Shutterstock Inc
For the period ended Mar 31, 2025. Filed May 2, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
SSTK$2.97-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0001549346-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0001549346-25-000028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 173 previous paragraphs and 159 current paragraphs.
97 unchanged; 33 reworded; 27 added; 37 removed; 6 previous and 2 current paragraphs rearranged.
Tables are not compared: 14 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
Merger Agreement with Getty Images
Current report
On January 6, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine in a merger-of-equals transaction with Getty Images Holdings, Inc. (NYSE:GETY) (“Getty Images”) (such transaction referred to herein as the “Merger”). Subject to terms and conditions in the Merger Agreement, the aggregate consideration to be paid by Getty Images in respect of the outstanding shares of common stock of Shutterstock will be:
Current report
(a)An amount in cash equal to the product of $9.50 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units); and
Current report
(b)A number of shares of Getty Images common stock equal to the product of 9.17 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units).
Current report
Each holder of shares of Shutterstock common stock immediately prior to the transaction close will have the option to receive, subject to proration, for each share of Shutterstock common stock held by such holder:
Current report
(a)Cash consideration of $9.50 and 9.17 shares of Getty Images common stock (a “Mixed Election”);
Current report
(b)Cash consideration of $28.8487; or
Current report
(c)13.67237 shares of Getty Images common stock.
Current report
If no election is made by a holder, each of such holder’s shares of Shutterstock common stock shall be treated as having made a Mixed Election.
Current report
The Merger is subject to the satisfaction of customary closing conditions, further described below, including receipt of required regulatory approvals, the approval of Shutterstock stockholders and the extension or refinancing of Getty Images’ existing debt obligations. Subject to the satisfaction of the closing conditions, upon closing of the Merger, Shutterstock’s common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended. The closing of the Merger is subject to the satisfaction or waiver of certain closing conditions, including:
Current report
•adoption of the Merger Agreement by Shutterstock stockholders (the “Shutterstock Stockholder Approval”) and the Getty Images stockholder approval, which condition was subsequently satisfied by the Getty Images stockholder written consent;
Current report
•Getty Images’ registration statement on Form S-4 to be filed in connection with the Merger having become effective and the mailing of an information statement to Getty Images stockholders at least 20 business days prior to the closing, which condition was subsequently satisfied on April 30, 2025;
Current report
•absence of any order, injunction or other order or law in certain jurisdictions prohibiting the Merger or making the closing of the Merger illegal;
Current report
•expiration of the applicable waiting period (and extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other regulatory approvals deemed necessary or advisable;
Current report
•shares of Getty Images common stock to be issued in connection with the Merger having been approved for listing on the NYSE;
Current report
•accuracy of each party’s representations and warranties, subject to certain standards set forth in the Merger Agreement;
Current report
•performance and compliance in all material respects of each party’s agreements and covenants under the Merger Agreement;
Current report
•absence of any Getty Images material adverse effect or Shutterstock material adverse effect, as applicable and subject to the definitions thereof in the Merger Agreement;
Current report
•delivery of an opinion of tax counsel that the Second Merger and the Third Merger as defined in the Merger Agreement, taken together, will qualify as a “reorganization” within the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended; and
Current report
•Getty Images having amended or otherwise refinanced its existing term loans and senior notes to extend the maturity of each to no earlier than February 19, 2028.
Current report
In 2024, we completed the acquisitions of Backgrid and Envato. The Company believes that Backgrid expands Shutterstock Editorial’s Newsroom offerings of editorial images, and Envato enhances digital creative assets and templates.
Current report
Costs and Expenses
Current report
Revenue increased by $28.3 million, or 13%, to $242.6 million for the three months ended March 31, 2025, compared to the same period in 2024. On a constant currency basis, revenue increased 14% in the three months ended March 31, 2025, compared to the same period in 2024 The increase was largely attributable to revenue recognized from Envato, which we did not have in the same period in 2024.
Current report
Costs and Expenses
Current report
General and Administrative. General and administrative expenses increased by $26.2 million to $58.3 million in the three months ended March 31, 2025 compared to the same period in 2024. This increase was driven by $11.9 million associated with the Getty merger and increases in professional fees, employee-related costs, bad debt expenses, and other general and administrative expenses attributed to the addition of Envato. In addition, there was a $0.4 million increase and a $1.6 million decrease from recurring and non-recurring Giphy Retention Compensation expenses, respectively.
Current report
For the three months ended March 31, 2025, the net effect of discrete items decreased the effective tax rate by 19.6%. The discrete items for the three months ended March 31, 2025 primarily relate to decreases for the UK valuation allowance and tax reserve releases. Excluding discrete items, our effective tax rate would have been 28.1% for the three months ended March 31, 2025.
Current report
For the three months ended March 31, 2024, the net effect of discrete items increased the effective tax rate by 1.5%. Excluding discrete items, our effective tax rate would have been 19.4% for the three months ended March 31, 2024.
