MicrostockGroup Sponsors


Author Topic: News: Shutterstock 2nd Second Quarter 2020 is available !  (Read 2663 times)

0 Members and 2 Guests are viewing this topic.

« on: July 28, 2020, 06:41 »
0
Hi,
Shutterstock 2nd Second Quarter 2020 is available !

link: https://investor.shutterstock.com/static-files/f32cebb1-de23-4171-8e92-66a505cb7693

What are your thoughts on the figures/numbers from the financial wizards?




« Reply #1 on: July 28, 2020, 08:09 »
+7
I am waiting for Jo Ann Snover's analysis!

« Reply #2 on: July 28, 2020, 08:28 »
+3
I am waiting for Jo Ann Snover's analysis!

Ditto! But I guarantee it will all be showing sunshine, lollipops, rainbows and unicorns.
« Last Edit: July 28, 2020, 08:31 by cathyslife »

m

« Reply #3 on: July 28, 2020, 08:50 »
+7
pump and dump
ss will be the myspace of stock agencies soon.
« Last Edit: July 28, 2020, 08:52 by m »

« Reply #4 on: July 28, 2020, 08:52 »
+1

steheap

  • Author of best selling "Get Started in Stock"

« Reply #5 on: July 28, 2020, 09:24 »
+5
This is what they said about the change to contributor payouts:

Quote
Cost of Revenue. Cost of revenue decreased by $4.7 million, or 7% to $63.8 million in the three months ended June 30, 2020 compared to the same period in 2019, due to lower royalty expense, content procurement costs and depreciation and amortization expense, partially offset by higher costs associated with website hosting, hardware and software licenses as well as increased credit card fees. The reduction in royalty expenses was driven by the 6% decline in paid downloads due to the impact of COVID-19 as well as a change in the way we remunerate contributors. We expect that our cost of revenue will fluctuate in line with changes in revenue and paid downloads.

So even though this only impacted one month of the quarter, they did show a significant drop in the cost of their revenue. I believe the annual report will spell out the components of the cost of revenue more clearly and you will be able to see how payments to contributors have changed. So I think it is clear they are paying out less and they have also tied that cost more clearly to revenue than it was with the old scheme. They are not going to go back on this, in my view.

Steve

« Reply #6 on: July 28, 2020, 10:00 »
+5
This is what they said about the change to contributor payouts:

Quote
Cost of Revenue. Cost of revenue decreased by $4.7 million, or 7% to $63.8 million in the three months ended June 30, 2020 compared to the same period in 2019, due to lower royalty expense, content procurement costs and depreciation and amortization expense, partially offset by higher costs associated with website hosting, hardware and software licenses as well as increased credit card fees. The reduction in royalty expenses was driven by the 6% decline in paid downloads due to the impact of COVID-19 as well as a change in the way we remunerate contributors. We expect that our cost of revenue will fluctuate in line with changes in revenue and paid downloads.

So even though this only impacted one month of the quarter, they did show a significant drop in the cost of their revenue. I believe the annual report will spell out the components of the cost of revenue more clearly and you will be able to see how payments to contributors have changed. So I think it is clear they are paying out less and they have also tied that cost more clearly to revenue than it was with the old scheme. They are not going to go back on this, in my view.

Steve

I can understand why they wanted to pay in tiered percentage structure but the way they have done it is brutal, underhanded and thick.

Brutal because the percentages are so low and the January reset is extremely cruel.

Underhanded because they have hidden the percentage they are paying by only telling us the absolute maximum percentage we can theoretically earn rather than anything like the real percentage.

And thick because they have lost a lot of content, and more than that given a lot of content to competitors that was exclusive to them (as we all look for other outlets to offset our losses). They have also had the opposite effect of their stated aim. Rather then motivating us to create more saleable content they have made all tiers pay less than before, and again MUCH worse come January. I am level six and even I have seen a BIG drop in revenue due to lower RPD.

