10q10k10q10k.net

What changed in Shutterstock, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Shutterstock, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+367 added−326 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-26)

Top changes in Shutterstock, Inc.'s 2024 10-K

367 paragraphs added · 326 removed · 258 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

37 edited+12 added−11 removed101 unchanged
Biggest changeWe have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training. We offer ethically sourced and licenseable metadata at industry leading scales and quality. Our metadata customer base ranges from large technology and media companies to smaller start-up organizations. In 2023, we completed our acquisition of Giphy, Inc. (“Giphy”).
Biggest changeThese products and services include, among other things, the use of our metadata, leveraging our Giphy, Inc. platform, and customized Shutterstock Studios offerings. We have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training. We offer ethically sourced and licenseable metadata at industry leading scales and quality.
Over the past several years, our investments in marketing have represented a significant percentage of revenue. This spend considers, among other things, the blended average customer value across our various purchase options so we can manage customer acquisition costs and aim to achieve targeted returns.
Over the past several years, our investments in marketing have represented a significant percentage of revenue. This spend considers, among other things, the blended average customer value across our various purchase options so we can manage customer acquisition costs and aim to achieve targeted returns.
A number of U.S. federal and state and foreign laws that could have an impact on our business practices and e-commerce generally have already been adopted, including, for example: • The Digital Millennium Copyright Act (the “DMCA”), which regulates digital material and created updated copyright laws to address the unique challenges of regulating the use of digital content. • The Directive on Copyright in the Digital Single Market, which governs a marketplace for copyright in the European Union. • The Digital Services Act, which governs the operation of online services in the European Union. 10 Table of Contents • The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 and similar laws adopted by a number of states, which regulate the format, functionality and distribution of commercial solicitation e-mails, create criminal penalties for unmarked sexually-oriented material, and control other online marketing practices. • The Children’s Online Privacy Protection Act and the Prosecutorial Remedies and Other Tools to End Exploitation of Children Today Act of 2003, which regulate the collection or use of information, and restrict the distribution of certain materials, as related to certain protected age groups.
A number of U.S. federal and state and foreign laws that could have an impact on our business practices and e-commerce generally have already been adopted, including, for example: • The Digital Millennium Copyright Act (the “DMCA”), which regulates digital material and created updated copyright laws to address the unique challenges of regulating the use of digital content. • The Directive on Copyright in the Digital Single Market, which governs a marketplace for copyright in the European Union. • The Digital Services Act, which governs the operation of online services in the European Union. • The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 and similar laws adopted by a number of states, which regulate the format, functionality and distribution of commercial solicitation e-mails, create criminal penalties for unmarked sexually-oriented material, and control other online marketing practices. 11 Table of Contents • The Children’s Online Privacy Protection Act and the Prosecutorial Remedies and Other Tools to End Exploitation of Children Today Act of 2003, which regulate the collection or use of information, and restrict the distribution of certain materials, as related to certain protected age groups.
Contributors upload their content to our web properties in exchange for royalty payments based on customer download activity. Beyond content, customers also leverage the Company’s platform to assist with the entire creative process from ideation through creative execution. Digital content licensed to our customers for their creative needs includes images, footage, music, and 3D models (our “Content” offering).
Contributors upload their content to our web properties in exchange for royalty payments based on customer download activity. Beyond content, customers also leverage our platform to assist with the entire creative process from ideation through creative execution. Digital content licensed to our customers for their creative needs includes images, footage, music, and 3D models (our “Content” offering).
These events could dampen growth in the use of the internet in general, and cause Shutterstock to divert significant resources and funds to addressing these issues, and possibly require us to change our business practices. 11 Table of Contents Competition We seek to be an integral component of the creative process for our customers based on a number of factors including the quality, relevance and breadth of content; ability to source new content; accessibility of content; distribution capabilities; ease and speed of search and fulfillment; content pricing models and practices; content licensing options and the degree to which users are protected from legal risk; brand recognition and reputation; the effective use of current and emerging technology; the global nature of our interfaces and marketing efforts, including the degree of localization; and customer service.
These events could dampen growth in the use of the internet in general, and cause Shutterstock to divert significant resources and funds to addressing these issues, and possibly require us to change our business practices. 12 Table of Contents Competition We seek to be an integral component of the creative process for our customers based on a number of factors including the quality, relevance and breadth of content; ability to source new content; accessibility of content; distribution capabilities; ease and speed of search and fulfillment; content pricing models and practices; content licensing options and the degree to which users are protected from legal risk; brand recognition and reputation; the effective use of current and emerging technology; the global nature of our interfaces and marketing efforts, including the degree of localization; and customer service.
Our Content revenues represent the majority of the Company’s business and are supported by our searchable creative platform and driven by our large contributor network. In addition, our customers have needs that are beyond traditional content license products and services.
Our Content revenues represent the majority of our business and are supported by our searchable creative platform and driven by our large contributor network. In addition, our customers have needs that are beyond traditional content license products and services.
Customers can generate images by entering a description of their desired content into model prompts. Our Content is distributed to customers under the following brands: Shutterstock; Pond5; TurboSquid; PicMonkey; PremiumBeat; Splash News; Bigstock; and Offset. Shutterstock, our flagship brand, includes various content types such as image, footage, music and editorial.
Customers can generate images by entering a description of their desired content into model prompts. Our Content is distributed to customers under the following brands: Shutterstock; Envato; Pond5; TurboSquid; PicMonkey; PremiumBeat; Splash News; Backgrid; Bigstock; and Offset. Shutterstock, our flagship brand, includes various content types such as image, footage, music and editorial.
Our license agreements generally cap our indemnification obligations at amounts ranging from $10,000 to $250,000, with exceptions for certain products for which our indemnification obligations may be uncapped. We maintain commercially reasonable insurance intended to protect against the costs of intellectual property litigation and our indemnification obligations under our license agreements.
Our license agreements generally cap our indemnification obligations at amounts ranging from $10,000 to $250,000, with exceptions for certain products for which our indemnification obligations may be uncapped. We maintain commercially 10 Table of Contents reasonable insurance intended to protect against the costs of intellectual property litigation and our indemnification obligations under our license agreements.
The information on or accessible through our websites is not incorporated by reference into this Annual Report on Form 10-K. In addition, the SEC maintains a website, www.sec.gov, that includes filings of and information about issuers that file electronically with the SEC. 13 Table of Contents
The information on or accessible through our websites is not incorporated by reference into this Annual Report on Form 10-K. In addition, the SEC maintains a website, www.sec.gov, that includes filings of and information about issuers that file electronically with the SEC. 14 Table of Contents
Our top 25 customers in the aggregate accounted for less than 20% of our revenue in 2023. Our customers are typically classified among three categories, as follows: • Corporate Professionals and Organizations. Marketing and communications professionals incorporate licensed content in the work they produce for their organizational or clients’ business communications.
Our top 25 customers in the aggregate accounted for less than 20% of our revenue in 2024. Our customers are typically classified among three categories, as follows: • Corporate Professionals and Organizations. Marketing and communications professionals incorporate licensed content in the work they produce for their organizational or clients’ business communications.
Thirteen other states have passed comprehensive data privacy laws, which are in effect today or taking effect by 2026. In addition, from a taxation perspective, there are applicable and potential government regulatory matters that may impact us.
Sixteen other states have passed comprehensive data privacy laws, which are in effect today or taking effect by 2026. In addition, from a taxation perspective, there are applicable and potential government regulatory matters that may impact us.
Contributors are notified within the contributor portal when a content submission is not approved during the review process. This notification includes an 7 Table of Contents explanation of why the image was not selected for publication. We believe that this feedback is valuable to contributors and enhances the quality of future content submissions as well as our customers’ experience.
Contributors are notified within the contributor portal when a content submission is not approved during the review process. This notification includes an explanation of why the image was not selected for publication. We believe that this feedback is valuable to contributors and enhances the quality of future content submissions as well as our customers’ experience.
Customers are also able to access content they have purchased through a live interaction or as part of a large global business license option via our self-serve digital properties. • Live Sales, Services and Client Management: We also have a base of customers with unique content, licensing, workflow and service needs.
Customers are also able to access content they have purchased through a live interaction or as part of a large global business license option via our self-serve digital properties. 7 Table of Contents • Live Sales, Services and Client Management: We also have a base of customers with unique content, licensing, workflow and service needs.
We continually improve upon these internal tools to enable business growth and drive efficiency. 8 Table of Contents Our systems infrastructure is hosted primarily by third-party cloud hosting providers that we believe offer scalable, reliable and secure global infrastructure. We also continue to invest in our infrastructure to improve the resiliency of our sites and systems.
We continually improve upon these internal tools to enable business growth and drive efficiency. Our systems infrastructure is hosted primarily by third-party cloud hosting providers that we believe offer scalable, reliable and secure global infrastructure. We also continue to invest in our infrastructure to improve the resiliency of our sites and systems.
Contributors earn royalties based on a tiered earnings rate schedule that is tied to annual licensing volume. The earnings tier of the contributor at the time of licensing, as well as the purchase option under which the content was licensed, are used to calculate the royalty earnings for each licensing event.
Contributors earn royalties based on a tiered earnings rate schedule that is tied to annual licensing volume. The earnings tier of the contributor at the time of licensing, as well as the purchase option under which the content was licensed, are used to calculate the royalty earnings for each licensing 8 Table of Contents event.
Whether photographers, videographers, illustrators, designers or musicians, our community of contributors ranges from part-time enthusiasts to full-time professionals. The content contributed by our five highest-earning contributors was together responsible for less than 2% of downloads in 2023, demonstrating the depth and diversity of our contributor population.
Whether photographers, videographers, illustrators, designers or musicians, our community of contributors ranges from part-time enthusiasts to full-time professionals. The content contributed by our five highest-earning contributors was together responsible for less than 3% of downloads in 2024, demonstrating the depth and diversity of our contributor population.
We enable users to search and discover content to meet their unique needs by searching our collection and previewing our content alongside its propensity to perform 5 Table of Contents and global utilization, at no cost prior to licensing.
We enable users to search and discover content to meet their unique needs by searching our collection and previewing our content alongside its propensity to perform and global utilization, at no cost prior to licensing.
Our Customers We serve a diverse array of customers across a variety of industries, organizational sizes and geographies. For the year ended December 31, 2023, over 2.0 million customers in more than 150 countries licensed revenue-generating content, with approximately 49%, 26% and 25% of revenue coming from customers in North America, Europe and the rest of the world, respectively.
Our Customers We serve a diverse array of customers across a variety of industries, organizational sizes and geographies. For the year ended December 31, 2024, over 4.0 million customers in more than 150 countries licensed revenue-generating content, with approximately 51%, 26% and 23% of revenue coming from customers in North America, Europe and the rest of the world, respectively.
Human Capital The Company and its consolidated subsidiaries have 1,274 full-time employees as of December 31, 2023, as compared to 1,328 as of December 31, 2022. Approximately 63% of our global workforce is located in North America and 32% are located in Europe with the remainder located in the rest of the world.
Human Capital The Company and its consolidated subsidiaries have 1,715 full-time employees as of December 31, 2024, as compared to 1,274 as of December 31, 2023. Approximately 57% of our global workforce is located in North America and 23% are located in Europe with the remainder located in the rest of the world.
Provided that a customer has not breached the license agreement or any other agreement with us, we will defend, indemnify, and hold a customer harmless from direct damages attributable to breaches of the express 9 Table of Contents representations and warranties provided in our license agreements.
Provided that a customer has not breached the license agreement or any other agreement with us, we will defend, indemnify, and hold a customer harmless from direct damages attributable to breaches of the express representations and warranties provided in our license agreements. From time to time, we agree to customize our license agreements with non-standard indemnification terms.
We typically offer a royalty-free, non-exclusive license, and the processes we maintain to properly license content and the indemnification protections we provide allow individuals and businesses of all sizes, including media agencies, publishers, production companies and creative service providers, to confidently utilize such content for their unique commercial or editorial needs.
We typically offer a royalty-free, non-exclusive license, and the processes we maintain to properly license content and the indemnification protections we provide allow individuals and businesses of all sizes, including media agencies, publishers, production companies and creative service providers, to confidently utilize such content for their unique commercial or editorial needs. 6 Table of Contents Our online platform provides a freely searchable collection of content that our users can license, download and incorporate into their work.
We believe continued use of third-party cloud hosting, along with improvements to our platform, allow us to further diversify our product offerings, reach new customers and contributors around the world and enable our developers to rapidly deploy new products, features and functionality.
We believe continued use of third-party cloud hosting, along with improvements to our platform, allow us to further diversify our product offerings, reach new customers and contributors around the world and enable our developers to rapidly deploy new products, features and functionality. 9 Table of Contents We have expanded our use of content delivery network solutions to help enable our customers around the world to have sustained and reliable high-speed access to our platform.
Finally, our Data, Distribution,and Services results will fluctuate from quarter to quarter based on the satisfaction of certain agreed to milestones with our customers In addition, expenditures on content by customers tend to be discretionary in nature, reflecting overall economic conditions, the economic prospects of specific industries, budgeting constraints, buying patterns and a variety of other factors, many of which are outside our control.
Expenditures on content by customers tend to be discretionary in nature, reflecting overall economic conditions, the economic prospects of specific industries, budgeting constraints, buying patterns and a variety of other factors, many of which are outside our control.
Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”). Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets. Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution.
We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet. Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”). Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets.
Our Offset brand provides authentic and exceptional content for high-impact use cases that require extraordinary images, featuring work from top assignment photographers and illustrators from around the world.
Bigstock maintains a separate content library tailored for creators seeking to incorporate cost-effective imagery into their projects. Our Offset brand provides authentic and exceptional content for high-impact use cases that require extraordinary images, featuring work from top assignment photographers and illustrators from around the world.
Customers have the flexibility to purchase a subscription-based plan that is paid on either a monthly or annual basis, or to license content on a transactional basis via these properties. Customers who engage and buy exclusively via self-serve digital properties generally license content under our standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs.
Customers who engage and buy exclusively via self-serve digital properties generally license content under our standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs.
Pond5 is a video-first content marketplace which expands the Company’s content offerings across footage, image and music. TurboSquid operates a marketplace that offers more than one million 3D models and a 2 dimensional (“2D”) marketplace derived from 3D objects. PicMonkey is a leading online graphic design and image editing platform.
Envato, which was acquired by the Company on July 22, 2024, also offers a variety of digital assets and templates. Pond5 is a video-first content marketplace which expands the Company’s content offerings across footage, image and music. TurboSquid operates a marketplace that offers more than one million 3D models and a 2 dimensional (“2D”) marketplace derived from 3D objects.
As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indicators of our future operating performance.
As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indicators of our future operating performance. Additionally, our Data, Distribution, and Services results will fluctuate from quarter to quarter based on the timing of delivery of large metadata sets in our Data business.
We offer a whole spectrum of services at pre-production, production, live production and post-production stages. Our Marketplace: We believe that we benefit from scale and network effects between customers and contributors. We have managed to build a world class library of images, footage clips, music and 3D models, sourced from our vast network of contributors.
Slides, PowerPoint, Keynote, WordPress, video, designs for social posts, gaming, podcasts and print-on-demand). Our Marketplace We believe that we benefit from scale and network effects between customers and contributors. We have managed to build a world class library of images, footage clips, music and 3D models, sourced from our vast network of contributors.
For customers seeking specialized solutions, Shutterstock Studios extends our offerings by providing custom, high-quality content matched with production tools and services at scale, leveraging assets from all brands or creating new assets as required. In 2023, we launched our AI image creator and Creative AI-powered editing tool which gives our customers the ability to modify and transform any image.
For customers seeking specialized solutions, Shutterstock Studios extends our offerings by providing custom, high-quality content matched with production tools and services at scale, leveraging assets from all brands or creating new assets as required. Our Data, Distribution, and Services Offering Our Data, Distribution, and Services offering addresses customer demand for products and services that are beyond our Content licenses.
Customers generally engage with us through the following sales channels: 6 Table of Contents • Digital: The majority of our customers access and/or license content directly through our self-service digital properties.
Customers generally engage with us through the following sales channels: • Digital: The majority of our customers access and/or license content directly through our self-service digital properties. Customers have the flexibility to purchase a subscription-based plan that is paid on either a monthly or annual basis, or to license content on a transactional basis via these properties.
