Shutterfly 2013 Annual Report Download - page 65

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Management strongly encourages shareholders to review our financial statements and publicly-filed
reports in their entirety and not to rely on any single financial measure.
The table below shows the trend of adjusted EBITDA and free cash flow as a percentage of net
revenues and Non-GAAP net income per share for the years ended December 31, 2013, 2012, and 2011 (in
thousands):
Year Ended December 31,
2013 2012 2011
Net revenues .................................... $ 783,642 $ 640,624 $ 473,270
Non-GAAP adjusted EBITDA ........................ $ 150,442 $ 128,144 $ 83,713
Percentage of net revenues .......................... 19% 20% 18%
Free cash flow ................................... $ 75,472 $ 67,387 $ 50,102
Percentage of net revenues .......................... 10% 11% 11%
Non-GAAP net income per share ..................... $ 0.38 $ 0.61 $ 0.40
We carefully manage our operating costs and capital expenditures, in order to make the strategic
investments necessary to grow and strengthen our business, while at the same time increasing our adjusted
EBITDA profitability and improving our free cash flows. Over the last three years, our full year adjusted
EBITDA profitability has improved to $150.4 million in 2013 from $83.7 million in 2011. This continued
growth in adjusted EBITDA profitability resulted from increased demand for our products and services,
scale efficiencies, and improvements from product mix. The increase in adjusted EBITDA is also driven by
higher net revenues in 2013 as compared to prior years. We also increased our free cash flow to
$75.5 million in 2013 from $50.1 million in 2011.
The following is a reconciliation of adjusted EBITDA, free cash flow, and Non-GAAP income per
share to the most comparable GAAP measure, for the years ended December 31, 2013, 2012, and 2011 (in
thousands):
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA Year Ended December 31,
2013 2012 2011
Net income ...................................... $ 9,285 $ 22,998 $ 14,048
Add back:
Interest expense ................................ 9,446 597 64
Interest and other income, net ...................... (308) (42) (35)
Tax provision ................................... 3,635 17,160 1,314
Depreciation and amortization ...................... 74,856 50,109 34,452
Stock-based compensation expense ................... 53,528 37,322 33,870
Non-GAAP Adjusted EBITDA ........................ $ 150,442 $ 128,144 $ 83,713
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