v3.19.2
Segment Reporting (Tables)
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6 Months Ended |
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| Segment Reporting [Abstract] |
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| Segment reporting information |
| | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | Six Months Ended | | | | June 30, | | | | June 30, | | | | (dollars in thousands) | 2019 | | 2018 | | 2019 | | 2018 | | Shutterfly Consumer: | | | | | | | | | Net revenue | $ | 169,584 | | $ | 165,003 | | $ | 318,432 | | $ | 317,062 | Cost of net revenue(1) | 95,261 | | 86,065 | | 185,667 | | 170,909 | | Technology and development | 34,373 | | 29,830 | | 67,896 | | 61,959 | | Sales and marketing | 31,739 | | 29,956 | | 60,863 | | 60,681 | | Credit card fees | 4,346 | | 4,349 | | 8,501 | | 8,548 | Margin(1)(2) | $ | 3,865 | | $ | 14,803 | | $ | (4,495) | | $ | 14,965 | | Margin % | 2.3 | % | | 9.0 | % | | (1.4) | % | | 4.7 | % | | | | | | | | | Lifetouch(3): | | | | | | | | Net revenue(4) | $ | 254,174 | | $ | 261,911 | | $ | 384,126 | | $ | 261,911 | Cost of net revenue(5) | 98,844 | | 91,148 | | 177,172 | | 91,148 | | Technology and development | 8,021 | | 7,109 | | 15,994 | | 7,109 | | Sales and marketing | 89,847 | | 86,960 | | 166,141 | | 86,960 | | Credit card fees | 2,693 | | 1,165 | | 4,920 | | 1,165 | Margin(2) | $ | 54,769 | | $ | 75,529 | | $ | 19,899 | | $ | 75,529 | | Margin % | 21.5 | % | | 28.8 | % | | 5.2 | % | | 28.8 | % | | | | | | | | | | Shutterfly Business Solutions: | | | | | | | | | Net revenue | $ | 49,658 | | $ | 49,809 | | $ | 96,184 | | $ | 97,475 | | Cost of net revenue | 42,941 | | 41,610 | | 81,092 | | 81,519 | | Technology and development | 3,700 | | 3,049 | | 6,992 | | 6,994 | | Sales and marketing | 1,107 | | 1,619 | | 2,515 | | 3,069 | Margin(2) | $ | 1,910 | | $ | 3,531 | | $ | 5,585 | | $ | 5,893 | | Margin % | 3.8 | % | | 7.1 | % | | 5.8 | % | | 6.0 | % | | | | | | | | | | Consolidated Segments: | | | | | | | | Net revenue(4) | $ | 473,416 | | $ | 476,723 | | $ | 798,742 | | $ | 676,448 | Cost of net revenue(1)(5) | 237,046 | | 218,823 | | 443,931 | | 343,576 | | Technology and development | 46,094 | | 39,988 | | 90,882 | | 76,062 | | Sales and marketing | 122,693 | | 118,535 | | 229,519 | | 150,710 | | Credit card fees | 7,039 | | 5,514 | | 13,421 | | 9,713 | Margin(1)(2) | $ | 60,544 | | $ | 93,863 | | $ | 20,989 | | $ | 96,387 | | Margin % | 12.8 | % | | 19.7 | % | | 2.6 | % | | 14.2 | % |
(1) Six months ended June 30, 2019 includes an immaterial out-of-period adjustment for shipping services provided in the fourth quarter of 2018 of $2.8 million, which increased cost of net revenue and lowered segment margin. (2) The margins reported reflect only costs that are directly attributable or allocable to a specific segment and exclude purchase accounting adjustments, corporate expenses, amortization of intangible assets, stock-based compensation, restructuring, acquisition-related, and executive transition and strategic review charges. (4) Lifetouch net revenue presented in management reporting related to certain obligations that would have otherwise been recorded by Lifetouch as an independent entity but were not recognized in the Company's condensed consolidated financial statements for the six months ended June 30, 2019 and the three and six months ended June 30, 2018 due to business combination accounting requirements. (5) Business combination accounting principles require the Company to measure acquired inventory at fair value. The fair value of inventory reflects Lifetouch's cost of manufacturing plus a portion of the expected profit margin. Segment reporting excludes this purchase accounting adjustment from cost of net revenue for the Lifetouch segment for the three and six months ended June 30, 2018.
