Craig Felenstein - Senior Vice President-Investor Relations Jonathan Oringer - Founder, Chairman & Chief Executive Officer Timothy E. Bixby - Chief Financial Officer.

Rohit R. Kulkarni - RBC Capital Markets LLC Brian P. Fitzgerald - Jefferies LLC Youssef H. Squali - Cantor Fitzgerald Securities Ralph E. Schackart - William Blair & Co. LLC Aaron M. Kessler - Raymond James & Associates, Inc. Lloyd Walmsley - Deutsche Bank Securities, Inc. Blake T. Harper - Topeka Capital Markets Dean J. Prissman - Morgan Stanley & Co. LLC.

Good day, ladies and gentlemen, and welcome to Shutterstock's 2015 Second Quarter Earnings Call. At this time, all participant lines are in a listen-only mode to reduce background noise, but later we will be conducting a question-and-answer session and instructions will follow at that time. As a reminder, this conference call today is being recorded.

I would now like to turn the conference over to Craig Felenstein, Senior Vice President of Investor Relations. You have the floor sir..

Thank you, operator. Good morning, everyone, and thank you for joining us for Shutterstock's second quarter 2015 earnings call. Joining me today is Jon Oringer, our Founder, Chief Executive Officer, and Chairman; and Tim Bixby, our Chief Financial Officer.

During this call, management may make forward-looking statements that are subject to risks and uncertainty, including predictions, expectations, estimates and other information.

These include statements relating to the expansion of our addressable markets, the success of new product offerings, including products we recently acquired, revenue growth and the predictability of our revenue, adjusted EBITDA, equity-based compensation, taxes, and capital expenditures.

Our actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Please refer to today's press release and the reports and documents filed by us from time-to-time with the U.S.

Securities and Exchange Commission, including the section entitled Risk Factors in the company's Form 10-K filed on February 27, 2015 for a discussion of important risk factors that could cause actual results to differ materially from those discussed in any forward-looking statements we may make on this call.

On this call, we will refer to adjusted EBITDA, non-GAAP net income and free cash flow, which are non-GAAP financial measures. You can find a description of these items along with a reconciliation to the most directly comparable GAAP financial measures in today's earnings release, which is posted on the Investor Relations section of our website.

We believe that the use of these measures provides additional insight for investors. However, these non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. And with that out of the way, let me turn the call over to Jon..

Thanks, Craig. And thank you, everyone, for joining us this morning. Shutterstock delivered another quarter of strong growth, as the key competitive advantages we have built, most notably the quality of our content library and unparalleled search technology, continue to attract more customers and contributors to our platform.

Product and user experience matter. It's a philosophy we have lived by since we launched our first offering in 2003, and it's what still drives us today.

We continually hear from our engaged customer base that Shutterstock's content is a true differentiator, given not only the size of the library but also the quality and diversity of the images we offer. That is why once creative professionals interact with our platform they keep returning, as evidenced by our annual retention rate, above 100%.

To ensure we are meeting the demands of existing customers while also attracting new users, we remain focused on building cutting-edge technology and introducing new and innovative product offerings. A great example is our rollout during the second quarter of monthly subscriptions with no daily download limit.

We also rolled out a smaller subscription offering for users who may not need as many images per month.

While these new subscription offerings have some short-term financial implications which Tim will discuss in a moment, over time we expect them to drive additional subscription growth, extend average retention length, and increase lifetime customer value.

Our relentless focus on providing the best user experience from a quality, search, and value perspective has resulted in consistent customer growth over the last 13 years. This past year alone, Shutterstock user accounts have grown by 25%, with over 1.3 million customers licensing content.

That trend has continued in the third quarter despite changes in the competitive environment. User accounts at the end of July remained 25% above a year ago, and our year-on-year subscription growth in July was the strongest it has been in 10 months.

The growing demand for content across our platform delivers bigger payouts to our contributor base and encourages them to upload fresh content to Shutterstock, further facilitating the network effect of our business.

