According to a BCC Research report, the global digital photography market is estimated to grow 3.8% annually to reach $82.5 billion by the year 2016. While the photo printing industry is expected to suffer losses, the digital cameras and lenses market are expected to have 5.8% annual growth.
For the recently reported quarter, Shutterfly (Nasdaq: SFLY) saw revenues grow 16% over the year to $142 million, falling short of the market’s projections of $143.61 million. Loss per share increased from $0.27 a year ago to $1.20 for the third quarter. Adjusted losses of $1.12 per share were better than the market’s forecast of $1.17.
By segment, revenues from the Consumers division grew 13% over the year to $127.3 million. Enterprise segment revenues improved 47% to $14.7 million.
During the quarter, their total customers grew 6% to 2.5 million and the number of orders processed increased 7% to 4.2 million. The average order value improved 5% to $30.63.
For the current quarter, Shutterfly projected revenues of $466.7 million–$481.7 million with a net income of $2.35–$2.60 per share. The market was looking for revenues of $477.98 million and EPS of $2.54 for the quarter. Shutterfly expects to end the year with revenues of $905 million–$920 million and EPS of $0.07–$0.20 compared with the market’s forecast of revenues of $918 million and EPS of $0.07.
Shutterfly Acquires GrooveBook
Last month, Shutterfly announced the acquisition of GrooveBook from Dot Graphics for an estimated $14.5 million. GrooveBook is a mobile photo book app subscription service that lets users create personalized books. The service has a user base of over 500,000 paid subscribers. They have apps for both the iOS and Android systems and have reported over 1 million app downloads and more than 200 million photo uploads. GrooveBook essentially uses the photos on the subscriber’s phone and prints them as an album and ships to the users for $2.99 a month. Through the acquisition, Shutterfly will be able to expand their mobile presence along with their customer reach and GrooveBook will be able to benefit from the enhanced printing services and technological prowess offered by Shutterfly.
Earlier this quarter, Shutterfly was in the news for the possible buyout being arranged by Silver Lake Partners. Silver Lake Partners wanted to acquire both Shutterfly and Snapfish and merge the two entities. The total deal was valued at $2 billion and would have created one of the biggest digital photo printing company. However, the deal did not go through.
Shutterfly has been looking for a potential buyer and had hired investment bank Qatalyst Partners this summer. The company has been bothered by the back to back losses that they have been reporting driven by the termination of the Costco partnership.
Their stock is trading at $41.86 with a market capitalization of $1.62 billion. It touched a 52-week high of $55.09 in February this year.