Total stockholders' equity   704,761     757,806  
Total liabilities and stockholders' equity $ 1,199,346   $ 1,332,278  
 
Shutterfly, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
      Three Months Ended
March 31,
2015       2014
 
Cash flows from operating activities:
Net loss $ (45,103 ) $ (34,214 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 19,909 14,222
Amortization of intangible assets 7,684 8,583
Amortization of debt discount and transaction costs 3,340 3,158
Stock-based compensation, net of forfeitures 17,760 15,992
Loss on disposal of property and equipment and rental assets 463 55
Deferred income taxes 1,539 1,309
Tax benefit from stock-based compensation 17,891 16,281
Excess tax benefits from stock-based compensation (18,139 ) (16,328 )
Changes in operating assets and liabilities:
Accounts receivable, net 10,928 7,106
Inventories 1,012 1,117
Prepaid expenses and other current assets (28,803 ) (23,345 )
Other assets 311 (5,484 )
Accounts payable (18,015 ) (19,982 )
Accrued and other liabilities

(78,669

) (68,226 )
Deferred revenue 382 2,527
Other non-current liabilities   (221 )   (244 )
Net cash used in operating activities  

(107,731

)   (97,473 )
 
Cash flows from investing activities:
Purchases of property and equipment

(11,059

) (10,285 )
Capitalization of software and website development costs

(3,798

) (4,326 )
Purchases of investments (3,150 ) (54,850 )
Maturities and sales of investments 11,700 -
Proceeds from sale of equipment and rental assets   13     128  
Net cash used in investing activities  

(6,294

)   (69,333 )
 
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options 1,168 1,358
Repurchases of common stock (45,195 ) (34,610 )
Excess tax benefits from stock-based compensation 18,139 16,328
Principal payments of capital lease and financing obligations   (2,466 )   (436 )
Net cash used in financing activities   (28,354 )   (17,360 )
 

Net decrease in cash and cash equivalents

(142,379 ) (184,166 )
Cash and cash equivalents, beginning of period   380,543     499,084  
Cash and cash equivalents, end of period $ 238,164   $ 314,918  
 
Supplemental schedule of non-cash activities
Net increase in accrued purchases of property and equipment $

2,919

$ 6,134

Net increase in accrued capitalized software and website development costs

274

 

786

Increase in estimated fair market value of building under build-to-suit leases

8,459 7,998
Property and equipment acquired under capital leases 9,803 -
Amount due from adjustment of net working capital from acquired business - 110
 
Shutterfly, Inc.            
Consumer Metrics Disclosure
 
Three Months Ended
March 31,
2015 2014
 
Consumer Metrics

 

Customers 3,186,588 2,557,245
year-over-year growth 25%
 
Orders 5,156,375 3,869,201
year-over-year growth 33%
 
Average order value* $28.86 $33.76
year-over-year growth -15%
 
* Average order value excludes Enterprise revenue.
 
Shutterfly, Inc.
Segment Disclosure
(In thousands)
(Unaudited)
             
Three Months Ended
Mar. 31, 2015 Mar. 31, 2014
Consumer
Revenues $ 148,788 $ 130,621
Cost of revenues   80,778     66,408  
Gross Margin

$

68,010  

$

64,213  
45.7 % 49.2 %
Enterprise
Revenues

$

11,190

$

6,478
Cost of revenues   9,888     6,110  
Gross Margin

$

1,302  

$

368  
11.6 % 5.7 %
Corporate (1)
Revenues

$

-

$

-
Cost of revenues   4,041     3,825  
Gross Margin

$

(4,041 )

$

(3,825 )
 
Consolidated
Revenues

$

159,978

$

137,099
Cost of revenues   94,707     76,343  
Gross Margin $ 65,271   $ 60,756  
40.8 % 44.3 %
 
Non-GAAP Gross Margin 43.3 % 47.1 %

 

(1) Corporate category includes activities that are not directly attributable or allocable to a specific segment. This category consists of stock-based compensation and amortization of intangible assets.