Removed paragraphs (37)
Previous report
As of September 30, 2024, our content library includes 800 million images and 55 million footage clips available for distribution in our Content and Data, Distribution and Services offerings. We believe this large selection of high-quality content enables us to attract and retain customers and drives our network effect. In addition, we had over 4.1 million active, paying customers contributing to our revenue for the twelve-month period ended September 30, 2024.
Previous report
On February 1, 2024, we acquired Backgrid USA, Inc. and Backgrid London, Ltd. (collectively “Backgrid”). Backgrid supplies media organizations with real-time celebrity content. On July 22, 2024, we completed our acquisition of Envato Pty Ltd. (“Envato”). Envato offers digital creative assets and templates.
Previous report
In 2023, we completed our acquisition of Giphy, Inc. (“Giphy”). Giphy is a content platform that allows users to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners. We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet.
Previous report
Acquisition of Backgrid USA, Inc. and Backgrid London LTD
Previous report
On February 1, 2024, the Company completed its acquisition of all of the outstanding shares of Backgrid USA, Inc. and Backgrid London LTD, (collectively, “Backgrid”), for approximately $20 million, subject to customary working capital adjustments. The total purchase price was paid with existing cash on hand. Backgrid supplies media organizations with real-time celebrity content. The Company believes this acquisition expands Shutterstock Editorial’s Newsroom offering of editorial images and footage across celebrity, red carpet and live-events.
Previous report
Acquisition of Envato Pty Ltd.
Previous report
On July 22, 2024, the Company completed its previously announced acquisition of Envato Pty Ltd. (“Envato”) pursuant to a Share Purchase Agreement (the “Purchase Agreement”) entered into on May 1, 2024, to acquire all of the issued and outstanding capital stock of Envato. The aggregate consideration paid by the Company, after customary working capital and other adjustments in accordance with the terms of the Purchase Agreement, was $250 million.
Previous report
The addition of Envato has:
Previous report
•Complemented Shutterstock’s existing offering with Envato Elements, a leading unlimited multi-asset subscription offering,
Previous report
•Expanded Shutterstock’s reach within faster growing audiences such as freelancers, hobbyists, small businesses and agencies,
Previous report
•Increased Shutterstock’s Content revenue from video, audio, graphics, fonts and templates, and
Previous report
•Further diversified Shutterstock into new content types including code & web themes, product mock-ups, fonts and templates (e.g. Slides, PowerPoint, Keynote, WordPress, video, designs for social posts, gaming, podcasts and print-on-demand).
Previous report
2 Envato Subscribers and Subscriber Revenue are presented as if Envato was acquired as of the beginning of the period presented, and represent metrics incremental to amounts presented under the “Shutterstock, Inc.” heading. Envato Average revenue per customer is derived from Envato historical results over the last twelve months.
Previous report
3 The Pro Forma key operating metrics are derived from (i) the Shutterstock amounts before combining with Envato and (ii) the historical Envato metrics, as discussed in footnote 2 above.
Previous report
In 2023, we completed our acquisition of Giphy, Inc. (“Giphy”). Giphy is a content platform that allows used to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners. We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet.
Previous report
Bargain Purchase Gain. A bargain purchase gain is recognized subsequent to an acquisition, if the fair value of the net assets acquired and liabilities assumed exceeds the net consideration.
Previous report
Revenue increased by $17.3 million, or 7%, to $250.6 million for the three months ended September 30, 2024, compared to the same period in 2023. Revenue was not impacted on a constant currency basis in the three months ended September 30, 2024, compared to the same period in 2023.
Previous report
General and Administrative. General and administrative expenses increased by $6.4 million to $44.0 million in the three months ended September 30, 2024 compared to the same period in 2023. This increase was driven by an increase in professional fees and employee-related costs associated with by the Envato business, offset by a decline in the Shutterstock-legacy employee-related costs. In addition, there were $0.7 million and $1.1 million decreases from recurring and non-recurring Giphy Retention Compensation expenses, respectively. In the three months ended September 30, 2024, the Company also incurred $3.2 million of transaction costs associated with the acquisition of Envato.
Previous report
Bargain Purchase Gain. In the three months ended September 30, 2023, we recorded an increase to the Giphy bargain purchase gain of $9.9 million associated with updates to deferred income tax balances recorded on the Giphy opening balance sheet.
Previous report
For the three months ended September 30, 2024, the net effect of discrete items decreased the effective tax rate by 32.9%. The discrete items for the three months ended September 30, 2024 primarily relate to reversal of unrecognized tax benefits of $7.3 million due to the settlement of an IRS audit. Excluding discrete items, our effective tax rate would have been 32.4% for the three months ended September 30, 2024.
Previous report
For the three months ended September 30, 2023, the net effect of discrete items decreased the effective tax rate by 14.9%. The discrete items for the three months ended September 30, 2023 primarily relate to the effect of the U.S. Research and Development (“R&D”) tax credit claimed on the Company’s 2022 tax return, which was substantially completed in the third quarter of 2023. Excluding discrete items, our effective tax rate would have been 12.0% for the three months ended September 30, 2023.