PremiumBeat offers exclusive high-quality music tracks and provides producers, filmmakers and marketers the ability to search handpicked production music from the world’s leading composers. Splash News provides editorial image and video content across celebrity 4 Table of Contents and red carpet events. Bigstock maintains a separate content library tailored for creators seeking to incorporate cost-effective imagery into their projects.
PicMonkey is a leading online graphic design and image editing platform. PremiumBeat offers exclusive high-quality music tracks and provides producers, filmmakers and marketers the ability to search handpicked production music from the world’s leading composers. Splash News and Backgrid, which was acquired on February 1, 2024, provide editorial image and video content across celebrity and red carpet events.
Intellectual Property We protect our intellectual property through a combination of patent, trademark, copyright and domain name registrations, as well as trade secret protections. We own a portfolio of trademarks, including “Shutterstock,” “Shutterstock Editorial,” “Asset Assurance,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “TurboSquid,” “PicMonkey,” “Pattern89,” “Shotzr,” “Pond5,” “Splash News,” “Giphy,” “Shutterstock Studios,” “Shutterstock Editor,” “Shutterstock.AI” and “Creative Flow” their associated logos.
We own a portfolio of trademarks, including “Shutterstock,” “Shutterstock Editorial,” “Asset Assurance,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “TurboSquid,” “PicMonkey,” “Pattern89,” “Shotzr,” “Pond5,” “Splash News,” “Giphy,” “Shutterstock Studios,” “Shutterstock Editor,” “Shutterstock.AI,” “Creative Flow,” “Backgrid,” “Envato,” “Envato Elements,” “Photodune,” “Tuts+,” “Themeforest,” “Codecanyon,” “Audiojungle,” “Graphicriver,” “Videohive,” “3DOcean,” “Mixkit,” and “Placeit” and their associated logos.
Giphy is a content platform that allows users to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners. We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet.
Our metadata customer base ranges from large technology and media companies to smaller start-up organizations. In 2023, we acquired Giphy, Inc. (“Giphy”). Giphy is a content platform that allows users to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners.
We will pursue additional trademark registrations to the extent that we create any additional material and registrable trademarks or logos. We are the registered owner of a variety of the shutterstock.com, bigstock.com, offset.com, premiumbeat.com, rexfeatures.com, turbosquid.com, picmonkey.com, pond5.com and splashnews.com internet domain names and various other related domain names.
We are the registered owner of a variety of the shutterstock.com, bigstock.com, offset.com, premiumbeat.com, rexfeatures.com, turbosquid.com, picmonkey.com, pond5.com, splashnews.com, backgrid.com, envato.com, placeit.net, tutsplus.com, themeforest.net, codecanyon.net, videohive.net, audiojungle.net, graphicriver.net, photodune.net, 3docean.net, and mixkit.co. internet domain names and various other related domain names.
Our Content and Data, Distribution, and Services offering revenues are as follows (in thousands): Year Ended December 31, 2023 2022 2021 Content $ 737,264 $ 789,306 $ 757,470 Data, Distribution, and Services 137,323 38,520 15,945 Total Revenue $ 874,587 $ 827,826 $ 773,415 Our Content Offering: Our Content offering includes licenses for: • Images - consisting of photographs, vectors and illustrations.
Our Content and Data, Distribution, and Services offering revenues are as follows (in thousands): Year Ended December 31, 2024 2023 2022 Content $ 760,011 $ 737,264 $ 789,306 Data, Distribution, and Services 175,251 137,323 38,520 Total Revenue $ 935,262 $ 874,587 $ 827,826 Merger Agreement with Getty Images On January 6, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine in a merger-of-equals transaction with Getty Images Holdings, Inc.
We encourage employee engagement through regular employee events, productive communication, our global recognition program and by creating a culture of belonging. 12 Table of Contents Our Diversity, Equity, and Inclusion (“DEI”) goal is to build a workforce, contributor network and content library that is representative and inclusive of the diverse global community we serve.
We encourage employee engagement through regular employee events, productive communication, our global recognition program and by creating a culture of belonging. 13 Table of Contents Seasonality Our operating results may fluctuate from quarter to quarter as a result of a variety of factors.
Removed
The Creative AI editing suite will empower our customers to leverage signature editing capabilities to unlock transformative possibilities in content creation and ideation.
Added
(NYSE:GETY) (“Getty Images”) (such transaction referred to herein as the “Merger”).
Removed
Signature capabilities include: • Magic Brush - modifies an image by brushing over the areas customers would like to change and simply describing what customers want to add, replace or erase. • Variations - generates alternate options of any stock or AI-generated image. • Expand Image - broadens the view of any image, as easily as if zooming out through a camera lens, to see more of the scene behind the central image. • Smart Resize - automatically changes the shape of an image to match the dimensions needed. • Background Remover - removes or replaces the background with any scene when the subject of an image is perfect, but the background is not.
Added
Subject to terms and conditions in the Merger Agreement, the aggregate consideration to be paid by Getty Images in respect of the outstanding shares of common stock of Shutterstock will be: (a) An amount in cash equal to the product of $9.50 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units); and (b) A number of shares of Getty Images common stock equal to the product of 9.17 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units).
Removed
Our Data, Distribution, and Services Offering: Our Data, Distribution, and Services offering address customer demand for products and services that are beyond our Content licenses. These products and services include, among other things, the use of our metadata, leveraging our Giphy, Inc. platform, and customized Shutterstock Studios offerings.
Added
Each holder of Shutterstock common stock immediately prior to the transaction close will have the option to receive, subject to proration, for each share of Shutterstock common stock held by such holder: (a) Cash consideration of $9.50 and 9.17 shares of Getty Images common stock; (b) Cash consideration of $28.8487; or (c) 13.67237 shares of Getty Images common stock.
Removed
Our online platform provides a freely searchable collection of content that our users can license, download and incorporate into their work. We encourage all our customers to take advantage of our creative platform’s AI-Powered search capabilities, our credit card-based payment options and the immediate digital delivery of licensed content.
Added
The closing of the Merger is subject to the satisfaction of closing conditions, including receipt of required regulatory approvals, the approval of Getty Images and Shutterstock stockholders and the extension or refinancing of Getty Images’ existing debt obligations.
Removed
We have expanded our use of content delivery network solutions to help enable our customers around the world to have sustained and reliable high-speed access to our platform.
Added
Subject to the satisfaction of the closing conditions, upon closing of the Merger, Shutterstock’s common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended. 4 Table of Contents Our Content Offering Our Content offering includes licenses for: • Images - consisting of photographs, vectors and illustrations.
Removed
From time to time, we agree to customize our license agreements with non-standard indemnification terms.
Added
Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution.
Removed
We have a long-term commitment to creating an inclusive culture, embedding DEI throughout our recruiting and retention efforts and promoting representation and inclusion throughout our platform. Our eight employee resource groups and our DEI team have helped to raise awareness about inclusion and advocate for various historically excluded groups.
Added
We offer a whole spectrum of services at pre-production, production, live production and post-production stages. 5 Table of Contents 2024 Acquisitions Backgrid USA, Inc. and Backgrid London LTD On February 1, 2024, the Company completed its acquisition of all of the outstanding shares of Backgrid USA, Inc. and Backgrid London LTD, (collectively, “Backgrid”), for approximately $20 million, subject to customary working capital adjustments.
Removed
We continued our focus on building leaders' and managers' cultural competency and inclusive leadership skills, as well as building a diverse pipeline of talent by establishing relationships with diverse talent communities and achieving greater representation in our content library through our Create Fund program.
Added
The total purchase price was paid with existing cash on hand. Backgrid supplies media organizations with real-time celebrity content. The Company believes this acquisition expands Shutterstock Editorial’s Newsroom offering of editorial images and footage across celebrity, red carpet and live-events. Envato Pty Ltd. On July 22, 2024, the Company completed its acquisition of Envato Pty Ltd.
Removed
Seasonality Our operating results may fluctuate from quarter to quarter as a result of a variety of factors. Our quarterly and annual results may reflect the effects of intra-period trends in customer behavior.
Added
(“Envato”) pursuant to a Share Purchase Agreement (the “Purchase Agreement”) entered into on May 1, 2024, to acquire all of the issued and outstanding capital stock of Envato. The aggregate consideration paid by the Company, after customary working capital and other adjustments in accordance with the terms of the Purchase Agreement, was approximately $250 million.
Removed
For example, we expect that certain customers’ usage may decrease at times during the third quarter of each calendar year due to the summer vacation season and may increase at times during the fourth quarter of each calendar year as demand is generally higher to support marketing campaigns in advance of the fourth quarter holiday season.
Added
The addition of Envato has: • Complemented Shutterstock’s existing offering with Envato Elements, a leading unlimited multi-asset subscription offering, • Expanded Shutterstock’s reach within faster growing audiences such as freelancers, hobbyists, small businesses and agencies, • Increased Shutterstock’s Content revenue from video, audio, graphics, fonts and templates, and • Further diversified Shutterstock into new content types including code & web themes, product mock-ups, fonts and templates (e.g.
Removed
While we believe seasonal trends have affected and will continue to affect our quarterly results, our growth trajectory may have overshadowed these effects to date. Additionally, because a significant portion of our revenue is derived from repeat customers who have purchased subscription plans, our revenues have historically been less volatile than if we had no subscription-based customers.
Added
Intellectual Property We protect our intellectual property through a combination of patent, trademark, copyright and domain name registrations, as well as trade secret protections.
Added
We will pursue additional trademark registrations to the extent that we create any additional material and registrable trademarks or logos.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

92 edited+55 added−10 removed295 unchanged
Biggest changeRisks Related to Regulatory and Tax Challenges • Government regulation of the internet, both in the United States and abroad, is evolving and unfavorable changes could have a negative impact on our business. • Action by governments to restrict access to, or operation of, our services or the content we distribute in their countries could substantially harm our reputation, business and financial results. • Income tax laws or regulations could be enacted or changed and existing income tax laws or regulations could be applied to us in a manner that could increase the costs of our products and services, which could harm our financial condition and results of operations. • We may be exposed to greater than anticipated withholding, sales, use, value added and other non-income tax liabilities, including as a result of future changes in laws or regulations, which could harm our financial condition and results of operations.
Biggest changeRisks Related to Regulatory and Tax Challenges • Government regulation of the internet, both in the United States and abroad, is evolving and unfavorable changes could have a negative impact on our business. • Action by governments to restrict access to, or operation of, our services or the content we distribute in their countries could substantially harm our reputation, business and financial results. • Income tax laws or regulations could be enacted or changed and existing income tax laws or regulations could be applied to us in a manner that could increase the costs of our products and services, which could harm our financial condition and results of operations. • We may be exposed to greater than anticipated withholding, sales, use, value added and other non-income tax liabilities, including as a result of future changes in laws or regulations, which could harm our financial condition and results of operations. 16 Table of Contents Risks Related to Ownership of Our Common Stock • Our operating results may fluctuate, which could cause our results to fall short of expectations and our stock price to decline. • Our stock price has been and will likely continue to be volatile. • Because the exchange ratio in the Merger Agreement is fixed and because the market price of Shutterstock and Getty Images’ common stock will fluctuate prior to the completion of the Merger, our stockholders cannot be sure of the market value of the Getty Images common stock they will receive as consideration in the Merger. • Our stockholders will have a reduced ownership and voting interest in Getty Images following the Merger as compared to their ownership and voting interest in us and will exercise less influence over management. • Jonathan Oringer, our founder and Executive Chairman of the Board, owns and controls approximately 31% of our outstanding shares of common stock, and his ownership percentage may increase, including as a result of any share repurchases pursuant to our share repurchase program.
Bribery Act and similar laws in other jurisdictions; • compliance with foreign laws and regulations, including with respect to disclosure requirements, privacy, consumer and data protection, marketing restrictions, human rights, rights of publicity, intellectual property, technology and content; • government regulation of e-commerce and other services and restrictive governmental actions on the distribution of content, such as filtering or removal of content; • disturbances in a specific country’s or region’s political, economic or military conditions, including potential sanctions (e.g., civil, political and economic conditions in markets including but not limited to Russia, Ukraine and the Crimean peninsula); • lower levels of consumer spending in foreign countries or lack of adoption of the internet as a medium of commerce; • longer payment cycles in some countries, increased credit risk, and higher levels of payment fraud; • reduced protection for our or our contributors’ intellectual property rights in certain countries; • laws that grant rights that may conflict with our business operations; • enhanced difficulties of integrating any foreign acquisitions; • difficulty in staffing, developing, managing and overseeing foreign operations as a result of travel distance, language and cultural differences as well as infrastructure, human resources and legal compliance costs; 30 Table of Contents • difficulty enforcing contractual rights in our license agreements; • potential adverse global tax consequences, especially those that may result from the expected proactive global development of greater efforts to identify, capture and subject to income and transactional tax, e-commerce revenue earned solely via the internet; • currency exchange fluctuations, hyperinflation, or devaluation; • strains on our financial and other systems to properly comply with, and administer, VAT, withholdings, sales and other taxes; and • higher costs associated with doing business internationally.
Bribery Act and similar laws in other jurisdictions; • compliance with foreign laws and regulations, including with respect to disclosure requirements, privacy, consumer and data protection, marketing restrictions, human rights, rights of publicity, intellectual property, technology and content; • government regulation of e-commerce and other services and restrictive governmental actions on the distribution of content, such as filtering or removal of content; • disturbances in a specific country’s or region’s political, economic or military conditions, including potential sanctions (e.g., civil, political and economic conditions in markets including but not limited to Russia, Ukraine and the Crimean peninsula); • lower levels of consumer spending in foreign countries or lack of adoption of the internet as a medium of commerce; • longer payment cycles in some countries, increased credit risk, and higher levels of payment fraud; • reduced protection for our or our contributors’ intellectual property rights in certain countries; • laws that grant rights that may conflict with our business operations; • enhanced difficulties of integrating any foreign acquisitions; • difficulty in staffing, developing, managing and overseeing foreign operations as a result of travel distance, language and cultural differences as well as infrastructure, human resources and legal compliance costs; • difficulty enforcing contractual rights in our license agreements; • potential adverse global tax consequences, especially those that may result from the expected proactive global development of greater efforts to identify, capture and subject to income and transactional tax, e-commerce revenue earned solely via the internet; • currency exchange fluctuations, hyperinflation, or devaluation; • strains on our financial and other systems to properly comply with, and administer, VAT, withholdings, sales and other taxes; and • higher costs associated with doing business internationally.
As a global technology business, we and our third-party service providers collect and maintain confidential information and personal data about our employees, customers, contributors and other third parties, in connection with marketplace-related processes on our websites and, in particular, in connection with processing and remitting payments to and from our customers and contributors, and we are therefore exposed to security and fraud-related risks, which are likely to become more challenging as we expand our operations.
As a global technology business, we and our third-party service providers collect and maintain confidential information and personal information about our employees, customers, contributors and other third parties, in connection with marketplace-related processes on our websites and, in particular, in connection with processing and remitting payments to and from our customers and contributors, and we are therefore exposed to security and fraud-related risks, which are likely to become more challenging as we expand our operations.
If we or our third-party service providers or partners were to experience a cybersecurity incident, data breach or disruption, unauthorized access or failure of systems compromising our customers’, contributors’ or employees’ data, or if one of our third-party service providers or partners were to access our customers’ personal data without authorization, our brand and reputation could be adversely affected, use of our products could decrease, we could experience business interruption and we could be exposed to a risk of loss, litigation and regulatory proceedings.
If we or our third-party service providers or partners were to experience a cybersecurity incident, data breach or disruption, unauthorized access or failure of systems compromising our customers’, contributors’ or employees’ data, or if one of our third-party service providers or partners were to access our customers’ personal information without authorization, our brand and reputation could be adversely affected, use of our products could decrease, we could experience business interruption and we could be exposed to a risk of loss, litigation and regulatory proceedings.
Further, we may be or become subject to data localization laws mandating that data collected in a foreign country be processed and stored only within that country. Russia adopted such a law in 2014, and, in 2018, India introduced a bill, which was updated in December 2019, requiring local storage of certain personal data of Indian data principals.
Further, we may be or become subject to data localization laws mandating that data collected in a foreign country be processed and stored only within that country. Russia adopted such a law in 2014, and, in 2018, India introduced a bill, which was updated in December 2019, requiring local storage of certain personal information of Indian data principals.
