Shutterfly Inc. is the picture of a consumer-focused manufacturer that is steadily growing its sales to businesses.
Sales through its Shutterfly Business Solutions, or SBS, division have grown from 5% of revenue in 2014 to 9% in 2015 and 12% last year. For the second quarter of fiscal 2017 ended June 30, B2B sales accounted for 14.3% of total revenue, up from 13.4% in the year-earlier quarter.
The manufacturer and marketer of digital and printed materials used in marketing and communications conducts its sales through Shutterfly.com and other e-commerce sites. It reported total Q2 revenue of $209.03 million, including $29.94 million in SBS division sales, up 10% from a year earlier. Sales to consumers grew relatively slowly in the quarter, inching up 1.4% to $179.09 million.
Shutterfly’s sales to businesses are composed mostly of digital image files and products imprinted with photos, graphics and data to customers in the direct marketing industry. The company attributes the increases in B2B sales in the recent quarter as well in recent years to its ability to handle large-scale projects for corporate buyers. “We were successful in winning follow-on contracts from our existing key clients where our ability to execute on personalized print and digital communications at scale resulted in additional programs and volumes,” Shutterfly says in its second quarter financial statement.
Shutterfly, No. 150 in the B2B E-Commerce 300, has also taken steps to grow its sales to consumers. Last year, for example, it introduced for consumers a new Shutterfly mobile app for Apple and Android devices with an expanded catalog of products. The apps were designed to let consumers more easily upload personal photos to Shutterfly, use them to design personalized cards and stationery, and purchase the personalized products, Shutterfly says.
For the second quarter ended June 30, Shutterfly reported:
- Shutterfly Business Solutions sales of $29.94 million, up 9.5% from $27.34 million a year earlier;
- SBS gross profit of $6.04 million, resulting in a gross profit margin of 20.2%, unchanged from a year earlier;
- Consumer sales of $179.09 million, up 1.4% from $176.62 million
- Consumer gross profit of $86.85 million, down 4.9% from $91.34 million, resulting in a gross profit margin of 48.5%, down from 51.7%;
- Total net revenue of $209.03 million, up 2.5% from $203.96 million;
- A net loss of $22.838 million, compared to a year-earlier net loss of $16.485 million.
For the six months ended June 30, Shutterfly reported:
- Shutterfly Business Solutions sales of $61.269 million, up 14.2% from $53.672 million a year earlier, as B2B sales accounted for 15.3% of revenue, up from 13.9%;
- SBS gross profit of $13.531 million, up 11.3% from $12.152 million;
- Consumer sales of $339.735 million, up 2.3% from $331.998 million;
- Consumer gross profit of $156.396 million, down 2.5% from $160.385 million, resulting in a gross profit margin of 46.0%, down from 48.3%.
- Total net revenue of $401.004 million, up 4.0% from $385.670 million;
- A net loss of $56.032 million, compared to a year-earlier net loss of $45.921 million.
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