Good morning, ladies and gentlemen, and welcome to the Shutterstock Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Rawson Daniel. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Shutterstock's first quarter 2017 earnings call. Joining me today is Jon Oringer, our Founder, Chief Executive Officer, and Chairman; and Steven Berns, our Chief Operating and Financial Officer. During this call, management may make forward-looking statements that are subject to risk and uncertainty, including predictions, expectations, estimates and other information. These include statements relating to the expansion of our addressable market; the growth of our customer base; and success of new and existing product offerings, revenue growth and the predictability of our revenue; adjusted EBITDA; equity-based compensation; foreign currency rates, taxes and capital expenditures. Our actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Please refer to today's press release and the reports and documents we file from time to time with the U.S. Securities and Exchange Commission, including the section entitled Risk Factors in the company's Annual Report on Form 10-K for the year ended December 31, 2016, for discussions of important risk factors that could cause actual results to differ materially from those discussed in any forward-looking statements we may make on this call. On this call, we will refer to adjusted EBITDA, adjusted EBITDA margin, adjusted net income, revenue and adjusted EBITDA growth on a constant-currency basis and free cash flow, which are non-GAAP financial measures. You can find a description of these items along with the reconciliation to the most directly comparable GAAP financial measures in today's earnings release and in our Form 10-K, which are posted on the Investor Relations section of our website. We believe that the use of these measures, in conjunction with GAAP financial measures, provides important additional insights for investors about the performance of the company's overall business and operating performance and enhances the comparability for investors in assessing our financial reporting. However, these non-GAAP financial measures should not be considered as a substitute for or superior to financial information prepared in accordance with GAAP. And with that, I will turn the call over to Jon.

Thanks, Rawson. And thanks everyone for joining us today for Shutterstock's first quarter 2017 earnings call. We had a solid start to the year and remain focused on executing against our long term vision. In the first quarter of 2017, on a constant currency and year-over-year basis, we grew revenue 14% and adjusted EBITDA 4%, as we continue to deliver strong growth across each of our key metrics. On a year-over-year basis, during the quarter we grew our customer base by 13% to 1.7 million customers. We grew paid downloads by 6% to $43.5 million. We grew revenue per download by 7% on a constant currency basis. We expanded our image library by 63% to 132 million images and we increased our video library by 64% to 6.9 million clips. We are pleased with our first quarter financial results and continued operational momentum. Over the past several years we have been successfully diversifying and expanding our offerings, including providing customers with additional content type beyond stock images and more innovative search tools, offering localized products so that we can increase our relevancy to customers globally and providing best-in-class functionality to help our customers more efficiently and effectively utilize and manage their content assets. By building a broader product suite, we continued to differentiate our business from the competition and attract an increasing number of customers and contributors to Shutterstock. As we continue to focus on growing and enhancing our current business, we also have our sights set on bigger goals that we believe will propel us to further grow shareholder value. This means continuing our transition from a stock image marketplace to a broader platform that provide individuals and enterprises with the various content types and tools needed to collaboratively design, build and distribute their creative projects. We believe that…

Thanks Jon. And thank you everyone for joining us today. Before I discuss our performance, I want to let you know that we have posted a brief presentation deck on our website which contains supporting materials for our quarterly results as well as other items discussed on today's call. As Jon highlighted, Shutterstock had a solid start to 2017 and continued to deliver profitable growth and operating momentum. Continued growth across our business translated into revenue growth in the first quarter of 2017 on a reported basis of 12% and an adjusted EBITDA margin of 18%. On a constant currency basis, revenue growth was 14% and adjusted EBITDA growth was 4%. We continue to see good trends across our key metrics as we attract new customers across our multiple product offerings and increase engagement and customer lifetime value. This past quarter our customer base expanded 13% to 1.7 million customers as compared to the prior year's first quarter. We saw a 6% increase in paid downloads driven by growth in new customers as well as increased activity across our existing user base. We also saw revenue per download increase 5% on a reported basis, or 7% on a constant currency basis primarily driven by continued growth in our enterprise and motion businesses which operate at higher price points than our traditional e-commerce images offering. As Jon mentioned, international expansion and localization continues to be a core part of our long-term growth strategy. In the first quarter of 2017, of the approximately 64% of our revenues from customers outside the United States, approximately half is from customers in Europe, with the balance from Asia-Pacific and Latin America. Excluding the impact of foreign currency movements, revenue from all of our regions grew at double-digit rates in the first quarter of 2017 as…

And your first question comes from the line of Naved Khan from Cantor Fitzgerald. Your line is open.