If our marketing activities prove less successful than anticipated in attracting new customers or retaining existing customers, we may not be able to recover our marketing spend, we may not acquire new customers or our cost to acquire new customers may increase, and our existing customers may reduce the frequency or size of their purchases from us, any of which could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows. 17 Table of Contents If we cannot continue to innovate technologically or develop, market and offer new products and services, or enhance existing technology and products and services to meet customer requirements, our ability to grow our revenue could be impaired.
If our marketing activities prove less successful than anticipated in attracting new customers or retaining existing customers, we may not be able to recover our marketing spend, we may not acquire new customers or our cost to acquire new customers may increase, and our existing customers may reduce the frequency or size of their purchases from us, any of which could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows. 20 Table of Contents If we cannot continue to innovate technologically or develop, market and offer new products and services, or enhance existing technology and products and services to meet customer requirements, our ability to grow our revenue could be impaired.
Further, data privacy laws have been enacted in a number of jurisdictions, including, but not limited to, the European Union, Illinois and California, which regulate the collection of certain biometric data regarding individuals, including their facial images, and the use of such data, including in facial recognition systems.
Further, data privacy laws have been enacted in a number of jurisdictions, including, but not limited to, the European Union, Illinois, Texas and California, which regulate the collection of certain biometric data regarding individuals, including their facial images, and the use of such data, including in facial recognition systems.
We rely on a mixture of mechanisms to transfer personal data from our E.U. business to the U.S. (having previously relied on Privacy Shield) and are evaluating what additional mechanisms may be required to establish adequate safeguards for personal information.
We rely on a mixture of mechanisms to transfer personal information from our E.U. business to the U.S. (having previously relied on the Privacy Shield) and are evaluating what additional mechanisms may be required to establish adequate safeguards for personal information.
In addition, the California Privacy Rights Act (“CPRA”), which came into effect on January 1, 2023 27 Table of Contents (with a look back to January 2022), amends and expands the CCPA to add additional disclosure obligations (including an obligation to disclose retention periods or criteria for categories of personal information), grant consumers additional rights (including rights to correct their data, limit the use and disclosure of sensitive personal information, and opt out of the sharing of personal information for certain targeted behavioral advertising purposes), and establishes a privacy enforcement agency known as the California Privacy Protection Agency (“CPPA”).
In addition, the California Privacy Rights Act 30 Table of Contents (“CPRA”), which came into effect on January 1, 2023 (with a look back to January 2022), amends and expands the CCPA to add additional disclosure obligations (including an obligation to disclose retention periods or criteria for categories of personal information), grant consumers additional rights (including rights to correct their data, limit the use and disclosure of sensitive personal information, and opt out of the sharing of personal information for certain targeted behavioral advertising purposes), and establishes a privacy enforcement agency known as the California Privacy Protection Agency (“CPPA”).
If customers reduce or cease their spending with us, or if content contributors reduce or end their participation on our platform, our business will be harmed. • The industry in which we operate is highly competitive with low barriers to entry and if we do not compete effectively, our operating results could suffer. • Our marketing efforts to acquire new, and retain existing customers may not be effective or cost-efficient, and may be affected by external factors beyond our control. • If we cannot continue to innovate technologically or develop, market and offer new products and services, or enhance existing technology and products and services to meet customer requirements, our ability to grow our revenue could be impaired. • Unless we increase market awareness of our brand and our existing and new products and services, our revenue may not continue to grow. • In order to continue to attract large corporate customers, we may encounter greater pricing pressure, and increased service, indemnification and working capital requirements, each of which could increase our costs and harm our business and operating results. • Expansion of our operations into new products, services and technologies, including content categories, is inherently risky and may subject us to additional business, legal, financial and competitive risks. • The impact of worldwide economic, political and social conditions, including effects on advertising and marketing budgets, may adversely affect our business and operating results. • Social and ethical issues relating to the use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability.
If customers reduce or cease their spending with us, or if content contributors reduce or end their participation on our platform, our business will be harmed. • The industry in which we operate is highly competitive with low barriers to entry and if we do not compete effectively, our operating results could suffer. • Our marketing efforts to acquire new, and retain existing customers may not be effective or cost-efficient, and may be affected by external factors beyond our control. • If we cannot continue to innovate technologically or develop, market and offer new products and services, or enhance existing technology and products and services to meet customer requirements, our ability to grow our revenue could be impaired. • Unless we increase market awareness of our brand and our existing and new products and services, our revenue may not continue to grow. • In order to continue to attract large corporate customers, we may encounter greater pricing pressure, and increased service, indemnification and working capital requirements, each of which could increase our costs and harm our business and operating results. • Expansion of our operations into new products, services and technologies, including content categories, is inherently risky and may subject us to additional business, legal, financial and competitive risks. • The impact of worldwide economic, political and social conditions, including effects on advertising and marketing budgets, may adversely affect our business and operating results. • Issues relating to the use of new and evolving technologies, such as AI, in our offerings could adversely affect our business and operating results.
Our corporate governance documents include provisions that: • authorize blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; • limit the liability of, and provide indemnification to, our directors and officers; • limit the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting; • require advance notice of stockholder proposals and the nomination of candidates for election to our board of directors; • establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; • require that directors only be removed from office for cause; and • limit the determination of the number of directors on our board and the filling of vacancies or newly created seats on the board to our board of directors then in office.
Our corporate governance documents include provisions that: • authorize blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; • limit the liability of, and provide indemnification to, our directors and officers; • limit the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting; 40 Table of Contents • require advance notice of stockholder proposals and the nomination of candidates for election to our board of directors; • establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; • require that directors only be removed from office for cause; and • limit the determination of the number of directors on our board and the filling of vacancies or newly created seats on the board to our board of directors then in office.
However, for the purposes of calculating excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax.
However, for the purposes of calculating such excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax.
For example, in Brazil, the General Data Privacy Law, which was signed into law in August 2018 and was subject to enforcement beginning in August 2021, imposes detailed rules for the collection, use, processing and storage of personal data.
For example, in Brazil, the General Data Privacy Law, which was signed into law in August 2018 and was subject to enforcement beginning in August 2021, imposes detailed rules for the collection, use, processing and storage of personal information.
Even a disruption as brief as a few minutes could have a negative impact on our marketplace activities and could result in a loss of revenue. To date we have not had any material disruptions.
Even a disruption as brief as a few minutes could have a negative impact on our marketplace activities and reputation, and could result in a loss of revenue. To date we have not had any material disruptions.
While we maintain insurance coverage that is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data breach, disruption, unauthorized access or failure of systems. 26 Table of Contents Regulatory scrutiny of privacy, data collection, use of data and data protection continues to intensify both within the United States and globally.
While we maintain insurance coverage that is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data breach, disruption, unauthorized access or failure of systems. 29 Table of Contents Regulatory scrutiny of privacy, data collection, use of data and data protection continues to intensify both within the United States and globally.
Although we maintain security features on our websites and utilize encryption and authentication technology, our cybersecurity measures may not detect or prevent all attempts, whether intentional or unintentional, to hack our systems, denial-of-service attacks, malware (including viruses and malicious software), break-ins, phishing attacks, ransomware, other social engineering attacks, cybersecurity breaches or other attacks and disruptions that may jeopardize our networks and the security of information stored in and transmitted by our networks and websites.
Although we maintain security features on our websites and utilize encryption and authentication technology, our cybersecurity measures may not detect or prevent all attempts, whether intentional or unintentional, to hack our systems, denial-of-service attacks, malware (including viruses and malicious software), break-ins, phishing attacks, ransomware, other social engineering attacks, cybersecurity incidents or other attacks and disruptions that may jeopardize our networks and the security of information stored in and transmitted by our networks and websites.
It is possible that, as our industry becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive and our efforts may not be successful. 18 Table of Contents In order to continue to attract large corporate customers, we may encounter greater pricing pressure, and increased service, indemnification and working capital requirements, each of which could increase our costs and harm our business and operating results.
It is possible that, as our industry becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive and our efforts may not be successful. 21 Table of Contents In order to continue to attract large corporate customers, we may encounter greater pricing pressure, and increased service, indemnification and working capital requirements, each of which could increase our costs and harm our business and operating results.
Risks Related to Operating our Business • We may not continue to grow our revenues at historical rates. • If we do not effectively expand, train, manage changes to, and retain our sales force, we may be unable to add new customers or increase sales to our existing customers, and our revenue growth and business could be adversely affected. • We have continued to grow in recent periods and if we fail to effectively manage our growth, our business and operating results may suffer. • If we do not successfully make, integrate and maintain acquisitions and investments, our business could be adversely impacted. • We rely on highly skilled personnel and if we are unable to retain and motivate key personnel, attract qualified personnel, integrate new members of our management team or maintain our corporate culture, we may not be able to grow effectively. • We may be exposed to risks related to our use of independent contractors. • The non-payment or late payments of amounts due to us from certain customers may negatively impact our financial condition. • We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our financial condition and results of operations. • If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings. • We may need to raise additional capital in the future and may be unable to do so on acceptable terms or at all. • We have incurred debt which could have a negative impact on our financing options and liquidity position, which could in turn adversely affect our business.
Risks Related to Operating our Business • We may not continue to grow our revenues at historical rates. • If we do not effectively manage changes to, and retain our sales force, we may be unable to add new customers or increase sales to our existing customers, and our revenue growth and business could be adversely affected. 15 Table of Contents • We have continued to grow in recent periods and if we fail to effectively manage our growth, our business and operating results may suffer. • If we do not successfully make, integrate and maintain acquisitions and investments, our business could be adversely impacted. • We rely on highly skilled personnel and if we are unable to retain and motivate key personnel, attract qualified personnel, integrate new members of our management team or maintain our corporate culture, we may not be able to grow effectively. • We may be exposed to risks related to our use of independent contractors. • The non-payment or late payments of amounts due to us from certain customers may negatively impact our financial condition. • We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our financial condition and results of operations. • If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings. • We may need to raise additional capital in the future and may be unable to do so on acceptable terms or at all. • We have incurred debt which could have a negative impact on our financing options and liquidity position, which could in turn adversely affect our business.
Although we have historically experienced minimal impact to our financial statements from credit card fraud, we may experience expense as a result of our failure to adequately control fraudulent credit. 22 Table of Contents We are also subject to, or voluntarily comply with, several other laws and regulations relating to money laundering, international money transfers, privacy and information security and electronic fund transfers.
Although we have historically experienced minimal impact to our financial statements from credit card fraud, we may experience expense as a result of our failure to adequately control fraudulent credit. 25 Table of Contents We are also subject to, or voluntarily comply with, several other laws and regulations relating to money laundering, international money transfers, privacy and information security and electronic fund transfers.
Regardless of their merit, intellectual property and indemnification claims are time-consuming, expensive to litigate or settle and cause significant diversion of management attention and could severely harm our financial condition and reputation, and adversely affect our business. 25 Table of Contents Assertions by third parties of infringement of intellectual property rights related to our technology could result in significant costs and substantially harm our business and operating results.
Regardless of their merit, intellectual property and indemnification claims are time-consuming, expensive to litigate or settle and cause significant diversion of management attention and could severely harm our financial condition and reputation, and adversely affect our business. 28 Table of Contents Assertions by third parties of infringement of intellectual property rights related to our technology could result in significant costs and substantially harm our business and operating results.
There have been a number of reported incidents where third-party service providers or partners have used software to access the personal data of their customers’ or partners’ customers for marketing and other purposes. Our privacy policies and practices prohibit such activities, but our third-party service providers or partners may nevertheless engage in such activity without our knowledge or consent.
There have been a number of reported incidents where third-party service providers or partners have used software to access the personal information of their customers’ or partners’ customers for marketing and other purposes. Our privacy policies and practices prohibit such activities, but our third-party service providers or partners may nevertheless engage in such activity without our knowledge or consent.
If an actual or perceived breach of our security occurs, the market perception 28 Table of Contents of the effectiveness of our security measures could be harmed and we could lose users and customers. We may also be required to expend significant capital and other resources to protect against such cybersecurity incidents to alleviate problems caused by such incidents.
If an actual or perceived breach of our security occurs, the market perception 31 Table of Contents of the effectiveness of our security measures could be harmed and we could lose users and customers. We may also be required to expend significant capital and other resources to protect against such cybersecurity incidents to alleviate problems caused by such incidents.
Given the OECD’s continued release of guidance regarding Pillar Two, that only certain jurisdictions have currently enacted laws to give effect to Pillar Two, and that jurisdictions may interpret such laws in different manners, the overall implementation of Pillar Two (and in particular, the adoption of the “under-taxed profit rule” by certain countries in which we and our affiliates do business) remain uncertain and subject to change, possibly on a retroactive basis, and could increase our global effective tax rate and have a material effect on our financial position and results of operations.
Given the OECD’s continued release of guidance regarding Pillar Two, that only certain jurisdictions have currently or just recently enacted laws to give effect to Pillar Two, and that jurisdictions may interpret such laws in different manners, the overall implementation of Pillar Two (and in particular, the adoption of the “under-taxed profit rule” by certain countries in which we and our affiliates do business) remain uncertain and subject to change, possibly on a retroactive basis, and could increase our global effective tax rate and have a material effect on our financial position and results of operations.
Because some of the causes of system interruptions may be outside of our control, we may not be able to remedy such interruptions in a timely manner, or at all. In addition, we have entered into service level agreements with some of our larger 24 Table of Contents customers and strategic partners.
Because some of the causes of system interruptions may be outside of our control, we may not be able to remedy such interruptions in a timely manner, or at all. In addition, we have entered into service level agreements with some of our larger 27 Table of Contents customers and strategic partners.
Changes in the estimates or assumptions underlying those accruals could have an adverse effect on our financial condition. 33 Table of Contents Risks Related to Ownership of Our Common Stock Our operating results may fluctuate, which could cause our results to fall short of expectations and our stock price to decline.
Changes in the estimates or assumptions underlying those accruals could have an adverse effect on our financial condition. 37 Table of Contents Risks Related to Ownership of Our Common Stock Our operating results may fluctuate, which could cause our results to fall short of expectations and our stock price to decline.
Our continued and future success is also dependent, in part, on our ability to identify, attract, retain and motivate highly skilled technical, managerial, product development, marketing, content operations and customer service personnel and to 21 Table of Contents preserve the key aspects of our corporate culture.
Our continued and future success is also dependent, in part, on our ability to identify, attract, retain and motivate highly skilled technical, managerial, product development, marketing, content operations and customer service personnel and to 24 Table of Contents preserve the key aspects of our corporate culture.
This concentration of ownership may have an effect on matters requiring the approval of our stockholders, including elections to our board of directors and transactions that are otherwise favorable to our stockholders. • Purchases of shares of our common stock pursuant to our share repurchase program may affect the value of our common stock and diminish our cash reserves, and there can be no assurance that our share repurchase program will enhance stockholder value. • If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. • Future sales of our common stock in the public market could cause our share price to decline. • Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our Company and may affect the trading price of our common stock. • There can be no assurance that we will declare dividends in the future. • We have incurred and expect to continue to incur increased costs and our management will continue to face increased demands as a result of continuously improving our operations as a public company. • If we fail to maintain an effective system of internal control over financial reporting, we may not be able to report our financial results accurately or in a timely fashion, and we may not be able to prevent fraud; in such case, our stockholders 15 Table of Contents could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.
This concentration of ownership may have an effect on matters requiring the approval of our stockholders, including elections to our board of directors. • Purchases of shares of our common stock pursuant to our share repurchase program may affect the value of our common stock and diminish our cash reserves, and there can be no assurance that our share repurchase program will enhance stockholder value. • If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. • Future sales of our common stock in the public market could cause our share price to decline. • Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our Company and may affect the trading price of our common stock. • There can be no assurance that we will declare dividends in the future. • We have incurred and expect to continue to incur increased costs and our management will continue to face increased demands as a result of continuously improving our operations as a public company. • If we fail to maintain an effective system of internal control over financial reporting, we may not be able to report our financial results accurately or in a timely fashion, and we may not be able to prevent fraud; in such case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.
Until the convention is adopted, however, countries that had previously enacted a digital services tax, may continue to impose their tax. The continued imposition of digital services taxes may have a material effect on our financial condition and results of operations.
Until the MLC is adopted, however, countries that had previously enacted a digital services tax, may continue to impose their tax. The continued imposition of digital services taxes may have a material effect on our financial condition and results of operations.
