What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-25 compared with 2024-02-26 · 365 added, 282 removed, 1047 unchanged (38% of the section changed)

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However, any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objective.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

On July 22, 2024, the Company completed its acquisition of Envato Pty Ltd.

The financial results of this acquisition are included in the consolidated financial statements as of and for the year ended December 31, 2024 and represent approximately 10% and 6% of total revenues and total assets, respectively.

Management is currently integrating Envato into our operations and internal control processes and, pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the Company is excluding the internal control over financial reporting of Envato from its evaluation of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2024 .

Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

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Management based its assessment on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2023.

In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred.

Our management’s evaluation of internal control over financial reporting excluded the internal control activities of Envato Pty Ltd., acquired in July 2024, as discussed in Note 5 to the Consolidated Financial Statements.

Based on our assessment, and subject to the foregoing, management has concluded that our internal control over financial reporting was effective as of December 31, 2024.

PricewaterhouseCoopers LLP, an independent registered public accounting firm (PCAOB ID 238 ), has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of the audit, has issued a report on the effectiveness of our internal control over financial reporting as of December 31, 2024, which begins on page F-2 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting, identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting identified in connection with management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As mentioned above, the Company completed its acquisition of Envato on July 22, 2024.

The Company is in the

process of reviewing the internal control structure of Envato and, if necessary, will make appropriate changes as it integrates Envato into the Company’s overall internal control over financial reporting process.

Limitations on Controls

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In August 2023 , John Caine , our Chief Product and Digital Officer, entered into a prearranged stock trading plan .

Caine's plan includes the potential sale of up to 8,600 shares of our common stock in February 2024.

The shares of common stock that may be sold pursuant to Mr.

Caine’s plan, are shares to be issued upon the vesting of restricted stock units and include shares that will be automatically sold to cover mandatory tax withholding obligations.

Caine’s trading plan was entered into during an open trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and our policies regarding insider transactions.

During the three months ended December 31, 2024, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (each as defined in Item 408(a) and (c), respectively, of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC, within 120 days after the end of the fiscal year ended December 31, 2023.

The information required by this item, other than the information set forth below, is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC, within 120 days after the end of the fiscal year ended December 31, 2024.

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our principal executive officer and our principal financial and accounting officer.

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The information required by this item is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC, within 120 days after the end of the fiscal year ended December 31, 2024.

Principal Accounting Fees and Services

Principal Accountant Fees and Services

Exhibits, Financial Statement Schedules.

Exhibits and Financial Statement Schedules.

(a) The following documents are included as part of this Annual Report on Form 10-K:

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included Management's Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Envato Pty Ltd.

(“Envato”) from its assessment of internal control over financial reporting as of December 31, 2024 because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded Envato from our audit of internal control over financial reporting.

Envato is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 6% and 10%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

Definition and Limitations of Internal Control over Financial Reporting

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These procedures also included, among others, evaluating the content revenue recognized on a sample basis by inspecting content license arrangements and evaluating the appropriateness of the revenue recognized based on the terms of each arrangement and customer download activity.

Acquisition - Valuation of Trade Name and Developed Technology Intangible Assets

As described in Note 3 to the consolidated financial statements, on June 23, 2023, the Company completed the acquisition of Giphy Inc.

The consideration paid by the Company was $53.0 million in net cash, in addition to cash acquired, assumed debt and other working capital adjustments.

The acquisition resulted in $21.0 million of a trade name and $19.5 million of developed technology intangible assets being recorded.

The fair value of the trade name and developed technology intangible assets was determined using the relief-from-royalty method.

Determining the fair value requires management to use significant judgment and estimates, including revenue growth rates, the royalty rate and the discount rate related to the trade name and revenue growth rates, the royalty rate and the economic life related to developed technology, among others.