 
Shutterfly, Inc.
Reconciliation of Forward-Looking Guidance for Non-GAAP Financial Measures to GAAP Measures
(In millions, except per share amounts)
                 
 
Forward-Looking Guidance
GAAP Non-GAAP
Range of Estimate Adjustments Range of Estimate
From To From To From To
 
Three Months Ending June 30, 2015
 
Net revenues $175.5 $179.5 - - $175.5 $179.5
Gross profit margin 43.7% 44.4% 1.7% 1.7% [a] 45.4% 46.1%
Operating loss ($44.5) ($39.9)

$26.0

$24.5 [b]

($18.4)

($15.4)
Operating margin (25%) (22%) 14% 13% [b] (11%) (9%)
 
Stock-based compensation $18.5

$17.8

$18.5

$17.8

- -
Amortization of intangible assets $7.5 $6.7 $7.5 $6.7

 

- -
 
Adjusted EBITDA* $5.5 $7.5
 
Diluted loss per share ($1.10) ($1.07)

$0.08

$0.08

[e]

($1.02)

($0.99)

Weighted average diluted shares 37.9 37.9
Effective tax rate 16.0% 10.0%
 
Twelve Months Ending December 31, 2015
 
Net revenues $1,045.0 $1,060.0 - - $1,045.0 $1,060.0
Gross profit margin 49.0% 50.5% 1.1% 1.1% [c] 50.1% 51.6%

Operating income/(loss)

($0.4) $10.8

$97.0

$96.1

[d]

$96.6

$106.9

Operating margin (0%) 1% 10% 9% [d] 10% 10%

Operating income/(loss) excluding restructuring

($0.4) $10.8 $11.3 $13.3 [g]

$10.9

$24.1
 
Stock-based compensation $69.5 $69.1 $69.5 $69.1 - -
Amortization of intangible assets $27.5 $27.0 $27.5 $27.0 - -
 
Adjusted EBITDA* $185.0 $192.9
Adjusted EBITDA* margin 17.7% 18.2%
Adjusted EBITDA* excluding restructuring $195.0 $204.9 [h]
Adjusted EBITDA* margin excluding restructuring 18.7% 19.3% [h]
 
Diluted earnings/(loss) per share ($0.46) ($0.23)

$0.32

$0.35

[f]

($0.14)

$0.12

Weighted average diluted shares 37.7 37.7
Effective tax rate 16.0% 10.0%
 
Capital expenditures - % of net revenues 8.6% 9.2%
 
 
 
* Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, amortization
and stock-based compensation.
 
[a]

Reflects estimated adjustments for stock-based compensation expense of approximately $1.0 million and amortization of purchased intangible assets of approximately $2.0 million.

[b]

Reflects estimated adjustment for stock-based compensation expense of approximately $17.8 million to $18.5 million, and amortization of purchased intangible assets of approximately $6.7 million to $7.5 million

[c]

Reflects estimated adjustments for stock-based compensation expense of approximately $4.2 million and amortization of purchased intangible assets of approximately $7.6 million.

[d]

Reflects estimated adjustments for stock-based compensation expense of approximately $69.5 million to $69.1 million and amortization of purchased intangible assets of approximately $27.5 million $27.0 million.

[e] Reflects estimated adjustments for interest expense of approximately $3.0 million to $3.2 million, net of tax.
[f] Reflects estimated adjustments for interest expense of approximately $12.1 million to $13.0 million, net of tax.
[g] Reflects a range of estimated adjustments for the following restructuring events:
From To
Platform consolidation $ 5.0 $ 6.0
Elmsford facility and Treat closure 5.0 6.0
Depreciation and amortization [1] 1.3 1.3
$ 11.3 $ 13.3
[1] Includes accelerated depreciation of capitalized website costs and amortization of intangible assets.
[h] Reflects estimated adjustments for platform consolidation, Elmsford facility closure, and Treat shutdown (excluding
depreciation and amortization) of approximately $10.0 million to $12.0 million.
 
Shutterfly, Inc.
Reconciliation of GAAP Gross Profit Margin to Non-GAAP Gross Profit Margin
(In thousands)
(Unaudited)
    Three Months Ended         Year Ended
Mar. 31,     Jun. 30,     Sep. 30,     Dec. 31,     Mar. 31, Dec. 31,
2014 2014 2014 2014 2015   2014
 
GAAP gross profit $ 60,756 $ 75,813 $ 52,282 $ 280,009 $ 65,271 $ 468,860
Stock-based compensation 1,002 894 886 875 1,192 3,657
Amortization of intangible assets   2,823     2,823     2,822     2,874     2,849     11,342  
Non-GAAP gross profit $ 64,581   $ 79,530   $ 55,990   $ 283,758   $ 69,312   $ 483,859  
 
Non-GAAP gross profit margin   47 %   50 %   39 %   59 %   43 %   53 %
 
Shutterfly, Inc.
Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin
(In thousands)
(Unaudited)
Three Months Ended   Year Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Dec. 31,

2014

2014 2014 2014 2015   2014
 
GAAP operating income (loss) $ (38,611 ) $ (26,697 ) $ (48,927 ) $ 120,480 $ (46,224 ) $ 6,245
Stock-based compensation 15,992 14,714 13,788 17,268 17,760 61,762
Amortization of intangible assets   8,583     8,740     8,530     8,014     7,684     33,867  
Non-GAAP operating income (loss) $ (14,036 ) $ (3,243 ) $ (26,609 ) $ 145,762   $ (20,780 ) $ 101,874  
 