Risks Related to our Intellectual Property and Security Vulnerabilities • We rely on information technologies and systems to operate our business and maintain our competitiveness, and any failures in our technology infrastructure could harm our reputation and brand and adversely affect our business. • Technological interruptions that impair access to our web properties or the efficiency of our marketplace could harm our reputation and brand and adversely affect our business and results of operations. 14 Table of Contents • We face risks resulting from the content in our collection such as unforeseen costs related to infringement claims, potential liability arising from indemnification claims, changes to intellectual property content regulations and laws and the inability to prevent or monitor misuse. • Assertions by third parties of infringement of intellectual property rights related to our technology could result in significant costs and substantially harm our business and operating results. • We collect, store, process, transmit and use personally identifiable information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, information security and data protection in many jurisdictions.
Risks Related to our Intellectual Property and Security Vulnerabilities • We rely on information technologies and systems to operate our business and maintain our competitiveness, and any failures in our technology infrastructure could harm our reputation and brand and adversely affect our business. • Technological interruptions that impair access to our web properties or the efficiency of our marketplace could harm our reputation and brand and adversely affect our business and results of operations. • We face risks resulting from the content in our collection such as unforeseen costs related to infringement claims, potential liability arising from indemnification claims, changes to intellectual property content regulations and laws and the inability to prevent or monitor misuse. • Assertions by third parties of infringement of intellectual property rights related to our technology could result in significant costs and substantially harm our business and operating results. • We collect, store, process, transmit and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, information security and data protection in many jurisdictions.
In addition, a breach of any of the covenants in our outstanding debt 23 Table of Contents agreements or our inability to comply with the required financial ratios could result in a default under our debt instruments, including the Credit Facility.
In addition, a breach of any of the covenants in our outstanding debt 26 Table of Contents agreements or our inability to comply with the required financial ratios could result in a default under our debt instruments, including the Credit Facility.
Cybersecurity breaches and improper access to or disclosure of data or confidential information we maintain, or hacking or phishing attacks on our systems, could expose us to liability, protracted and costly litigation, business interruption, and damage our reputation.
Cybersecurity incidents and improper access to or disclosure of data or confidential information we maintain, or hacking or phishing attacks on our systems, could expose us to liability, protracted and costly litigation, business interruption, and damage our reputation.
Legislation to adopt and implement these standards has been enacted or is currently under consideration in a number of jurisdictions. 32 Table of Contents In May 2019, the OECD published a “Programme of Work,” divided into two pillars, which is designed to address the tax challenges created by an increasing digitalized economy.
Legislation to adopt and implement these standards has been enacted or is currently under consideration in a number of jurisdictions. In May 2019, the OECD published a “Programme of Work,” divided into two pillars, which is designed to address the tax challenges created by an increasing digitalized economy.
If we do not effectively expand, train, manage changes to, and retain our sales force, we may be unable to add new customers or increase sales to our existing customers, and our revenue growth and business could be adversely affected.
If we do not effectively manage changes to, and retain our sales force, we may be unable to add new customers or increase sales to our existing customers, and our revenue growth and business could be adversely affected.
Any cybersecurity breaches or our actual or perceived failure to comply with such legal obligations by us, or by our third-party service providers or partners, could harm our business. We currently provide content licensing to customers in more than 150 countries and license content from contributors located in over 100 countries.
Any cybersecurity incidents or our actual or perceived failure to comply with such legal obligations by us, or by our third-party service providers or partners, could harm our business. We currently provide content licensing to customers in more than 150 countries and license content from contributors located in over 150 countries.
We have incurred and expect to continue to incur costs to obtain directors’ and officers’ insurance as a result of operating as a public company, as well as additional costs necessitated by compliance matters and ongoing revisions to disclosure and governance standards. Also, the TCJA amended Section 162(m) of the U.S.
We have incurred and expect to continue to incur costs to obtain directors’ and officers’ insurance as a result of operating as a public company, as well as additional costs necessitated by compliance matters and ongoing revisions to disclosure and governance standards. 41 Table of Contents Also, the TCJA amended Section 162(m) of the U.S.
Any cybersecurity breaches or our actual or perceived failure to comply with such legal obligations by us, or by our third-party service providers or partners, could harm our business and subject us to regulatory scrutiny. • Cybersecurity breaches and improper access to or disclosure of data or confidential information we maintain, or hacking or phishing attacks on our systems, could expose us to liability, protracted and costly litigation, disrupt our business, and damage our reputation. • Failure to protect our intellectual property could substantially harm our business and operating results. • Much of the software and technologies used to provide our services incorporate, or have been developed with, “open source” software, which may restrict how we use or distribute our services or require that we publicly release certain portions of our source code. • Catastrophic events or other interruptions or failures of our information technology systems could hurt our ability to effectively provide our products and services, which could harm our reputation and brand and adversely affect our business and operating results.
Any cybersecurity incidents or our actual or perceived failure to comply with such legal obligations by us, or by our third-party service providers or partners, could harm our business. • Cybersecurity incidents and improper access to or disclosure of data or confidential information we maintain, or hacking or phishing attacks on our systems, could expose us to liability, protracted and costly litigation, business interruption, and damage our reputation. • Failure to protect our intellectual property could substantially harm our business and operating results. • Much of the software and technologies used to provide our services incorporate, or have been developed with, “open source” software, which may restrict how we use or distribute our services or require that we publicly release certain portions of our source code. • Catastrophic events or other interruptions or failures of our information technology systems could hurt our ability to effectively provide our products and services, which could harm our reputation and brand and adversely affect our business and operating results.
Factors that could cause fluctuations in the trading price of our common stock include, but are not limited to, the following: • changes in projected operational and financial results; • announcements about our share repurchase program, including purchases or the suspension of purchases under the program; • issuance of new or updated research or reports by securities analysts; • the use by investors or analysts of third-party data regarding our business that may not reflect our actual performance; • fluctuations in the valuation of companies perceived by investors or analysts to be comparable to us; • the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; • a reduction in the amount of cash dividends on our common stock, the suspension of those dividends or a failure to meet market expectations regarding dividends; • additions or departures of key senior management; • our capital allocation strategy; • fluctuations in the trading volume of our common stock; • limited “public float” in the hands of a small number of investors whose sales (or lack of sales) could result in positive or negative pricing pressure on the market price for our common stock; and • general economic and market conditions.
Factors that could cause fluctuations in the trading price of our common stock include, but are not limited to, the following: • uncertainties related to the pendency of the Merger or our inability to complete the Merger, or to complete the Merger in a timely manner; • changes in projected operational and financial results; • announcements about our share repurchase program, including purchases or the suspension of purchases under the program; • issuance of new or updated research or reports by securities analysts; • the use by investors or analysts of third-party data regarding our business that may not reflect our actual performance; • fluctuations in the valuation of companies perceived by investors or analysts to be comparable to us; • the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; • a reduction in the amount of cash dividends on our common stock, the suspension of those dividends or a failure to meet market expectations regarding dividends; • additions or departures of key senior management; • our capital allocation strategy; • fluctuations in the trading volume of our common stock; • limited “public float” in the hands of a small number of investors whose sales (or lack of sales) could result in positive or negative pricing pressure on the market price for our common stock; and • general economic and market conditions.
If 36 Table of Contents we experience delays or difficulties in implementing these systems, or if we otherwise do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, or satisfy customer requirements, among other things.
If we experience delays or difficulties in implementing these systems, or if we otherwise do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, or satisfy customer requirements, among other things.
Any of these outcomes could have a material adverse effect on our business, financial condition or results of operations. Action by governments to restrict access to, or operation of, our services or the content we distribute in their countries could substantially harm our reputation, business and financial results.
Any of these outcomes could have a material adverse effect on our business, financial condition or results of operations. 35 Table of Contents Action by governments to restrict access to, or operation of, our services or the content we distribute in their countries could substantially harm our reputation, business and financial results.
We filed registration statements on Form S-8 under the Securities Act covering shares of common stock issuable pursuant to options and shares reserved for future issuance under our 2022 Omnibus Equity Incentive Plan and our 2012 Omnibus Equity 35 Table of Contents Incentive Plan.
We filed registration statements on Form S-8 under the Securities Act covering shares of common stock issuable pursuant to options and shares reserved for future issuance under our 2022 Omnibus Equity Incentive Plan and our 2012 Omnibus Equity Incentive Plan.
Private and class plaintiffs have successfully asserted claims in settled litigation relating to the processing and storage of photographs under biometric privacy laws. Similar laws have also been introduced in several additional states. We have entered into certain contractual agreements that may implicate or make use of such technology.
State governments as well as private and class plaintiffs have successfully asserted claims in settled litigation relating to the processing and storage of photographs under biometric privacy laws. Similar laws have also been introduced in several additional states. We have entered into certain contractual agreements that may implicate or make use of such technology.
These provisions of our charter documents and Delaware law, alone or together, could delay or deter hostile takeovers and changes in control or changes in our management.
These provisions of our charter documents and Delaware law, alone or together, could delay or deter any future hostile takeovers and changes in control or changes in our management.
We evaluate the credit-worthiness of new customers and resellers and perform ongoing financial condition evaluations of our existing customers and resellers; however, there can be no assurance that our allowances for uncollected accounts receivable balances will be sufficient. As of December 31, 2023, our allowance for doubtful accounts was $6.3 million.
We evaluate the credit-worthiness of new customers and resellers and perform ongoing financial condition evaluations of our existing customers and resellers; however, there can be no assurance that our allowances for uncollected accounts receivable balances will be sufficient. As of December 31, 2024, our allowance for doubtful accounts was $3.1 million.
Our amended and restated certificate of incorporation and bylaws contain provisions that could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors.
Our amended and restated certificate of incorporation and bylaws contain provisions that could have the effect of rendering more difficult or discouraging a future acquisition deemed undesirable by our board of directors.
We collect, store, process, transmit and use personally identifiable information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, information security and data protection in many jurisdictions.
We collect, store, process, transmit and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, information security and data protection in many jurisdictions.
The trading price of our common stock has fluctuated and may continue to fluctuate substantially. Since 2015, the reported high and low sales prices per share of our common stock have ranged from $25.44 to $128.36 through February 21, 2024.
The trading price of our common stock has fluctuated and may continue to fluctuate substantially. Since 2015, the reported high and low sales prices per share of our common stock have ranged from $25.13 to $128.36 through February 21, 2025.
Pursuant to our share repurchase program which was publicly announced in June 2023, we were authorized to repurchase up to $100 million of our outstanding common stock. As of December 31, 2023, there was $71.8 million remaining authorization for purchases under the share repurchase program. Our board may authorize additional purchases at any time.
Pursuant to our share repurchase program, which was publicly announced in June 2023, we were authorized to repurchase up to $100 million of our outstanding common stock. As of December 31, 2024, there was $30.2 million remaining authorization for purchases under the share repurchase program. Our board may authorize additional purchases at any time.
For example, in 2023, 2022 and 2021 our product and development costs (which exclude costs that are capitalized related to internal-use software development projects), were approximately $96.2 million, $65.4 million and $52.0 million, respectively, and may continue to increase in the future as we continue to innovate.
For example, in 2024, 2023 and 2022 our product and development costs (which exclude costs that are capitalized related to internal-use software development projects), were approximately $88.4 million, $96.2 million and $65.4 million, respectively, and may continue to increase in the future as we continue to innovate.
Since various jurisdictions have already enacted or are considering enacting digital services taxes, which could lead to inconsistent and potentially overlapping tax regimes as a result of the profit allocation rule under Pillar One, the multilateral convention would require the removal of existing digital services taxes and prohibit the introduction of new digital services taxes.
Since various jurisdictions 36 Table of Contents have already enacted or are considering enacting digital services taxes, which could lead to inconsistent and potentially overlapping tax regimes as a result of the profit allocation rule under Pillar One, the MLC would require the removal of existing digital services taxes and prohibit the introduction of new digital services taxes.
Data protection legislation is also becoming increasingly common in the United States at both the federal and state level. For example, in June 2018, the State of California enacted the CCPA, which came into effect on January 1, 2020.
Data protection legislation is also becoming increasingly common in the United States at both the federal and state level. For example, in June 2018, the State of California enacted the California Consumer Privacy Act (“CCPA”), which came into effect on January 1, 2020.
For each of the years ended December 31, 2023, 2022 and 2021, approximately 54%, 60% and 66%, respectively, of our revenue was derived from customers located outside of the United States.
For each of the years ended December 31, 2024, 2023 and 2022, approximately 55%, 54% and 60%, respectively, of our revenue was derived from customers located outside of the United States.
We spend a significant amount on marketing activities to acquire new customers and retain and engage existing customers. For example, in 2023, 2022 and 2021 our marketing expenses were approximately $93.1 million, $97.2 million and $112.9 million, respectively, and we expect our marketing expenses to continue to account for a significant portion of our operating expenses.
We spend a significant amount on marketing activities to acquire new customers and retain and engage existing customers. For example, in 2024, 2023 and 2022 our marketing expenses were approximately $91.8 million, $93.1 million and $97.2 million, respectively, and we expect our marketing expenses to continue to account for a significant portion of our operating expenses.
For example, our revenues increased from $773.4 million in 2021 to $827.8 million in 2022 and to $874.6 million in 2023. Our continued growth has placed significant demands on our management and our administrative, operational and financial infrastructure and our success will depend in part on our ability to manage this growth efficiently.
For example, our revenues increased from $827.8 million in 2022 to $874.6 million in 2023 and to $935.3 million in 2024. Our continued growth has placed significant demands on our management and our administrative, operational and financial infrastructure, and our success will depend in part on our ability to manage this growth efficiently.
Similarly, on August 9, 2023, India passed a data protection law that will establish how entities can handle personal data and the rights individuals have over their personal data.
Similarly, on August 9, 2023, India passed an information protection law that will establish how entities can handle personal information and the rights individuals have over their personal information.
Potential government regulation related to AI ethics may also increase the burden and cost of research and development in this area, subjecting us to brand or reputational harm, competitive harm or legal liability.
Potential litigation or government regulation related to AI may also increase the burden and cost of 22 Table of Contents research and development in this area, subjecting us to brand or reputational harm, competitive harm or legal liability.
As international e-commerce and other online and web services grow, competition is expected to intensify and local companies may have a substantial competitive advantage because of their greater understanding of, and focus on, the local customer. If we do not effectively enter new international markets, our competitive advantage may be harmed. We are subject to foreign exchange risk.
As international e-commerce and other online and web services grow, competition is expected to intensify 34 Table of Contents and local companies may have a substantial competitive advantage because of their greater understanding of, and focus on, the local customer. If we do not effectively enter new international markets, our competitive advantage may be harmed.
We have incurred debt which could have a negative impact on our financing options and liquidity position, which could in turn adversely affect our business. As of December 31, 2023, we had $30.0 million in aggregate principal amount of total debt.
We have incurred debt which could have a negative impact on our financing options and liquidity position, which could in turn adversely affect our business. As of December 31, 2024, we had $277.7 million in aggregate principal amount of total debt.
As of February 21, 2024, we had 35,544,416 shares of common stock outstanding. All shares of our common stock are freely transferable without restriction or registration under the Securities Act, except for shares held by our “affiliates,” which remain subject to the restrictions set forth in Rule 144 under the Securities Act.
As of February 21, 2025, we had 34,893,659 shares of common stock outstanding. All shares of our common stock are freely transferable without restriction or registration under the Securities Act, except for shares held by our “affiliates,” which remain subject to the restrictions set forth in Rule 144 under the Securities Act.
As of December 31, 2023, we had operations based in a number of territories outside of the United States and a significant portion of our business may be transacted in currencies other than the U.S. dollar, including the euro, the British pound, the Australian dollar and the Japanese yen.
We are subject to foreign exchange risk. As of December 31, 2024, we had operations based in a number of territories outside of the United States and a significant portion of our business may be transacted in currencies other than the U.S. dollar, including the euro, the British pound, the Australian dollar and the Japanese yen.
We continue to be substantially dependent on our sales force to effectively obtain new customers and to drive additional use cases and adoption among our existing customers. We believe that there is significant competition for sales personnel with the skills and knowledge that we require.
We have been substantially dependent on our sales force to effectively obtain new customers and to drive additional use cases and adoption among our existing customers. We believe that there is significant competition for sales personnel with the skills and knowledge that our business requires.
If our assumptions 20 Table of Contents regarding these risks and uncertainties are incorrect or change, or if we do not execute on our strategy and manage these risks and uncertainties successfully, our operating results could differ materially from our expectations and those of securities analysts and investors, our business could suffer and the trading price of our common stock could decline.