They don;t have to go back on the general idea, they do have to do it in a better way.

« Reply #7 on: July 28, 2020, 10:01 »
+1
Their Wall street Stock is up 17% this morning. I am up 27% for this month ..I will sell today...

« Reply #8 on: July 28, 2020, 10:23 »
+9
Their Wall street Stock is up 17% this morning. I am up 27% for this month ..I will sell today...
Not surprising, the new structure was just them dipping their hands into our (already hurting) pockets to take money and put it into theirs, as insider shareholders. They have demonstrated to the market that they are prepared to strip the company bare to line shareholders pockets.


« Reply #9 on: July 28, 2020, 12:04 »
+6
I am waiting for Jo Ann Snover's analysis!


Whole bunch of tweets this morning. I'll write something more detailed once I can look at the earnings call transcript later

https://twitter.com/joannsnover/status/1288148695557402625

That's a highlight of how they've benefitted from slashing royalties in just one month of the quarter.

Their new investor focused "microsite" is a smoke & mirrors exercise - lots of pretty charts and ways to cast lower revenue as growth...

http://content.shutterstock.com/investor-report/index.html

There are tweets about some of their claims there, particularly this idea of selling data "insights"

https://twitter.com/joannsnover/status/1288134604705001473

All ways to make money on something they don't have to pay royalties on.

Enterprise continues to shrink but that's spun into some continuing "realignment"

blah, blah, blah...

Shelma1

« Reply #10 on: July 28, 2020, 12:12 »
+10
That video of Pavlovsky standing at his pool table in his multi-million-dollar house like a stiff cardboard cutout, reading stilted jargon-filled gobbledygook into the camera with a bad microphone with lots of echo, then awkwardly hitting his cue ball with that self-satisfied let-them-eat-cake smirk, tho...

« Reply #11 on: July 28, 2020, 15:09 »
+6
Unfortunately there is no number for content quality, however the decrease in assets should ring alarm bells for investors


Some alarm bells for contributers
- Focus on royalty restructuring
- focus on subscription
- focus on AI reviewing
- the hope that prosumer buyers will come in driven by low price

Guess this gravy train has ended, time to build somewhere else

« Reply #12 on: July 28, 2020, 16:08 »
+14
You can read the earnings call transcript here - it would be funny if it wasn't so serious for all of us.

https://www.fool.com/earnings/call-transcripts/2020/07/28/shutterstock-inc-sstk-q2-2020-earnings-call-transc.aspx

Some random thoughts on why SSTK closed at $51.06 today and the claims made in the earnings call.

Wall Street was happy at the profit numbers being so much higher than earlier guidance.

There's a new VP of Investor Relations - I guess that highlights where Stan Pavlovsky's attention is focused. Fire the reviewers and hire someone to sweet talk investors...

They claim over 340 million images - that doesn't include video and I don't see how they came up with that number. Not sure it matters as IMO the bigger story is the piles of junk they're adding to the collection. There is still some good stuff coming in, but when they were claiming 170k+ per day at the end of May and today it's 123k+ it's not good news. As I've mentioned in some tweets, a lot of searches I tracked at the end of May have many fewer images today, even though the collection numbers are up. I think the difference is image spam and stuff from newbies that should never have been accepted and will never sell.

They got lucky with an earnings boost from unused subscriptions as a result of the pandemic as well as our royalty cut (which was for only 1 month of the 3 in Q2) - buyers weren't downloading so Shutterstock didn't have to pay out royalties but kept the subscription revenue.

Stan's all eager puppy about  growing platform solutions - the most recent of which is the Microsoft ad deal. Yesterday Kate offered in the Shutterstock forums that what contributors would be paid was proprietary information but it wasn't the minimum subscription amount:

https://twitter.com/joannsnover/status/1287952508699082752

I can imagine their excitement at having more revenue sources (fees for the API deals) that don't involve paying royalties - i.e. contributors don't get a cut of any fees, only some subscription royalty when images are used.

