Shutterfly 2014 Annual Report Download - page 110

Download and view the complete annual report

Please find page 110 of the 2014 Shutterfly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

Enterprise — Includes revenues primarily from variable, four-color direct marketing collateral
manufactured and fulfilled for business customers.
In addition to the above reportable segments, the Company has a corporate category that includes
activities that are not directly attributable or allocable to a specific segment. This category consists of
stock-based compensation and amortization of intangible assets.
The Company’s segment results for fiscal 2014, 2013 and 2012 were as follows (dollars in thousands):
Year Ended December 31,
2014 2013 2012
Consumer
Net revenues ................................... $ 870,959 $ 745,970 $ 613,445
Cost of net revenues ............................. 394,265 327,145 263,962
Gross profit ................................... $ 476,694 $ 418,825 $ 349,483
Gross profit as a percentage of net revenues ............ 55% 56% 57%
Enterprise
Net revenues ................................... $ 50,621 $ 37,672 $ 27,179
Cost of net revenues ............................. 43,456 29,480 22,803
Gross profit ................................... $ 7,165 $ 8,192 $ 4,376
Gross profit as a percentage of net revenues ............ 14% 22% 16%
Corporate
Net revenues ................................... $ — $ — $ —
Cost of net revenues ............................. 14,999 12,968 8,092
Gross profit ................................... $ (14,999) $ (12,968) $ (8,092)
Consolidated
Net revenues ................................... $ 921,580 $ 783,642 $ 640,624
Cost of net revenues ............................. 452,720 369,593 294,857
Gross profit ................................... $ 468,860 $ 414,049 $ 345,767
Gross profit as a percentage of net revenues ............ 51% 53% 54%
Note 14 — Related Party Transactions
Shutterfly’s Chief Executive Officer, Jeffrey Housenbold, was appointed to Chegg, Inc.’s (‘‘Chegg’’)
Board of Directors in May 2013 and to Groupon, Inc.’s (‘‘Groupon’’) Board of Directors in October 2013.
During the year ended December 31, 2014, Shutterfly conducted business with both Groupon and Chegg.
Shutterfly’s business with Groupon during the year consisted primarily of offering Shutterfly’s products as
part of Groupon’s Flash deals. Shutterfly’s business with Chegg primarily consisted of advertising
campaigns, and commercial print services with its Enterprise segment.
During the year ended December 31, 2014, Shutterfly paid approximately $3.3 million in commissions
to Groupon related to these Flash deals. As of December 31, 2014, the Company had a receivable balance
of approximately $0.5 million with Groupon and $0.5 million with Chegg. During the year ended
December 31, 2014, Shutterfly earned revenue of approximately $0.5 million from Chegg. Management
109