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| Reconciliation of operating segments to consolidated |
The following table reconciles total segment margin to total operating loss and loss before income taxes, segment net revenue to net revenue, and segment cost of net revenue to cost of net revenue for the three and six months ended June 30, 2019 and 2018:
| | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | Six Months Ended | | | | June 30, | | | | June 30, | | | | 2019 | | 2018 | | 2019 | | 2018 | | (in thousands) | | | | | | | | Total segment margin | $ | 60,544 | | $ | 93,863 | | $ | 20,989 | | $ | 96,387 | Purchase accounting deferred revenue adjustment(1) | — | | (33,351) | | (645) | | (33,351) | Purchase accounting inventory adjustment(2) | — | | (10,931) | | — | | (10,931) | Corporate expenses(3) | (32,459) | | (37,012) | | (67,549) | | (55,036) | | Amortization of intangible assets | (12,795) | | (12,831) | | (25,620) | | (15,164) | | Stock-based compensation expense | (11,507) | | (11,697) | | (23,545) | | (23,389) | | Restructuring | (3,274) | | (2,952) | | (7,247) | | (2,952) | | Executive transition and strategic review costs | (8,445) | | — | | (10,099) | | — | | Acquisition-related costs | — | | (8,000) | | — | | (12,585) | | | | | | | | | | Loss from operations | $ | (7,936) | | $ | (22,911) | | $ | (113,716) | | $ | (57,021) | | | | | | | | | | Loss from operations | $ | (7,936) | | $ | (22,911) | | $ | (113,716) | | $ | (57,021) | | Interest expense | (13,312) | | (17,769) | | (31,566) | | (27,402) | | Interest and other income, net | 1,088 | | 1,561 | | 2,266 | | 3,310 | | Loss before income taxes | $ | (20,160) | | $ | (39,119) | | $ | (143,016) | | $ | (81,113) | | | | | | | | | | Total segment net revenue | $ | 473,416 | | $ | 476,723 | | $ | 798,742 | | $ | 676,448 | Purchase accounting deferred revenue adjustment(1) | — | | (33,351) | | (645) | | (33,351) | | Net revenue | $ | 473,416 | | $ | 443,372 | | $ | 798,097 | | $ | 643,097 | | | | | | | | | | Total segment cost of net revenue | $ | 237,046 | | $ | 218,823 | | $ | 443,931 | | $ | 343,576 | Purchase accounting inventory adjustment(2) | — | | 10,931 | | — | | 10,931 | | Stock-based compensation expense for cost of net revenue | 844 | | 943 | | 1,736 | | 1,942 | | Amortization of intangible assets for cost of net revenue | 2,623 | | 2,531 | | 5,245 | | 2,826 | | Cost of net revenue | $ | 240,513 | | $ | 233,228 | | $ | 450,912 | | $ | 359,275 |
(1) Lifetouch net revenue presented in management reporting related to certain obligations that would have otherwise been recorded by Lifetouch as an independent entity but were not recognized in the Company's condensed consolidated financial statements due to business combination accounting requirements. (2) Business combination accounting principles require the Company to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. Management reporting excludes this purchase accounting adjustment from cost of net revenue for the Lifetouch segment. (3) Corporate expenses include activities that are not directly attributable or allocable to a specific segment. This category consists primarily of expenses related to certain functions performed at the corporate level such as non-manufacturing facilities, human resources, finance and accounting, legal, information technology, integration, etc.
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- DefinitionTabular disclosure of the reconciliation of profit (loss) from reportable segments to the consolidated income (loss) before income tax expense (benefit) and discontinued operations. Includes, but is not limited to, reconciliation after income tax if income tax is allocated to the reportable segment.
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- DefinitionTabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.
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- References
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