Stan on the API integrations as a source of growth: "...we are redeploying capital into our platform solutions offering and undertaking significant global expansion of our sales and technical integration team"

I don't have a clue what this word salad means, but somehow I think Stan believes that Shutterstock gets to interact with the end user of images served up as part of ad placement deals. I don't see how that comes about. He said Shutterstock benefits "...because we are accessing our customer's customer, we expect these relationships to effectively open up new market segments for us" and that these customers are more likely to stay (customer retention & "stickiness")

They've fired reviewers and are using AI - looking at the content they could save money on the AI as there's so much dreck (you can look at twitter posts from @joannsnover for pictures)

They've put the best spin possible on the enterprise side of the business continuing to decline (blah blah about the new sales teams being in place): "We expect to always have some meaningful non-subscription component of our business, including editorial and custom but expect that it will become a minority of our revenues over time. " So don't count on bulking up contributor earnings with a return to large SOD royalties :)

I love "margin expansion" as a way of referring to cost cutting, but they can't goose profits for the "back half of the year" the same way they did this time - more royalty cuts? More "leftover" subscription revenue they keep?

"Subscribers increased 30% to 223,000." - I'm surprised it's that small a number given the boast of 2 million customers overall. Subscriber revenue averages $281 for Q2, or $1,124 per year (if the mix stays the same).

There was talk about acquisitions but nothing clear about what they might buy. This is from the CFO in reply to a question on M&A from an analyst who asked for "incremental color":

 "we believe that these are businesses that are often additive from a content-type perspective and may give us a leg-up with this specific type of content, give us access to a new contributor community. "

I wonder if the need for a new contributor community might be as a result of having royally ticked off large chunks of their existing contributor community?

The CFO went on to blather about tools & utilities a creative uses - meaning, I think, Canva-like design tools that make social media banners & ads easy to create. And he said they look at AI & machine learning for identification of content, performance of content. I assume this is all trying to help their API customers select images and track how they're doing.

One analyst asked about competition and which competitors they might eliminate - the answer was dancing around the subject (Stan didn't mention any competitors). "Integrating deeper" with customers and improving the "margin profile".

An analyst asked about whether the new video subscriptions had contributed to the subscription growth and the answer was they don't give details by product. Stan did say that the "prosumer" segment with smaller subscriptions is growing faster than the bigger subscriptions. Pavlovsky used the term "casual creatives" which I think means users of Canva-like products

Only one analyst, Lloyd Walmsley at Deutsche Bank, asked about "changes to the royalty payouts to contributors". Pavlovsky dodged the question, saying there were multiple things affecting gross margins "...including hosting costs of our data centers, content ingestion costs, credit card fees, royalties."

The CFO followed up with a note on the lower unit prices of subscription products "And we believe that the structure we have in place today enables that." I translate that to say that switching to a percentage basis with a 10 floor for subscription royalties allows them to heavily discount and still make money. He talks about gross margin "stability" and not to expect an increase in gross margins in Q3 & Q4 because price is the other variable. So they can keep their percentage of the take constant but don't expect the absolute numbers to jump up.

The CFO also claimed that their costs will be lower because there's less need to bring in net new customers, just to retain the ones they have. I think he too needs to look at the garbage they're accepting to anticipate a future attrition in subscribers because they can't find what they need.

The idea that Stan the clueless talks about "transitioning" to being a subscription business made me laugh. I think he means that they're not so focused on growing via the enterprise route, but it sounds as if he's forgotten how Shutterstock started

The buzzword-laden talk by Pavlovsky is worth a read just for a chuckle. Possibly it impresses the analysts??
« Last Edit: July 28, 2020, 17:57 by Jo Ann Snover »

« Reply #13 on: July 28, 2020, 16:14 »
+4
That video of Pavlovsky standing at his pool table in his multi-million-dollar house like a stiff cardboard cutout, reading stilted jargon-filled gobbledygook into the camera with a bad microphone with lots of echo, then awkwardly hitting his cue ball with that self-satisfied let-them-eat-cake smirk, tho...