During the second quarter, our content library grew by nearly 6 million images, 60% more than we added in Q2 a year ago, and now includes more than 58 million photos, vectors, and illustrations along with over 3 million video clips.

With more contributors than ever uploading their best content and a state-of-the-art processing operation and best images 24 hours a day, seven days a week, we believe we are well positioned to scale the supply-side of our marketplace for years to come.

We see plenty of opportunities to invest even further, to create the best user experience for both customers and contributors, and we will continue to do so even if the ultimate return on that spend is not expected for quite some time. Our operating momentum today is broad-based, with strong gains across all of our businesses and content types.

The strongest growth driver continues to be our enterprise business as we further build our relationships with agencies, media organizations, and large enterprises, by adapting our core offerings to their needs. This was a business that barely existed several years ago and now has over 20,000 users, up over 50% from the second quarter in 2014.

By providing dedicated sales reps, user management functionality, curated content, and robust legal protection, we regularly transform customers who are spending a few thousand dollars per year and the clients with deep relationships who spend tens of thousands or even hundreds of thousands of dollars annually.

On average, an e-commerce client who evolves into a premier enterprise client increases their annual spend by 10 times in that first year. This increase in spend is driven not only by the higher price we can charge per image, given the additional services we provide, but also by increased usage across each enterprise.

In fact, if you add up both the paid downloads as well as the free comps we provide as part of our enterprise agreements, the number of downloads across our enterprise business more than doubled this past quarter versus a year ago.

As a result, in the past year alone, the number of customers spending over $50,000 annually has doubled; and those spending over $100,000 has increased by nearly 70%. Our enterprise business now exceeds 20% of our overall revenue, and we continue to invest in new products and services to further enhance these relationships.

In the last few years, we have introduced Offset, a highly curated marketplace featuring an elite collection of images with simple royalty-free pricing that our enterprise customers are embracing.

And we acquired WebDAM, a cloud-based digital asset management service that enables marketing and creative teams to efficiently manage and collaborate on their creative files.

Most recently, with the acquisition of PremiumBeat and Rex Features we expanded our content offerings to include music and editorial content, further deepening and broadening our relationships, especially with enterprise customers.

We have already made significant progress in integrating these businesses, and in June we announced the next big step in building a preeminent editorial service. Our recently announced partnership with Penske Media combines Shutterstock's innovative platform and loyal customer base with Penske's event access and high-quality content.

This exclusive agreement speaks to both our commitment to provide the best and most diverse content to our customers as well as the opportunity ahead of us, as we look to revolutionize the editorial marketplace.

Shutterstock has had a history of successfully disrupting established business models, and we believe this is another area where we have significantly expanded our addressable market.

The investments we have made over the last few years in new content types, advanced technology, global expansion, and enterprise sales are paying off with sustained financial growth.

We are still in the early days of maximizing the opportunity we see in front of us, and we are determined to nurture both sides of our existing marketplace so we can deliver strong financial growth.

At the same time, in step with our philosophy from day one, as we deliver these results we are also hard at work developing the next-generation user experience for our customers so we can build additional long-term value.

Before I finished up, I'm sure that most of you have seen the announcement that Tim will be leaving Shutterstock; and Steven Berns, one of our board members up until a few days ago, will be taking over the CFO role next month.

Tim has been a great financial and operational leader, and his hard work and dedication during his tenure as CFO will allow us to build upon the growth we have delivered over the past few years. We wish him the best of luck. Now let me turn the call over to Tim to walk you through our financial results and outlook..

Revenue of $425 million to $430 million; adjusted EBIDTA of $82 million to $85 million; non-cash equity-based compensation expense of approximately $31 million; an effective tax rate approximately 44%; and capital expenditures approximately $18 million.

And now taking a look specifically at the third quarter, and we are assuming in these figures both for the quarter and the full year no material change from current U.S.

