Shutterfly 2013 Annual Report Download - page 59

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Comparison of the Years Ended December 31, 2012 and 2011
Year Ended December 31,
2012 2011 $ Change % Change
(in thousands)
Net revenues
Consumer ........................... $ 613,445 $ 459,725 $ 153,720 33%
Enterprise ........................... 27,179 13,545 13,634 101%
Total net revenues ................... 640,624 473,270 167,354 35%
Cost of net revenues ..................... 294,857 219,542 75,315 34%
Gross profit ........................... $ 345,767 $ 253,728 92,039 36%
Percentage of net revenues ................ 54% 54% ——
Net revenues increased $167.4 million, or 35%, in 2012 compared to 2011. Revenue growth was
attributable to increases in both revenue categories and driven by strong customer acquisition and an
increased number of transacting customers and orders. Consumer net revenues increased $153.7 million,
or 33%, in 2012 compared to 2011, and represented 96% of total net revenues in 2012 compared to 97% in
2011. The increase in Consumer net revenues is primarily a result of increased sales of greeting and
stationery cards and photo books with a smaller contribution from increased sales of other photo-based
merchandise. Enterprise revenues increased $13.6 million, or 101%, in 2012 compared to 2011, and
represented 4% of total net revenues in 2012 compared to 3% in 2011. The increase is a combination of
new Enterprise customers as well as increased sales to existing customers.
Consumer net revenue increases were also the result of year-over-year increases in total transacting
customers and orders as outlined below. Average order value was flat year-over-year.
Year Ended December 31,
Shutterfly 2012 2011 Change % Change
(In thousands, except AOV amounts)
Customers ............................ 7,062 5,388 1,674 31%
Orders ............................... 16,322 12,340 3,982 32%
Average order value ..................... $ 37.58 $ 37.25 $ 0.33 1%
On a pro forma basis, including the orders and revenue of Tiny Prints for the period prior to the
acquisition date, total orders for the year ended December 31, 2011 was 12,676,000 resulting in an average
order value of $38.30, a decrease of 2%.
Cost of net revenues increased $75.3 million, or 34%, in 2012 compared to 2011, however, it remained
flat as a percentage of net revenues at 46%, with gross margin remaining flat at 54%. Overall, the increase
in cost of net revenues was primarily the result of the increased volume of shipped products, increased
headcount and greater third-party fulfillment costs associated with Tiny Prints products. Gross margin
57