DEFR14A: Shutterstock Details 2024 Performance, Merger Progress

Shutterstock's latest proxy statement reveals 2024 financial results, executive compensation, and updates on its pending merger with Getty Images.

Summary

• The 2025 Annual Meeting of Stockholders will be held virtually on Monday, December 22, 2025, at 10:00 a.m. Eastern Time, with a record date of November 19, 2025.
• Key proposals for the meeting include the election of Class I director nominees (Jonathan Oringer, Rachna Bhasin, Jaime Teevan), a non-binding advisory vote on named executive officer compensation, and the ratification of PricewaterhouseCoopers LLP as the independent auditor for fiscal year 2025.
• Shutterstock reported 2024 revenue of $935.3 million, a 7% increase compared to 2023.
• Net income for 2024 decreased by 67% to $35.9 million, while income from operations remained essentially flat at $68.7 million.
• Adjusted EBITDA increased by 3% to $247.1 million in 2024.
• Operating cash flows decreased by $107.9 million to $32.6 million, and adjusted free cash flow decreased by $29.8 million to $108.7 million in 2024.
• The merger-of-equals transaction with Getty Images Holdings, Inc. was approved by Shutterstock stockholders on June 10, 2025, and is awaiting customary closing conditions, including regulatory approvals.
• Upon the closing of the merger, Shutterstock's common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934.
• Executive cash incentive payouts for 2024 were at 83.4% of target, based on 93.6% achievement of revenue targets and 96.2% achievement of adjusted EBITDA targets.
• The CEO to median employee pay ratio for 2024 was 44:1, with CEO Paul Hennessy's total compensation at $7,176,468 and the median employee's at $163,640.

Sentiment

Score: 4

Explanation: While revenue and adjusted EBITDA saw modest growth, the significant decline in net income and operating cash flows, coupled with executive bonus payouts below target, indicates a challenging year for profitability and cash generation. The pending merger provides a strategic direction but introduces uncertainty regarding the company's independent future.

Positives

• Revenue increased 7% to $935.3 million in 2024, demonstrating continued top-line growth.
• Adjusted EBITDA increased 3% to $247.1 million in 2024, indicating improved operational profitability on an adjusted basis.
• The company served over 4.0 million active, paying customers in 2024.
• The content collection expanded significantly to 800 million images and 59 million footage clips as of December 31, 2024.
• Shutterstock stockholders approved the merger with Getty Images on June 10, 2025, signaling progress towards a strategic combination.
• The 2024 advisory vote on executive compensation received strong stockholder support, with approximately 94.8% of votes cast in favor.

Negatives

• Net income decreased significantly by 67% to $35.9 million in 2024.
• Income from operations remained essentially flat at $68.7 million in 2024.
• Operating cash flows decreased substantially by $107.9 million to $32.6 million in 2024.
• Adjusted free cash flow decreased by $29.8 million to $108.7 million in 2024.
• Executive annual cash incentive payouts were below target at 83.4%, reflecting that internal performance goals for revenue and adjusted EBITDA were not fully met.

Risks

• Risks related to the closing of the proposed merger with Getty Images, including the satisfaction of customary closing conditions and receipt of required regulatory approvals.
• General risks and uncertainties that could cause actual results to differ materially from forward-looking statements, as detailed in the company's Annual Report on Form 10-K and Form 10-K/A.

Future Outlook

The company is proceeding with its merger-of-equals transaction with Getty Images, which was approved by Shutterstock stockholders and is now subject to customary closing conditions, including regulatory approvals. Upon closing, Shutterstock's common stock will be delisted from the NYSE and deregistered. The company's executive compensation program aims to attract and retain high performers, motivating them to pursue corporate and business objectives that create long-term stockholder value.

