Acquisition of Envato
May 2, 2024
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Forward Looking Statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding guidance, industry prospects, future business, future results of operations or financial condition, new or planned features, products or services, management strategies and our competitive position. You can identify forward-looking statements by words such as "may," "will," "would," "should," "could," "expect," "aim," "anticipate," "believe," "estimate," "intend," "plan," "predict," "project," "seek," "potential," "opportunities" and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, uncertainties as to the timing to purchase (the "Acquisition") all of the issued and outstanding capital stock of Envato Pty Ltd. ("Envato"); the risk that a condition to closing the Acquisition may not be satisfied; potential litigation relating to the Acquisition that could be instituted; the effects of disruption to our or the target's respective businesses; the impact of transaction costs; our ability to achieve the benefits from the Acquisition; our ability to effectively integrate the acquired operations into our operations following the Acquisition; our ability to retain and hire key target personnel; and the effects of any unknown liabilities; and the risks discussed under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other documents that the Company may file from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, Shutterstock's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. The forward-looking statements contained in this presentation are made only as of this date and Shutterstock assumes no obligation to update the information included in this presentation or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.
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+
"Empowering the world to tell
their stories by bridging the gap "Empowering creators to thrive" between idea and execution"
Compelling Strategic Rationale for Acquiring Envato
Adds Envato Elements, a leading unlimited multi-asset content subscription, to Shutterstock's product portfolio
Expands Shutterstock's reach within faster growing audiences
such as freelancers, hobbyists, small businesses and agencies
Enhances content breadth & depth for the benefit of both content and data customers, with 80%+ of Envato's downloads attributable to video, audio, graphics, fonts and templates
Attractive subscription-based business model adding 650k
subscribers
Financially accretive transaction aligned with Shutterstock's
M&A strategy
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Envato Elements Fills a Key Gap in Shutterstock's Product Portfolio
Packs
Transactional
✔ Suited for episodic needs |
✔ Most extensive collection |
of video, image, audio and |
Unlimited Creative Subscription
Access to Multiple Content Types with a
Single Subscription
Videos Audio Templates
Graphics
Subscriptions
Fixed monthly allotment
of downloads
- Suited for recurring
needs
editorial content, including |
premium content |
& Fonts
3D Images
✔ Most extensive collection |
of video, image, audio and |
Attractive Value Proposition Especially for
Individuals and Smaller Companies
Annual Subs Priced at
$16.50/month
for unlimited content
editorial content, including |
premium content |
- Subscription product limited to single asset type
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Envato Elements Expands Shutterstock's Reach Within Faster Growing Audiences
Envato Benefits from Demand Tailwinds Driving the Growth in Stock Content
Advent of the Creator | Growth in Digital | Proliferation of Social | Digital Adoption by Small |
Economy | Marketing | Media | Businesses |
50 Million | 11% CAGR | 4.9 Billion | 33 Million |
Individual Content Creators, | Growth in Digital Ad Spending | Global Social Media Users | Small Businesses in the US Alone |
including social media | (2023-2028) | in 2023 | (<500 Employees) |
influencers, bloggers and | |||
videographers |
Sources: SignalFire's "Creator Economy Market Map"; eMarketer's Digital Ad Spending Forecast; Statista's "Number of social media users worldwide from 2017 to 2027"; US Chamber of Commerce's "The State of Small Business Now"
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Elements Expands Content Breadth & Depth with a Focus on Video, Audio, Graphics, Fonts and Templates
Selective Author Base
8,000 | 600k+ |
Elements | Content Items |
Authors | Reviewed |
Monthly |
5%
Author
Approval Rate
Curated Library
6M Videos | 1M Audio |
0.5M Templates 0.2M Graphics & Fonts
0.3M 3D | 10M Images |
80%+ Weighted Towards Video,
Audio, Graphics and 3D
2023 Downloads by Content Type
5%
3D & Other
Images
Graphics
& Fonts
AudioVideo
Graphics
3D &
Other
Note: 3D assets provided by PixelSquid
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Recurring Revenue Powered by Elements Subscriptions
8 million | 56% | 2x | 36 |
Monthly Unique | Annual Subscriptions | Annual Subs LTV / | Average Downloads |
Visitors | as a % of Total | Monthly Subs LTV | Per Subscriber per |
Subscription | Month | ||
Revenue | |||
Growing top-of-funnel | Annual subs pay | Higher retention rates | Highly engaged user |
traffic, synergistic with | upfront and are more | for annual subs offset | base |
Shutterstock's traffic | retentive | lower ARPU |
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Financially Accretive Transaction Aligned with M&A Strategy
Transaction reflects an attractive purchase price supported by low cost financing
Attractive
Purchase Price
Efficient
Financing
Strong Financial
Profile
Raising
Guidance
Expected
Timeline
- Approximately $245 million purchase price after customary working capital and other adjustments
- 1.4x revenues and 7x EBITDA purchase price multiple
- 100% acquisition of Envato Pty Ltd payable in cash at closing
- $375 million unsecured credit facility with attractive 6.7% interest rate
- Expected drawn leverage of 0.7x net debt / 2024 combined adjusted EBITDA
- Financing from Bank of America, Citigroup, Wells Fargo and Citizens
- Expected revenue growth of 5% to 7%, in line with stock content industry
- 20% adjusted EBITDA margins with strong FCF conversion
- Consistent growth business with strong profitability throughout operating history
- Shutterstock + Envato Guidance: 2024 revenue growth of 5.5% to 7%
- Expected to accelerate path to Shutterstock 2027 targets adding 20% to annual revenue and 15% to annual adjusted EBITDA
- Expected transaction closing in Q3 2024, subject to customary closing conditions
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Key Takeaways - Transformative Impact to Shutterstock's Content Business
Fills a Gap in
Shutterstock's
Existing Offering
- New product - access to multiple content types in a single unlimited subscription, at an attractive price point
- Faster growing audiences - including freelancers, hobbyists, small businesses and agencies
- Breadth of content types - focus on Video, Audio, Graphics, Fonts, Templates and Mock-ups
More than Doubles Subscriber Count
1.15mm
650k Envato
499k
499k Shutterstock
Before After
Further Diversifies Content Revenue
Revenue from Videos, Audio, Graphics, 3D & Templates as % of Total Content Revenue
35%45%
2023 | 2024E Pro |
Forma |
Notes: Envato subscriber count includes both Elements and PlaceIt subscribers. 2024 pro forma figures are estimates for full year of Envato ownership.
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Disclaimer
Shutterstock Inc. published this content on 02 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 11:51:35 UTC.