Previous report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Previous report
*Not meaningful
Previous report
Revenue
Previous report
Revenue increased by $27.6 million, or 4%, to $685.0 million in the nine months ended September 30, 2024 compared to the same period in 2023. Revenue was not impacted on a constant currency basis in the nine months ended September 30, 2024, compared to the same period in 2023.
Previous report
The Company’s Content revenues decreased by 2%, to $547.5 million in the nine months ended September 30, 2024, compared to the same period in 2023. Foreign currency fluctuations did not have a significant impact on the Company’s Content revenues in the nine months ended September 30, 2024. The decline in our Content revenues was driven by weakness in new customer acquisition, partially offset by revenue from Envato, which was acquired on July 22, 2024.
Previous report
The Company’s Data, Distribution, and Services revenues increased by 41%, to $137.5 million in the nine months ended September 30, 2024, compared to the same period in 2023. Foreign currency fluctuations did not have a significant impact on the Company’s Data, Distribution, and Services revenues in the nine months ended September 30, 2024. The increase in Data, Distribution, and Services revenues was driven by growth in our data offering, which grew 22% in the nine months ended September 30, 2024, as well as growth in our Distribution and Services offerings.
Previous report
Cost of Revenue. Cost of revenue increased by $27.1 million, or 11%, to $283.9 million in the nine months ended September 30, 2024 compared to the same period in 2023. As a percent of revenue, cost of revenue increased to 41% for the nine months ended September 30, 2024, from 39% for the same period in 2023. This increase was driven by increased royalty and content costs, costs associated with website hosting, hardware and software licenses, and employee related costs, and depreciation and amortization driven by the acquisition of Envato. We expect that our cost of revenue will continue to fluctuate in line with changes in revenue.
Previous report
Sales and Marketing. Sales and marketing expenses increased by $11.4 million, or 8%, to $163.5 million in the nine months ended September 30, 2024 compared to the same period in 2023. As a percent of revenue, sales and marketing expenses increased to 24% for the nine months ended September 30, 2024, from 23% for the same period in 2023. This increase was driven by increases in employee-related costs performance marketing spend driven by the Envato business, offset by a decline in Shutterstock’s performance marketing spend. In addition, there were $3.2 million and $0.8 million increases from recurring and non-recurring Giphy Retention Compensation, respectively. We expect sales and marketing expenses to continue to fluctuate as we optimize our sales channels and invest in new customer acquisition, products and geographies.
Previous report
General and Administrative. General and administrative expenses increased by $3.0 million, or 3%, to $112.5 million in the nine months ended September 30, 2024 compared to the same period in 2023. The increase was driven by an increase in professional fees associated with the acquisitions of Envato and Backgrid, and increase in employee-related costs driven by the the acquisition of Envato. This was partially offset by a decrease in bad debt expense, and a decrease in Shutterstock-legacy employee-related costs. In addition, there was a $0.3 million increase and a $1.5 million decrease from recurring and non-recurring Giphy Retention Compensation expenses, respectively. General and Administrative expenses for the nine months ended September 30, 2024 also includes $8.2 million of transaction costs for the Backgrid and Envato acquisitions.
Previous report
Bargain Purchase Gain. In the nine months ended September 30, 2023, we recognized a bargain purchase gain of $51.8 million related to the acquisition of Giphy, which represents the excess of the fair value of the net assets acquired in addition to the net negative purchase price.
Previous report
Income Taxes. Income tax expense increased by $8.0 million for the nine months ended September 30, 2024 as compared to the same period in 2023. Our effective tax rates yielded an expense of 31.4% and 7.6% for the nine months ended September 30, 2024 and 2023, respectively.
Previous report
For the nine months ended September 30, 2024, the net effect of discrete items increased the effective tax rate by 8.2%. The discrete items for the nine months ended September 30, 2024 relate to shortfalls on equity award vestings and a one-time charge of $6.3 million related to the reversal of a deferred tax asset resulting from the expiration of equity awards granted to the Company’s Founder and Executive Chairman, partially offset by the reversal of unrecognized tax benefits of $7.3 million due to the settlement of an IRS audit. Excluding discrete items, our effective tax rate would have been 23.2% for the nine months ended September 30, 2024.
Previous report
For the nine months ended September 30, 2023, the net effect of discrete items decreased the effective tax rate by 8.9%. The discrete items for the nine months ended September 30, 2023 primarily relate to the non-taxable bargain purchase gain associated with the acquisition of Giphy and the effect of the U.S. Research and Development (“R&D”) tax credit claimed on the Company’s 2022 tax return, which was substantially completed in the third quarter of 2023. Excluding discrete items, our effective tax rate would have been 16.5% for the nine months ended September 30, 2023.
Previous report
Cash provided by financing activities for the nine months ended September 30, 2024 was $162.6 million, consisting of (i) $280.0 million received from our A&R Credit Agreement; (ii) $30.0 million used for the repayment of our Credit Facility; (iii) $31.9 million, related to the payment of the quarterly cash dividend; (vi) $41.6 million paid in connection with the repurchase of common stock under our 2023 Share Repurchase Program; (v) $11.7 million paid in the settlement of tax withholding obligations related to employee stock-based compensation awards; and (vi) $2.2 million paid for debt issuance costs.
