Shutterstock, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the first quarter 2020 Shutterstock, Inc. earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. It is now my pleasure to introduce Senior Vice President, General Counsel, and Corporate Secretary, Heidi Garfield.

Thank you, Operator. Good morning, everyone, and thank you for joining us for Shutterstock's first quarter 2020 earnings call. Joining me today is Stan Pavlovsky, our Chief Executive Officer, and Jared Yates, our Chief Financial Officer. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements. including, without limitation, the impact of COVID-19 on our business, long-term effects of our investments in our business, the future success and financial impact of new and existing product offerings, our future growth, margins, and profitability, our long-term strategy, and our 2020 guidance. Actual results or trends could differ materially from our forecast. For more information, please refer to today's press release and the reports we file with the SEC from time to time. including the risk factors discussed in our most recently filed quarterly report on Form 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission. We will be discussing certain non-GAAP financial measures today including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, revenue growth including by distribution channel on a constant currency basis and free cash flow. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure can be found in the financial tables included with today's press release, which is posted on the investor relations section of our website. Finally, please refer to the brief information deck we posted on our website that contains supporting materials for today's call. And now, I'll turn the call over to Stan.

Thanks, Heidi. Good morning, everyone, and thank you for joining Shutterstock's first quarter earnings call and my first call as CEO. I hope everyone is keeping safe during this period. This is a memorable and turbulent time to be taking the helm of Shutterstock, and I'm grateful that the management team and our global employees are up to the challenges that lie ahead. I am truly excited to begin this journey as Shutterstock's CEO. We have in front of us a tremendous opportunity to leverage our content marketplace platform and leadership position with focused execution around innovation, content services, and data and insights in order to deliver strong returns for our shareholders. I want to begin my remarks by thanking all of our Shutterstock employees. Our first concern has and continues to be the health and well-being of our employee population. We are following local government guidance in implementing mandatory work-from-home policies and our employees effectively transition to working remotely. and have been incredibly dedicated and focused during this time to offer continuity of service to our clients. Through this transition, Shutterstock's operations have been functioning normally and we are able to serve our clients without disruption. Our technology infrastructure, global customer service operation, content review function and marketplace operations are functioning business as usual. and are able to respond to the business needs that we have. I would also like to thank Shutterstock's contributor community for capturing touching and impactful visual stories to showcase the global nature of the crisis that we are in. Their content portrayed the heroic efforts of first responders in countries and cities around the world, as well as the complexities of daily life during time of social distancing. For example, Palakdar David from India and Vika Foto from Spain contributed strong image and video content illustrating the local impact on their communities to Shutterstock, allowing our customers to visually highlight how we are living during this challenging time. Like our contributor community, as a business, we remain resilient and optimistic despite these uncertain times. From a market demand perspective, we have seen variances on a country-by-country basis as productivity in regions across the world is impacted by the trajectory of the pandemic. Overall, our first quarter 2020 revenues of $161.3 million declined 1% from last year. The Asia Pacific region, which suffered early declines in January and February, is optimistically showing signs of returning to normal levels. Growing approximately 3% in the quarter on a year-over-year basis, led by strong performance in Japan and China. Our revenues from the European region declined 3% for the quarter, driven primarily by a 10% year-over-year decline in March, specifically driven by performance in the UK, Italy, and France. Total revenues in the US and Canada declined 1% for the quarter, and 5% in the month of March. Europe and North America are seeing some signs of improvement in April as compared to the March declines. Our adjusted EBITDA in the first quarter was $22.1 million, representing a margin of 13.7%. We are committed to cost management and margin enhancement and investors should expect to see the benefit of the actions we are taking over the course of the year. This will require at times incurring expenses as we realign resources and pare back in some areas and invest for growth in others. For example, we recorded a $2.3 million cash expense for severance in the quarter that is included in our