Yeah. Hi. Thank you very much. Just a couple of questions. If I just look at the e-commerce growth that slowed to kind of mid single-digits. And Jon, just putting that in context with your remarks about things that you're doing to react to basically drive better engagement, do you think e-commerce can again come back into the double-digit growth? And then I had a follow up question on the enterprise.

Yeah. Yeah. I think that the core part of our business can grow again. And we're focused every day on coming into this office and working together to do that. Part of the reorganization we went through where we organized the company into GM verticals is really going to help us do this. We were on a new tech stack. We have a lot of great ideas. We know the market is really large, that we sell to businesses. Businesses use our images every day to sell their product or service. We have 1.7 million of those customers today and we know there's tens of millions of more customers out there that need these assets to sell their products, sell their services, so.

As we've talked about, Naved, in prior calls, we in 2016 moved our tech stack to update it after many years of kind of not bringing into, if you would, the next generation, so that we believed based on that we'll improve the ability of our launching of features and functionality to improve the customer experience. And so we clearly have done that with the expectation of reacceleration of the growth in the e-commerce business.

Okay. And then on the enterprise side, it looks like it's doing very well, growing on 25% or so. How much of that is driven by growth in account versus penetration of existing account (20:31) that you might have? And can you just also touch upon the opportunity within enterprise outside of the U.S., what do you see there and where you are at currently?

So the split between expansion within existing customers and new is about 50/50 and so we're seeing continued retention and spend from our existing customers as well as the attraction and spend from new enterprise customers. That's primarily in the image business. We see opportunities in video, editorial and music both domestically as well as outside the U.S. So that's really a global opportunity as those products become more – greater utilization from stock providers. In addition, we – our strategy and as we've indicated in our remarks, we've put a senior sales leader in Singapore because of the significant opportunities in the Asia Pacific region. About a year ago, we put a senior sales leader in Europe to further expand our presence and our opportunities there. And so we continue to see significant opportunities globally despite the fact that two-thirds of our revenue come from customers outside the U.S. We believe that the opportunities continue to be material.

Okay. And then the two-thirds comment also applies to enterprise, the two-thirds of enterprise revenue is also from non-U.S.?

No, it's two-thirds of overall, but still we – remember, as you know, in the life cycle of a customer, it's often that a customer will be in our e-commerce business and then either evolve to or come to our enterprise business. So we look at the two-thirds as a total number. That's the best because that's what it is mathematically, but that's the best way to evaluate it.

Thank you.

Your next question comes from the line of Brian Fitzgerald from Jefferies. Your line is open.

Hey, this is John (22:56) on for Brian. Thanks for taking my question. Just curious if you could share any additional kind of data points around Shutterstock Editor. As you kind of continue to invest in reducing the friction to buy, any data points you can share around how Shutterstock Editor is increasing either the lifetime value of the customer or kind of reducing the acquisition cost. Thanks.

Yeah. It's early days for all of our workflow tools. We know that people that use Editor stay with us longer. We can see that they're more engaged. We see that they're using the tool. We're adding features and functionalities to Editor every month. And I see a pretty big future for Editor. It's only available in our core product. We eventually wanted to be available on our enterprise product and even for other asset types as we start to build that out. We have an entire team working on machine learning and artificial intelligence-type features that will be implemented more and more in our search results and even could be part of our Editor product in the future. So there's a lot of stuff we're working on that hasn't reached the customer yet. It will be very exciting when it does.

Great. Thanks, guys.

Your next question comes from the line of Ralph Schackart from William Blair. Your line is open. Ralph E. Schackart - William Blair & Co. LLC: Good morning. Two questions if I could. Jon, just on the platform rebuilding, maybe just give us a sense of how you're progressing vis-a-vis your internal targets. And then, I'm guessing you still have a view that it will have a potential impact to accelerate your business again, but just wanted to sort of ask on that. And then Steven you talked about LTV metrics, so holding steady across the customer base, but just wanted to ask specifically as you've introduced some of the lower price plans, how that customer behavior is trending vis-a-vis sort of the broader mix on the e-comm side of the business. Thank you.

I'll start on the platform. So, through the history of Shutterstock, we fought hard to build and grow fast through individual siloed asset types and that worked for a while until around 2013 or 2014 when we decided to agree on a common tax stack and bring all of our asset types and platforms, whether we organically built those or we acquired those, onto a single tax stack. We are well through that process. There's always going to be pieces of the platform that we're upgrading. There's always going to be tech that we're working our way out of. But we're getting to a place now where we have an agreed upon platform throughout the company that we all build on. And we are moving the remaining pieces of those acquisitions and organic pieces that we grew onto this new platform. That will enable us to move faster, cross-sell between products, understand who customers are between all of our products, and our customers – and allow us to do things like focus on reaccelerating growth in the core, for instance.