The principal considerations for our determination that performing procedures relating to the valuation of the trade name and developed technology intangible assets acquired in the acquisition of Giphy is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the trade name and developed technology intangible assets acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates, the royalty rate, and the discount rate used in the valuation of the trade name and the revenue growth rates, the royalty rate, and the economic life used in the valuation of the developed technology;

Envato - Valuation of Developed Technology and Trademark Intangible Assets

As described in Note 5 to the consolidated financial statements, on July 22, 2024, the Company completed the acquisition of Envato.

The aggregate amount paid by the Company, after customary working capital and other adjustments was $250.2 million.

The acquisition resulted in $61.0 million of developed technology and $31.0 million of trademark intangible assets being recorded.

Fair values of the trademark and developed technology were determined using the relief-from-royalty method.

Determining the fair value requires management to use significant judgment and estimates, including revenue growth rates, the royalty rate, the discount rate, and the economic life related to developed technology and revenue growth rates, the royalty rate, and the discount rate related to the trademark, among others.

The principal considerations for our determination that performing procedures relating to the valuation of the developed technology and trademark intangible assets acquired in the acquisition of Envato is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the developed technology and trademark intangible assets acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the royalty rates and the discount rates used in the valuation of the developed technology and trademark intangible assets acquired;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the trade name and developed technology intangible assets.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology and trademark intangible assets acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the trade name and developed technology intangible assets acquired;

(ii) testing management’s process for developing the fair value estimate of the developed technology and trademark intangible assets acquired;

(iii) evaluating the appropriateness of the relief-from-royalty method used by management;

(iv) testing the completeness and accuracy of underlying data used in the relief-from-royalty method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, the royalty rate, and the discount rate used in the valuation of the trade name and the revenue growth rates, the royalty rate, and the economic life used in the valuation of the developed technology.

Evaluating management’s assumptions related to the revenue growth rates used in the valuation of the trade name and developed technology intangible assets involved considering (i) the past performance of the acquired business;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Evaluating management’s assumption related to the economic life used in the valuation of the developed technology intangible asset involved considering whether the assumption was consistent with evidence obtained in

other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the relief-from-royalty method and the reasonableness of the royalty rate and discount rate assumptions used in the valuation of the trade name and the royalty rate and the economic life assumptions used in the valuation of the developed technology.

and (v) evaluating the reasonableness of the significant assumptions used by management related to the royalty rates and the discount rates used in the valuation of the developed technology and trademark intangible assets acquired.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the relief-from-royalty method and the reasonableness of the assumptions related to the royalty rates and the discount rates used in the valuation of the developed technology and trademark intangible assets acquired.

/s/ PricewaterhouseCoopers LLP

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Deferred tax liability, net 2,174 4,182

Long-term debt 119,598 —

Lease liabilities 23,365 29,404

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Bargain purchase gain — 50,261 —

Interest expense ( 10,561 ) ( 1,857 ) ( 1,336 )

Other income / (expense), net 4,401 5,664 ( 1,251 )

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Net income $ 35,932 $ 110,269 $ 76,103

Foreign currency translation gain / (loss) 3,465 ( 4,651 ) ( 3,107 )

Other comprehensive income / (loss) 3,465 ( 4,651 ) ( 3,107 )

Foreign currency translation (loss) / gain ( 4,867 ) 3,465 ( 4,651 )

Other comprehensive (loss) / income ( 4,867 ) 3,465 ( 4,651 )

Comprehensive income $ 31,065 $ 113,734 $ 71,452

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Comprehensive

Income / (Loss) Retained

(Loss) / Income Retained

Common Stock Treasury Stock

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Cash dividends paid — — — — — — ( 34,589 ) ( 34,589 )

Other comprehensive income / (loss) — — — — — ( 3,107 ) — ( 3,107 )

Other comprehensive (loss) / income — — — — — ( 4,651 ) — ( 4,651 )

Net income — — — — — — 76,103 76,103

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Cash dividends paid — — — — — — ( 38,667 ) ( 38,667 )

Other comprehensive income / (loss) — — — — — ( 4,651 ) — ( 4,651 )