Dollar exchange rates, we expect in the third quarter revenue of $105 million to $108 million; adjusted EBITDA of $18 million to $20 million; non-cash equity-based compensation expense of approximately $8 million; an effective tax rate of 44%; and CapEx of approximately $5 million.

Before I finish up I would like to thank Jon and the board and the entire employee base at Shutterstock for providing me the opportunity to be a part of this team for these past few years.

It is truly a unique company, and we've worked hard to deliver sustained operating performance while further solidifying Shutterstock's long-term strategic position. While it's difficult to leave, I firmly believe Shutterstock is well situated to achieve long-term success and continued growth. Thanks for your time this morning.

And now if the operator could rejoin the call, Jon and I would be happy to answer any questions from the participants..

Our first question for the day comes from the line of Rohit Kulkarni from RBC Capital. Your line is open..

Okay, great. Thanks.

Tim, on the guidance for second half, if you could just draw out your assumptions underlying the change in guidance versus in May and Q2 performance; in particular, if you could just call out what the accounting impact and incremental FX headwinds versus the softness in consumer or customer acquisitions in revenue and EBITDA, that would be helpful.

And as far as the big-picture competitive environment is concerned, is there any linearity that you saw in terms of how customer acquisition, or your retention, or your churn trended over the last 12 weeks to 18 weeks around Adobe launch? And how do you think you need to react over the next six months or so?.

Sure, so I'll take a couple questions there. So the first one around the guidance adjustment; the second one around timing and potential Adobe impact. I'll take the first one. So important to note that this past year, we gave our initial full-year guidance, actually almost a year ago, last November, for the full year. A lot had changed since then.

We did not adjust guidance in Q1; a lot of FX movement. And at this point, we decided that it felt the numbers were a little bit aggressive for the year, particularly due to the three primary changes that you noted.

So about half of the adjustment that we're making to the revenue line in our guidance versus the previous guidance, about half of that is due to the softness we saw in customer acquisitions in Q2, which in a recurring revenue business with our retention rates, et cetera, that impact rolls through the rest of the year.

And then about 25% due to continued FX impacts, that sort of lag impact of FX; and then the remaining 25% due to actually the success of the new product launch, which has slightly different accounting implications, so there's just a little bit more deferred revenue that impacts us because this is the changeover year of launching this new product.

In terms of the Adobe launch and I'll let Jon chime in here, but from a timing perspective Adobe didn't really launch anything new through Fotolia until the end of the quarter, so clearly no potential to have real impact on the numbers.

And while they are out there in the market with some marketing efforts, we have not seen any impact on our business either in the second quarter or in the continuing result to date in the third quarter..

Yes. And further on the competitive environment point, the competitive environment has changed around us, and we've watched over the past decade-plus change consistently. We focus on our product; we focus on our customers; we focus on our contributors. We're completely focused on doing what we do every day.

And we're going to continue to deliver the strong growth we've been delivering and continue to invest in new opportunities, and that's not going to change..

Okay.

And if I could just add one follow-up on the Penske agreement, can you quantify or give more color as to how large of a contributor that agreement could become over the next 12 months to 24 months?.

Yes, the partnership with Penske is a great one; they're obviously a super-strong brand with a long reputation for great content, and they are really forward thinking. And they chose Shutterstock as a partner over several other options, so we're very excited about it. We're not giving financial guidance at this point.

We're just getting up and running over the next coming months. And this is going to be a long-term partnership, and we are very optimistic about the results we can deliver..

Yes, and the PMC – if you think about the combination of Rex and PMC together, it's a very powerful combination. Our customers that buy commercial images from us have always asked for the editorial part of the business. It's been a hard thing to break into, but we think we have the right strategy.

Now we have two important pieces that will push that strategy forward. And we plan to make this a part of our business going forward..

Okay. Thank you. I'll get back into the queue..

Thanks..

Thank you. Our next question is from the line of Brian Fitzgerald from Jefferies. Your line is open..

Thanks. A question around – maybe a follow-up question. With the changes in the competitive environment, have you seen any shift or changes in the dynamics around – or percentages around your a-la-carte business versus your subscription customers? And then I have one follow-up. Thanks..