Previous report
(2)For the nine months ended September 30, 2024, the tax effect of non-cash equity-based compensation includes a $6.3 million add-back for the reduction of deferred tax assets associated with the expiration of performance-based stock options and restricted stock units granted the Company’s Founder and Executive Chairman in 2014. The performance-based metrics were not met, the awards were not exercisable, and the Company recognized a non-cash tax expense for the change in deferred taxes.
Previous report
(1)Envato Seller Obligations relate to payments made on behalf of the Envato sellers’ after the closing of the acquisition. These liabilities were funded from the acquired cash on the Envato balance sheet and are not indicative of obligations and cash flows to be incurred prospectively.
Reworded paragraphs (33)
Previous wording
Subscribers, subscriber revenue and average revenue per customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023, and, for Average Revenue per Customer, from Giphy beginning July 2024. These metrics exclude the respective counts and revenues from Backgrid and Envato.
Current wording
Subscribers, subscriber revenue and average revenue per customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Average Revenue per Customer from Giphy beginning July 2024 and Subscribers, Subscriber revenue, and Average revenue per customer from Backgrid beginning February 2025. 2025 metrics include the counts and revenues from Envato for the three months ended March 31, 2025, which was acquired in July 22, 2024.
Previous wording
The following tables summarize our key operating metrics, which are unaudited, for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following tables summarize our key operating metrics, which are unaudited, for the three months ended March 31, 2025 and 2024:
Previous wording
1 Represents Shutterstock, Inc. key operating metrics before combining the Envato related metrics. Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023, and, for Average Revenue per Customer, from Giphy beginning July 2024. These metrics exclude the respective counts and revenues from our acquisitions of Backgrid and Envato.
Current wording
1 Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Average Revenue per Customer from Giphy beginning July 2024 and Subscribers, Subscriber revenue, and Average revenue per customer from Backgrid beginning February 2025. 2025 metrics include the counts and revenues from Envato for the three months ended March 31, 2025, which was acquired in July 22, 2024.
Previous wording
The Company’s revenues by distribution channel for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):
Current wording
The Company’s revenues by distribution channel for the three months ended March 31, 2025 and 2024 are as follows (in thousands):
Previous wording
The Company’s Content revenues increased by 14%, to $203.7 million in the three months ended September 30, 2024, compared to the same period in 2023. On a constant currency basis, Content revenues grew 13% in the three months ended September 30, 2024, compared to the same period in 2023. During the three months ended September 30, 2024, growth in our Content revenue was driven by the contribution of Envato, which was acquired on July 22, 2024. The increase was partially offset by a reduction in Content revenue generated from Shutterstock’s content offering due to weakness in new customer acquisition.
Current wording
The Company’s Content revenues increased by 17%, to $202.9 million in the three months ended March 31, 2025, compared to the same period in 2024. Content revenue was not impacted by foreign currency fluctuations in the three months ended March 31, 2025, compared to the same period in 2024. During the three months ended March 31, 2025, growth in our Content revenue was driven by the contribution of Envato, which was acquired on July 22, 2024. The increase was partially offset by a reduction in Content revenue generated from Shutterstock’s content offering due to weakness in new customer acquisition.
Previous wording
The Company’s Data, Distribution, and Services revenues decreased by 14%, to $46.9 million in the three months ended September 30, 2024, compared to the same period in 2023. The decrease in Data, Distribution, and Services revenues was driven by a decline in our data offering, which was offset by growth in our Distribution and Services offerings.
Current wording
The Company’s Data, Distribution, and Services revenues decreased by 2%, to $39.7 million in the three months ended March 31, 2025, compared to the same period in 2024. Data, Distribution, and Services revenues were not impacted by foreign currency fluctuations in the three months ended March 31, 2025, compared to the same period in 2024. The decrease in Data, Distribution, and Services revenues was driven by a decline in our data offering, which was offset by growth in our Distribution and Services offerings.
Previous wording
Changes in our revenue by region were as follows: revenue from North America decreased by $2.8 million, or 2%, to $120.5 million, revenue from Europe increased by $12.9 million, or 23%, to $69.5 million and revenue from outside Europe and North America increased by $7.2 million, or 14%, to $60.6 million, in the three months ended September 30, 2024 compared to the same period in 2023.
Current wording
Changes in our revenue by region were as follows: revenue from North America increased by $9.8 million, or 9%, to $120.2 million, revenue from Europe increased by $10.8 million, or 19%, to $66.2 million and revenue from outside Europe and North America increased by $7.7 million, or 16%, to $56.2 million, in the three months ended March 31, 2025 compared to the same period in 2024.
