May 16th, 2012

Shutterstock IPO Prospectus Reveals Market Value of Stock Photos

Microstock photo agency Shutterstock has filed a business prospectus with the Securities and Exchange Commission, announcing its intention to sell shares through an initial public offering “as soon as practicable.” The filing sheds light on Shutterstock’s revenues, and the surprisingly low average price for the millions of photos in its database.

The business prospectus is incomplete, so Shutterstock has not yet specified the number of shares it intends to sell or the price. But for the purposes of its filing the company estimated it would raise no more than $115 million.

Founded eight years ago by CEO (and majority shareholder) Jonathan Oringer, Shutterstock was one of the first microstock agencies to offer subscription-based pricing. That allows users to download up to 25 images per day for a flat fee of $250 per month, or $2559 per year. Users can also license image on demand, for prices starting at about $10 per image.

Last year, Shutterstock’s total sales revenues were $120 million, a 45 percent increase over 2010 revenues of $83 million and nearly double the 2009 revenues of $61 million. The average price users paid per image download last year was $2.05, according to Shutterstock’s SEC filing.

Meanwhile, net income–which is income after administrative, marketing, and research and development costs are subtracted from total revenues–has hovered around $20 million for the past three years. Income has remained relatively flat despite the rise in revenues because Shutterstock’s operating costs have increased by about 50 percent per year since 2009. Operating costs were $97 million last year.

The company says it plans to use the IPO money for operations. Shutterstock says it plans to invest in new technology, and in its sales and marketing efforts to attract more contributors and customers. Most customers are small and medium-sized businesses, but Shutterstock says it hasn’t fully tapped that market. It also wants to increase revenues from large businesses, which currently account for just 10 percent of its revenues.

Shutterstock claims an image database of more than 19 million photos and illustrations and 500,000 video clips, provided by more than 35,000 contributors. The vast majority of contributors are amateur photographers.