Q2 2021 Shutterstock Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Q2 'twenty 'twenty 1 shutterstock.
Doc Inc earnings Conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press Star then zero on your touch.
Charles town.
As a reminder, this conference call is being recorded.
I'd now like to turn the conference over to your house, Mr. Chris The VP Investor Relations and corporate development.
Thank you Phyllis.
Good morning, everyone and thank you for joining us for Shutterstock.
Second quarter 2021 earnings call joining us today is Stan Pavlovsky, Shutterstock, Chief Executive Officer, and Jared Yeas, Shutterstock, the Chief Financial Officer.
Please note that some of the information you'll hear during our discussion today will consist of forward from forward looking statements, including without limitation the impact.
The COVID-19 on our business the long term effects of investments in our business the future success and the financial impact of new and existing product offerings, our ability to consummate acquisitions of integrate the businesses, we have acquired or may acquire into our existing operations, our future growth margins and profitability our.
Our long term strategy.
<unk> and our performance targets.
Actual results or trends could differ materially from our forecast for.
For more information please refer to today's press releases and the reports we file with the SEC from time to time.
Including the risk factors discussed in our most recently filed 10-Q and our annual 10-K for discussions of important risk factors that could cause actual results to differ.
Differ materially from any forward looking statements when they make on this call.
We'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA and adjusted EBITDA margin adjusted net income adjusted net income per diluted share.
Revenue growth, including by distribution channel on a constant currency basis billings and free cash.
Cash flow reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the financial tables included with today's press release in our in our 10-Q, which are posted on the Investor Relations section of our website.
Finally, please refer to the brief information deck, we posted on our website that contains supporting materials for today's call.
With that I'll turn the call over to Stan.
Thank you Chris Good morning, everyone and thank you for joining Shutterstock second quarter 'twenty 'twenty 1 earnings call.
We're happy to report that the company has seen another strong quarter in terms of growth. This morning, I'll be discussing the key drivers of growth.
However, before doing that I'd first like to talk in more detail about the exciting announcement that you saw this morning in connection with the formation of Shutterstock Dot AI and the acquisition of 3 AI driven creative intelligence platforms.
As backdrop in previous quarters I've spoken.
And about Shutterstock, 3 strategic pillars, workflow innovation, fresh and relevant content and data and insights to drive performance Shutterstock.
Shutterstock dot AI and the 3 acquisitions represent the very important and tangible advancement with respect to our plans for data and insights.
This is a major.
Milestone for us that will reshape our product offerings and ultimately our addressable market in the years to come.
In broad terms Shutterstock AI will offer 2 discrete solutions predictive performance and computer vision solutions.
The acquisitions, we announced this morning relate to our.
Predictive performance offering which will be rolled out to both e-commerce and enterprise customers gradually over the next 6 to 12 months.
We believe that our predictive performance offering will address a major customer pain point by delivering actionable data driven recommendations.
These.
These recommendations will be embedded in a comprehensive yet intuitive workflow that enables customers to test analyze and optimize their content prior to deployment.
With these acquisitions Shutterstock will be able to score our content library to predict performance as a result.
Marketers will no longer be guessing or solely using intuition and selecting their content for campaign or other marketing purposes, but rather they will have predictive insights baked into our offering.
This means that shutterstock customers can pick and choose within our content library with the benefit.
Of the insights that will help drive performance for them.
These insights will be delivered via either general models, which will not rely on any customer specific campaign data or custom models, which will leverage and individuals' individual customer's historic campaign data.
Of <unk> lastly, the Shutterstock predictive performance solution does not rely on third party cookie based identity data since it relies on contextual targeting.
I'd like to talk more specifically about our 3 acquisitions and the critical components each company contributes.
On a.
Combined basis pattern of 89 data sign and shops are will help us deliver on our vision for predictive performance. Each company represents an important piece of the overall puzzle.
Pattern of 89 is in Indianapolis based company customers rely on pattern, 89% SaaS solutions.
