August 6, 2008, 12:00 AM

Shutterfly grows the top line in Q2, but also posts a hefty loss

Shutterfly Inc.’s net loss grew by 64.7% in the second quarter while revenue rose by 19%. The online retailer of digital photo and social networking services continues to spend heavily on new product development.

Shutterfly Inc.’s net loss grew by 64.7% in the second quarter as the online retailer of digital photo and social networking services continues to spend heavily on new product development.

In Q2, Shutterfly posted a net loss of just over $4 million, compared with a net loss of about $2.4 million in the second quarter of 2007. At the same time total revenue for Shutterfly, No. 76 in the Internet Retailer Top 500 Guide, for the quarter ended June 30 rose by 18.6% to $35.4 million from $29.9 million in the prior year. For the first six months of the year, Shutterfly posted a net loss of $7.7 million on sales of $69.8 million, compared with a net loss of $3.5 million on revenue of $56.5 million in the prior year.

"We are beginning to achieve leverage in our business model with improved margins, despite a challenging economy," says Shutterfly president and CEO Jeffrey Housenbold, whose audio-visual presentation at IRCE 2008 is available on CD-ROM.. "In addition, in the second quarter 2008 we launched several new service and technology enhancements, including the beta version of our Share 2.0 service that extends our customers` ability to tell and share their stories."

In the second quarter Shutterfly spent $9.8 million on technology, an increase of 48% from $6.6 million in Q2 of 2007, while spending on sales and marketing rose by 19.4% to $8.6 million from $7.2 million in the same quarter in the prior year. Shutterfly recorded general and administrative expenses of $7.6 million, up 13.4% from $6.7 million in the second quarter of 2007.

For the third quarter and the full year, Shutterfly expects revenue to range from $33 million to $36 million and $225 million to $240 million, respectively.

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