adjusted EBITDA. From a channel perspective, we are seeing a larger impact on our enterprise channel as compared to e-commerce in the current environment. The Enterprise Channel, as expected, experienced a down quarter of revenues, which was exacerbated by COVID-19. This was offset by performance in e-commerce, where we saw increased customer engagement and paid downloads year over year. This is a critical time for businesses as they shift the way they market their products and services and try to communicate with customers and reach new audiences. The pandemic has also led to significant digital transformation initiatives among small and medium businesses around the world as they adjust their offerings and communications to be available online. While some areas of advertising spending has been impacted 30 to 50 percent due to the reductions in campaign volumes, we have not experienced that type of impact. Partially due to the wide range of use cases for Shutterstock's content, from global websites to streaming video on-demand service and podcasts, and our customers' need to continue marketing their products and services. We are seeing even a greater variety of use cases for our ready-to-use content and creative services as businesses accommodate for new budget guidelines. as well as the new mode of working from home and social distancing policies. We are working closely with our clients to deliver the custom products and services they need at this time and will continue to innovate and pivot with our customers as they address returning to work in the upcoming days and months. While we address the effects of the global pandemic on our customers and our business, we are still committed to continuing to invest In our people and business in order to drive growth. First, I want to highlight two strategic hires that we made to the executive team in the past quarter. Avi Muchnick as Chief Product Officer and Jamie Eldon as Chief Revenue Officer. Avi is a true entrepreneur and innovator at heart. He comes to us after selling his prior company to Adobe and is highly experienced in the creative and marketing software ecosystem. In addition to making improvements to our core marketplace, we look forward to AVI generating additional products and ancillary services that create new revenue streams and reinvigorating Shutterstock with the innovation culture that drove the genesis of the company. Jamie leads our enterprise sales team and is a seasoned sales leader with extensive experience successfully building and growing world-class enterprise sales teams across TV, digital, Social, Programmatic, and Over-the-Top Media. With Jamie's arrival, we are further along in the Salesforce realignment that we started six months ago. We believe the current environment will be an opportune time to add key additional strategic sales talent under Jamie as we continue to optimize our sales and client service teams by geography and customer segment. Furthermore, We believe there is a tremendous untapped opportunity to optimize our go-to-market packaging and deliver a more fulsome suite of services to our enterprise clients, including custom content and editorial services. On committing to growth of our business, last quarter I discussed the three tenets that I will be focusing on as Shutterstock's CEO. They are innovation that enhances our customers' workflow, Content that is relevant and fresh and data and insights that drive performance. Since then our team has begun revamping our product vision and roadmap to deliver new applications and tools that will deliver improved workflow productivity and purchasing flexibility to our target audiences. So far innovative thinking coupled with speed to execute has allowed us to bring valuable and relevant services to market quickly. As an example, We've expanded our partnership with Wix, an API partner, since 2014. Over the years, we have responded to Wix's need to make fresh content available to our customers. In this quarter, our content was further integrated into three new Wix products. Specifically, as video consumption has skyrocketed during this time, we integrated into their video editor tool, allowing their users to quickly create videos with relevant content. Furthermore, our innovative and customer-focused thinking has extended beyond technology and product. Supported by our strong financial position, in this difficult time, we are extending support to our clients and flexibility on payment terms as a way to demonstrate our commitment to not just the growth of our business, but also the well-being of businesses that work with us. As we invest in the future of Shutterstock and define our product vision, I remain confident that we are well positioned to expand on our current portfolio of offerings and to find ways to better align with key trends to capture compelling new opportunities. Lastly, before handing it over to Jared for a detailed financial review, I want to reemphasize the strong position Shutterstock is in financially to be able to weather this storm and continue to serve our clients while investing in the long-term success of the business. Today, we have no debt and close to $300 million of cash. Our dividend continues and we plan to stay the course with our balanced strategy of shareholder capital allocation through dividends, share repurchases and M&A. And now, I'd like to turn the call over to Jared.