If our assumptions regarding these risks and uncertainties are incorrect or change, or if we do not execute on our strategy and manage these risks and uncertainties successfully, our operating results could differ materially from our expectations and those of securities analysts and investors, our business could suffer and the trading price of our common stock could decline. 23 Table of Contents If we do not successfully make, integrate and maintain acquisitions and investments, our business could be adversely impacted.
In connection with providing content licensing, we collect, store, process and use our customers’ and contributors’ personally identifiable information and other data, and we rely on third parties that are not directly under our control to do so as well.
In connection with providing content licensing, we collect, store, process and use our customers’ and contributors’ personal information and other data, and we rely on third parties that are not directly under our control to do so as well. We also collect, store, process, transmit and use our employees’ personal information and other data in connection with their employment.
Oringer, regardless of the impact of such transaction on our other stockholders. Additionally, Mr. Oringer has significant influence over management and major strategic investments as a result of his position as Executive Chairman of the Board. Furthermore, if we purchase additional shares pursuant to our share repurchase program, Mr.
Oringer has significant influence over management and major strategic investments as a result of his position as Executive Chairman of the Board. Furthermore, if we purchase additional shares pursuant to our share repurchase program, Mr.
We have registered “Shutterstock,” “Shutterstock Editorial,” “Asset Assurance,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “TurboSquid,” “PicMonkey,” “Pattern89,” “Shotzr,” “Pond5,” “Splash News,” “Shutterstock Studios,” “Shutterstock Editor,” “Shutterstock.AI” and “Creative Flow,” and associated logos and other marks as trademarks in the United States and other jurisdictions and we are the registered owner of the shutterstock.com, bigstock.com, offset.com, premiumbeat.com, rexfeatures.com, turbosquid.com, picmonkey.com, pond5.com, splashnews.com and giphy.com internet domain names and various other related domain names.
We have registered “Shutterstock,” “Shutterstock Editorial,” “Asset Assurance,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “TurboSquid,” “PicMonkey,” “Pattern89,” “Shotzr,” “Pond5,” “Splash News,” “Giphy,” “Shutterstock Studios,” “Shutterstock Editor,” “Shutterstock.AI,” “Creative Flow,” “Backgrid,” “Envato,” “Envato Elements,” “Photodune,” “Tuts+,” “Themeforest,” Codecanyon,” “Audiojungle,” Graphicriver,” “Videohive,” “3DOcean,” “Mixkit,” and “Placeit” and associated logos and other marks as trademarks in the United States and other jurisdictions and we are the registered owner of the shutterstock.com, bigstock.com, offset.com, premiumbeat.com, rexfeatures.com, turbosquid.com, picmonkey.com, pond5.com, splashnews.com and giphy.com internet domain names and various other related domain names.
Additionally, our revolving credit facility has remaining borrowing capacity of $67.0 million, net of standby letters of credit, as of December 31, 2023.
Additionally, our revolving credit facility has remaining borrowing capacity of $94 million, net of standby letters of credit, as of December 31, 2024.
In addition, we may have inadequate insurance coverage to compensate for any related loss. Any of these events could damage our reputation and cause a material adverse effect on our financial condition. Risks Related to our International Operations Our international operations and our continued expansion internationally expose us to many risks.
In addition, we may have inadequate insurance coverage to compensate for any related loss. Any of these events could damage our reputation and cause a material adverse effect on our financial condition.
If our competitors use their experience and resources to provide an offering that is more attractive to customers across these categories, or if our competitors innovate and provide products faster than we can, we may be unable to compete effectively and our business will be harmed. 16 Table of Contents Many of our competitors have or may obtain significantly greater financial, marketing or other resources or greater brand awareness than we have.
If our competitors use their experience and resources to provide an offering that is more attractive to customers 19 Table of Contents across these categories, or if our competitors innovate and provide products faster than we can, we may be unable to compete effectively and our business will be harmed.
The Dynamex decision and Assembly Bill 5 altered the analysis of whether an individual, who is classified by a hiring entity as an independent contractor in California, has been properly classified as an independent contractor.
This standard was expanded and codified in California via Assembly Bill 5, effective as of January 1, 2020. The Dynamex decision and Assembly Bill 5 altered the analysis of whether an individual, who is classified by a hiring entity as an independent contractor in California, has been properly classified as an independent contractor.
Social and ethical issues relating to the use of new and evolving technologies such as AI in our offerings may result in reputational harm and liability, and may cause us to incur additional research and development costs to resolve such issues. We are increasingly building AI into many of our offerings.
Issues relating to the use of new and evolving technologies such as AI in our offerings may result in brand or reputational harm, competitive harm, legal liability, or new or enhanced governmental or regulatory scrutiny, and may cause us to incur additional costs to resolve such issues. We are increasingly building AI into many of our offerings.
Initially, the profit allocation rule would apply only to multinational enterprises with more than €20 billion in global annual revenues and a profit margin above 10%. The revenue threshold is expected to be reduced to €10 billion beginning seven years after the effective date of Pillar One.
Initially, the profit allocation rule, referred to under Pillar One as ‘Amount A’, would apply only to multinational enterprises with more than €20 billion in global annual revenues and a profit margin above 10%. The revenue threshold is expected to be reduced to €10 billion.
Any failure, or perceived failure, by us to comply with any of these laws or regulations could result in litigation, damage to our reputation, lost business and proceedings or actions against us by governmental entities or others, which could impact our operating results. 31 Table of Contents Compliance with new regulations or legislation or new interpretations of existing regulations or legislation could cause us to incur additional expenses, make it more difficult to renew subscriptions automatically, require us to display specific disclaimers, require us to obtain consent from users for certain activities, make it more difficult to attract new customers, require us to implement costly security or other measures before users can utilize our services, or otherwise require us to alter our business model, or cause us to divert resources and funds to address government or private investigatory or adversarial proceedings.
Compliance with new regulations or legislation or new interpretations of existing regulations or legislation could cause us to incur additional expenses, make it more difficult to renew subscriptions automatically, require us to display specific disclaimers, require us to obtain consent from users for certain activities, make it more difficult to attract new customers, require us to implement costly security or other measures before users can utilize our services, or otherwise require us to alter our business model, or cause us to divert resources and funds to address government or private investigatory or adversarial proceedings.
Under the European Union’s minimum tax directive, unanimously agreed by the member states in 2022, each member state is required to adopt domestic legislation implementing the minimum tax rules effective for periods beginning on or after December 31, 2023, with the “under-taxed profit rule” to take effect for periods beginning on or after December 31, 2024.
Certain members of the European Union have already adopted domestic legislation implementing the minimum tax rules effective for periods beginning on or after December 31, 2023, with the “under-taxed profit rule” expected to take effect for periods beginning on or after December 31, 2024, pursuant to the European Union’s minimum tax directive, unanimously agreed by the member states in 2022.
This could cause the trading price of our common stock to decline. Risk Factors Summary Risks Related to Industry Dynamics and Competition • The success of our business depends on our ability to continue to attract and retain customers of, and contributors to, our creative platform.
Risks Related to Industry Dynamics and Competition • The success of our business depends on our ability to continue to attract and retain customers of, and contributors to, our creative platform.
To assist in the implementation of Pillar Two, the OECD published the Global Anti-Base Erosion Model Rules, a detailed model legislation in December 2021, and related commentary in March 2022. The OECD has released additional administrative guidance on the global minimum income tax in February, July and December of 2023.
To assist in the implementation of Pillar Two, the OECD published the Global Anti-Base Erosion Model Rules, a detailed model legislation in December 2021, and related commentary in March 2022, with the latest update to the commentary in December 2023.
While we believe that there are obstacles to creating a meaningful network effect between customers and contributors, the barriers to creating a platform that allows for the licensing of content or provides workflow tools are low.
This could lead to more variability in operating results and could have a material adverse effect on our business, operating results, and financial condition. While we believe that there are obstacles to creating a meaningful network effect between customers and contributors, the barriers to creating a platform that allows for the licensing of content or provides workflow tools are low.
Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business.
Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to retain sufficient numbers of qualified individuals until the Merger is consummated to run our business effectively.
Risks Related to Ownership of Our Common Stock • Our operating results may fluctuate, which could cause our results to fall short of expectations and our stock price to decline. • Our stock price has been and will likely continue to be volatile. • Jonathan Oringer, our founder and Executive Chairman of the Board, owns and controls approximately 31% of our outstanding shares of common stock, and his ownership percentage may increase, including as a result of any share repurchases pursuant to our share repurchase program.
Jonathan Oringer, our founder and Executive Chairman of the Board, owns and controls approximately 31% of our outstanding shares of common stock, and his ownership percentage may increase, including as a result of any share repurchases pursuant to our share repurchase program.
As with many innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. If we enable or offer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm or legal liability.
If we enable or offer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm or legal liability.
If we do not successfully make, integrate and maintain acquisitions and investments, our business could be adversely impacted. We have acquired, invested in and entered into strategic relationships with companies, and we may acquire, invest in or enter into strategic relationships with additional companies to complement our existing business and the breadth of our offerings.
We have acquired, invested in and entered into strategic relationships with companies, and in the event the Merger Agreement is terminated, we may acquire, invest in or enter into strategic relationships with additional companies to complement our existing business and the breadth of our offerings.
Five other states (Delaware, Iowa, New Jersey, Tennessee and Indiana) have similar comprehensive data privacy laws set to become effective by 2026. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data.
Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data.

… 77 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed15 unchanged
Biggest changeAnnually, this team assesses its communication plan 38 Table of Contents to confirm that its members can be alerted quickly in the event of an actual crisis and meet as a team to discuss the event and response options. Each of these committees provides summary reports on their activities, which the CISO communicates as appropriate to the Audit Committee.
Biggest changeAnnually, this team assesses its communication plan to confirm that its members can be alerted quickly in the event of an actual crisis and meet as a team to discuss the event and response options. Each of these committees provides summary reports on their activities, which the CISO communicates as appropriate to the Audit Committee.
Item 1C. Cybersecurity. Risk Management and Strategy 37 Table of Contents We recognize the importance of assessing, identifying and managing risks from cyber security threats, and our processes to manage risks from cybersecurity threats have been integrated into our overall risk management framework.
Item 1C. Cybersecurity. Risk Management and Strategy We recognize the importance of assessing, identifying and managing risks from cyber security threats, and our processes to manage risks from cybersecurity threats have been integrated into our overall risk management framework.
With respect to third party service providers, we obligate vendors to adhere to privacy and cybersecurity measures, perform risk assessments of vendors including their ability to protect data from unauthorized access.
With respect to third party service providers, we obligate vendors to adhere to privacy 42 Table of Contents and cybersecurity measures, perform risk assessments of vendors including their ability to protect data from unauthorized access.
We also hold annual employee trainings on privacy and cybersecurity, records and information management, and generally seek to promote awareness of cybersecurity risk through communication and education of our employee population.
We also hold annual employee trainings on privacy and cybersecurity, records and information management, and generally seek to promote awareness of cybersecurity risk through communication and education of our employee population. 43 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeAdditionally, we have other office facilities in the United States and abroad related to, among other things, sales and marketing support, technology services and customer service under operating lease agreements that expire on various dates during the period from 2024 through 2029.
Biggest changeAdditionally, we have other office facilities in the United States and abroad related to, among other things, sales and marketing support, technology services and customer service under operating lease agreements that expire on various dates during the period from 2025 through 2029.
For additional information regarding obligations under operating leases, see Note 15 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
For additional information regarding obligations under operating leases, see Note 17 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeIn addition, in the ordinary course of our business, we are also subject to periodic threats of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures Not applicable. 39 Table of Contents PART II
Biggest changeIn addition, in the ordinary course of our business, we are also subject to periodic threats of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures Not applicable. 44 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−2 removed6 unchanged
Biggest changeIn June 2023, our Board of Directors authorized the repurchase of up to $100 million of our common stock. As of December 31, 2023, $71.8 million remained available for purchase under this authorization. We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate.
Biggest changeWe expect to fund any future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our share repurchase program is subject to us having available cash to fund repurchases.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange, or the NYSE, under the symbol “SSTK.” Stockholders As of February 21, 2024, there were 3 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange, or the NYSE, under the symbol “SSTK.” Stockholders As of February 21, 2025, there were 3 holders of record of our common stock.
Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, this number is not indicative of the total number of stockholders represented by these stockholders of record. Unregistered Sales of Equity Securities We did not sell any unregistered equity securities during the year ended December 31, 2023 .
Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, this number is not indicative of the total number of stockholders represented by these stockholders of record. Unregistered Sales of Equity Securities We did not sell any unregistered equity securities during the year ended December 31, 2024 .
Equity Compensation Plan Information The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023. 41 Table of Contents Performance Graph The graph below matches Shutterstock, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the NYSE Composite index and the S&P Internet Software & Services Select index.
Equity Compensation Plan Information The information required by this item is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2024. 45 Table of Contents Performance Graph The graph below matches Shutterstock, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the NYSE Composite index and the S&P Internet Software & Services Select index.
As of December 31, 2023, in total we have repurchased approximately 4.4 million shares of our common stock under the 2015 and 2017 Share Repurchase Programs and the 2023 Share Repurchase Program at an average per-share cost of $51.74.
As of December 31, 2024, we have repurchased approximately 5.5 million shares of our common stock in total since 2015 under our repurchase programs (including our 2015 and 2017 Share Repurchase Programs and the 2023 Share Repurchase Program) at an average per-share cost of $48.86.
During the year ended December 31, 2023, we repurchased approximately 634,500 shares of our common stock at an average per share cost of $44.45 and as of December 31, 2023, we had $71.8 million of remaining authorization for purchases under the 2023 Share Repurchase Program.
During the year ended December 31, 2024, we repurchased approximately 1.1 million shares of our common stock at an average per share cost of $37.42 and as of December 31, 2024, we had $30.2 million of remaining authorization for purchases under the 2023 Share Repurchase Program.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2018 to 12/31/2023. 12/2018 12/2019 12/2020 12/2021 12/2022 12/2023 Shutterstock, Inc. 100.00 119.08 202.07 315.16 152.18 142.39 NYSE Composite 100.00 125.51 134.28 162.04 146.89 167.12 S&P Software & Services Select Industry 100.00 135.93 207.60 224.16 147.51 204.92 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2019 to 12/31/2024. 12/1/2019 12/1/2020 12/1/2021 12/1/2022 12/1/2023 12/2024 Shutterstock, Inc. 100.00 169.70 264.66 127.80 119.58 77.58 NYSE Composite 100.00 106.99 129.11 117.04 133.16 154.19 S&P Software & Services Select Industry 100.00 152.72 164.91 108.52 150.75 189.60 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Removed
The table below presents shares of our common stock which we acquired during the three months ended December 31, 2023: ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid Per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (1) October 1 - 31, 2023 — $ — — November 1 - 30, 2023 106,787 44.96 106,787 December 1 - 31, 2023 96,381 45.66 96,381 203,168 $ 45.29 203,168 $ 71,794,311 _______________________________________________________________________________ 40 Table of Contents (1) We purchased shares of our common stock in open market purchases pursuant to share repurchases authorized by our Board of Directors.
Added
During the three months ended December 31, 2024, we did not repurchase any shares of our common stock.
Removed
Accordingly, our share repurchase program is subject to us having available cash to fund repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+41 added−45 removed65 unchanged
Biggest changeComparison of the Years Ended December 31, 2022 and December 31, 2021 The following table presents our results of operations for the periods indicated: Year Ended December 31, 2022 2021 $ Change % Change (in thousands) Consolidated Statements of Operations Data: Revenue $ 827,826 $ 773,415 $ 54,411 7 % Operating expenses: Cost of revenue 314,306 277,659 36,647 13 Sales and marketing 203,154 204,878 (1,724) (1) Product development 65,434 52,014 13,420 26 General and administrative 132,644 130,758 1,886 1 Impairment of long-lived assets 18,664 — 18,664 * Total operating expenses 734,202 665,309 68,893 10 Income from operations 93,624 108,106 (14,482) (13) Other expense, net (2,587) (3,370) 783 (23) Income before income taxes 91,037 104,736 (13,699) (13) Provision for income taxes 14,934 12,853 2,081 16 Net income $ 76,103 $ 91,883 $ (15,780) (17) % * Not meaningful Revenue Revenue increased by $54.4 million, or 7%, to $827.8 million in 2022 as compared to 2021.