Other comprehensive (loss) / income — — — — — 3,465 — 3,465

Net income — — — — — — 110,269 110,269

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Cash dividends paid — — — — — — ( 42,383 ) ( 42,383 )

Other comprehensive income / (loss) — — — — — 3,465 — 3,465

Other comprehensive (loss) / income — — — — — ( 4,867 ) — ( 4,867 )

Net income — — — — — — 35,932 35,932

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Bargain purchase gain — ( 50,261 ) —

Unrealized gain on investments, net ( 2,160 ) — —

Changes in operating assets and liabilities:

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Accounts payable and other current and non-current liabilities ( 48,600 ) 20,892 ( 24,328 )

Envato Seller Obligations ( 63,320 ) — —

Contributor royalties payable 14,654 15,841 7,772

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Payment of debt issuance costs ( 2,200 ) — ( 619 )

Net cash used in financing activities $ ( 102,704 ) $ ( 79,487 ) $ ( 77,722 )

Net cash provided by / (used in) financing activities $ 150,096 $ ( 102,704 ) $ ( 79,487 )

Effect of foreign exchange rate changes on cash ( 5,813 ) 1,804 ( 2,277 )

Net decrease in cash, cash equivalents and restricted cash ( 14,664 ) ( 198,863 ) ( 114,557 )

Cash, cash equivalents and restricted cash, beginning of period 115,154 314,017 428,574

Cash, cash equivalents and restricted cash, end of period $ 100,490 $ 115,154 $ 314,017

Net increase / (decrease) in cash and cash equivalents 10,761 ( 14,664 ) ( 198,863 )

Cash and cash equivalents, beginning of period 100,490 115,154 314,017

Cash and cash equivalents, end of period $ 111,251 $ 100,490 $ 115,154

Supplemental Disclosure of Cash Information:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Operations and Significant Accounting Policies

(1) Summary of Operations

Description of Business

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Customers can generate images by entering a description of their desired content into model prompts.

On June 23, 2023, the Company completed its acquisition of Giphy, Inc.

(“Giphy”), a a New York-based company that operates a collection of GIFs and stickers that supplies casual conversational content.

The Company believes its acquisition of Giphy extends Shutterstock’s audience touchpoints beyond primarily professional marketing and advertising use cases and expands into casual conversations.

On February 1, 2024, the Company acquired Backgrid USA, Inc.

and Backgrid London, Ltd.

(collectively “Backgrid”).

Backgrid supplies media organizations with real-time celebrity content.

On July 22, 2024, the Company acquired Envato Pty Ltd.

Envato offers digital creative assets and templates.

See Note 5 Acquisitions.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Merger Agreement with Getty Images

On January 6, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine in a merger-of-equals transaction with Getty Images Holdings, Inc.

(NYSE:GETY) (“Getty Images”) (such transaction referred to herein as the “Merger”).

Subject to terms and conditions in the Merger Agreement, the aggregate consideration to be paid by Getty Images in respect of the outstanding shares of common stock of Shutterstock will be:

(a) An amount in cash equal to the product of $ 9.50 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units);

(b) A number of shares of Getty Images common stock equal to the product of 9.17 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units).

Each holder of Shutterstock common stock immediately prior to the transaction close will have the option to receive, subject to proration, for each share of Shutterstock common stock held by such holder:

(a) Cash consideration of $ 9.50 and 9.17 shares of Getty Images common stock;

(b) Cash consideration of $ 28.8487 ;

The Merger is subject to the satisfaction of customary closing conditions, further described below, including receipt of required regulatory approvals, the approval of Getty Images and Shutterstock stockholders and the extension or refinancing of Getty Images’ existing debt obligations.

Subject to the satisfaction of the closing conditions, upon closing of the Merger, Shutterstock’s common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended.

