Jon Oringer, Founder & CEO Tim Bixby, CFO
May 2013 Safe Harbor
This presentation contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our management’s beliefs and assumptions and on information currently available to management. Forward- looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition.
Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of our most recent public filings. You should read our public filings, including the Risk Factors set forth therein and the documents that we have filed as exhibits to those filings, completely and with the understanding that our actual future results may be materially different from what we currently expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.
In addition, as we refer to earnings, we will also refer to adjusted EBITDA, non-GAAP net income and free cash flow. We define adjusted EBITDA as earnings adjusted for interest income/(expense), income taxes, depreciation, amortization and non-cash equity- based compensation; non-GAAP net income as net income excluding the after tax impact of non-cash equity based compensation expense; and free cash flow as cash provided by (or used in) operating activities adjusted for capital expenditures and interest income/(expense). Adjusted EBITDA, non-GAAP net income free cash flow are non-GAAP financial measures. You can find a reconciliation of adjusted EBITDA, non-GAAP net income and free cash flow to the most directly comparable GAAP financial measures in our most recent quarterly earnings release, which is posted on the Investor Relations section of our website. We believe that the use of adjusted EBITDA, non-GAAP net income and free cash flow provides additional insight for investors to use in evaluation of ongoing operating results and trends. However, non-GAAP financial measures such as adjusted EBITDA, non-GAAP net income and free cash flow should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. A Global Marketplace for Imagery
3 Company Snapshot
Revenue Key Facts
(M) • 25 million images
$170 $51 • 1 million video clips • 750,000 paying customers $38 • 40,000 contributors $120 • 150 countries, 18 languages $83 • Headquartered in New York City $61 • 262 employees • 20% Adjusted EBITDA margin
20092010 2011 2012 Q1 2012 Q1 2013
4 Key Investment Highlights
1 Disruptive player in a large, growing market
2 Highly recurring revenues, with profitable growth
3 Scalable customer acquisition model
4 Powerful network effects
5 Multiple future growth opportunities
5 World-Class Leadership Executive Team Jon Oringer Founder, CEO and Chairman Thilo Semmelbauer President and COO Tim Bixby Chief Financial Officer Jim Chou Chief Technology Officer Miles Williams VP Marketing Nick Flynn VP Sales Scott Braut VP Content Wyatt Jenkins VP Product Michael Lesser VP/General Counsel Board of Directors Steven Berns EVP and CFO, Revlon
Jeff Epstein Former EVP and CFO, Oracle
Thomas Evans President and CEO, Bankrate
Jeffrey Lieberman Managing Director, Insight Venture Partners
Jonathan Miller Former CEO, Digital Media Group at News Corp
6 All Businesses Need Images Leading Ad Agency Fortune 500 Large Publisher
Freelancer Small Business Blogger
7 Challenges in Licensing Images
Web Search Commissioned Traditional Stock
• Unlicensed • $2,000 to $20,000+ • Often $200-$500+ • Mixed quality • Days to weeks • Time consuming • Time-consuming • Uncertain results • Complex licensing
8 A Highly Disruptive Solution
Simple Immediate Affordable
Monthly Subscriptions $249 / month Image Packs $49 for 5 images Enterprise $10’s to $100’s / image
9 Reflects USD pricing. Shutterstock prices in ten currencies. Large and Growing Market
Market for Commercial Imagery Key Trends
(B) $13 • Growth in websites $11 • Growth in advertising • Tablet and mobile browsing Commissioned • Commissioned Stock • Traditional Marketplaces