Biggest changeYear Ended December 31, 2024 2023 2022 (in thousands) Consolidated Statements of Operations: Revenue $ 935,262 $ 874,587 $ 827,826 Operating expenses: Cost of revenue 396,297 352,630 314,306 Sales and marketing 222,704 214,749 203,154 Product development 88,417 96,162 65,434 General and administrative 159,136 142,646 132,644 Impairment of lease and related assets — — 18,664 Total operating expenses 866,554 806,187 734,202 Income from operations 68,708 68,400 93,624 Bargain purchase gain — 50,261 — Interest expense (10,561) (1,857) (1,336) Other income / (expense), net 4,401 5,664 (1,251) Income before income taxes 62,548 122,468 91,037 Provision for income taxes 26,616 12,199 14,934 Net income $ 35,932 $ 110,269 $ 76,103 The following table presents the components of our results of operations for the periods indicated as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Consolidated Statements of Operations: Revenue 100 % 100 % 100 % Operating expenses: Cost of revenue 42 % 40 % 38 % Sales and marketing 24 % 25 % 25 % Product development 9 % 11 % 8 % General and administrative 17 % 16 % 16 % Impairment of lease and related assets — % — % 2 % Total operating expenses 93 % 92 % 89 % Income from operations 7 % 8 % 11 % Bargain purchase gain — % 6 % — % Interest expense (1) % — % — % Other income / (expense), net — % 1 % — % Income before income taxes 7 % 14 % 11 % Provision for income taxes 3 % 1 % 2 % Net income 4 % 13 % 9 % 53 Table of Contents Comparison of the Years Ended December 31, 2024 and December 31, 2023 The following table presents our results of operations for the periods indicated: Year Ended December 31, 2024 2023 $ Change % Change (in thousands) Consolidated Statements of Operations Data: Revenue $ 935,262 $ 874,587 $ 60,675 7 % Operating expenses: Cost of revenue 396,297 352,630 43,667 12 Sales and marketing 222,704 214,749 7,955 4 Product development 88,417 96,162 (7,745) (8) General and administrative 159,136 142,646 16,490 12 Total operating expenses 866,554 806,187 60,367 7 Income from operations 68,708 68,400 308 — Bargain purchase gain — 50,261 (50,261) * Interest expense (10,561) (1,857) (8,704) 469 Other income, net 4,401 5,664 (1,263) (22) Income before income taxes 62,548 122,468 (59,920) (49) Provision for income taxes 26,616 12,199 14,417 118 Net income $ 35,932 $ 110,269 $ (74,337) (67) % * Not meaningful Revenue Revenue increased by $60.7 million, or 7%, to $935.3 million in 2024 as compared to 2023.
Impairment of Lease and Related Assets . Impairment of lease and related assets includes impairment charges related to a portion of the Company’s right-of-use assets and property and equipment triggered by the decision to cease using certain office spaces. Bargain Purchase Gain .
Impairment of lease and related assets includes impairment charges related to a portion of the Company’s right-of-use assets and property and equipment triggered by the decision to cease using certain office spaces. Bargain Purchase Gain .
On a constant currency basis, revenue increased approximately 5% in the year ended December 31, 2023, as compared to 2022. Content license revenues decreased by 7%, to $737.3 million in 2023, as compared to 2022. On a constant currency basis, Content license revenues decreased by 7% in 2023, as compared to 2022.
On a constant currency basis, revenue increased approximately 5% in the year ended December 31, 2023, as compared to 2022. Content license revenues decreased by 7%, to $737.3 million in 2023 as compared to 2022. On a constant currency basis, Content revenues decreased by 7% in 2023, as compared to 2022.
We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies. General and Administrative.
We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies. General and Administrative.
Cash used in investing activities for the year ended December 31, 2022 was $275.6 million, consisting primarily (i) $211.8 million cash used in the acquisitions of Pond5 and Splash News, net of cash acquired; (ii) capital expenditures of $43.3 million for internal-use software and website development costs, and purchase of software and equipment, and (iii) $16.8 million paid to acquire the rights to distribute certain digital content in perpetuity.
Cash used in investing activities for the year ended December 31, 2022 was $275.6 million, consisting primarily of (i) $211.8 million cash used in the acquisitions of Pond5 and Splash News, net of cash acquired; (ii) capital expenditures of $43.3 million for internal-use software and website development costs, and purchase of software and equipment, and (iii) $16.8 million to acquire the rights to distribute certain digital content in perpetuity.
Our Content revenues represent the majority of the Company’s business and are supported by our searchable creative platform and driven by our large contributor network. In addition, our customers have needs that are beyond traditional content license products and services.
Our Content revenues represent the majority of our business and are supported by our searchable creative platform and driven by our large contributor network. In addition, our customers have needs that are beyond traditional content license products and services.
Shutterstock’s management uses these non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing the business and to, among other things: (i) monitor and evaluate the performance of Shutterstock’s business operations, financial performance and overall liquidity; (ii) facilitate management’s internal comparisons of the historical operating performance of its business operations; (iii) facilitate management’s external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of Shutterstock’s management team and, together with other operational objectives, as a measure in evaluating employee compensation and bonuses; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
Our management uses these non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing the business and to, among other things: (i) monitor and evaluate the performance of our business operations, financial performance and overall liquidity; (ii) facilitate management’s internal comparisons of the historical operating performance of its business operations; (iii) facilitate management’s external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of our management team and, together with other operational objectives, as a measure in evaluating employee compensation; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
Cash used in investing activities for the year ended December 31, 2023 was $54.3 million, consisting primarily of (i) $53.7 million cash used in the acquisition of Giphy, net of cash acquired; (ii) capital expenditures of $44.6 million for internal-use software and website development costs, and purchases of software and equipment, and (iii) $11.1 million paid to acquire the rights to distribute certain digital content in perpetuity.
Cash used in investing activities for the year ended December 31, 2023 was $54.3 million, consisting primarily of (i) $53.7 million cash used in the acquisition of Giphy, net of cash acquired; (ii) capital expenditures of $44.6 million for internal-use software and website development costs, and purchase of software and equipment, and (iii) $11.1 million paid to acquire the rights to distribute certain digital content in perpetuity.
Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. 47 Table of Contents Results of Operations The following table presents our results of operations for the periods indicated. The period-to-period comparisons of results are not necessarily indicative of results for future periods.
Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. 52 Table of Contents Results of Operations The following table presents our results of operations for the periods indicated. The period-to-period comparisons of results are not necessarily indicative of results for future periods.
The decline in cash provided by operating activities for the year ended December 31, 2022 was impacted by the timing of payments and cash receipts in the ordinary course of business which can cause operating cash flow to fluctuate from period to period.
The decline in cash provided by operating activities for the year ended December 31, 2023 was impacted by the timing of payments and cash receipts in the ordinary course of business which can cause operating cash flow to fluctuate from period to period.
Customers can generate images by entering a description of their desired content into model prompts. Our Content is distributed to customers under the following brands: Shutterstock; Pond5; TurboSquid; PicMonkey; PremiumBeat; Splash News; Bigstock; and Offset. 43 Table of Contents Shutterstock, our flagship brand, includes various content types such as image, footage, music and editorial.
Customers can generate images by entering a description of their desired content into model prompts. Our Content is distributed to customers under the following brands: Shutterstock; Pond5; TurboSquid; PicMonkey; PremiumBeat; Splash News; Bigstock; Envato; and Offset. 48 Table of Contents Shutterstock, our flagship brand, includes various content types such as image, footage, music and editorial.
Cash used in financing activities during 2022 primarily consisted of (i) $73.5 million in connection with the repurchase of common stock under our share repurchase program; (ii) $34.6 million, related to the payment of the quarterly cash dividend, and (iii) $22.6 million, paid in settlement of tax withholding obligations related to employee stock-based compensation awards.
Cash used in financing activities during 2022 primarily consisted of (i) $73.5 million in connection with the repurchase of common stock under our share repurchase program; (ii) $34.6 million related to the payment of the quarterly cash dividend; and 60 Table of Contents (iii) $22.6 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards.
The Credit Facility includes a letter of credit sub-facility and a swingline facility and it also permits, subject to the satisfaction of certain conditions, up to $100 million of additional revolving loan commitments with the consent of the Administrative Agent.
The Credit Facility includes a letter of credit sub-facility and a swingline facility and it also permitted, subject to the satisfaction of certain conditions, up to $100 million of additional revolving loan commitments with the consent of the Administrative Agent.
Non-GAAP Financial Measures To supplement our consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, our management considers certain financial measures that are not prepared in accordance with GAAP, collectively referred to as non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage), and free cash flow.
Non-GAAP Financial Measures To supplement our consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, our management considers certain financial measures that are not prepared in accordance with GAAP, collectively referred to as non-GAAP financial measures, including adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, adjusted EBITDA margin, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage), and adjusted free cash flow.
In addition, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) and free cash flow should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address.
In addition, adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, adjusted EBITDA margin, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted free cash flow should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address.
For content licenses, we recognize revenue on both our subscription-based and transaction-based products when content is downloaded by a customer, at which time the license is provided.
We recognize revenue on both our subscription-based and transaction-based products when content is downloaded by a customer, at which time the license is provided.
We recognize revenue gross of contributor royalties because we are the principal in the transaction as we are the party responsible for the performance obligation and we control the product or service before transferring it to the customer. We also license content to customers through third-party resellers.
We recognize revenue gross of contributor royalties because we are the principal in the transaction as we are the party responsible for the performance obligation and control the product or service before transferring it to the customer. We also license content to customers through third-party resellers, who are our direct customers.
As of December 31, 2023, we had approximately $82 million in unconditional cash obligations, consisting primarily of purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, of which the majority is due to be paid within the next two years.
As of December 31, 2024, we had approximately $56 million in unconditional cash obligations, consisting primarily of purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, of which the majority is due to be paid within the next two years.
Management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by distribution channel) on a constant currency basis (expressed as a percentage) and free cash flow are useful to investors because these measures enable investors to analyze Shutterstock’s operating results on the same basis as that used by management.
Management believes that adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, adjusted EBITDA margin, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted free cash flow are useful to investors because these measures enable investors to analyze Shutterstock’s operating results on the same basis as that used by management.
Changes in our revenue by region were as follows: revenue from North America increased by $74.5 million, or 21%, to $427.7 million, revenue from Europe decreased by $12.0 million, or 5%, to $231.0 million and revenue from outside Europe 49 Table of Contents and North America decreased by $15.8 million, or 7%, to $215.8 million, in the year ended December 31, 2023 compared to 2022.
Changes in our revenue by region were as follows: revenue from North America increased by $74.5 million, or 21%, to $427.7 million, revenue from Europe decreased by $12.0 million, or 5%, to $231.0 million and revenue from outside Europe and North America decreased by $15.8 million, or 7%, to $215.8 million, in the year ended December 31, 2023 compared to 2022.
This increase was primarily driven by (i) $7.9 million in higher non-cash equity-based compensation expense and (ii) Giphy employee-related costs comprised of $1.8 million of recurring Giphy Retention Compensation, net of capitalized labor and $5.4 million of non-recurring Giphy Retention Compensation not considered necessary to operate our business.
This increase was primarily driven by (i) $7.9 million in lower non-cash compensation expense and (ii) Giphy employee-related costs comprised of $1.8 million of recurring Giphy Retention Compensation, net of capitalized labor and $5.4 million of non-recurring Giphy Retention Compensation not considered necessary to operate our business.
A significant portion of our revenue is generated from credit card transactions and is typically settled within one to five business days. Our primary uses of cash for operating activities are for the payment of royalties to content contributors, employee-related expenditures and the payment of other operating expenses incurred in the ordinary course of business.
The majority of our revenue is generated from credit card transactions and is typically settled within one to five business days. Our primary uses of cash for operating activities are for the payment of royalties to content contributors, employee-related expenditures and the payment of other operating expenses incurred in the ordinary course of business.
Adjusted EBITDA and Adjusted EBITDA Margin We define adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, bargain purchase gain related to the acquisition of Giphy, Giphy Retention Compensation Expense - non-recurring, impairment of lease and related assets, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, interest income and expense and income taxes.
Adjusted EBITDA and Adjusted EBITDA Margin We define adjusted EBITDA as net income adjusted for depreciation and amortization, non-cash equity-based compensation, bargain purchase gain related to the acquisition of Giphy, Giphy Retention Compensation Expense - non-recurring, impairment of lease and related assets, foreign currency transaction gains and losses, severance costs associated with strategic workforce optimizations, unrealized gains and losses on investments, transaction costs associated with the Getty merger, interest income and expense and income taxes.
Determining the fair value requires management to use significant judgment and estimates, including revenue growth rates, the royalty rate and the discount rate related to the trade name and revenue growth rates, the royalty rate and the economic life related to developed technology, among others.
Determining the fair value requires management to use significant judgment and estimates, including revenue growth rates, the royalty rate, the discount rate, and the economic life related to developed technology and revenue growth rates, the royalty rate, and the the discount rate related to the trademark, among others.
Additionally, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted net income per diluted common share provide useful information to investors about the performance of the Company’s overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to Shutterstock’s underlying operating performance and revenue growth (including by distribution channel) on a constant currency basis, provides useful information to investors by eliminating the effect of foreign currency fluctuations that are not directly attributable to Shutterstock’s operating performance.
Additionally, management believes that adjusted net income, adjusted net income per diluted common share, adjusted EBITDA and adjusted EBITDA margin provide useful information to investors about the performance of the Company’s overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to Shutterstock’s underlying operating performance and revenue growth (including by product offering) on a constant currency basis (expressed as a percentage), provides useful information to investors by eliminating the effect of foreign currency fluctuations that are not directly attributable to Shutterstock’s operating performance.
This resulted in an $18.7 million impairment charge, of which $15.9 million and $2.8 million relates to right-of-use assets and property and equipment, respectively. There was no impairment of lease and related assets in 2023. Other income / (expense), net.
This resulted in an $18.7 million impairment charge, of which $15.9 million and $2.8 million relates to right-of-use assets and property and equipment, respectively. There was no impairment of lease and related assets in 2023. Interest Expense .
See Notes 15 and 16 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding our lease and other non-lease commitments, respectively, as of December 31, 2023. Cash Flows The following table summarizes our cash flow data for 2023, 2022 and 2021, respectively.
See Notes 17 and 18 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding our lease and other non-lease commitments, respectively, as of December 31, 2024. Cash Flows The following table summarizes our cash flow data for 2024, 2023 and 2022, respectively.
These increases are partially offset by $1.4 million in lower occupancy costs and $1.2 million in lower professional fees. For the twelve months ended December 31, 2023 and 2022, general and administrative expenses included $3.0 million and $3.9 million in transaction costs related to the Giphy and Pond5 acquisitions, respectively. Bargain Purchase Gain .
These increases were partially offset by (i) $1.4 million in lower occupancy costs and $1.2 million in lower professional fees. For the years ended December 31, 2023 and 2022, general and administrative expenses included $3.0 million and $3.9 million in transaction costs related to the Giphy and Pond5 acquisitions, respectively. Bargain Purchase Gain .
This makes our collection of content one of the largest of its kind, and we delivered 153.0 million paid downloads to our customers across all of our brands during the year ended December 31, 2023. Contributors of Content typically earn a royalty each time their work is licensed.
This makes our collection of content one of the largest of its kind, and we delivered 134.3 million paid downloads to our customers across all of our brands during the year ended December 31, 2024. Contributors of Content typically earn a royalty each time their work is licensed.
In addition, as of December 31, 2023, we had approximately $45 million in operating lease obligations with lease payments extending through 2029.
In addition, as of December 31, 2024, we had approximately $38 million in operating lease obligations with lease payments extending through 2029.
We are also required to pay an unused commitment fee ranging from 0.150% to 0.225%, determined based on the Company’s consolidated leverage ratio. In connection with the execution of this agreement, we paid debt issuance costs of approximately $0.6 million.
We are also required to pay an unused commitment fee ranging from 0.175% to 0.250%, determined based on our consolidated leverage ratio. In connection with the execution of this agreement, we paid debt issuance costs of approximately $2.2 million.
We recognize revenue gross of contributor royalties because we are the principal in the transaction as we are the party responsible for the performance obligation and control the product or service before transferring it to the customer. We also license content to customers through third-party resellers. Third-party resellers sell our products directly to customers as the principal in those transactions.
We recognize revenue gross of contributor royalties because we are the principal in the transaction as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. We also license content to customers through third-party resellers.
Over 2.0 million active, paying customers contributed to our revenue in 2023. Our contributors made their images, footage and music tracks available in our collection, which has grown to 771 million images and 54 million footage clips as of December 31, 2023.