Previous wording
Cost of Revenue. Cost of revenue increased by $10.2 million to $104.4 million in the three months ended September 30, 2024 compared to the same period in 2023. As a percentage of revenue, cost of revenue increased to 42% for the three months ended September 30, 2024, from 40% for the same period in 2023. This increase was driven by increased royalties, content expenses, and employee-related costs driven by the acquisition of Envato. These amounts were partially offset by a decrease in Shutterstock-legacy related royalties, content expenses, production costs and employee-related costs, and a decrease in recurring and non-recurring Giphy Retention Compensation. We expect that our cost of revenue will continue to fluctuate in-line with changes in revenue.
Current wording
Cost of Revenue. Cost of revenue increased by $12.7 million to $100.9 million in the three months ended March 31, 2025 compared to the same period in 2024. As a percentage of revenue, cost of revenue increased to 42% for the three months ended March 31, 2025, from 41% for the same period in 2024. This increase was driven by increased royalties, content expenses, employee-related costs, and website hosting fees, primarily driven by the acquisition of Envato. These amounts were partially offset by a decrease in recurring and non-recurring Giphy Retention Compensation. We expect that our cost of revenue will continue to fluctuate in-line with changes in revenue.
Previous wording
Sales and Marketing. Sales and marketing expenses decreased by $0.8 million, or 1%, to $55.4 million in the three months ended September 30, 2024 compared to the same period in 2023. As a percentage of revenue, sales and marketing expenses decreased to 22% for the three months ended September 30, 2024, from 24% for the same period in 2023. This was driven by a decrease in Shutterstock-legacy brand and performance-based marketing expenses and a decrease in consultant expenses. This was partially offset by marketing spend and employee-related costs attributable to the Envato business. In addition, there were $0.9 million and $1.1 million increases from recurring and non-recurring Giphy Retention Compensation expenses, respectively. We expect sales and marketing expenses to continue to fluctuate as we optimize our sales channels and invest in new customer acquisition, products and geographies.
Current wording
Sales and Marketing. Sales and marketing expenses decreased by $2.9 million, or 5%, to $53.4 million in the three months ended March 31, 2025 compared to the same period in 2024. As a percentage of revenue, sales and marketing expenses decreased to 22% for the three months ended March 31, 2025, from 26% for the same period in 2024. This was driven by a decrease in brand and performance-based marketing expenses and a decrease in consultant expenses. In addition, there was a
Previous wording
Product Development. Product development expenses increased by $0.5 million to $28.6 million in the three months ended September 30, 2024 compared to the same period in 2023. The increase in product development was driven by an increase in employee-related costs associated with the Envato business, offset by a decline in Shutterstock-legacy employee-related costs. In addition, there was a $1.2 million decrease and a $2.7 million increase from recurring and non-recurring Giphy Retention Compensation expenses, respectively. We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies.
Current wording
Product Development. Product development expenses decreased by $1.2 million to $19.9 million in the three months ended March 31, 2025 compared to the same period in 2024. The decrease in product development was driven by decreases of $1.5 million and $4.0 million from recurring and non-recurring Giphy Retention Compensation expenses, respectively. These costs were partially offset by increases in employee-related costs and software licenses driven by the acquisition of Envato. We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies.
Previous wording
Interest Expense. In the three months ended September 30, 2024 and September 30, 2023, we recognized interest expense of $4.5 million and $0.6 million, respectively, related to our credit facility and the amortization of deferred financing fees. Interest expense for the three months ended September 30, 2024 increased due to the borrowings under A&R Credit Agreement entered into during the quarter ended September 30, 2024 to fund the acquisition of Envato.
Current wording
Interest Expense. In the three months ended March 31, 2025 and March 31, 2024, we recognized interest expense of $4.3 million and $0.6 million, respectively, related to our credit facility and the amortization of deferred financing fees. Interest expense for the three months ended March 31, 2025 increased due to the borrowings under A&R Credit Agreement entered into during the quarter ended September 30, 2024 to fund the acquisition of Envato.
Previous wording
Other Income, Net. In the three months ended September 30, 2024, other income, net was driven by $1.6 million of unrealized gains related to our investment in Meitu, Inc. In addition, other income, net had $1.1 million of interest income and $1.2 million of unrealized foreign currency gains. During the three months ended September 30, 2023, other income, net substantially consisted of $1.9 million of interest income and $0.8 million of unrealized foreign currency losses. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.
Current wording
Other Income, Net. In the three months ended March 31, 2025, other income, net was driven by $13.3 million of unrealized gains related to our investment in Meitu, Inc. In addition, other income, net had $0.9 million of interest income and $0.3 million of unrealized foreign currency gains. In the three months ended March 31, 2024, other income, net was primarily driven by $3.8 million of unrealized gains related to our investment in Meitu, Inc. In addition, other income, net had $4.8 million of interest income and $0.6 million of unrealized foreign currency losses. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.
Previous wording
Income Taxes. The income tax benefit decreased by $0.7 million for the three months ended September 30, 2024, compared to the same period in 2023. Our effective tax rates yielded a net benefit of 0.5% and 2.9% for the three months ended September 30, 2024 and 2023, respectively.