No, I mean most of the trends in terms of the share of business we're seeing across each of the content types and the product lines has remained quite stable.

I think that the change we have seen is, with the launch of our new subscription product, some positive trends where more of our customers are choosing that subscription product than might have before.

And so I think it's – removing that daily download limit is not only appearing to be a great move for subscribers or historic subscribers but also it's possible that on-demand customers may find it more interesting. So we are seeing a couple of positive trends with that launch..

Yes. And while you may see other companies out there trying to replicate our subscription, 10 years ago, we invented the marketplace-based subscription for stock photography. We have more data than all of our competitors. We know how this product sells better than anybody else in the competitive environment.

We continue to evolve it, and you can see that in the changes we have made recently; they are very customer-centric, and we know those customers best..

Thanks, Jon, Tim. And then the follow-up maybe was as you take a step back, do you think Shutterstock's library or the technology, if you had to put yourself in one camp, what's the real competitive advantage against – it's a very fragmented space. There's a lot of big players there. Everybody's getting to library sizes that are big.

Is it the library or the technology that you would argue is your competitive advantage?.

It's both. You need the content but you also need all of the data. We have the best quality. You can see it by doing search results from our competitors and doing the same search result with us. In some cases for some searches, maybe other competitors will have good content, too.

But you'll get the content that you need for your project from us quicker, because of all the data collected and because of how customer-centric we are and how well we know these customers..

Great. Thanks, Jon..

Okay..

Thank you. Our next question comes from the line of Youssef Squali from Cantor Fitzgerald. Your line is open..

Hi, thank you very much, a couple questions, please, if I may. Tim, can you go back to and maybe give us a little more clarity on exactly what happened in Europe? I think you singled out Europe as the area of some weakness around your e-commerce offering and then you were launching the new products.

So maybe just some more detail on that would be helpful. And then on the a-la-carte service, I think Adobe's offering is priced more competitively than yours. Any plans to match pricing? And if not, how do you compete within that niche? Thanks..

Sure. Some of the softness we saw across Europe, I would say, is a couple things coming together. You've got a pretty significant currency impact, whether you're in a local currency, you've got uncertain economies; you've got FX effect. And you've got countries like certainly Eastern Europe and Greece and Russia with fairly significant or macro issues.

So that coupled with, I think, some normal ongoing competitive impact, we just found that our forecast on expectations were a little bit aggressive, and that was much more localized in Europe. U.S. growth rates were very strong; we're seeing steady improvement across most of Asia Pacific. But that I think is the main driver there.

With the product launch, this is an expected thing. We're going to be testing different flavors of our subscription products going forward.

But we're finding that customers are really reacting positively to no daily download limit, so that's one where we're going to continue to see how the data flows and the revenue recognition is just a byproduct of that, where anytime you switch over to a new product that has this impact.

And you're going to have that negative impact in the switchover year. On the a-la-carte pricing, price is not – we're not competing on price. I think price and value since the beginning of Shutterstock is important. But it's more around the simplicity and the clarity of the price and not the price level. This is not a commodity business.

We want to be competitive on pricing, but quality, search, value, those are, have always been, will continue to be the primary competitive components..

As far as price goes, like Tim said, we're always looking at price and we're always looking at the competitive environment. We have a huge head-start on our product. We have a huge head-start on understanding our customers. We plan to keep that head-start.

And while we grow fast we also continue to invest in new products and services that make it easier for our customers to find these images and to get the best images. That's not going to stop, and as we grow we're going to continue to invest. So, as long as we continue to have a lead, which we plan to, we will be competitive on price.

And we can probably even charge more because of that competitive lead..

Jon, just one last one. Stock wise, maybe can you just help us understand your philosophy around buybacks? Your stock obviously has seen a pretty major drop of late. Just wondering; with your cash-generative business model and strong balance sheet, what are your thoughts about buybacks, or the board's thoughts about buybacks on that? Thanks..

