Shutterfly 2014 Annual Report Download - page 60

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Comparison of the Years Ended December 31, 2014 and 2013
Year Ended December 31,
2014 2013 $ Change % Change
(in thousands, except AOV amounts)
Net revenues
Consumer ........................... $ 870,959 $ 745,969 $ 124,990 17%
Enterprise ........................... 50,621 37,673 12,948 34%
Total net revenues ................... 921,580 783,642 137,938 18%
Cost of net revenues ..................... 452,720 369,593 83,127 22%
Gross profit ........................... $ 468,860 $ 414,049 $ 54,811 13%
Percentage of net revenues ................ 51% 53% ——
Key Consumer Metrics
Customers ............................ 9,206 8,094 1,112 14%
Orders ............................... 21,773 18,561 3,212 17%
Average order value ..................... $ 40.00 $ 40.19 $ (0.19) —%
Net revenues increased $137.9 million, or 18%, in 2014 compared to 2013 . Revenue growth was
attributable to increases in revenue from both reportable segments. Consumer net revenues increased
$125.0 million, or 17%, in 2014 compared to 2013, and represented 95% of total net revenues in 2014 in
line with 2013. The increase in Consumer net revenues is primarily the result of increased sales of greeting
and stationery cards, other photo-based merchandise, photo books and a full year of BorrowLenses
revenue. The increase is also reflected in the increases in customers and orders in 2014 as compared to
2013, as noted above.
Average order value remained flat in 2014 as compared to 2013. Enterprise revenues increased
$12.9 million, or 34%, in 2014 compared to 2013, and represented 5% of total net revenues in 2014 in line
with 2013. The increase is a combination of new Enterprise customers as well as increased sales to existing
customers.
Cost of net revenues increased $83.1 million, or 22%, in 2014 compared to 2013. As a percentage of
net revenues, cost of net revenues increased to 49% in 2014 compared to 47% in 2013, with gross margin
decreasing to 51% in 2014 from 53% in 2013. For our Consumer segment, cost of net revenues increased
$67.1 million in 2014 compared to 2013. Overall, the increase in cost of net revenues was primarily the
result of the increased volume of shipped products as well as increased depreciation from our expanded
and recently acquired manufacturing facilities and production and rental equipment. For our Enterprise
segment, cost of net revenues increased $14.0 million in 2014 compared to 2013. The increase was
primarily the result of the increased volume of shipped products in 2014 compared to 2013.
Year Ended December 31,
2014 2013 $ Change % Change
(in thousands)
Technology and development ............... $ 133,623 $ 108,995 $ 24,628 23%
Percentage of net revenues ................ 14% 14% ——
Sales and marketing ..................... $ 216,035 $ 189,985 $ 26,050 14%
Percentage of net revenues ................ 23% 24% ——
General and administrative ................ $ 112,957 $ 93,011 $ 19,946 21%
Percentage of net revenues ................ 12% 12% ——
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