Shutterfly (NASDAQ: SFLY) is expected to publish its Q1 2019 results on April 25. After delivering a strong performance in FY 2018, the market expects the online photo company to post a quarterly loss of $2.54 per share, while revenues are expected to be $323 million, up 61.8% from the year-ago quarter.
We have summarized our full year expectations for SFLY based on the company’s guidance and our own estimates, in our interactive dashboard How Is Shutterfly Likely To Have Fared In Q1? You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see more Trefis Internet & Software Services Data here. Below we highlight some of the key historical trends and key revenue drivers that are likely to impact Shutterfly’s future performance:
What drove changes to Shutterfly’s revenues in recent quarters and what can we expect in Q1?
- Shutterfly’s revenue has trended upwards over the recent quarters, increasing from $200 million in Q1 2018 to $950 billion in Q4 2018.
- The growth was driven by the better-than-expected performance from the Lifetouch acquisition and strong performance of its Business Solutions segment.
- The increasing trend in expected to continue in Q1, with revenues growing to $323 million, up 61.8% from the year-ago quarter.
- The Lifetouch acquisition will continue to drive top-line growth for Shutterfly in Q1.
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How have SFLY’s expenses changed over recent quarters and what can we expect in Q1?
- Total expenses for Shutterfly have trended upwards over recent quarters, growing from $108 million in Q1 2018 to $314 million in Q4 2018.
- This growth has been driven by higher integration costs related to the Lifetouch acquisition and higher personnel expenses.
- We expect the increasing trend to continue in Q1 2019 as the company continues to make technology investments to expand its product and category range. Moreover, integration costs coupled with costs related to Project Aspen will likely add to the operating expenses.
Which are the key revenue drivers to watch out for in SFLY’s Q1 results?
- Shutterfly acquired Lifetouch, a national leader in school photography, in April 2018 for $825 million.
- Lifetouch added $799 million of non-GAAP revenue in 2018 driven by strong performance in schools and preschools.
- Lifetouch is expected to continue to drive top-line growth for Shutterfly in Q1, with management expecting Lifetouch Q1 revenue to range from $126 million to $230 million.
Shutterfly Business Solutions (SBS)
- SBS provides personalized direct marketing and other end-consumer communications as well as just-in-time, inventory-free printing to Shutterfly’s customers.
- SBS grew revenues by 19% in 2018 to $231 million, driven by higher than expected volumes from existing customers.
- The company expects SBS net revenue to range from $45 million to $48 million in Q1 2019, a 2.5% decline from the year-ago quarter.
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