Can Shutterfly Turn Itself Around After This Earnings Miss?

When Shutterfly Inc. (NASDAQ: SFLY) released its fourth-quarter earnings report after the markets closed on Wednesday, the company said it had $2.63 in earnings per share (EPS) and $561.2 million in revenue. The consensus estimates had called for $2.84 in EPS and revenue of $586.4 million. In the same period of last year, it posted EPS of $3.57 and $548.1 million in revenue.

Revenues for the quarter broke down into consumer net revenues totaling $521.5 million, a year over year increase of 4%, and business solutions net revenues of $39.7 million, a decrease of 11%.

During the quarter, transacting customers totaled 6.2 million, up 1% from last year, while orders increased by 6% to 10.9 million.

In terms of guidance for the first quarter, the company expects to see a net loss of $0.95 to $1.00 per share and net revenues between $185 million and $190 million. The consensus estimates are a net loss of $0.84 per share and $199.36 million in revenue.

One of the big highlights from this report was that the company will be laying off about 13% of its staff, or about 260 employees. At the same time the Santa Clara office and both New York locations will be closed.

Christopher North, president and CEO of Shutterfly, commented:

Our vision is strongly motivated by the belief that sustainable growth comes from innovating on behalf of customers over the long term. At the same time, our plan strikes a balance between investing for growth and delivering improvements in profitability. In each of 2017 and 2018, we will deliver sequential improvements in profitability as well as quality of earnings, while funding re-investment in the business to drive growth in 2019 and beyond.

On the books, Shutterfly’s cash, cash equivalents and short-term investments totaled $315.6 million at the end of the quarter, up from $311.8 million at the end of the previous year.

Shares of Shutterfly were down more than 18% to $42.31 shortly after Thursday’s opening bell. The consensus analyst price target is $55.50, and a 52-week trading range is $35.91 to $54.60.