Current wording
Income Taxes. The income tax benefit decreased by $2.5 million for the three months ended March 31, 2025, compared to the same period in 2024. Our effective tax rates were 8.5% and 20.9% for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
As of September 30, 2024, we had cash and cash equivalents totaling $131.4 million which consisted primarily of bank balances. Since inception, we have financed our operations primarily through cash flows generated from operations. In addition, if necessary, we have the ability to draw on our A&R Credit Agreement dated July 22, 2024.
Current wording
As of March 31, 2025, we had cash and cash equivalents totaling $112.2 million which consisted primarily of bank balances. Since inception, we have financed our operations primarily through cash flows generated from operations. In addition, if necessary, we have the ability to draw on our A&R Credit Agreement dated July 22, 2024.
Previous wording
We declared and paid cash dividends of $0.90 per share of common stock, or $31.9 million during the nine months ended September 30, 2024.
Current wording
We declared and paid cash dividends of $0.33 per share of common stock, or $11.5 million during the three months ended March 31, 2025.
Previous wording
On October 21, 2024, our Board of Directors declared a quarterly cash dividend of $0.30 per share of outstanding common stock payable on December 13, 2024 to stockholders of record at the close of business on November 29, 2024. Future declarations of dividends are subject to the final determination of our Board of Directors, and will depend on, among other things, our future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors our Board of Directors may deem relevant.
Current wording
On April 21, 2025, our Board of Directors declared a quarterly cash dividend of $0.33 per share of outstanding common stock payable on June 19, 2025 to stockholders of record at the close of business on June 5, 2025. Future declarations of dividends are subject to the final determination of our Board of Directors, and will depend on, among other things, our future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors our Board of Directors may deem relevant.
Previous wording
In June 2023, our Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”), providing authorization to repurchase up to $100 million of our common stock.
Current wording
In June 2023, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”), providing authorization to repurchase up to $100 million of our common stock.
Previous wording
We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our 2023 Share Repurchase Program is subject to us having available cash to fund repurchases. Under the share repurchase program, management is authorized to purchase shares of our common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
Current wording
We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our Share Repurchase Program is subject to us having available cash to fund repurchases. Under the share repurchase program, management is authorized to purchase shares of our common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
Previous wording
As of September 30, 2024, we have repurchased approximately 5.5 million shares of our common stock under the 2023 Share Repurchase Program at an average per-share cost of $48.86. During the three and nine months ended September 30, 2024, we repurchased approximately 594,400 and 1,111,500 shares of our common stock at an average cost of $35.33 and $37.42, respectively. During the three and nine months ended September 30, 2023, we repurchased approximately 351,000 and 431,000 shares of common stock at an average cost of $42.75 and $44.06, respectively, under the 2023 Share Repurchase Program. As of September 30, 2024, we had $30 million of remaining authorization for repurchases under the 2023 Share Repurchase Program.
Current wording
As of March 31, 2025, we have repurchased approximately 5.5 million shares of our common stock under the Share Repurchase Program at an average per-share cost of $48.86. During the three months ended March 31, 2025 and 2024, we did not repurchase shares of our common stock. As of March 31, 2025, we had $30 million of remaining authorization for repurchases under the Share Repurchase Program.
Previous wording
For the three and nine months ended September 30, 2024, we recognized interest expense of $4.5 million and $5.6 million, respectively. As of September 30, 2024, unamortized debt issuance cost related to the Term Loan - A&R Credit Agreement is $0.8 million.
Current wording
For the three months ended March 31, 2025, we recognized interest expense of $4.3 million. As of March 31, 2025, unamortized debt issuance cost related to the Term Loan - A&R Credit Agreement is $0.7 million.
Previous wording
As of September 30, 2024, we had approximately $55 million in unconditional cash obligations, consisting primarily of purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, of which the majority is due to be paid within the next two years. In addition, as of September 30, 2024, we had approximately $40 million in operating lease obligations with lease payments extending through 2029.
Current wording
As of March 31, 2025, we had approximately $40 million in unconditional cash obligations, consisting primarily of purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, of which the majority is due to be paid within the next two years. In addition, as of March 31, 2025, we had approximately $34 million in operating lease obligations with lease payments extending through 2029.
Previous wording
The following table summarizes our cash flow data for the nine months ended September 30, 2024 and 2023 (in thousands):
Current wording
The following table summarizes our cash flow data for the three months ended March 31, 2025 and 2024 (in thousands):
Previous wording
Net cash provided by operating activities was $24.7 million for the nine months ended September 30, 2024, compared to Net cash provided by operating activities of $106.6 million for the nine months ended September 30, 2023. In the nine months ended September 30, 2024 and 2023, operating cash flows included a $28.7 million increase in the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows. In the nine months ended September 30, 2024, operating cash flows included $45.7 million of cash outflows made for the Envato Seller Obligations.