Elution to analyze past campaigned data predict future campaign performance and optimize their media spend and real time, rather than relying on AB tests or educated guesses.
The analytics are focused on the myriad of creative dimensions, such as colors used.
Text sentiment presence of people and presence of specific objects.
Pattern of 89 as of product led organization and its platform provides shutterstock with the front end workflow.
And of backend campaign data feed alongside strong product and tech talent.
Data science is based in London.
The data sign this particularly strong in areas such as machine learning and natural language processing, which drive the analytics on the backend to understand and optimize the creative elements of an ad.
These backend strength are highly additive to pattern.
Heinz from and in terms of both technology and talent. We are excited about the combination of these uniquely complementary platforms.
Last but not least Denver based shots or has built a repository of survey data, which informs the company's proprietary audience models.
These audience models will allow shutterstock to generate what we call resonant scores, which are predictions on how well a particular digital asset will resonate for a given audience segment.
Unlike pattern of 89% and data sign shots or doesn't need specific customer campaigned data to generate.
Generate its predictions.
This is particularly critical in addressing the cold start problem in instances, where a customer may not yet have a deep dataset of historic campaign data.
I am extremely excited for the advancement against our product roadmap that these 3 acquisitions represent I.
I look forward to updating you on our progress on our data and insights strategy in the quarters ahead.
Now that we've reviewed our predictive performance offering and the 3 acquisitions that power of that offering I want to turn to computer vision.
Helping AI models see and understand digital imagery is the large and.
And growing market today, a number of our customers are looking to train their own AI models for use cases, such as self driving cars and robotics.
To that end Shutterstock computer vision, offering leverages and commercializing our extensive dataset which includes.
A collection of more than 400 million images videos music tracks and 3 the models and associated metadata in short Shutterstock has built a proprietary process for tagging assets over our 17 year history, which gives us 1 of the richest datasets.
From the marketplace, which we continued to enrich.
Switching gears to revenue and overall demand environment digital marketing spend is exhibiting continued strong momentum across channels and use cases.
Smbs large enterprise corporates and agencies are.
<unk> spending again with an eye on growth and new customer acquisition the.
The results for Shutterstock was revenue growth of 19% in the second quarter and constant currency organic revenue growth of 12% of meaningful acceleration.
Subscriber kpis were exceptional with subscriber count.
<unk> growing 44% and subscriber revenue growth of 25%.
E Commerce was up 23% in Q2, 2021, driven by balanced growth across image footage and music as well as the strong performance of turbo squid 3 D.
Meanwhile, enterprise saw of true inflection in its momentum with revenue growth accelerating to 13%.
The significant acceleration and enterprise revenue growth was driven by bookings momentum both in our large agency and corporate businesses supported by products like Shutterstock Studer.
Yes.
And our small and medium businesses supported by innovative new products, such as SMB flex, which allows customers to buy multiple assets within a single subscription.
We are truly pleased with enterprise revenue and bookings growth and are increasingly confident that this.
Revenue channel has turned the corner in terms of sustainable growth.
In closing based on our strong record second quarter and confidence in the continuation of the economic recovery, we are raising our revenue and EBITDA guidance for 2021.
We could not.
<unk> are excited about the potential of Shutterstock dot AI and the unique offering we will bring to market garnering us access to a large and fast growing market.
Furthermore, we expect to bring several more exciting innovations to market this year around tools and creative workflows.
Those that we think our customers will love, while continuing to provide shutterstock customers access to fresh and relevant content, which will soon be uniquely augmented with data and insights to drive performance.
And now I'll turn the call over to Jarrett.
Thank you Stan and.
And good morning, everyone.
Share of stock grew revenue was 19% in the second quarter or 16% on a constant currency basis, our fourth quarter of accelerating revenue growth.
Revenues benefited this quarter from the addition of turbo squid, which added 4% to our growth are.
Our growth rate also benefited from the comparison.
Second quarter of 2020, when demand was negatively impacted due to the pandemic.
Constant currency organic growth was 12% for the second quarter the acceleration in organic constant currency revenue growth in the second quarter is further evidence of demand acceleration along with solid execution across the revenue.