The closing of the Merger is subject to the satisfaction or waiver of certain closing conditions, including:

• adoption of the Merger Agreement by Shutterstock stockholders (the “ Shutterstock Stockholder Approval ”) and the Getty Images Stockholder Approval, which condition was subsequently satisfied by the Getty Images Stockholder Written Consent,

• Getty Images’ registration statement on Form S-4 to be filed in connection with the Merger having become effective and the mailing of an information statement to Getty Images stockholders at least 20 business days prior to the closing,

• absence of any order, injunction or other order or law in certain jurisdictions prohibiting the Merger or making the closing of the Merger illegal,

• expiration of the applicable waiting period (and extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other regulatory approvals deemed necessary or advisable,

• shares of Getty Images Common Stock to be issued in connection with the Merger having been approved for listing on the NYSE,

• accuracy of each party’s representations and warranties, subject to certain standards set forth in the Merger Agreement,

• performance and compliance in all material respects of each party’s agreements and covenants under the Merger Agreement,

• absence of any Getty Images material adverse effect or Shutterstock material adverse effect, as applicable and subject to the definition thereof in the Merger Agreement,

• delivery of an opinion of tax counsel that the Second Merger and the Third Merger as defined in the Merger Agreement, taken together, will qualify as a “reorganization” within the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended, and

• Getty Images having amended or otherwise refinanced its existing term loans and senior notes to extend the maturity of each to no earlier than February 19, 2028 (the “ Existing Debt Modifications ”).

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

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Use of Estimates

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements.

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The Company also performs ongoing financial condition evaluations for its existing customers.

As of December 31, 2023, two customers accounted for approximately 29 % of the accounts receivable balance.

As of December 31, 2024, one customer accounted for approximately 17 % of the accounts receivable balance.

No other customer accounted for or exceeded 10% of the accounts receivable balance.

As of December 31, 2022, one customer accounted for 22 % of the accounts receivable balance.

Additionally, no single customer accounted for or exceeded 10% of revenue for the year ended December 31, 2021.

Cash, Cash Equivalents and Restricted Cash

As of December 31, 2023, two customers accounted for 29 % of the accounts receivable balance.

Cash, Cash Equivalents

As of December 31, 2024 and 2023, the Company’s cash and cash equivalents were $ 111.3 million and $ 100.5 million, respectively.

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Cash equivalents consists primarily of money market accounts and are stated at cost, which approximates fair value.

Restricted cash is not material in any period presented.

Fair Value Measurements

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Balance, beginning of period $ 6,335 $ 5,830 $ 1,910

bad debt expense 1,894 3,697 137

(Less) / Add:

bad debt (recovery) / expense ( 2,033 ) 1,894 3,697

(Less) / Add:

write-offs, net of recoveries and other adjustments ( 1,201 ) ( 1,389 ) 223

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The Company recognizes revenue on both its subscription-based and transaction-based products when content is downloaded by a customer, at which time the license is provided.

In addition, the Company estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during the subscription period.

In addition, for subscription-based products in which the Customer obtains an allotted number of digital assets to download, the Company estimates expected unused licenses and recognizes the revenue associated with the unused licenses as digital assets are downloaded and licenses are obtained for such content by the customer during the subscription period.

The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products.

For revenue associated with tools available through the Company’s platform, revenue is recognized on a straight-line basis over the subscription period.

For unlimited download subscription-based products, the Company recognizes revenue in a manner that reflects estimated content download patterns during the subscription period.

The estimate of content download patterns is based on historical download activities from the unlimited download products.

Revenue associated with tools available through the Company’s platform is recognized on a straight-line basis over the subscription period.

The Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less.

Collectability is probable at the time the electronic order or contract is entered.

The significant portion of the Company’s customers purchase products by making electronic payments with a credit card at the time of the transaction.

For customers making electronic payments, collectability is probable at the time the order or contract is entered.

A significant portion of the Company’s customers purchase products by making electronic payments with a credit card at the time of the transaction.

Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue.