As it relates to the LTV metrics, what I would tell you is that we're looking at overall conversion rate. We look at total overall volume and we look at retention. And so when we take the combination of these across all of our products, we're seeing very good results. We don't share specific results by product, but what we can tell you is that we believe that our offerings are finding the customers. They're attractive to customers. And on an overall basis, we believe that as we have done in the past, we'll continue to iterate to make sure that we're meeting the needs of customers globally. And it's a dynamic customer base and we'll continue to serve their needs. But we feel very good about where we are at this time. Ralph E. Schackart - William Blair & Co. LLC: Great. One more if I could, Steven. Would you mind providing your revenue repeat rate in the quarter, please?

The retention.

The retention rate? Ralph E. Schackart - William Blair & Co. LLC: Retention, yeah.

At 92%. Ralph E. Schackart - William Blair & Co. LLC: Okay. Thank you.

Sure.

Your next question comes from the line of Blake Harper from Loop Capital. Your line is open.

Yes. Thanks. I wanted to ask, last quarter you had talked about some of the lower priced e-commerce packages that contributed to some slower growth. And just wanted to see where you were seeing some of the newer customer additions, was it some similar type of dynamics in the quarter or are you seeing some kind of some of the -- some higher priced packages that are getting more traction now as well?

Yes. So I'll just refer back to the last answer I gave in terms of what we're seeing is that we recognize that there are everything from project oriented users, there are small and medium sized businesses that utilize images and other assets, music video and so on, on a more regular basis. There are freelancers and then there are, if you would, large enterprises that are utilizing huge numbers of assets over -- on a daily basis. And what we're doing is we're making sure that from our small and medium sized business products, our enterprise products, our team subscriptions as well as our individual users that we are providing them with the pricing and packaging that meets their needs on a fair value basis. And so we're not ever trying to be the lowest priced. We're trying to be the best value for the work and the projects that they're doing. And when we do that, we see high long-term values consistent with our return on investments that we've had history.

Okay. Thanks.

Your next question comes from the line of Lloyd Walmsley from Deutsche Bank. Your line is open.

Thanks. Two if I can. First, following up on the replatforming, you've talked about moving faster, potentially doing more cross-selling. Wondering if you can just give us more specifics on what maybe the biggest impact you've seen to date as you guys work on a more modern platform? Are you seeing more customers buy across product or anything specific you'd point to? And then second one, following up around the questions around the acquisition funnel in the script you talked about. Tests you're doing, changes you're making, is there anything aside from the new lower price points that you would just point us to that you're changing in the acquisition funnel that that's helping you either CAC or LTV?

So I would start with a couple of things. One is, in terms of -- if you think about the history that we've gone through in terms of the legacy business of just traditional 25 a day images now to being a multi-asset platform with tools for users to modify their assets and to create assets that are customized for their particular need. When we think about that, whether it be the editorial business with Rex, where we really utilize that, it's the basis of our platform to build out our editorial business and then sign deals with PMC and Associated -- Penske Media, Associated Press. Billy Farrell, we recently had for the second year in a row the exclusive of the Met Gala inside. We've done numerous events on a global basis that we hadn't. So using that we have lots of customers who want to actually acquire both editorial as well as commercial that is creative assets that are, if you would, the traditional images that we sold. So that enables us to cross-sell primarily to enterprise but also small and medium size and some individual customers. So that's significant. As we think about music and video, when you – there are upcoming movies and upcoming commercials in which we have typically sold, for instance, to studios in the production arena images, who are now using our video product in major feature films where that had been, I would say, less common in the past. It's now not just more common, it's actually a place where creative talent in terms of videographers and cinematographers and directors will come to Shutterstock as a first stop for that type of content. And the same is true for music. So it's becoming a much more, as those assets are easier to use as the technology has become easier to incorporate stock content into their productions, we're seeing cross-platform activity once again from all venues or customer type segments whether it be on the production side or on creatives in major corporations or even small or medium sized businesses.

Okay, that's helpful. And then around just the e-commerce acquisition funnel, any more color you can share on just things you're trying or things that are working aside from changes to the pricing?

Yeah. I mean if you look at our pages they change all the time. We're constantly updating them. If you look at the – even the responsiveness of our core site, speed is way up. The site will feel snappier from page to page. That is our new platform at work. And we plan to get better and better, add things like site speed globally as we start to move that code to the edge in a more cloud based environment.

Thanks.

I am showing no further questions at this time. I would now like to turn the conference back to Steven Burns.

Thanks very much for your time today. We appreciate it, and we'll talk to you in the next quarter.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.