Listen to the geographies content types and industries.
Both of our E Commerce and enterprise revenue channels performed strongly this quarter.
Growth was led by our E Commerce channel, which grew 23% or 16% excluding turbo squid.
Turbos Covid has grown 20% plus year to date post acquisition.
Acquisition, clearly exceeding our expectations for the business.
Our enterprise channel grew 13% and accelerated from 5% growth realized last quarter on the back of some of the product introductions and bookings momentum Stan mentioned previously.
From a geographic perspective revenue was up 23% in north.
America, 24% in Europe, and 11% in the rest of the world.
European growth was strong and accelerated from the prior quarter driven by the UK, Germany, and France, which also continued to be favorably impacted by currency movements.
The rest of the World had more moderate growth led by Asia and Australia.
However that growth was negatively impacted by relatively weaker performance in South America.
Gross margin improved by 400 basis points to 64% in the second quarter compared to 60% in the second quarter of 2020 and was down 200 basis points from the first quarter per our expectations.
<unk> commentary last quarter.
Gross margin was impacted by the return to growth in paid downloads of this quarter of 2%.
In additional month of the inclusion of turbo squid royalties and an ongoing step up in earnings tiers of <unk>.
<unk> by our contributors over the course of the year.
Sales and marketing expense was.
<unk>, 4% of revenues as compared to 22% in the second quarter of 2020.
This increase is driven from increased investment in marketing spend as well as higher sales commissions associated with our increased enterprise revenue.
Product development as a percentage of revenue declined 200 basis points in the.
The second quarter, However, our product development spend of $12 million was up 12% sequentially from the first quarter of 2021 due to higher compensation costs due to the additional hiring of engineers as well as additional performance based stock compensation expense.
We anticipate that the recent acquisitions and the additional.
The technology hires will increase product development expense in the second half of the year as we continue to invest in product priorities.
G&A expenses were 16% of revenue flat from the second quarter of 2020 G&A expenses. This quarter included some incremental stock compensation expense associated.
Associated with our performance based stock awards.
Excluding stock comp expense G&A expenses as a percentage of revenue declined by 150 basis points compared to the second quarter of 2020 due to continued cost reduction efforts combined with operating leverage in our business.
The 460.
Expansion in adjusted EBITDA margins to 27, 9% resulted from the combination of accelerated revenue growth upside in gross margin and operating leverage across the business.
For the second quarter GAAP diluted earnings per share was <unk> 79.
And adjusted diluted EPS was $1.2.
2 representing growth of 49% and 65% respectively.
Turning to our balance sheet and cash flows at the end of the quarter, we had $411 million of cash up from 363 million at March 31, 2021 and includes $71 million of operating.
Point of cash flows offset by $10 million of Capex and content acquisitions $7 million of taxes paid on the vesting of equity awards, which are issued underwithhold to cover basis, and the $8 million quarterly cash dividend paid in June.
Our deferred revenue balance of 162 million.
Operating increased over $8 million from March 31, 2021, and over $23 million from the second quarter of 2020, representing year over year growth of 17%.
The growth in our deferred revenue is a strong leading indicator of the future growth in recognized revenues of our enterprise revenue.
New channel, which represents more than half of the deferred revenue balance.
In terms of capital allocation, we will pay our next quarterly dividend of <unk> 21 per share on September 16th 2021.
As previously stated we plan to grow the dividend in line with earnings growth and plan to revisit the quarterly dividend.
And after the third quarter consistent with last year.
With respect to our share buyback program, we will commence of $75 million annual buyback. We expect this to be an ongoing annual program wherein we purchase of similar amount each year by dollar cost averaging and being in the market each month.
<unk> over the course of a quarter.
By growing our dividend over time at rates in excess of average equity market rates of return repurchasing shares on a consistent basis and remaining active in M&A. Our goal is to provide investors compounding annual returns that exceed our growth and revenues.
And operating profit.
Yes.