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Costs of revenue also includes employee compensation, including non-cash equity-based compensation, bonuses and benefits associated with the maintenance of the Company’s creative platform and cloud-based software platform.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contributor Royalties and Internal Sales Commissions

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For the years ended December 31, 2024, 2023 and 2022, the Company deferred $ 3.4 million, $ 3.9 million and $ 6.3 million, respectively, in royalty advances and amortized $ 3.7 million, $ 4.0 million and $ 7.1 million, respectively, in royalty advance expense which is included in cost of revenue.

As of December 31, 2023 and 2022, the Company has deferred contributor royalties of $ 0.6 million, which is included in prepaid expenses and other current assets in the Consolidated Balance Sheets.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2024 and 2023, the Company has deferred contributor royalties of $ 0.3 million and $ 0.6 million, respectively, which is included in prepaid expenses and other current assets in the Consolidated Balance Sheets.

Internal sales commissions are generally paid in the month following collection or invoicing of the commissioned receivable and is reported in sales and marketing expense on the Consolidated Statements of Operations.

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An option to terminate is considered unless the Company is reasonably certain the option will not be exercised.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Equity-Based Compensation

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Awards granted subsequent to June 2, 2022 were granted under the 2022 Plan.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company measures and recognizes non-cash equity-based compensation expense for all stock-based awards granted to employees based on estimated fair values.

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Debt issuance costs are recorded in prepaid expenses and other current assets and other assets in the Consolidated Balance Sheets and are amortized over the term of the credit facility.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s income tax expense includes U.S.

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To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

The reserves are adjusted in light of changing

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

facts and circumstances, such as the outcomes of tax audits or lapses in statutes of limitations.

The reserves are adjusted in light of changing facts and circumstances, such as the outcomes of tax audits or lapses in statutes of limitations.

Any reserve for uncertain tax provisions and related penalties and interest is included in the income tax provision.

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The Company records an asset or liability for contingent consideration at the date of a business combination and reassesses the fair value of the asset or liability each period until it is settled.

Upon settlement of these assets or liabilities, the portion of the contingent consideration payment that is attributable to the initial amount recorded as part of the business combination is classified as a cash flow from financing activities if the contingent consideration is a liability, or a cash flow from investing activities if the contingent consideration is an asset, and the portion of the settlement that is attributable to subsequent changes in the fair value of the contingent consideration is classified as a cash flow from operating activities in the Consolidated Statement of Cash Flows.

Upon settlement of these assets or liabilities,

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the portion of the contingent consideration payment that is attributable to the initial amount recorded as part of the business combination is classified as a cash flow from financing activities if the contingent consideration is a liability, or a cash flow from investing activities if the contingent consideration is an asset, and the portion of the settlement that is attributable to subsequent changes in the fair value of the contingent consideration is classified as a cash flow from operating activities in the Consolidated Statement of Cash Flows.

Foreign Currency

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Monetary assets and liabilities that are denominated in currencies other than each entity’s functional currency are remeasured into the functional currency at the period-end exchange rates and result in transactional gains and losses.

The net impact of foreign currency transactional gains and losses on the Company’s results of operations were gains of $ 0.7 million in 2023 and losses of $ 3.1 million in 2022 and $ 3.2 million in 2021, respectively.

The net impact of foreign currency transactional gains and losses on the Company’s results of operations were losses of $ 3.2 million and $ 3.1 million in 2024 and 2022, respectively, and a gain of $ 0.7 million in 2023.

Translation adjustments resulting from converting the foreign subsidiaries financial statements into U.S.

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Recently Adopted Accounting Standard Updates

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

ASU 2019-12 eliminates certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The new guidance also simplifies aspects of the accounting for franchise taxes, enacted changes in tax laws or rates and clarifies the accounting transactions that result in a step-up in the tax basis of goodwill.

The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

The Company adopted ASU 2019-12, effective January 1, 2021.

The impact of adoption of this standard on the consolidated financial statements, including accounting policies, processes and systems, was not material.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).

ASU 2021-08 addresses inconsistency related to the recognition and measurement of contract assets and contract liabilities acquired in a business combination.

ASU 2021-08 requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination as if it had originated the contracts, in accordance with Topic 606, Revenue from Contracts with Customers .

The guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years.

Early adoption of the amendments is permitted and an entity that early adopts should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application.

The Company has early adopted ASU 2021-08 effective January 1, 2021, and the impact of adoption of this standard on the consolidated financial statements was not material.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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This ASU applies to all public entities that are required to report segment information in accordance with ASC 280, and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Shutterstock is evaluating the impact of this ASU on our consolidated financial statements.

The Company adopted the ASU 2023-07 disclosure requirements in its December 31, 2024 consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

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Shutterstock is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

2024-03 (“ASU 2024-03”), Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue and selling, general and administrative expenses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

Shutterstock is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(4) Fair Value Measurements and Other Long-term Investments

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Other Fair Value Measurements

The carrying amounts of cash, accounts receivable, restricted cash, accounts payable, accrued expenses and the Giphy Retention Compensation approximate fair value because of the short-term nature of these instruments.

The carrying amounts of cash, accounts receivable, accounts payable, accrued expenses and the Giphy Retention Compensation approximate fair value because of the short-term nature of these instruments.

Debt consists of principal amounts outstanding under our credit facility, which approximates fair value as underlying interest rates are reset regularly based on current market rates and is classified as Level 2.

3 unchanged sentences

See Note 17, Leasing for further discussion.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-Term Investments

As of December 31, 2023 and 2022, the Company’s Long-Term Investments totaled $ 20.0 million, which is reported within other assets on the Consolidated Balance Sheets.

The Company uses the measurement alternative for equity investments with no readily determinable fair value and are reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments.

On a quarterly basis, the Company evaluates the carrying value of its Long-Term Investments for impairment, which includes an assessment of revenue growth, earnings performance, working capital and the general market conditions.

For the years ended December 31, 2023 and 2022, no adjustments to the carrying values of the Company’s Long Term Investments were identified as a result of this assessment.

Changes in performance negatively impacting operating results and cash flows of these investments could result in the Company recording an impairment charge in future periods.

Investment in ZCool Technologies Limited (“ZCool”)

In 2018, the Company invested $ 15.0 million in convertible preferred shares issued by ZCool (the “Preferred Shares”).

Investment in Meitu, Inc.

In 2018, the Company invested $ 15.0 million in convertible preferred shares issued by ZCool Technologies Limited (“ZCool”) (the “Preferred Shares”).

ZCool’s primary business is the operation of an e-commerce platform in the People’s Republic of China (the “PRC”) whereby customers can pay to license content contributed by creative professionals.

ZCool and its affiliates have been the exclusive distributor of Shutterstock content in China since 2014.

ZCool is a variable interest entity that is not consolidated because the Company is not the primary beneficiary.

The Preferred Shares are not deemed to be in-substance common stock and are accounted for using the measurement alternative for equity investments with no readily determinable fair value.

On February 2, 2024, ZCool entered into a definitive agreement with Meitu, Inc.

(“Meitu”), whereby all outstanding shares of ZCool will be acquired by Meitu upon the satisfaction of certain conditions precedent.

In connection with this acquisition, the Company’s $ 15.0 million of Preferred Shares will be exchanged for approximately $ 15.0 million of Meitu common shares which are publicly traded on the Main Board of The Stock Exchange of Hong Kong Limited.

Meitu’s primary business is the provision of online advertising and other internet value added services in the PRC.

Other Equity Investments

In 2020, the Company invested $ 5.0 million in preferred shares of an entity with a creative production and analytics platform.

These preferred shares do not have a readily determinable fair value, and give the Company less than a 2 % fully diluted ownership interest.

The Company used the measurement alternative and the investment in ZCool was reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments.

On March 27, 2024, ZCool was acquired by Meitu, and the Company’s Preferred Shares in ZCool were exchanged for $ 18.4 million of Meitu common shares, resulting in an investment carrying value increase of $ 3.4 million, which is recorded in Other income / (expense), net in the Consolidated Statement of Operations.