Yes. Well, first, I agree our shares are significantly undervalued. But our first priority is investing organically to build off of long-term growth opportunities. Second opportunity is M&A to augment our organic growth. And the third is then to return that capital back to shareholders in the form of, in the future, a dividend or a buyback.

But as long as we see a future where we can continue to invest organically, we do. As long as we see a future where we can continue to invest in M&A, we do. We will keep that cash for those investments..

Okay. Thanks, and Tim, best of luck..

Thanks, Youssef..

Thank you. Our next question comes from the line of Ralph Schackart from William Blair. Your line is open..

Good morning. A couple questions if I could. Just curious how your customer acquisitions have trended post Q2, mainly in Eastern Europe with the new products.

Has that new subscription product offering brought customers back there? And then maybe as a follow-up, why did you decide to change to the subscription pricing right now without metering? I think historically you've metered the number of images around 25 downloads per day, if I'm not mistaken. And then one more if I could.

With the no-metering on the subscription, do you expect that to change the gross margin profile going forward?.

Sure, I'll take that. On the customer acquisition side, we don't break down that level of detail by region going forward, outside the current – the prior quarter. But I think we're seeing encouraging signs across the board with the subscription acquisition. So you know the data we've seen so far is all quite positive..

Yes. On the unlimited, well, on the no limit per day, no metering subscription, we were always listening to our customers, and we always had a way for them to top off if they did run out of their daily download limit. And that was our on-demand product. We decided to make it easier.

And with a bunch of backend changes, it became easier for us to launch this, and it made sense. We listened to customers and we delivered the product that they wanted. It's as simple as that..

On the gross margin side on the new products, our goal is for contributors to make a fair return. That is a key part of why our content library is so strong; if our contributors tend to come to us first, we pay out 28% or so of revenue across contributor base.

Products on their own can have higher or lower royalty impacts, but we're seeing fairly consistent royalty rates across even the new products. It tends to be a little higher when you launch a new product then it comes down over time, because folks are testing, and without a limit they may download more.

But the trend-lines are all going where we expect them to go. If we found that a new product had very strong uptake and great growth prospects, and it somehow had a higher download rate at a royalty or margin impact, we control that.

We would have to decide and we would decide and our target is to continue to deliver that just under 30% return to our contributors. I expect that will continue to be very – part of the strategy going forward..

Great. One more if I could. Just on the newly revised full-year guidance, just curious; what's your visibility that you have into it now? I guess on one hand you have more visibility because it's subscription-based.

But the other hand you have also the potential to have more customers adopt subscription, which could potentially change the dynamics in Q3 and Q4. Just any thoughts around that..

Yes, I would say the visibility is comparable, so not a dramatic change. What is a change is that we don't have the years of history for the new products that we have for 25 downloads a day or on-demand. So from that perspective, you don't have quite as much of the seasonal historical data. But these are the same customers. They are the same.

They are creative professionals around the world. Their needs are not much different than they had been over many years. So the nice thing about having 1.3 million users and growing is that the law of large numbers helps you. Behavior is consistent and stable, and so our visibility tends to be pretty good.

When we set our own goals for each coming quarter, our track record of coming in that range or even slightly above has been very consistent..

Great. One more if I could, actually, please. Your comment today on the increase in Adwords pricing, I know historically you've given out some LTV metrics around your customer base.

Do you think that with what you've seen today that you could still manage the business to your historic LTV range that you've talked about?.

Yes, I think we have seen some incremental increases. And it's not just in the last couple quarters, but the last couple of years, there's been an increase in how much we're spending to acquire new customers, particularly in search. But another benefit we have is; search is not the only game in town. We have other ways of generating customers.

We have strong word-of-mouth, a lot of customers coming to us through unpaid channels. So overall, we're still seeing our ability to grow the customer base and our ad spend or marketing spend versus revenue has remained pretty stable..

Okay, thanks. Best of luck, Tim..

Thank you..

