Shutterfly 2014 Annual Report Download - page 54
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Enterprise. Our Enterprise revenues are primarily from variable, four-color direct marketing
collateral manufactured and fulfilled for business customers. We continue to focus our efforts in
expanding our presence in this market.
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%
In addition to the two reportable segments, we also have 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.
Our Consumer segment is subject to seasonal fluctuations. In particular, we generate a substantial
portion of our revenues during the holiday season in the fourth quarter. We also typically experience
increases in net revenues during other shopping-related seasonal events, such as Easter, Mother’s Day,
Father’s Day, and Halloween. We generally experience lower net revenues during the first, second and
third calendar quarters and have incurred and may continue to incur losses in these quarters. Due to the
relatively short lead time required to fulfill product orders, usually one to three business days, order
backlog is not material to our business.
To further understand net revenue trends in our Consumer segment, we monitor several key metrics
including, total customers, total number of orders, and average order value.
Total Customers. We closely monitor total customers as a key indicator of demand. Total
customers represents the number of transacting customers in a given period. We seek to expand our
customer base by empowering our existing customers with sharing and collaboration services, and by
conducting integrated marketing and advertising programs. We also acquire new customers through
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