Non-GAAP operating margin   (10 %)   (2 %)   (19 %)   30 %   (13 %)   11 %
 
Shutterfly, Inc.
Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended   Year Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Dec. 31,
2014 2014 2014 2014 2015   2014
 
GAAP net income (loss) $ (34,214 ) $ (27,052 ) $ (46,244 ) $ 99,650 $ (45,103 ) $ (7,860 )
Interest expense 3,947 3,856 4,381 4,548 4,736 16,732
Interest and other income, net (227 ) (54 ) (102 ) (125 ) (102 ) (508 )
Tax (benefit) provision (8,117 ) (3,447 ) (6,962 ) 16,407 (5,755 ) (2,119 )
Depreciation and amortization 22,805 23,712 25,415 26,820 27,593 98,752
Stock-based compensation   15,992     14,714     13,788     17,268     17,760     61,762  
Non-GAAP Adjusted EBITDA $ 186   $ 11,729   $ (9,724 ) $ 164,568   $ (871 ) $ 166,759  
 
Shutterfly, Inc.
Reconciliation of Cash Flow from Operating Activities to Non-GAAP Adjusted EBITDA and Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended   Year Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Dec. 31,
2014 2014 2014 2014 2015   2014
 
Net cash provided by (used in) operating activities $ (97,473 ) $ 12,282 $ (7,850 ) $ 259,529 $

(107,731

) $ 166,488
Interest expense 3,947 3,856 4,381 4,548 4,736 16,732
Interest and other income, net (227 ) (54 ) (102 ) (125 ) (102 ) (508 )
Tax (benefit) provision (8,117 ) (3,447 ) (6,962 ) 16,407 (5,755 ) (2,119 )
Changes in operating assets and liabilities 106,531 (7,633 ) (2,521 ) (100,737 )

113,075

(4,360 )
Other adjustments   (4,475 )   6,725     3,330     (15,054 )   (5,094 )   (9,474 )
Non-GAAP Adjusted EBITDA   186     11,729     (9,724 )   164,568     (871 )   166,759  
Less: Purchases of property and equipment (16,419 ) (22,734 ) (18,769 ) (10,573 )

(13,978

) (68,495 )
Less: Capitalized technology & development costs (5,112 ) (5,324 ) (6,084 ) (5,228 ) (4,072 ) (21,748 )
             
Free cash flow $

(21,345

) $ (16,329 ) $ (34,577 ) $ 148,767   $

(18,921

) $ 76,516  
 
Shutterfly, Inc.

Reconciliation of Net Income (Loss) per Share to Non-GAAP Net Income (Loss) per Share

(In thousands)
(Unaudited)
Three Months Ended   Year Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Dec. 31,
2014 2014 2014 2014 2015   2014
 
GAAP net income (loss) $ (34,214 ) $ (27,052 ) $ (46,244 ) $ 99,650 $ (45,103 ) $ (7,860 )
Add back interest expense related to:
Amortization of debt discount 2,870 2,911 2,951 2,994 3,035 11,726
Amortization of debt issuance costs 288 293 297 301 305 1,179
0.25% coupon 188 187 187 188 187 750
Tax effect   (637 )   (438 )   (395 )   (1,430 )   (391 )   (2,900 )
Non-GAAP net income (loss) $ (31,505 ) $ (24,099 ) $ (43,204 ) $ 101,703   $ (41,967 ) $ 2,895  
 
GAAP basic shares outstanding 38,503 38,438 38,453 38,412 37,968 38,452
Add back:
Dilutive effect of stock options and restricted awards   -     -     -     1,219         -  
GAAP diluted shares outstanding   38,503     38,438     38,453     39,631     37,968     38,452  
Add back:

 

Dilutive effect of stock options and restricted awards - - -

-

-

1,442
Dilutive effect of convertible notes   -     -     -     -     -     -  
Non-GAAP diluted shares outstanding   38,503     38,438     38,453     39,631     37,968     39,894  
 
GAAP net income (loss) per share $ (0.89 ) $ (0.70 ) $ (1.20 ) $ 2.51   $ (1.19 ) $ (0.20 )
Non-GAAP net income (loss) per share $ (0.82 ) $ (0.63 ) $ (1.12 ) $ 2.57   $ (1.11 ) $ 0.07  
 

Shutterfly, Inc.
Media Relations:
Gretchen Sloan, 650-610-5276
[email protected]
or
Investor Relations:
Jeff Majtyka, 656-759-3635
[email protected]

Source: Shutterfly, Inc.


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