Thank you. Our next question comes from the line of Aaron Kessler from Raymond James. Your line is open..

Great. Thanks, guys; couple questions. First just on the guidance, I believe you noted that the subscription change to unlimited will have some impact on the on-demand buying.

How was that factored, if at all, into guidance? Was that part of the accounting change? And second, Tim, for metrics going forward, I think you noted you made some changes there.

Do you continue to plan to give out downloads and pricing? And third, just for Europe, I guess how much of that would've been maybe seasonality, just weaker seasonality in Europe in Q2 versus an actual slowdown there? Thanks..

Yes, so the accounting change is really not related to on-demand. It's really the un-metered or the no daily download limit. So the mechanics of revenue recognition are that when you have a daily download limit of 25 downloads, our practice is to recognize a month's worth of revenue pro rata each day over the course of the month.

And when we switch to an unlimited download we're recognizing on download. And then at the end of the month, we recognize the balance of the deferred revenue, because the month is over and you start a new month. So it tends to be a little more back-loaded.

Over time, that works itself out, because you've got similar amounts coming into a month as being deferred out of a month. But because this is a changeover quarter, Q2, and this is a changeover year, 2015, we will see a negative impact. We will recognize a little bit – a few million dollars less of revenue than we otherwise would have.

On the metrics, yes, we think that there's a bunch of metrics combined that capture the color of the business. And we didn't – increased (37:37) the different data points that we've been sharing with folks. And I expect we'll continue to add – to share some of those, particularly the enterprise information, because we think that's very helpful.

Downloads and revenue per download we'll continue to provide. It's just one piece of the puzzle. I think you see this quarter where the growth rate in the download count has actually increased versus the prior quarter. These will ebb and flow. It's a natural – captures the flow of the business; so we expect to continue to share those metrics.

On Europe, Europe's seasonality; true seasonality tends to be in the third quarter, which are the slower summer months.

Q2, I wouldn't ascribe so much to seasonality as I would to economic uncertainty and currency fluctuation, which not only affects just the translation of currency itself but also folks' ability to purchase products in foreign currency. There's quite a bit of business outside of the U.S.

that's being conducted in dollars for Shutterstock as it is for lots of e-commerce companies, so that also impacts..

Just back to the first question real quick.

I understood the accounting changes; but I guess the question was do you expect an impact from maybe less on-demand buying in the guidance for second half?.

No. I mean we factored in the trend lines we're seeing. So we're seeing nice growth rate in on-demand; to the extent that there is a change in mix of customers purchasing one versus the other, that's all factored into our models and our guidance..

Okay, great. Thank you..

Thank you. Our next question comes from the line of Lloyd Walmsley from Deutsche Bank. Your line is open..

Thanks, guys. So a couple, I guess just first, it sounds like the new guidance reflects mostly some of the trends in Europe as well as some of these accounting changes around the new plans. But it doesn't sound like you're seeing anything outside of marketing costs potentially competitively.

Is that fair to say the guidance doesn't really assume any meaningful competitive impact outside of marketing?.

Yes. We've seen no, as I mentioned, the competitive landscape is very much like it has always been. Adobe launched something new at the end of the quarter, but Fotolia has been a key competitor of Shutterstock for many years. It's the same images, it's the same catalog, it's the same search.

Adobe has a nice brand name, but no real change in the market dynamics that we're seeing either in the quarter or in the week since the quarter ended..

Okay.

And then on the lower volume subscription offering, I know you touched on it; but can you give us a better sense of how much of the uptake there is coming from new customers or a-la-carte customers switching into the subscriptions versus people trading down from higher-volume subscriptions?.

It's coming from everywhere. We also see – because we haven't had a subscription at that level before, we're seeing new types of customers too come in. So it spans the whole customer base..

It's pretty early days for the new product. And I think once we get a few quarters of data and a better understanding of how these – the customers' decision-making is working, that's the kind of information we would consider sharing.

But it's – we're a few months into this launch and things look good, but it's a little early I think to look at macro trends until we get a little bit more data..