Turning to our key operating metrics. They continued to be exceptionally strong for shutterstock during the quarter subscriber count increased by 44% subscriber revenue increased by 25% average revenue per customer increased by 9% paid downloads.
Per cent and revenue per download increased of $4.17 per download our image library expanded by 12% and our footage library increased by 16%.
Our subscriber growth and subscriber revenue growth are driven by demand for our SMB and prosumer oriented smaller subscription product.
<unk> and some of the new products, we've brought to market over the past year.
Investors should remember that we introduced a range of new video and music subscription products in the back half of 2020 and.
And we expect to lap the introduction of those products and their contribution to our revenues in the back half of the year.
Similar to our.
Our commentary in the first quarter, we expect subscriber growth and subscriber revenue growth to come down from current levels in the back half of the year.
With that being said as Stan mentioned, we're really pleased with the market reception of SMB flex and the progress in our pivot towards the subscription model our near term goals are to introduce.
Incremental value and to differentiate our subscription offerings by using Shutterstock dot AI data and insights.
<unk> Dot AI as predicted performance solution will be a core element of delighting our subscribers and we believe this could ultimately result in meaningfully higher retention for our subscription offerings over time.
Before discussing the guidance revision I would like to add the Stan's comments on Shutterstock that AI and I would also like to encourage investors to go to the Shutterstock dot AI webpage to better understand our offerings I'm.
I'm truly pleased that we were able to fill out the data and insights element of our product roadmap with these 3 acquisitions and completed.
Complete all of the necessary pieces of the puzzle concurrently sugar.
<unk> Dot AI was created as a discrete legal entity and accurate acquisition vehicle to acquire these intellectual property assets and will also serve as of contracting entity for our computer vision and predicted performance offerings in.
In the future this.
This will allow us to disclose elements of the Shutterstock dot AI business as it grows and see strong reception in the market.
While the aggregate cash consideration for the transactions was relatively small at $35 million.
<unk> on these 3 deals gives us core technology and intellectual property that would've taken.
Minimum of 3 to 5 years to build internally.
We also have an aggressive product integration and go to market plan that has us being in market with our predicted performance offering within the next 6 to 12 months.
Therefore, we do not expect predictive performance to meaningfully contribute to revenues were improved retention until 2000.
US some too.
That being said we are already in the market with our computer vision offering and expect to have some exciting deals to announce soon.
Finally, I'd like to review our revised guidance.
Based on the results from the second quarter, and a greater level of confidence for the remainder of the year, we are increasing our full year.
The revenue adjusted EBITDA and adjusted earnings per share targets as follows.
Revenue of $740 to $750 million, representing 11% to 12, 5% annual revenue growth.
Adjusted EBITDA of $175 million to $180 million with annual.
22, the expansion towards the upper end of the previously provided range of 50 to 100 basis points.
And adjusted earnings per share of between $2.80 per share to $2.95 per share.
Looking at the revenue growth for the remainder of the year our commentary remains.
The margin with last quarter, we expect to see continued steady growth in our enterprise business.
The quarterly growth rates of E Commerce will moderate in the back half of the year as the comparables become more difficult and we lap the growth of some of our successful subscription product introductions in 2020.
With respect.
Consumer margins implied in our guidance, we expect a further 100 to 200 basis point decline in gross margin from the second quarter based on the step up in earnings tiers achieved by our contributors combined with expected utilization increases.
In addition, we of 2 major investments totaling.
Expect $2 million, we expect in the back half of the year.
Firstly, we are engaged with several agencies to spend in excess of $13 million in the second half of the year on incremental brand advertising and new product Rollouts support.
We think of this as a long term investment that will further fuel the.
The <unk> of our funnel and allow us to carry our strong growth momentum into 2022.
Additionally, we expect to incur approximately $7 million and costs associated with the consumption and integration of the Shutterstock Dot AI deals we discussed earlier.
Those costs include $1 million.
Top advisory and legal costs $2 million of employee retention bonuses and $4 million of ongoing operating and integration related expenses associated with the deals.