$6$6 Bn Stock $4$4 Bn
2011 2016
10 Source: L.E.K. Consulting LLC, August 2012 Why Do Customers Choose Shutterstock?
Content Largest and freshest library
Search Fast, relevant and unbiased
Value Simple and frictionless
11 Powerful Network Effects
Data Customers Contributors
Data
12 Multiple Growth Opportunities
Increased Penetration in All Markets
Emerging Content Types
Large Enterprises and Ad Agencies
13 Market Leading Innovation
Instant
Offset
14 Highly Loyal Customers
Revenue by Cohort - Each Year Builds on a Stronger Base
$175M
$140M
$105M
$70M
$35M
$0M 2006
15 Note: Excludes inorganic growth. Highly Loyal Customers
Revenue by Cohort - Each Year Builds on a Stronger Base
$175M
$140M
$105M
$70M
$35M
$0M 2006 2007 2008 2009 2010 2011 2012
16 Note: Excludes inorganic growth. Highly Loyal Customers
Revenue by Cohort - Each Year Builds on a Stronger Base
$175M
$140M
$105M
$70M
$35M
2007 Cohort Earlier Cohorts $0M 2006 2007 2008 2009 2010 2011 2012
17 Note: Excludes inorganic growth. Highly Loyal Customers
Revenue by Cohort - Each Year Builds on a Stronger Base
$175M
$140M
$105M
$70M
$35M
2007 Cohort Earlier Cohorts $0M 2006 2007 2008 2009 2010 2011 2012
18 Note: Excludes inorganic growth. Highly Loyal Customers
Revenue by Cohort - Each Year Builds on a Stronger Base
$175M
$140M 2012 Cohort
$105M 2011 Cohort
$70M 2010 Cohort
2009 Cohort $35M 2008 Cohort 2007 Cohort Earlier Cohorts $0M 2006 2007 2008 2009 2010 2011 2012
19 Note: Excludes inorganic growth. Highly Loyal Customers
Revenue by Cohort - Each Year Builds on a Stronger Base
$175M
$140M 2012 Cohort
$105M 2011 Cohort
$70M 2010 Cohort
2009 Cohort $35M 2008 Cohort 2007 Cohort Earlier Cohorts $0M 2006 2007 2008 2009 2010 2011 2012
20 Note: Excludes inorganic growth. Profitable Customer Acquisition
Customers Acquired in Q1 2010
$3.5M $12M Gross Profit or $4M Marketing spend 4x recovered in first year ROI
after 3 years $3M
$3M $3M $1.5M Investment
Marketing Gross Profit
Q1 2010 Next 3 Qtrs 2nd year 3rd year
21 Note: Only includes customers whose first purchase was in Q1 2010. Growing, Predictable & Profitable Business Model
Growing 41% revenue CAGR (2009-2012) Increasing number of images, customers, paid downloads
Predictable ~100% annual revenue retention Strong repeat behavior across all plans
Profitable Profitable for 23 consecutive quarters High degree of control over margins
22 Note: Year-to-year revenue retention statistic based on average of the last five years (2008-2012) Growth in Key Metrics
Images in Library Active Customers Paid Downloads
(M) (K) (M) 23 786 76
17 59 552
13 44
34 9 322
175
20092010 2011 2012 20092010 2011 2012 2009 2010 2011 2012
$1.80 $1.88 $2.05 $2.23
Revenue per download
23 Strong and Consistent Revenue Growth
Revenue
$51 (M) $49
$42 $41 $38 $35 $31 $29 $25 $24 $21 $19 $20
1Q’10 2Q’10 3Q’10 4Q’10 1Q’11 2Q’11 3Q’11 4Q’111Q’12 2Q’12 3Q’12 4Q’12 1Q’13
24 Diverse Revenue Sources
All Geographies All Company Sizes No Concentration
43% 45% 12% EMEA Americas Asia/Pacific Top 25 Customers <3% of Revenue
Self Employed 2-5
6-50 51-500 500+
25 Note: Charts reflect 2012 revenue except company size chart which reflects customer count by company size, via customer survey in July 2011. (n = 2,421) Profitable, Scalable Customer Acquisition Model
Unit Economics Sales and Marketing Spend
(M) $45 ~$100
$32 ~$350
$18
$11 $9 $7
Lifetime Acquisition Cost of Lifetime 2007 2008 2009 2010 2011 2012 Revenue Costs Goods Contribution
26 Key Investment Highlights
1 Disruptive player in a large, growing market
2 Highly recurring revenues, with profitable growth
3 Scalable customer acquisition model
4 Powerful network effects
5 Multiple future growth opportunities
27