That's because the man is as talentless as his management style

~ and a tosser  ;D

« Reply #14 on: July 28, 2020, 16:17 »
0
Unfortunately there is no number for content quality, however the decrease in assets should ring alarm bells for investors


Some alarm bells for contributers
- Focus on royalty restructuring
- focus on subscription
- focus on AI reviewing
- the hope that prosumer buyers will come in driven by low price

Guess this gravy train has ended, time to build somewhere else

Where is the focus on AI reviewing mentioned? I can't find that. Thanks.

« Reply #15 on: July 28, 2020, 16:31 »
+5
It feels like we are watching some kind of weird theatre show.

Throw out all kinds of cool buzzwords, keep a smokescreen about what is really happening, distract,distract,distract...pump and dump show.

But who is their mark?

Anyone really interested in investing in the stock industry will put their money in Adobe.

« Reply #16 on: July 28, 2020, 16:36 »
+5
Spending on administration is also down. 
Can I assume this is because they fired all of the image reviewers?  Or did they lay off all their staff during Covid?

Shelma1

« Reply #17 on: July 28, 2020, 17:05 »
+5
No more reviewers, no more customer service for contributors.

« Reply #18 on: July 28, 2020, 18:18 »
+5
Spending on administration is also down. 
Can I assume this is because they fired all of the image reviewers?  Or did they lay off all their staff during Covid?

What they said about cutting administrative costs by $7.2 million:

"The G&A decrease of $7.2 million is attributable to reductions in stock compensation and amortization expense, coupled with our global efforts around vendor elimination and renegotiation; overhead cost reductions and process automation; and enterprise software platform consolidation. Our efforts in this regard since the -- since the beginning of the year are beginning to shine through."

Not sure what the consolidation item would be for enterprise because we don't know much about how they work that side of the business. Reducing stock awards for employees is done by firing the employees (other choice is cutting the awards)?

Vendor elimination would be firing the offshore reviewers? Renegotiation would be cutting payments to any that remain?

In the forum post about the recent week-long breakage, Kate (admin) said on Monday "I've opened a ticket with our forum service provider. Hopefully they'll get back to me shortly" so that's outsourced too. The notion that the forum was down from Tuesday evening to Monday morning and Shutterstock only noticed when someone who had disabled JavaScript posted to ask about a fix just beggars belief. Did it really not occur to anyone to see why no one was posting anything??

In the earnings call Stan Pavlovsky thanked employees "I wanted to begin by thanking all of our Shutterstock employees who have effectively transitioned to working remotely and have been incredibly dedicated and focused during this time to offer continuity of service to our customers." A June 25 2020 Glassdoor post (titled "Stay away!!!!!!!!") mentioned continuous layoffs, but I assume some staff remain :)

Shelma1

« Reply #19 on: July 28, 2020, 18:34 »
+5
"...because we are accessing our customer's customer, we expect these relationships to effectively open up new market segments for us" and that these customers are more likely to stay (customer retention & "stickiness")

I don't see how they'll access their customer's customer. They'll be giving designers and art directors a quick tool to create ads for their clients...I don't think clients will create ads themselves. And if by some chance clients DO create ads themselves they won't need the designers and art directors any more, which means those people will no longer be licensing as many images because they'll lose business from their customers, which would be a wash.

« Reply #20 on: July 28, 2020, 23:18 »
+2
Thank you for the posts specially to Jo Ann who describe some points in detail. What I get out of this is STAY OUT of this ghost town or you contributors before it is too late and focus your efforts on agencies that have respect for you and your work. You always have to watch out, others that are now respected might go this route (As SS and Getty did), this is a hard core business and always do what is in your best term (and better not short term but medium long) All the writing is on the wall. It is us to decide what we do with out hard to get/produce content.