Even with the $20 million investment in the back half of the year, we still expect to be at the upper end of our previously provided margin guidance.
<unk> of $50 to 100 basis points of margin expansion as compared to last year.
We could not be more pleased with our results for the first half of the year, including the market reception of our subscription offerings, the accelerating momentum in enterprise as well as the strong profitability we have been exhibiting.
For the consummation of the 3 AI acquisitions, and the formation of Shutterstock Dot AI as a core part of our data and insights pillar has the potential to open up new opportunities for Shutterstock and uniquely differentiate our offerings in the market.
Thank you so much for joining us today, we very much appreciate your time operator.
I would now like to open the lineup for any questions.
Ladies and gentlemen, if you have a question at this time. Please press the Star then the number 1 key.
Key on your Touchtone telephone if your question has been answered or you wish to remove yourself from the queue. Please press.
Greater we pound key.
Your first question comes from the line of Youssef Squali with choice.
Thank you very much and guys congrats on a really nice quarter.
2 questions if I may 1st.
Jared on just the the guidance that you just went through I think you talked about sequential improvement.
I guess in the top line driven by enterprise and maybe to a lesser degree ecommerce if I look at the even the high end of your guide of 70 <unk>.
It effectively implies.
First of that on that just the pure dollar standpoint for Q3, and Q4 day would actually be at or below which you did in Q2.
So just wondering if you can maybe fill that out a little.
2 of that onion, a little bit for us.
Any reason for that or is that just out of conservatism.
Stan.
Is that all of these deals.
Can you just step back a little bit of 30000 foot view of the business relative to where you guys were say last year of couple of years ago, and where you see the the business seems like the business is pivoting.
More and more towards AI.
These kind.
The campaign or these these acquisitions seem to be even putting you more maybe into campaign management optimization, particularly with data side and shorts here. So maybe she can just.
Speak to how you see the business of Vulcan and where you see.
How would you see the business and like.
You know 3 to 5 years ideally how do you see it because it's clearly a very very different from where it was 2 or 3 years ago. Thank you.
Sure use of so with respect to our guidance I think we feel really good about the guidance raise.
The $20 million of the top.
Top end and the bottom end of the raise I think of something that at this point of the year, we're feeling quite confident about the business. We're feeling quite good about the subscription metrics and yes to your point, we are feeling quite good about enterprise and the bookings growth. That's taken place there and you can see some of that on the balance sheet and the deferred revenue balance.
As you look towards the back half of the year I think there's a few things going on number 1 as we've mentioned several times, we are lapping some of the new subscription product introductions in the second half of the year and we think that will bring some of the subscription growth metrics down.
We are going to face tougher comparables in the back half of the year.
So if you look at 2020 by the time, we got to the fourth quarter. There was a pretty sharp rebound in demand. We grew 9% in the fourth quarter of 2020, and so as we face tougher comparables, we are being more conservative as we look towards the back half of the year.
Think as you pull apart the numbers 1 of the things you'll see is.
If you look at the constant currency organic revenue growth implied by the top end of the guidance, it's somewhere around mid single digit growth in the back half of the year and I think at this point in time.
The zone that we feel quite good about from a from a guidance perspective and visibility perspective.
Okay.
Yeah.
And.
Good morning, Youssef. Thanks for your question about the about the company and sort of strategically where we're going.
You are right we are definitely.
Pivoting the company.
I would say is the from an from a industry perspective.
The cross section or the intersection of content technology and data.
Its something thats extremely powerful and something that we've talked about for a couple of years.
But at the at the 30000 foot level.
Looked at what our customer.
<unk> pinpoints.
And the creative selection criteria is 1 of the key pinpoints that remains within the.
The marketing workflow.
And so we felt like this is an area that is open and fragmented and really.
Felt.
Like our.
The first party data.
In conjunction with some of these acquisitions could really be a powerful solution for customers as they determine what content will work for their campaigns.
So what you can expect from us in terms of our pivot is that our <unk>.
Some products will be will continue to be enhanced.