Management Comments

• On behalf of the Board of Directors and our senior management team, we are pleased to invite you to attend our 2025 Annual Meeting of Stockholders.
• We encourage you to read our 2024 Annual Report, as it includes our audited financial statements and provides important information about our business.
• Your vote is important. Whether or not you plan to attend the 2025 Annual Meeting via live webcast, we hope you will vote as soon as possible.
• Thank you for your ongoing support of, and continued interest in, Shutterstock.
• Our Board unanimously recommends that you vote FOR ALL of the director nominees.
• Our Board unanimously recommends that you vote FOR approval, on a non-binding, advisory basis, of the compensation of our named executive officers.
• Our Board unanimously recommends that you vote FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm.
• Our Compensation Committee believes that any risks arising from our compensation programs do not create disproportionate incentives for employees, including our named executive officers, to take risks that could have a material adverse effect on us in the future.

Industry Context

The pending merger with Getty Images represents a significant consolidation within the digital imagery and content licensing industry, aiming to create a combined entity with a larger market share and potentially enhanced competitive positioning. The industry continues to evolve with increasing demand for digital content and the integration of AI, as highlighted by Dr. Jaime Teevan's expertise in AI and her role in M365 Copilot. The company's focus on growing its content collection and active customer base aligns with broader industry trends of expanding digital asset libraries and subscription-based models.

Comparison to Industry Standards

• The company's peer group for executive compensation includes technology and software services companies such as Alarm.com Holdings, Inc., Box, Inc., Dropbox, Inc., Etsy, Inc., Getty Images Holdings, Inc., LivePerson, Inc., Pinterest, Inc., and Vimeo, Inc., indicating a competitive landscape for talent and performance benchmarks.
• The 2024 revenue growth of 7% and adjusted EBITDA growth of 3% can be benchmarked against these peers to assess relative performance, though specific peer results are not provided in this filing.
• The significant decrease in net income (67%) and operating cash flows ($107.9 million) in 2024, despite revenue growth, suggests potential underperformance relative to industry expectations for profitability and cash generation, especially when compared to companies with more stable or growing net income and cash flows.

Management Changes

Corporate Governance

Related Party Transactions

• No transactions or series of similar transactions exceeding $120,000 with related persons have occurred since January 1, 2024, nor are any currently proposed.

Stakeholder Impact

• Shareholders will vote on director elections, executive compensation, and auditor ratification. The pending merger with Getty Images will result in the delisting and deregistration of Shutterstock common stock, fundamentally altering their investment in the company.
• Employees, particularly executives, experienced transitions with changes in CFO and Chief Product and Digital Officer roles. Executive compensation is tied to company performance, with payouts below target for 2024.
• Customers, numbering over 4.0 million active, paying users, continue to engage with the company's content offerings, contributing to revenue growth.
• Contributors benefit from the expanding content collection, which reached 800 million images and 59 million footage clips, indicating continued demand for their creative assets.

Next Steps

• Hold the 2025 Annual Meeting of Stockholders on December 22, 2025.
• Elect Class I director nominees (Jonathan Oringer, Rachna Bhasin, Jaime Teevan).
• Conduct an advisory vote on named executive officer compensation.
• Ratify the appointment of PricewaterhouseCoopers LLP as the independent auditor for fiscal year 2025.
• Complete the merger-of-equals transaction with Getty Images, subject to regulatory approvals and customary closing conditions.
• Upon merger closing, Shutterstock's common stock will be delisted from the NYSE and deregistered.
• Determine the remaining three Shutterstock-designated directors for the post-merger Getty Images board.

Key Dates

Recommendation

The filing presents a mixed financial picture for 2024, with revenue and adjusted EBITDA showing modest growth, but net income and operating cash flows experiencing significant declines. The pending merger with Getty Images is a transformative event, but its full impact and the post-merger entity's performance remain to be seen. While the merger has been approved by shareholders, regulatory approvals are still pending, introducing a degree of uncertainty. Given the current financial performance challenges and the impending strategic shift, a 'hold' recommendation is appropriate. Investors should await further clarity on the merger's completion and the combined entity's strategic direction and financial outlook before making more aggressive investment decisions.

Keywords

Shutterstock, Getty Images, Merger, SEC Filing, Proxy Statement, Executive Compensation, Financial Results, Revenue, Net Income, EBITDA, Cash Flow, Corporate Governance, Stockholders Meeting, Director Election, Audit Firm, Digital Imagery, Content Licensing