I am surely not given mine to this bongheads ( I specially dislike by how they have conducted themselves Mr Oringer and Pavlovsky). Good luck to all the ones that stay with them. They will surely need it.

« Reply #21 on: July 29, 2020, 02:35 »
0
It feels like we are watching some kind of weird theatre show.

Keeping up appearances

Quote
No more reviewers, no more customer service for contributors.

I think in Shutterstocks case this is a good thing. Their (human) reviewers seem to have their own agenda and like to play games so good riddance! Of course Im not uploading there anymore so not much use to me anyway.

I would prefer no contributor support over what people get now. Their replies always felt like an SS commercial. They rarely solve problems, its just more promo talk for SS.

So yes I feel AI would be an improvement in SS case since their humans seem to malfunction  ;)

« Reply #22 on: July 29, 2020, 02:53 »
+3
Unfortunately there is no number for content quality, however the decrease in assets should ring alarm bells for investors


Some alarm bells for contributers
- Focus on royalty restructuring
- focus on subscription
- focus on AI reviewing
- the hope that prosumer buyers will come in driven by low price

Guess this gravy train has ended, time to build somewhere else

Where is the focus on AI reviewing mentioned? I can't find that. Thanks.
Got this off jo ann's twitter, second para top line

csm

« Reply #23 on: July 29, 2020, 03:52 »
0
Unfortunately there is no number for content quality, however the decrease in assets should ring alarm bells for investors


Some alarm bells for contributers
- Focus on royalty restructuring
- focus on subscription
- focus on AI reviewing
- the hope that prosumer buyers will come in driven by low price

Guess this gravy train has ended, time to build somewhere else

Where is the focus on AI reviewing mentioned? I can't find that. Thanks.
Got this off jo ann's twitter, second para top line

I seriously wonder how much new images sell.
A sunset, some rocks a meadow, surely they have all these subjects already, if they were exceptional they might stand a chance, but with the amount of similars I doubt it. I`t a waste of contributors time, and a waste of storage.

So they are getting 130 000 images a day roughly.
How many stand out images out of all that.
I was once with an agency that received 5000 images a day and they didn't keep all of that, I wish they'd be a bit more picky about what they keep but I know that will never happen.

So now I say let them accept everything and lets hope buyers see that too and look elsewhere where its easier to find quality images.

Noedelhap

  • www.colincramm.com

« Reply #24 on: July 29, 2020, 04:45 »
+8
From what I read and hear Shutterstock has adopted the approach of cutting down on excess spending (automation, lower royalty payout) to counter the lack of actual growth in subscriber revenue and high quality images.

Sure, they're making more profit for the time being, but not because their product/offering or customer demand has improved. Cutting costs will only delay the crash, but not prevent it.

This quarterly report they can compare progress to the 2nd quarter of 2019, so the immediate impact of their failures are not yet visible in the financial numbers. But I think the next quartertly and annual reports will paint a much clearer (and dire) picture of where they're heading. They can mask it with fancy numbers and fluff talk all they want, but I believe investors are smart enough to see past that.
« Last Edit: July 29, 2020, 04:49 by Noedelhap »


 

Related Topics

  Subject / Started by Replies Last post
55 Replies
9467 Views
Last post November 22, 2012, 01:41
by RacePhoto
2 Replies
2218 Views
Last post November 09, 2013, 16:58
by Pauws99
14 Replies
13721 Views
Last post May 10, 2014, 03:10
by BaldricksTrousers
7 Replies
2519 Views
Last post May 07, 2015, 14:17
by Semmick Photo
37 Replies
8188 Views
Last post November 04, 2017, 20:38
by Mantis

Sponsors

Mega Bundle of 5,900+ Professional Lightroom Presets

Microstock Poll Results

Sponsors

3100 Posing Cards Bundle