That customers have not just content, but intelligence around that content. So they can make smart decisions about what will work.
But also as I mentioned in my in my talking points earn.
Earlier, we will continue to further develop products in the workflow.
So you can you can imagine that.
We will we will continue to launch products that and drench us further and are in the customer's workflow.
And.
Subscription thing will be data enabled to allow customers to make smarter decisions.
So we are going to be much more of a of a.
The <unk>.
Technology platform.
The forward not just a content marketplace and we feel that this is going to be a good use of our cash.
Sure.
For shareholders, but also.
We feel like the decisions, we're making with these investments will be great for our customers.
Thank you.
That's actually helpful.
Your next question comes from the line of Andrew Boone with.
And every piece securities.
Hi, guys. Thanks for taking the question.
We got 1 and then a follow up please.
As we think about the impact of AI kind of in 2022 can you help us understand how big of the impact can be.
Another way right as.
As the AI starts to mature and.
JMP couple of Shutterstock from industry growth of 5% to 7% can you guys grow faster than that now.
Can materially move kind of revenue growth higher.
Yes, absolutely.
Take this 1 this is stan.
Ultimately everything we do.
In support of our customers.
Does that is meant to improve retention and acquire new customers. So.
This is definitely.
For us.
Part of the growth strategy that we have over the next several years.
So while we're not providing any guidance.
Today on 2022 and the impact.
That shutterstock AI will have we will do so.
In Q4 of the 1 thing I can tell you is that for example today, we're in market with computer vision services.
And we.
<unk> pretty robust pipeline.
We've already generated several million dollars of revenue.
And we have a robust pipeline around that so that hopefully at least gives you a sense of.
Of the fact that this is.
This is something that we are launching in the near term, but we.
We expect.
A lot more of the benefits as we integrate these technologies within the within the marketplace and within our subscriptions over the next.
Call It 12 to 18 months.
Okay that makes sense. Thank you and then on enterprise booking.
The first was pretty impressive up 6% quarter over quarter.
Can you talk about just the sustainability of enterprise and the impact from SMB flex.
Yes, so there's really.
With enterprise Theres really.
Several customer segments.
That we focus on.
On the high end of our high touch business, we've seen a lot of growth, resulting from both increased retention of customers as.
As well as.
New customer growth.
As well as average.
<unk> growth order value on that growth and the reason that this is happening is because 1.
Over the last 12 to 18 months, we have completely changed our go to market approach.
We've brought new services, including studios.
Editorial news desk.
Yes.
As well as other services.
To the enterprise.
We have segmented our.
Our sales team around customer segments.
And so we're seeing a lot of success that has been the has been the fruit sort of of our labor over.
Over the last call. It 12 to 18 months and that's really nice to see.
On the small and medium segment, we have.
Been really innovative with new products that support small businesses and.
In fact in that segment, we launched our first multi asset sub where customers can buy image music.
The can footage assets all within the same subscription or have access to multiple assets within the same subscription and.
And we're finding a lot of success globally from that product as well.
I guess, what I would say is we're really trying to.
Continue to bring.
Part, but new products to market.
And with our recent acquisitions, including 3 D.
Some of these data acquisitions as well as additional new products that we plan to launch for the small and medium segment of business segment, we feel pretty confident there.
We have of team now in place that can really be.
A lot of value to our agency partners corporate customers as well as our small and medium business customers.
Great. Thanks, guys.
Your next question.
The new <unk> comes from the line of Bernie Mcternan with Needham and company.
Great. Good morning, Thanks for taking the question.
The investments in <unk> make a whole lot of sense I was just wondering from a competitive standpoint or agencies are they doing anything with AI and big data and just how differentiated your offering will be.
<unk> follow up as well.
Yes, absolutely.
So.
Many companies are leveraging AI.
For a number of.
For a lot of purposes, and a lot of ways to both automate increased margins as well as.
And <unk> performance.
The media agencies definitely use AI.
Given the trove of data that they have.
On behalf of their customers.
And partners.
Our offering is really focused on creative.
