Shutterfly Earnings Preview: Earnings Could Be Narrower Than Expected

Shutterfly (NASDAQ:SFLY) is scheduled to report earnings on July 27th. Due to the cyclical nature of the business, the company tends to make losses in the first three quarters of the years. The final quarter helps recover a large portion of these losses. Last quarter, it managed to perform better than expected as a higher top line helped reduced losses. That said, we expect the company to have narrower losses than the preceding quarter.

Key Highlights:

• Shutterfly boasts of a variety of easy to use products that really have a knack of selling themselves. Moreover, the company worked hard last year to improve and open new manufacturing facilities to accommodate the growing business. With strategic acquisitions, the company has enabled newer and improved product and mix that has helped bolster revenues, especially in the last year. Furthermore, Shutterfly has worked hard to broaden its mobile e-commerce platform.
• That being said, Shutterfly’s expansion plans could dampen earnings in the coming quarters. Expenses are bound to increase as the company will have to now consider added depreciation and equipment costs.
• The company faces a great deal of competition from tech companies like Facebook and Alphabet. Both companies have been stiffly pursuing a variety of strategic acquisitions in the internet and technology space and, unfortunately for Shutterfly, both companies have adequate funds and knowledge to leverage the buyouts. Such competition is increasingly eating into the company’s marketshare.

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