Okay, thanks. Thanks for the help, guys..

Thank you. Our next question comes from the line of Blake Harper from Topeka Capital Markets. Your line is open..

Hi, guys.

I wanted to ask you, Jon, if you think that any of the changes to the pricing for your subscription model or other lower-priced offerings by your competitors changes the addressable market in any way or the size of it?.

Yes, I think what we're seeing through all these changes is a lot of people that normally wouldn't have bought images before start to buy them. Just like we always have, we see more and more people starting to realize they need legal, model released (42:11) they start to get in trouble. If you just grab images off of Google you will get in trouble.

It's easier than ever to find your copyrighted material and to sue if someone uses it incorrectly.

So as people get more educated, and as the environment changes around us, and more and more people are able to easily create websites and do marketing on their own, we are seeing different types of customers come in, all the way from PowerPoint presentations to billboard advertisements. People need this stuff..

Okay. And then one follow-up if I could, on the paid download growth that accelerated again after being – after declining last quarter and previously, just wanted to understand really how that is an indicator of the business. Obviously with the enterprise product, it's not as relevant.

But just wanted to see if you could help us explain how that metric can indicate some of the health of business, or if there's other types of metrics that you could release in the future that would help us either to understand on the number of subscribers, or on number of enterprise customers, or something else like that, that could help us to get a better understanding of the business..

Yes, I think it's a nice trend point we saw where the growth rate was a little higher in Q2 than in prior quarters. The download count tends to be somewhat of a proxy for the subscription business. We have sort of an 80/20 rule where the bulk of the downloads are under the subscription plan. Subscription products, probably 75% or so of the downloads.

And so it is a good indicator of subscription behavior. It's not necessarily an indicator of revenue or customer growth, but it's more an indicator of their behavior. So that's a good data point; but looking at it in isolation, you definitely lose a lot of the nuance of the rest of the business.

I think enterprise accounts and their growth, and our ability to take an e-commerce customer and make them an enterprise customer and generate 10 times as much revenue in that year of transition, that's a pretty great metric. And those are the kinds of metrics that we've begun sharing.

And we'll continue to share things like that where it gives you a little more sight into some of the sub-business units of the business that are growing well..

We are pretty conscious about metrics, and we're always trying to figure out what could be the best way to get you guys to understand the business the best. So we're always reevaluating the stuff and trying to figure out how to communicate those metrics..

Okay. Thanks, guys. Best of luck, Tim..

Thank you..

Operator, we have time for one last question, please..

Sure. Our last question that we have time for today is from the line of Dean Prissman from Morgan Stanley. Your line is open..

Hey, guys; thanks for taking my questions.

I know you talked about enterprise customer growth, but what was the enterprise revenue growth in the quarter, and how did it compare to last quarter? And then I think following upon Youssef's question, Jon, what if anything in the competitive environment would make you consider price cuts in your a-la-carte business? Thank you..

First question first. Enterprise growth was strong. We don't break out specific growth rates for each of the businesses, but enterprise continues to grow faster than the overall business. We've got more than 100 sales reps cranking it out and selling well. That business is growing very nicely.

It's 22% or so of the overall revenue, so it continues to grow as a proportion of the whole business..

As far as pricing goes, again, we're constantly evaluating the competitive environment. You have to remember; these are businesses buying our images. Businesses are using our images to make money off of our images. A business spending a couple dollars for an image is not too much to ask.

It happens 4 times per second at Shutterstock, and it will continue to happen because people need these images to run their businesses..

Great, thanks. Best of luck, Tim..

Thank you..

Thank you. That's all the questions that we have time for today, so I'd like to turn the call back over to management for closing remarks..

Thank you, everybody, for joining us today. If you have any follow-up questions, please let us know. We're here in New York. Thank you very much..

Ladies and gentlemen, thank you, again, for your participation in today's conference. This now concludes the program, and you may all disconnect your telephone lines. Everyone, have a great day..