And our data offering is focused on the performance of that creative which still continues to be.
A real pain point for customers, it's what do I choose.
The upfront in that process both.
Leveraging might create of instinct as well.
Being able to leverage data upfront to really make.
That process much more efficient and so when you think about a company like ours. When you when you show up to our site and you.
<unk>.
Our searching across our library of almost half of 1 billion assets.
Having those types of recommendations and being able to have more confidence.
Round, what content will work not just <unk>.
Performing tasks.
But actually understanding upfront, what's going to work we feel is a real.
Real differentiator in the marketplace.
But the use of an application of AI machine learning and our case computer vision.
These are.
Very fragmented.
Use cases across the marketplace and.
We.
Expect that will be.
Also a major player with AI.
In the in the market for.
The creative content and creative performance.
Of the thing I would just say is.
As a business, we've been leveraging machine learning and AI for some time.
<unk> with our internal processes.
So really what we're doing now is we're taking some of the assets that we've built internally and really commercializing those data assets for our customers.
It makes sense and then I know we spent a lot of time on last call talking about turbo squid. So I was just wondering.
If you could talk about the contribution of turbo squid in the quarter, how the integration process is going and any.
The early data points on cross selling to existing customers.
Yes, so I'll talk really briefly on the integration and then ill, let Jeremy talk about the numbers, but.
<unk> has been great the.
The.
The team is fantastic.
Just as a reminder, there.
The company based in New Orleans.
The largest <unk> marketplace in the world the <unk>.
Business has really seen nice growth during this time.
We've seen a lot of really nice grow.
Not just in terms of the volume but also.
The unit economics, as we see more and more sophisticated models are being used for a number of use cases as you can imagine for of gaming for special effects movies et cetera.
And.
And we really do see.
In 2022.
Some real opportunities from an integration perspective across the areas that I talked about right in terms of the marketplace itself.
We want to democratize the use of 3 D.
Today.
It really requires of skill.
<unk> that is.
Not necessarily prevalent so we want to make it much easier for customers to use <unk>.
<unk>.
There's also in <unk>.
Terms of the model as you think about.
Technologies that are that are emerging around.
Augmented reality virtual.
The reality, we feel like we have of real role to play.
The health of the large platforms that are developing.
Really.
The exciting technologies, such as self driving cars and.
Really mapping out the world with 3 D objects.
We do see a lot of excitement and a lot of demand and what you're going to see from us is.
Integration across all of our sales channel will have offerings, including studio offerings within the enterprise around <unk>.
We will have much more.
So self service offering and e-commerce and <unk>.
As is always the case, we will leverage our platform partners and platform solutions.
To do 3 D integrations with the with some of the largest platforms in the world.
And Jared do you want to talk a little bit about the contribution of the.
Turbo squid this quarter sure.
And then just in terms of the specific contribution from my prepared remarks turbo squid contributed 4% in the quarter sort of $6.8 million of recognized revenue.
As the first quarter, where we recognized the full.
The 3 months of Turbo squid revenue as we closed on the deal of the beginning of February.
But I would say that the.
The business has certainly outperformed our expectations from the time of the consummation of the acquisition really as a result of a lot of the tailwind that that Stan mentioned, so we feel great about the secular industry.
Demand for 3 D. We feel great about the company that we've acquired and brought into the Shutterstock family and I think now we're really going to be in investment mode of integrating the business and making sure that we can leverage of the full breadth of assets that we acquired with shutterstock channels and capabilities.
Great. Thanks.
And of the questions.
Yes.
Yeah.
Again, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad.
To remove yourself from the queue. If your question has been answered please press the pound key.
<unk>.
Okay.
At this time.
I would like to turn the call back over to <unk>.
Stan Pavlovsky C E.
Thank you everyone for joining us today in closing we are extremely excited for what lies ahead in terms of innovation around data and insights workflow innovation and fresh and relevant content as always thank you to all of our customers contributors and employees that ends our call for the day.
Thank you that does conclude today's conference. We thank you for participating you may now disconnect.
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