November 1, 2012, 5:29 PM

Q3 sales increase 29% for Shutterfly

But its net loss widens to $10.5 million.

Kevin Woodward

Senior Editor

Lead Photo

It was another quarter with double-digit sales growth for online photo processor and photo album retailer Shutterfly Inc., but one that still ended with a net loss.

 For the third quarter ending Sept. 30, Shutterfly, No. 53 in the Internet Retailer Top 500 Guide, reported:

  • Net sales of $98.5 million, a 28.8% increase compared with $76.5 million in Q3 of 2011.
  • The number of paying customers grew about 42.8% to nearly 2.20 million from about 1.54 million in the third quarter of last year.
  • Total orders grew about 40% from nearly 2.58 million to about 3.61 million.
  • Average order value decreased 11.1% to $25.06 from $28.18.
  • Net loss was $10.5 million compared with a $10.0 million loss in the third quarter of 2011.

Jeff Housenbold, Shutterfly president and CEO, says that the results from the first nine months of 2012 validate the company’s long-term strategy and that “our market opportunity remains significant and that the strategies that have enabled us to emerge as the online market share leader will continue to distinguish us from our competition.”

Shutterfly’s results pleased analyst Colin Sebastian at Baird Equity Research. “While guidance reflects some caution related to the macro backdrop, we continue to believe Shutterfly is well positioned as the clear market leader in digital photo products,” Sebastian writes in a research note. Third quarter results were above his expectations, “as the company benefited from healthy organic growth and faster integration of recent acquisitions.” In September, Shutterfly bought Penguin Digital Inc., a mobile app developer.

For the first nine months of the year, the merchant reported:

  • Net sales of $288.8 million, a 37.9% increase from $209.5 million in the first nine months of last year.
  • A net loss of nearly $30.0 million, compared with a $21.4 million loss for the first three quarters of 2011.

Shutterfly is forecasting 2012 revenue to range from $589.0 million to $599.0 million.

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