Over 4.0 million active, paying customers contributed to our revenue in 2024. Our contributors made their images, footage and music tracks available in our collection, which has grown to 800 million images and 59 million footage clips as of December 31, 2024.
On January 29, 2024, our Board of Directors declared a quarterly cash dividend of $0.30 per share of outstanding common stock payable on March 14, 2024 to stockholders of record at the close of business on February 29, 2024. The Company currently expects to continue to pay comparable cash dividends on a quarterly basis in the future.
On January 27, 2025, our Board of Directors declared a quarterly cash dividend of $0.33 per share of outstanding common stock payable on March 20, 2025 to stockholders of record at the close of business on March 6, 2025. The Company currently expects to continue to pay comparable cash dividends on a quarterly basis in the future.
We believe the number of subscribers is an important metric that provides insight into our monthly recurring business. We believe that an increase in our number of subscribers is an indicator of engagement in our platform and potential for future growth. Subscriber Revenue We define subscriber revenue as the revenue generated from subscribers during the period.
We believe that an increase in our number of subscribers is an indicator of engagement in our platform and potential for future growth. Subscriber Revenue We define subscriber revenue as the revenue generated from subscribers during the period.
Subscribers, subscriber revenue and average revenue per customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from TurboSquid beginning February 2022, from PicMonkey beginning September 2022, and from Pond5 and Splash News beginning May 2023.
Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023, and for Average Revenue per Customer, from Giphy beginning July 2024.
The following is a reconciliation of net income to adjusted net income for each of the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands) Net income $ 110,269 $ 76,103 $ 91,883 Add / (less) Non-GAAP adjustments: Non-cash equity-based compensation 48,577 35,740 36,179 Tax effect of non-cash equity-based compensation (1) (11,416) (8,397) (8,502) Acquisition-related amortization expense (2) 34,737 29,302 13,334 Tax effect of acquisition-related amortization expense (1) (8,163) (6,886) (3,133) Bargain purchase gain (50,261) — — Giphy Retention Compensation Expense - non-recurring 31,577 — — Tax effect of Giphy Retention Compensation Expense - non-recurring (7,421) — — Impairment of lease and related assets — 18,664 — Tax effect of impairment of lease and related assets (1) — (4,199) — Other $ 12,493 $ 1,576 $ — Tax effect of other (1) $ (2,811) $ (355) $ — Adjusted net income $ 157,581 $ 141,548 $ 129,761 Adjusted net income per diluted common share $ 4.35 $ 3.87 $ 3.48 Weighted average diluted shares 36,242 36,546 37,324 (1) Statutory tax rates are used to calculate the tax effect of the adjustments.
The following is a reconciliation of net income to adjusted net income for each of the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands) Net income $ 35,932 $ 110,269 $ 76,103 Add / (less) Non-GAAP adjustments: Non-cash equity-based compensation 56,330 48,577 35,740 Tax effect of non-cash equity-based compensation (1)(2) (6,883) (11,416) (8,397) Acquisition-related amortization expense (3) 37,967 34,737 29,302 Tax effect of acquisition-related amortization expense (1) (8,922) (8,163) (6,886) Bargain purchase gain — (50,261) — Giphy Retention Compensation Expense - non-recurring 22,116 31,577 — Tax effect of Giphy Retention Compensation Expense - non-recurring (1) (5,197) (7,421) — Impairment of lease and related assets — — 18,664 Tax effect of impairment of lease and related assets (1) — — (4,199) Merger-related costs 2,750 — — Tax effect of merger-related costs (1) (619) — — Other (4) 7,425 12,493 1,576 Tax effect of other (1) (2,157) (2,811) (355) Adjusted net income (4) $ 138,742 $ 157,581 $ 141,548 Net income per diluted common share $ 1.01 $ 3.04 $ 2.08 Adjusted net income per diluted common share $ 3.89 $ 4.35 $ 3.87 Weighted average diluted shares 35,658 36,242 36,546 (1) Statutory tax rates are used to calculate the tax effect of the adjustments.
Our method for calculating adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted common share, revenue growth (including by distribution channel) on a constant currency basis and free cash flow, as well as a reconciliation of the differences between adjusted EBITDA, adjusted net income, revenue growth (including by 56 Table of Contents distribution channel) on a constant currency basis and free cash flow, and the most comparable financial measures calculated and presented in accordance with GAAP, is presented below.
Our method for calculating adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, adjusted EBITDA margin, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted free cash flow, as well as a reconciliation of the differences between each of our non-GAAP financial measures (adjusted EBITDA, adjusted net income, revenue growth (including by product offering) on a constant currency basis (expressed as a percentage) and adjusted free cash flow), and each measure’s most directly comparable financial measure calculated and presented in accordance with GAAP, is presented below.
At our option, revolving loans accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.125% to 0.500%, determined based on the Company’s consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.125% to 1.5%, determined based on our consolidated leverage ratio.
At our option, loans under the A&R Credit Agreement accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.375% to 0.750%, determined based on our consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.375% to 1.750%, determined based on our consolidated leverage ratio, plus a credit spread of 0.100%.
The Company’s Content and Data, Distribution, and Services offering revenues are as follows (in thousands): Year Ended December 31, 2023 2022 2021 Content $ 737,264 $ 789,306 $ 757,470 Data, Distribution, and Services 137,323 38,520 15,945 Total Revenue $ 874,587 $ 827,826 $ 773,415 Our Content Offering: Our Content offering include: • Images - consisting of photographs, vectors and illustrations.
The Company’s Content and Data, Distribution, and Services offering revenues are as follows (in thousands): Year Ended December 31, 2024 2023 2022 Content $ 760,011 $ 737,264 $ 789,306 Data, Distribution, and Services 175,251 137,323 38,520 Total Revenue $ 935,262 $ 874,587 $ 827,826 Our Content Offering: Our Content offering include: • Images - consisting of photographs, vectors and illustrations.
The decline in our Content license revenues was driven by weakness in new customer acquisition, partially offset by increases in Pond5. Pond5 contributed to revenues for the full year in 2023 compared to seven months in 2022.
The decline in our Content license revenues was driven by weakness in new customer acquisition, partially offset by increases in Pond5. Pond5 contributed to revenues for the full year in 2023 compared to seven months in 2022. Data, Distribution, and Services revenues increased by 256%, to $137.3 million in 2023 as compared to 2022.
In addition, operating cash flows for the year ended December 31, 2023 were unfavorably impacted by the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows.
In addition, operating cash flows for the year ended December 31, 2023 were unfavorably impacted by the recurring and non-recurring payments made to the Giphy workforce, the reimbursement of which is reflected in Investing Activities on the Statement of Cash Flows. Investing Activities Our investing activities have consisted primarily of capital expenditures, business combinations, asset acquisitions, investments and content acquisitions.
Capital expenditures are primarily attributable to investments in internally developed software. We continue to invest significantly in product development to enhance our customer experience and increase the efficiency with which we deploy new products and features. Cash used in investing activities totaled $54.3 million, $275.6 million and $250.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We continue to invest significantly in product development to enhance our customer experience and increase the efficiency with which we deploy new products and features. Cash used in investing activities totaled $166.2 million, $54.3 million and $275.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 140,552 $ 158,451 $ 216,372 Net cash used in investing activities $ (54,316) $ (275,550) $ (250,438) Net cash used in financing activities $ (102,704) $ (79,487) $ (77,722) Operating Activities Our primary source of cash from operating activities is cash collections from our customers.
Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 32,646 $ 140,552 $ 158,451 Net cash used in investing activities $ (166,168) $ (54,316) $ (275,550) Net cash provided by / (used in) financing activities $ 150,096 $ (102,704) $ (79,487) Operating Activities Our primary source of cash from operating activities is cash collections from our customers.
Content licenses are generally purchased on a monthly or annual subscription basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download.
Content licenses are generally purchased on a monthly or annual basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. We also generate revenue from tools made available through our platform.
In addition, we estimate expected unused licenses for subscription-based products and recognize the estimated revenue associated with unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during the subscription period.
In addition, for subscription-based products in which the customer obtains an allotted number of digital assets to download, we estimate expected unused licenses and recognize the revenue associated with the unused licenses as digital assets are downloaded and licenses are obtained for such content by the customer during the subscription period.
We expect that our cost of revenue will continue to fluctuate in line with changes in revenue. Sales and Marketing. Sales and marketing expenses increased by $11.6 million, or 6%, to $214.7 million in 2023 as compared to 2022. As a percent of revenue, sales and marketing expenses was 25% for the years ended December 31, 2023 and 2022.
We expect that our cost of revenue will continue to fluctuate in line with changes in revenue. 56 Table of Contents Sales and Marketing. Sales and marketing expenses increased by $11.6 million, or 6%, to $214.7 million in 2023 as compared to 2022.
Year Ended December 31, 2023 2022 2021 Reported revenue (in thousands) $ 874,587 $ 827,826 $ 773,415 Revenue growth 6 % 7 % 16 % Revenue growth on a constant currency basis 5 % 11 % 15 % Content reported revenue (in thousands) $ 737,264 $ 789,306 $ 757,470 Content revenue growth (7) % 4 % 14 % Content revenue growth on a constant currency basis (7) % 8 % 13 % Data, Distribution, and Services reported revenue (in thousands) $ 137,323 $ 38,520 $ 15,945 Data, Distribution, and Services revenue growth 256 % 142 % 252 % Data, Distribution, and Services revenue growth on a constant currency basis 256 % 144 % 252 % 58 Table of Contents Free Cash Flow We define free cash flow as our cash provided by operating activities, adjusted for capital expenditures and content acquisition, and, with respect to the twelve months ended December 31, 2023, cash received related to Giphy Retention Compensation in connection with the acquisition of Giphy.
Year Ended December 31, 2024 2023 2022 Reported revenue (in thousands) $ 935,262 $ 874,587 $ 827,826 Revenue growth 7 % 6 % 7 % Revenue growth on a constant currency basis 7 % 5 % 11 % Content reported revenue (in thousands) $ 760,011 $ 737,264 $ 789,306 Content revenue growth 3 % (7) % 4 % Content revenue growth on a constant currency basis 3 % (7) % 8 % Data, Distribution, and Services reported revenue (in thousands) $ 175,251 $ 137,323 $ 38,520 Data, Distribution, and Services revenue growth 28 % 256 % 142 % Data, Distribution, and Services revenue growth on a constant currency basis 28 % 256 % 144 % 64 Table of Contents Adjusted Free Cash Flow We define adjusted free cash flow as our net cash provided by operating activities, adjusted for capital expenditures, content acquisition, cash received related to Giphy Retention Compensation in connection with the acquisition of Giphy and cash paid for Envato Seller Obligations.
Beyond content, customers also leverage the Company’s platform to assist with the entire creative process from ideation through creative execution. Digital content licensed to our customers for their creative needs includes images, footage, music, and 3D models (our “Content” offering).
Contributors upload their content to our web properties in exchange for royalty payments based on customer download activity. Beyond content, customers also leverage our platform to assist with the entire creative process from ideation through creative execution. Digital content licensed to our customers for their creative needs includes images, footage, music, and 3D models (our “Content” offering).
We have elected to treat any potential GILTI inclusions as a period cost. 60 Table of Contents Acquisitions Business combinations are recorded at fair value and the purchase price is allocated to the assets acquired and liabilities assumed in the transaction. Assets acquired may include intangible assets such as customer relationships, trade names, developed technology and contributor content.
Acquisitions Business combinations are recorded at fair value and the purchase price is allocated to the assets acquired and liabilities assumed in the transaction. Assets acquired may include intangible assets such as customer relationships, trade names, developed technology and contributor content.
As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate. During 2021, other expense, net substantially consisted of $3.3 million of expense due to foreign currency fluctuations. 52 Table of Contents Income Taxes.
During 2023, other income / (expense), net substantially consisted of $4.8 million of interest income and $0.9 million of favorable unrealized foreign currency fluctuations. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.
This increase was primarily driven by: (i) increased depreciation and amortization expense driven by our recent acquisitions; (ii) increased royalty, content and reviewer costs; and (iii) higher costs associated with website hosting, hardware and software licenses. We expect that our cost of revenue will continue to fluctuate in line with changes in revenue and paid downloads. Sales and Marketing.
This increase was driven by increased royalty and content costs, costs associated with website hosting, hardware and software licenses, employee related costs, and depreciation and amortization driven by the acquisition of Envato. We expect that our cost of revenue will continue to fluctuate in line with changes in revenue. Sales and Marketing.
Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences, is based on a credit evaluation for certain new customers and transaction history with existing customers.
Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences, is based on a credit evaluation for certain new customers and transaction history with existing customers.
Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences, is based on a credit evaluation for certain new customers and transaction history with existing customers.
Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences, is based on a credit evaluation for certain new customers and transaction history with existing customers.
See also the “Risk Factors” disclosure in Item 1A above for additional discussion of the risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Overview and Recent Developments Shutterstock is a leading global creative platform connecting brands and businesses to high quality content.
See also the “Risk Factors” disclosure in Item 1A above for additional discussion of the risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.
We also generate revenue from tools made available through our platform. For contracts that contain multiple performance obligations, we allocate the transaction price to each performance obligation based on a relative standalone selling price.
For contracts that contain multiple performance obligations, we allocate the transaction price to each performance obligation based on a relative standalone selling price.
Year Ended December 31, 2023 2022 2021 (in thousands) Consolidated Statements of Operations: Revenue $ 874,587 $ 827,826 $ 773,415 Operating expenses: Cost of revenue 352,630 314,306 277,659 Sales and marketing 214,749 203,154 204,878 Product development 96,162 65,434 52,014 General and administrative 142,646 132,644 130,758 Impairment of lease and related assets — 18,664 — Total operating expenses 806,187 734,202 665,309 Income from operations 68,400 93,624 108,106 Bargain purchase gain 50,261 — — Other income / (expense), net 3,807 (2,587) (3,370) Income before income taxes 122,468 91,037 104,736 Provision for income taxes 12,199 14,934 12,853 Net income $ 110,269 $ 76,103 $ 91,883 The following table presents the components of our results of operations for the periods indicated as a percentage of revenue: Year Ended December 31, 2023 2022 2021 Consolidated Statements of Operations: Revenue 100 % 100 % 100 % Operating expenses: Cost of revenue 40 % 38 % 36 % Sales and marketing 25 % 25 % 26 % Product development 11 % 8 % 7 % General and administrative 16 % 16 % 17 % Impairment of lease and related assets — % 2 % — % Total operating expenses 92 % 89 % 86 % Income from operations 8 % 11 % 14 % Bargain purchase gain 6 % — % — % Other income / (expense), net — % — % — % Income before income taxes 14 % 11 % 14 % Provision for income taxes 1 % 2 % 2 % Net income 13 % 9 % 12 % 48 Table of Contents Comparison of the Years Ended December 31, 2023 and December 31, 2022 The following table presents our results of operations for the periods indicated: Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Consolidated Statements of Operations Data: Revenue $ 874,587 $ 827,826 $ 46,761 6 % Operating expenses: Cost of revenue 352,630 314,306 38,324 12 Sales and marketing 214,749 203,154 11,595 6 Product development 96,162 65,434 30,728 47 General and administrative 142,646 132,644 10,002 8 Impairment of lease and related assets — 18,664 (18,664) * Total operating expenses 806,187 734,202 71,985 10 Income from operations 68,400 93,624 (25,224) (27) Bargain purchase gain 50,261 — 50,261 * Other income / (expense), net 3,807 (2,587) 6,394 (247) Income before income taxes 122,468 91,037 31,431 35 Provision for income taxes 12,199 14,934 (2,735) (18) Net income $ 110,269 $ 76,103 $ 34,166 45 % * Not meaningful Revenue Revenue increased by $46.8 million, or 6%, to $874.6 million in 2023 as compared to 2022.