Current wording
Net cash provided by operating activities was $25.2 million for the three months ended March 31, 2025, compared to Net cash provided by operating activities of $8.3 million for the three months ended March 31, 2024. In the three months ended March 31, 2025, operating cash flows were unfavorably impacted from payments of year-end bonuses and commissions, which are typical first quarter cash outflows. In addition, operating cash flows included a $17.9 million decrease in the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows.
Previous wording
In addition, operating cash flows for the nine months ended September 30, 2023 were favorably impacted from an increase in operating income and changes in the timing of cash collections from data deal customers and payments pertaining to operating expenses, which can cause operating cash flow to fluctuate from period to period. In addition, operating cash flows for the nine months ended September 30, 2023 were unfavorably impacted by the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows.
Current wording
Operating cash flows for the three months ended March 31, 2024 were unfavorably impacted from payments of year-end bonuses and commissions, which are typical first quarter cash outflows. In addition, operating cash flows for the three months ended March 31, 2024 were unfavorably impacted by the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows.
Previous wording
Cash used in investing activities for the nine months ended September 30, 2024 was $156.1 million, consisting primarily of (i) $179.1 million used in the acquisition of Envato and Backgrid, net of cash acquired; (ii) capital expenditures of $38.3 million for internal-use software and website development costs and purchases of software and equipment; and (iii) $2.5 million paid to acquire the rights to distribute certain digital content into perpetuity. These cash outflows were partially offset by $63.4 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.
Current wording
Cash used in investing activities for the three months ended March 31, 2025 was $11.2 million, consisting primarily of (i) capital expenditures of $10.8 million for internal-use software and website development costs and purchases of software and equipment; and (ii) $0.9 million paid to acquire the rights to distribute certain digital content into perpetuity. These cash outflows were partially offset by $0.5 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.
Previous wording
Cash used in investing activities in the nine months ended September 30, 2023 was $61.9 million, consisting primarily of (i) $53.7 million used in the acquisition of Giphy, net of cash acquired, (ii) capital expenditures of $34.7 million for internal-use software and website development costs and purchases of software and equipment, and (iii) $9.7 million paid to acquire the rights to distribute certain digital content in perpetuity. These cash outflows were partially offset by (i) $34.7 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.
Current wording
Cash used in investing activities in the three months ended March 31, 2024 was $16.5 million, consisting primarily of (i) $19.5 million used in the acquisition of Backgrid, net of cash acquired, (ii) capital expenditures of $14.5 million for internal-use software and website development costs and purchases of software and equipment, and (iii) $1.0 million paid to acquire the rights to distribute certain digital content in perpetuity. These cash outflows were partially offset by (i) $18.4 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.
Previous wording
Cash used in financing activities in the nine months ended September 30, 2023 was $83.2 million, consisting of (i) $50.0 million used for the repayment of our Credit Facility; (ii) $29.0 million related to the payment of the quarterly cash dividend; (iii) $19.0 million paid in connection with the repurchase of common stock under the 2023 Share Repurchase Program; and (iv) $15.2 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards. These amounts were partially offset by $30.0 million proceeds received from our Credit Facility.
Current wording
Cash used in financing activities for the three months ended March 31, 2025 was $15.8 million, consisting of (i) $11.5 million, related to the payment of the quarterly cash dividend; (ii) $3.5 million paid in the settlement of tax withholding obligations related to employee stock-based compensation awards; and (ii) $0.8 million used for the repayment of our Credit Facility.
Previous wording
The expense associated with the Giphy Retention Compensation related to (i) the one-time employment inducement bonuses and (ii) the vesting of the cash value of unvested Meta equity awards held by the employees prior to closing, which are reflected in operating expenses (together, the “Giphy Retention Compensation Expense - non-recurring”), are required payments in accordance with the terms of the acquisition. Meta’s sale of Giphy was directed by the CMA and accordingly, the terms of the acquisition were subject to CMA preapproval. Management considers the operating expense associated with these required payments to be unusual and non-recurring in nature. The Giphy Retention Compensation Expense - non-recurring is not considered ongoing expense necessary to operate the Company’s business. Therefore, such expenses have been included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share. For the three months ended September 30, 2024, the Company also incurred $4.5 million, of Giphy Retention Compensation expense related to recurring employee costs, which is included in operating expenses, and are not included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share.
Current wording
The expense associated with the Giphy Retention Compensation related to (i) the one-time employment inducement bonuses and (ii) the vesting of the cash value of unvested Meta equity awards held by the employees prior to closing, which are reflected in operating expenses (together, the “Giphy Retention Compensation Expense - non-recurring”), are required payments in accordance with the terms of the acquisition. Meta’s sale of Giphy was directed by the CMA and accordingly, the terms of the acquisition were subject to CMA preapproval. Management considers the operating expense associated with these required payments to be unusual and non-recurring in nature. The Giphy Retention Compensation Expense - non-recurring is not considered ongoing expense necessary to operate the Company’s business. Therefore, such expenses have been included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share. For the three months ended March 31, 2025, the Company also incurred $4.8 million, of Giphy Retention Compensation expense related to recurring employee costs, which is included in operating expenses, and are not included in the below adjustments for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share.
