Whether or not you are the consummate shutterbug, you can rely on Shutterfly for digital prints. An e-commerce company specializing in digital photo products and services for the consumer and professional photography markets, the company offers customers the ability to upload, share, store, and edit digital photos through its website. In addition to traditional 4-inch by 6-inch prints, Shutterfly provides prints ranging from wallet-sized to jumbo enlargements. The company also offers personalized items including mugs, photo books, and calendars through its personalized products and services business segment. In 2012 Shutterfly acquired Kodak Imaging Network (doing business as KODAK Gallery).
The company purchased the online photo service of bankrupt photography company Eastman Kodak for nearly $24 million. Shutterfly made the deal to acquire Kodak's 75 million customers in the US and Canada. The purchase is helping it gain an even larger share of the online photo market, which it shares with rivals such as Hewlett Packard's Snapfish, and American Greetings' Photoworks and Webshots brands.
The deal comes after Shutterfly reported positive earnings in 2011. It earned revenue of $473.3 million, and income of $35.4 million. These results were due to an increase in customers and orders, combined with strong financial discipline. Customers for the year totaled more than 4.8 million (up from about 4 million in 2010), while orders equaled about 11.2 million (up from about 9.2 million in 2010). The average order in 2011 remained flat, at about $33. The company also owes its success to investing in its personalized product line. In 2011 it reported an increase in sales of photo books and greeting and stationery cards.
The KODAK Gallery deal represents Shutterfly's efforts to grow all areas of the business through a steady stream of targeted acquisitions. It also acquired Penguin Digital in 2012. Penguin Digital is a mobile application developer that provides consumers with a way to create, share, and purchase photo merchandise directly from a mobile device.
In 2011 the company acquired personalized card and stationery seller Tiny Prints for $146.5 million in cash and about 4 million shares of common stock. Shutterfly made the deal to enhance efficiencies in product innovation, merchandising, manufacturing, customer service, and marketing. And in late 2010 Shutterfly enhanced its commercial printing services through the purchase of WSMG, a digital direct marketing agency based in Dallas. Shutterfly is integrating WSMG's data management and marketing analytics capabilities with its own manufacturing and printing operations.
Shutterfly makes more than half its revenues during the fourth quarter of the year due to holiday sales. Sales of 4x6 prints account for about 7% of revenues. The company makes additional money through advertising -- clients such as Sony, ABC, AT&T, Universal Music, and Proctor & Gamble have advertised on its website. Revenues from ads and sponsorship are included in the company's personalized products and services segment. Shutterfly also provides commercial printing services, primarily to the direct marketing industry, though that business accounts for only 3% of sales.
The company was founded in 1999 and was funded in part by Silicon Valley icon Jim Clark, a co-founder of Netscape Communications. The company went public in a 2006 IPO. – less