Shutterfly, Inc.(NASDAQ: SFLY) delivered a fourth quarter of 2017 net revenues of $593.8 million, driven by consumer as well as SBS. The consumer segment was flat on a year-over-year basis, driven by a healthy performance of Shutterfly brands like-for-like growth as well as a better than expected retention of revenue and customers from Tiny Prints, Wedding Paper Divas, and MyPublisher. As a result, the stock surged over 20% on Jan 31st, 2018 (as of 11:38AM EST; Source: Google finance) leading to a total rise of around 49.8% in the last three months.
Moreover, the group’s platform consolidation initiative was also a major contributor to the fourth quarter performance. The group is also restructuring their consumer business which includes simplifying their brand portfolio over the course of 2017, creating a Tiny Prints boutique on a dedicated tab on Shutterfly.com, and shutting down the legacy Tiny Prints, Wedding Paper Divas, and MyPublisher websites while encouraging those customers to migrate to Shutterfly.com.
The group’s Mobile business was better than expectations in the fourth quarter, which rose 465 basis points to 21% of Shutterfly brand revenue. Major contributors for App revenue were cards and stationery and personalized gifts and home décor which were representing over 60% of app revenue in the fourth quarter.
The group launched more than 40 new products in the app during 2017. During the quarter, over one million app downloads and increased new to app customers by 54% year-over-year. Shutterfly.com platform rose 27% year-over-year driven by Tiny Prints boutique revenues as well as from higher year-over-year purchases of Shutterfly brand products by customers migrating from legacy websites.
SBS revenue reached $71.9 million during the fourth quarter leading to the full-year growth rate to 41% boosted by the major multi-year deal they signed in the third quarter with a current technology client. But he early phases of this deal is lower margin while the group sees a better opportunities to improve on these margins in 2018.
For 2018, the group would be launching two new categories kids and pets, while continue to add to the personalized gifts and home décor range. The group is aiming to double the number of new products launched in 2018 against 2017