Previous wording
We define adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets, Giphy Retention Compensation Expense - non-recurring, unrealized gains and losses on investments, severance costs associated with strategic workforce optimizations, and the estimated tax impact of such adjustments. We define adjusted net income per diluted common share as adjusted net income divided by weighted average diluted shares.
Current wording
We define adjusted net income as net income adjusted for the impact of non-cash equity-based compensation, the amortization of acquisition-related intangible assets, Giphy Retention Compensation Expense - non-recurring, unrealized gains and losses on investments, severance costs associated with strategic workforce optimizations, costs incurred associated with the Getty merger, and the estimated tax impact of such adjustments. We define adjusted net income per diluted common share as adjusted net income divided by weighted average diluted shares.
Previous wording
(3)Of these amounts, $7.8 million and $8.1 million are included in cost of revenue for the three months ended September 30, 2024 and 2023, respectively, and $24.1 million and $23.4 million are included in cost of revenue for the nine months ended September 30, 2024 and 2023, respectively. The remainder of acquisition-related amortization expense is included in general and administrative expense in the Statement of Operations.
Current wording
(2)Of these amounts, $9.0 million and $8.2 million are included in cost of revenue for the three months ended March 31, 2025 and 2024, respectively. The remainder of acquisition-related amortization expense is included in general and administrative expense in the Statement of Operations.
Previous wording
(4)Other consists of unrealized gains and losses on investments and severance costs associated with strategic workforce optimizations.
Current wording
(3)Other consists of unrealized gains and losses on investments and severance costs associated with strategic workforce optimizations.
Previous wording
We define adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, bargain purchase gain related to the acquisition of Giphy, Giphy Retention Compensation Expense - non-recurring, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, unrealized gains and losses on investments, interest income and expense and income taxes. We define adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue.
Current wording
We define adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, Giphy Retention Compensation Expense - non-recurring, costs incurred associated with the Getty merger, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, unrealized gains and losses on investments, interest income and expense and income taxes. We define adjusted EBITDA margin as the ratio of adjusted EBITDA to revenue.
Previous wording
We define adjusted free cash flow as our net cash provided by operating activities, adjusted for capital expenditures, content acquisition, cash received related to Giphy Retention Compensation in connection with the acquisition of Giphy and cash paid for Envato Seller Obligations.
Current wording
We define adjusted free cash flow as our net cash provided by operating activities, adjusted for capital expenditures, content acquisition, cash received related to Giphy Retention Compensation in connection with the acquisition of Giphy, and cash paid for Merger related costs.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
$0.4 million increase from recurring Giphy Retention Compensation expenses and an increase in employee-related costs driven by the acquisition of Envato. We expect sales and marketing expenses to continue to fluctuate as we optimize our sales channels and invest in new customer acquisition, products and geographies.
Current report — wording carried from elsewhere
Cash used in financing activities in the three months ended March 31, 2024 was $18.6 million, consisting of (i) $10.7 million related to the payment of the quarterly cash dividend; and (ii) $8.0 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
The following table presents our results of operations for the periods indicated:
Previous report — wording carried elsewhere
Changes in our revenue by region were as follows: revenue from North America increased by $32.4 million, or 10%, to $351.1 million, revenue from Europe increased by $4.2 million, or 2%, to $178.2 million and revenue from outside Europe and North America decreased by $9.1 million, or 5%, to $155.6 million, in the nine months ended September 30, 2024 compared to the same period in 2023.
Previous report — wording carried elsewhere
Product Development. Product development expenses decreased by $3.2 million, or 4%, to $69.5 million in the nine months ended September 30, 2024 as compared to the same period in 2023. The decrease in product development was driven by a decrease in outside consultant expenses and a decrease Shutterstock-legacy employee-related costs. This was partially offset by increases in employee-related costs driven by the Envato business. In addition, there was a $2.7 million increase and a $0.7 million decrease from recurring and non-recurring Giphy Retention Compensation expenses, respectively. We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies.
Previous report — wording carried elsewhere
Interest Expense. In the nine months ended September 30, 2024 and September 30, 2023, we recognized interest expense of $5.6 million and $1.3 million, respectively related to our credit facility and the amortization of deferred financing fees. Interest expense for the nine months ended September 30, 2024 increased due to borrowings under the A&R Credit Agreement entered into during the quarter ended September 30, 2024 to fund the acquisition of Envato.
Previous report — wording carried elsewhere
Other Income, Net. During the nine months ended September 30, 2024, other income, net substantially consisted of $3.5 million of interest income and $1.7 million of unrealized gains related to our investment in Meitu, Inc., partially offset by $0.7 million of unrealized foreign currency losses. During the nine months ended September 30, 2023 other income, net consisted of $0.9 million of unrealized foreign currency gains and $2.7 million of interest income. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.
Previous report — wording carried elsewhere
As we continue to expand our operations outside of the United States, we have been and may continue to become subject to taxation in additional non-U.S. jurisdictions, and our effective tax rate could fluctuate accordingly.