Shutterfly 2015 Annual Report Download - page 51

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• We significantly grew our Enterprise segment as we entered into a multi-year agreement with a
major Enterprise customer. We will continue to make investments in our Enterprise platform and
seek additional partnerships.
• We made significant investments in our websites during the year which helped our websites and
systems perform well and keep them available, especially in the record volume period of the fourth
quarter.
In 2015, we have prioritized specific areas to continue our focus on long term strategic priorities and
investments in consumer facing programs and infrastructure projects that will provide future scale and scope
efficiencies. These included the following:
• In 2015, we continued our initiative to build the next generation of Shutterfly; Shutterfly 3.0. We
began to intentionally slow investments and innovation in the Tiny Prints and Wedding Paper Divas
technology to redirect resources to the new Shutterfly platform, which will allow these brands to be
supported by a common set of shared technology services, including cart, creation paths, login,
address book and media storage platform.
• In 2015, we decided to discontinue the Treat brand. Treat was originally launched as an early stage
growth initiative over three years ago, and during that time we invested in building a distinct one-
to-one card experience that has delighted our customers, but that failed to attract a large enough
standalone user base. As of March 2015, customers were no longer able to place orders on
Treat.com and they are now redirected to Shutterfly.com where we will enhance the one-to-one
card experience under our flagship brand identity.
• In 2015, we continued to make investments in modernizing our technology platform. We improved
the mobile experience, adding new features, functionality and products to our apps with a focus on
our universal iOS mobile app. We made progress on our Shutterfly 3.0 platform that aims to
address the friction points caused by fragmented storage options and limited organization and
search capabilities, and will begin migrating customers to the new, integrated platform through out
2016. Additionally, we began building a scalable platform for the Enterprise business that will
enable our clients to optimize their integrated marketing campaigns.
Finally, we executed against our share repurchase program which was approved in October 2012 and
increased in February 2015. During 2015, we purchased a total of 4,907,675 shares for a total repurchase amount
of $215.9 million. We have $95.3 million remaining under our share repurchase program authorization at
December 31, 2015.
Basis of Presentation
Net Revenues. Our net revenues are comprised of sales generated from Consumer and Enterprise segments.
Consumer. Our Consumer revenues include sales from all of our brands and are derived from the sale
of photo-based products, such as photo books, stationery and greeting cards, other photo-based merchandise,
photo prints, and the related shipping revenues as well as rental revenue from our BorrowLenses
brand. Included in our photo-based merchandise are items such as mugs, iPhone cases, desktop plaques,
candles, pillows, canvas prints and blankets. Photo prints consist of wallet, 4x6, 5x7, 8x10, and large format
sizes. Revenue from advertising displayed on our websites is also included in Consumer revenues.
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