Research and Development (“R&D”) tax credit and the foreign-derived intangible income deduction. 55 Table of Contents Comparison of the Years Ended December 31, 2023 and December 31, 2022 The following table presents our results of operations for the periods indicated: Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Consolidated Statements of Operations Data: Revenue $ 874,587 $ 827,826 $ 46,761 6 % Operating expenses: Cost of revenue 352,630 314,306 38,324 12 Sales and marketing 214,749 203,154 11,595 6 Product development 96,162 65,434 30,728 47 General and administrative 142,646 132,644 10,002 8 Impairment of long-lived assets — 18,664 (18,664) * Total operating expenses 806,187 734,202 71,985 10 Income from operations 68,400 93,624 (25,224) (27) Bargain purchase gain 50,261 — 50,261 * Interest expense (1,857) (1,336) (521) 39 Other income / (expense), net 5,664 (1,251) 6,915 (553) Income before income taxes 122,468 91,037 31,431 35 Provision for income taxes 12,199 14,934 (2,735) (18) Net income $ 110,269 $ 76,103 $ 34,166 45 % * Not meaningful Revenue Revenue increased by $46.8 million, or 6%, to $874.6 million in 2023 as compared to 2022.
General and administrative expenses include employee compensation, including non-cash equity-based compensation, bonuses and benefits for executive, finance, accounting, legal, human resources, internal information technology, internet security, business intelligence and other administrative personnel. In addition, general and administrative expenses include outside legal, tax and accounting services, bad debt expense, insurance, facilities costs, other supporting overhead costs and depreciation and amortization expense.
General and administrative expenses include employee compensation, including non-cash equity-based compensation, bonuses and benefits for executive, finance, accounting, legal, human resources, internal information technology, internet security, business intelligence and other administrative personnel.
Research and Development (“R&D”) tax credit, and the foreign-derived intangible income deduction. The 2022 effective tax rate differs from the U.S. federal statutory rate primarily due to the effect of the U.S. R&D tax credit and the foreign-derived intangible income deduction.
The 2023 effective tax rate differs from the U.S. federal statutory tax rate primarily due to the non-taxable bargain purchase gain associated with the acquisition of Giphy, the effect of the U.S. Research and Development (“R&D”) tax credit, and the foreign-derived intangible income deduction.
Investing Activities Our investing activities have consisted primarily of capital expenditures, business combinations, asset acquisitions, investments and content acquisitions. As of 2023, investing activities also includes amounts related to the Giphy Retention Compensation. Capital expenditures include internal-use software and website development costs, purchases of software equipment, and capitalization of leasehold improvements.
Starting in 2023, investing activities also includes amounts related to the Giphy Retention Compensation. Capital expenditures include internal-use software and website development costs, purchases of software equipment, and capitalization of leasehold improvements. Capital expenditures are primarily attributable to investments in internally developed software.
We are also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the Credit Facility. As of December 31, 2023, we are in compliance with these covenants.
We are also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the A&R Credit Agreement. As of December 31, 2024, we were in compliance with these covenants. 58 Table of Contents Our outstanding debt (in thousands) is reflected in the table below.
The increase in Data, Distribution, and Services revenues was primarily driven by growth in our data offering, which accounted for $84.9 million of the growth from 2022 to 2023 and $10.5 million of revenue generated from Giphy. 2023 revenue from our E-commerce customers decreased by 12%, to $439.9 million in 2023, as compared to 2022.
Foreign currency fluctuations did not have a significant impact on our Data, Distribution, and Services revenues in 2023. The increase in Data, Distribution, and Services revenues was primarily driven by growth in our data offering, which accounted for $84.9 million of the growth from 2022 to 2023 and $10.5 million of revenue generated from Giphy.
Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets. Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution. We offer a whole spectrum of services at pre-production, production, live production and post-production stages.
Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”). Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets. Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution.
As of December 31, 2023, we had $71.8 million of remaining authorization for purchases under the 2023 Share Repurchase Program. 53 Table of Contents Revolving Credit Facility On May 6, 2022, we entered into a five-year $100 million unsecured revolving loan facility (the “Credit Facility”) with Bank of America, N.A., as Administrative Agent and other lenders.
Credit Facility and A&R Credit Agreement On May 6, 2022, we entered into a five-year $100 million unsecured revolving loan facility (the “Credit Facility”) with Bank of America, N.A., as Administrative Agent and other lenders.
Cost and Expenses Cost of Revenue. Cost of revenue increased by $36.6 million, or 13%, to $314.3 million in 2022 as compared to 2021. As a percent of revenue, cost of revenues increased to 38% for the year ended December 31, 2022, from 36% for 2021.
Cost and Expenses Cost of Revenue. Cost of revenue increased by $43.7 million, or 12%, to $396.3 million in 2024 as compared to 2023. As a percent of revenue, cost of revenues increased to 42% for the year ended December 31, 2024, from 40% for 2023.
During 2022, other income / (expense), net substantially consisted of $1.3 million of expense due to foreign currency fluctuations and $1.3 million of interest expense related to the Credit Facility. Income Taxes. Income tax expense decreased by $2.7 million, to $12.2 million in 2023 as compared to 2022.
During 2022, other income / (expense), net substantially consisted of $1.3 million of expense due to foreign currency fluctuations. Income Taxes. Income tax expense decreased by $2.7 million, to $12.2 million in 2023 as compared to 2022. Our effective tax rates for the years ended December 31, 2023 and 2022 were approximately 10.0% and 16.4%, respectively.
Management believes that free cash flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in internal-use software and website development costs to support the Company’s ongoing business operations and provides them with the same measures that management uses as the basis for making resource allocation decisions.
Management believes that adjusted free cash flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in internal-use software and website development costs to support the Company’s ongoing business operations and provides them with the same measures that management uses as the basis for making resource allocation decisions. 61 Table of Contents Our use of non-GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP, as the excluded items may have significant effects on our operating results and financial condition.
These metrics exclude the respective counts and revenues from Giphy. Subscribers We define subscribers as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period.
Subscribers We define subscribers as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period. We believe the number of subscribers is an important metric that provides insight into our monthly recurring business.
A bargain purchase gain is recognized subsequent to an acquisition, if the fair value of the net assets acquired and liabilities assumed exceeds the net consideration. Other (Expense) / Income, Net. Other (expense) / income, net consists of non-operating costs such as foreign currency transaction gains and losses, in addition to interest income and expense. Income Taxes.
A bargain purchase gain is recognized subsequent to an acquisition, if the fair value of the net assets acquired and liabilities assumed exceeds the net consideration. Interest Expense. Interest expense consists of interest on our debt and amortization of deferred financing fees. Other Income / (Expense), Net.
Cash used in investing activities for the year ended December 31, 2021 was $250.4 million, consisting primarily of (i) $181.6 million cash used in the acquisitions of Turbosquid and PicMonkey, net of cash acquired; (ii) $31.6 million cash used in the asset acquisitions of Pattern89, Inc., Datasine Limited and assets from Shotzr, Inc.; (iii) capital expenditures of $28.1 million for internal-use software and website development costs, and purchase of software and equipment, and (iv) $8.9 million to acquire the rights to distribute certain digital content in perpetuity.
Cash used in investing activities for the year ended December 31, 2024 was $166.2 million, consisting primarily of (i) $179.1 million cash used in the acquisitions of Envato and Backgrid, net of cash acquired; (ii) capital expenditures of $47.2 million for internal-use software and website development costs and purchases of software and equipment; and (iii) $4.0 million paid to acquire the rights to distribute certain digital content into perpetuity.
As of December 31, 2023, we have repurchased approximately 4.4 million shares of our common stock under the share repurchase program at an average per-share cost of $51.74. During the year ended December 31, 2023, we repurchased approximately 634,500 shares of our common stock at an average per share cost of $44.45.
During the year ended December 31, 2024, we repurchased approximately 1.1 million shares of our common stock at an average per share cost of $37.42. As of December 31, 2024, we had $30.2 million of remaining authorization for purchases under the 2023 Share Repurchase Program.
The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of our subscription products. For revenue associated with tools available 59 Table of Contents through our platform, we recognize revenue on a straight-line basis over the subscription period.
The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of our subscription products. For unlimited download subscription-based products, we recognize revenue in a manner that reflects estimated content download patterns during the subscription period.
Our effective tax rates for the years ended December 31, 2023 and 2022 were approximately 10.0% and 16.4%, respectively. 50 Table of Contents The 2023 effective tax rate differs from the U.S. federal statutory tax rate primarily due to the non-taxable bargain purchase gain associated with the acquisition of Giphy, the effect of the U.S.
The 2023 effective tax rate differs from the U.S. federal statutory tax rate primarily due to the non-taxable bargain purchase gain associated with the acquisition of Giphy, the effect of the U.S.
As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.
During the twelve months ended December 31, 2023, other income, net consisted of $4.8 million of interest income and $0.9 million of unrealized foreign currency gains. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate. Income Taxes.
In addition, management estimates expected unused licenses for subscription-based products and recognizes the estimated revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during the subscription period.
In addition, for subscription-based products in which the Customer obtains an allotted number of digital assets to download, we estimate expected unused licenses and recognize the revenue associated with the unused licenses as digital assets are 65 Table of Contents downloaded and licenses are obtained for such content by the customer during the subscription period.
The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of our subscription products. For revenue associated with tools available through our platform, the Company recognizes revenue on a straight-line basis over the subscription period.
The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of our subscription products. For unlimited download subscription-based products, we recognize revenue in a manner that reflects estimated content download patterns during the subscription period.
We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our share repurchase program is subject to us having available cash to fund repurchases.
Share Repurchase Program In June 2023, our Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”), providing authorization to repurchase up to $100 million of our common stock. We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate.
The following is a presentation of cash flow information and a reconciliation of net cash provided by operating activities to free cash flow for each of the periods indicated: Year Ended December 31, 2023 2022 2021 Cash flow information: (in thousands) Net cash provided by operating activities $ 140,552 $ 158,451 $ 216,372 Net cash used in investing activities $ (54,316) $ (275,550) $ (250,438) Net cash used in financing activities $ (102,704) $ (79,487) $ (77,722) Free cash flow: Net cash provided by operating activities $ 140,552 $ 158,451 $ 216,372 Capital expenditures (44,645) (43,296) (28,125) Content acquisitions (11,096) (16,821) (8,874) Cash received related to Giphy Retention Compensation 53,657 — — Free Cash Flow $ 138,468 $ 98,334 $ 179,373 Critical Accounting Estimates Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
The following is a presentation of cash flow information and a reconciliation of net cash provided by operating activities to adjusted free cash flow for each of the periods indicated: Year Ended December 31, 2024 2023 2022 Cash flow information: (in thousands) Net cash provided by operating activities $ 32,646 $ 140,552 $ 158,451 Net cash used in investing activities $ (166,168) $ (54,316) $ (275,550) Net cash provided by / (used in) financing activities $ 150,096 $ (102,704) $ (79,487) Adjusted free cash flow: Net cash provided by operating activities $ 32,646 $ 140,552 $ 158,451 Capital expenditures (47,215) (44,645) (43,296) Content acquisitions (4,029) (11,096) (16,821) Cash received related to Giphy Retention Compensation 63,971 53,657 — Cash paid for Envato Seller Obligations (1) 63,320 — — Adjusted Free Cash Flow $ 108,693 $ 138,468 $ 98,334 (1) Envato Seller Obligations relate to payments made on behalf of the Envato sellers’ after the closing of the acquisition.
Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from TurboSquid beginning February 2022, from PicMonkey beginning September 2022, and from Pond5 and Splash News beginning May 2023. These metrics exclude the respective counts and revenues from our acquisition of Giphy. Basis of Presentation Revenue A significant portion of our revenues are earned from licensing content.
Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Pond5 and Splash News beginning May 2023, and for Average Revenue per Customer, from Giphy beginning July 2024. These metrics exclude the respective counts and revenues from Backgrid and Envato.
Key Operating Metrics In addition to key financial metrics, we regularly review a number of key operating metrics to evaluate our business, determine the allocation of resources and make decisions regarding business strategies. We believe that these metrics can be useful for understanding the underlying trends in our business.
We offer a whole spectrum of services at pre-production, production, live production and post-production stages. 49 Table of Contents Key Operating Metrics In addition to key financial metrics, we regularly review a number of key operating metrics to evaluate our business, determine the allocation of resources and make decisions regarding business strategies.

… 112 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed3 unchanged
Biggest changeDollars Originating Currency Euro $ 139,529 € 128,714 $ 148,643 € 138,531 $ 152,290 € 129,140 British pounds 56,679 £ 45,366 57,144 £ 45,711 57,851 £ 42,340 All other non-U.S. currencies (1) 54,839 59,204 57,342 Total foreign currency 251,047 264,991 267,483 U.S. dollar 623,540 562,835 505,932 Total revenue $ 874,587 $ 827,826 $ 773,415 (1) Includes no single currency which exceeded 5% of total revenue for any of the periods presented. 61 Table of Contents Interest Rate Fluctuation Risk Our cash and cash equivalents consist of cash and money market accounts.
Biggest changeDollars Originating Currency Euro $ 142,729 € 131,958 $ 139,529 € 128,714 $ 148,643 € 138,531 British pounds 57,960 £ 45,573 56,679 £ 45,366 57,144 £ 45,711 All other non-U.S. currencies (1) 53,255 54,839 59,204 Total foreign currency 253,944 251,047 264,991 U.S. dollar 681,318 623,540 562,835 Total revenue $ 935,262 $ 874,587 $ 827,826 (1) Includes no single currency which exceeded 5% of total revenue for any of the periods presented.
Based on our foreign currency denominated revenue for 2023, we estimate that a 10% change in the exchange rate of the U.S. dollar against all foreign currency denominated revenues would impact our revenue by approximately 3%. We have established foreign subsidiaries in various countries and have concluded that the functional currency of these entities is generally the local currency.
Based on our foreign currency denominated revenue for 2024, we estimate that a 10% change in the exchange rate of the U.S. dollar against all foreign currency denominated revenues would impact our revenue by approximately 3%. We have established foreign subsidiaries in various countries and have concluded that the functional currency of these entities is generally the local currency.
A hypothetical 10% change in interest rates would not have a material impact on our interest expense as of December 31, 2023. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
A hypothetical 10% change in interest rates would not have a material impact on our interest expense as of December 31, 2024. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Translation adjustments resulting from converting the foreign subsidiaries’ financial statements into U.S. dollars are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. We do not currently enter into derivatives or other financial instruments in order to hedge our foreign currency exchange risk, but we may do so in the future.
Translation adjustments 66 Table of Contents resulting from converting the foreign subsidiaries’ financial statements into U.S. dollars are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. We do not currently enter into derivatives or other financial instruments in order to hedge our foreign currency exchange risk, but we may do so in the future.
Foreign Currency Exchange Risk Our sales to international customers are denominated in multiple currencies, including but not limited to the U.S. dollar, the euro, the British pound, the Australian dollar and the Japanese yen. Revenue denominated in foreign currencies as a percentage of total revenue was approximately 29%, 32% and 35% in 2023, 2022 and 2021, respectively.
Foreign Currency Exchange Risk Our sales to international customers are denominated in multiple currencies, including but not limited to the U.S. dollar, the euro, the British pound, the Australian dollar and the Japanese yen. Revenue denominated in foreign currencies as a percentage of total revenue was approximately 27%, 29% and 32% in 2024, 2023 and 2022, respectively.
Our historical revenue by currency is as follows (in thousands): Year Ended December 31, 2023 2022 2021 U.S. Dollars Originating Currency U.S. Dollars Originating Currency U.S.
Our historical revenue by currency is as follows (in thousands): Year Ended December 31, 2024 2023 2022 U.S. Dollars Originating Currency U.S. Dollars Originating Currency U.S.
Business transacted in currencies other than each entity’s functional currency results in transactional gains and losses. The net impacts of foreign currency transactions on our financial statements was a gain of $0.7 million in 2023 and losses of $3.1 million and $3.2 million in 2022 and 2021, respectively.
Business transacted in currencies other than each entity’s functional currency results in transactional gains and losses. The net impacts of foreign currency transactions on our financial statements were losses of $3.2 million and $3.1 million in 2024 and 2022, respectively, and a gain of $0.7 million in 2023.
The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. The fair value of our cash and cash equivalents is not particularly sensitive to interest rate changes.
Interest Rate Fluctuation Risk Our cash and cash equivalents consist of cash and money market accounts. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. The fair value of our cash and cash equivalents is not particularly sensitive to interest rate changes.
Amounts borrowed under our Credit Facility accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.125% to 0.500%, determined based on our consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.125% to 1.5%, determined based on our consolidated leverage ratio.
Amounts borrowed under our A&R Credit Agreement accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.375% to 0.750%, determined based on our consolidated net leverage ratio or (ii) the Term SOFR rate (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.375% to 1.750%, determined based on our consolidated net leverage ratio, plus a credit spread adjustment of 0.100%.

Other SSTK 10-K year-over-year comparisons