Meitu’s primary business is the provision of online advertising and other internet value added services in the PRC, and its common shares are publicly traded on the Main Board of The Stock Exchange of Hong Kong Limited.

This investment is recorded at fair value on a recurring basis, with changes in fair value being recorded in Other income / (expense), net in the Consolidated Statement of Operations.

Its fair value level hierarchy and amount at December 31, 2024 are as follows (in thousands):

As of December 31, 2024

Hierarchy Level:

Level 1 $ 17,290

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Long-Term Investments

In connection with its Data, Distribution, and Services business, the Company may receive equity instruments in addition to cash for revenue contract consideration.

As of December 31, 2024, the Company has $ 24.0 million recorded in Other Assets in the Consolidated Balance Sheet from equity instruments received.

The Company held no customer equity instruments as of December 31, 2023.

The Company estimated the value of these equity instruments based on issuers’ recent market transactions.

The Company will use the measurement alternative for fair value since the equity instruments do not have a readily determinable fair value and will report the instruments at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments.

As of December 31, 2024 and December 31, 2023, the Company also had a long-term investment in an equity security with no readily determinable fair value totaling $ 5.0 million.

The Company uses the measurement alternative for fair value and the investment’s carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments.

(5) Acquisitions

2024 Acquisitions

On July 22, 2024, the Company completed its acquisition of Envato Pty Ltd.

(“Envato”) pursuant to a Share Purchase Agreement (the “Purchase Agreement”) entered into on May 1, 2024, to acquire all of the issued and outstanding capital stock of Envato.

The aggregate amount paid by the Company, after customary working capital and other adjustments in accordance with the terms of the Purchase Agreement, was $ 250.2 million.

The consideration was sourced with cash obtained through the A&R Credit Agreement.

See Note 9 Debt for more information.

In connection with the acquisition, the Company incurred approximately $ 7.0 million of transaction costs in total, which are included in general and administrative expenses on the Consolidated Statements of Operations.

Envato offers digital creative assets and templates, including Envato Elements, a creative subscription providing unlimited downloads of a diverse array of assets, templates, and more.

The Company believes this acquisition complements Shutterstock’s existing offerings and expands its reach with faster growing audiences such as freelancers, hobbyists, small businesses and agencies.

The purchased assets included identifiable intangible assets, comprised of trademarks, developed technology and customer relationships, which have weighted average useful lives of approximately 10 years, 5 years and 6 years, respectively.

Fair values of the trademark and developed technology were determined using the relief-from-royalty method, and the fair value of the customer relationships was determined using the excess of earnings method.

Determining the fair value requires management to use significant judgement and estimates, including revenue growth rates, the royalty rate and the discount rate , and the economic life related to developed technology and revenue growth rates, the royalty rate, and the discount rate related to the trademark, among others.

The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes.

On February 1, 2024, the Company completed its acquisition of all of the outstanding shares of Backgrid USA, Inc.

and Backgrid London LTD, (collectively, “Backgrid”), for approximately $ 20 million, subject to customary working capital adjustments.

The total purchase price was paid with existing cash on hand.

In connection with the acquisition, the Company incurred approximately $ 1.5 million of transaction costs in total, which are included in general and administrative expenses on the Consolidated Statements of Operations.

Backgrid supplies media organizations with real-time celebrity content.

The Company believes this acquisition expands Shutterstock Editorial’s Newsroom offering of editorial images and footage across celebrity, red carpet and live-events.

The identifiable intangible assets, trademark and developed technology, have useful lives of approximately 10 years and 5 years, respectively.

Fair values of the trademark and developed technology were determined using the excess earnings and relief-from-royalty methods, respectively.

The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Envato and Backgrid transactions were accounted for using the acquisition method and, accordingly, the results of the acquired businesses have been included in the Company’s results of operations from the respective acquisition dates.

The fair value of consideration transferred in these business combinations have been allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill.

The identifiable intangible assets of these acquisitions are being amortized on a straight-line basis.

For the year ended December 31, 2024, revenues of $ 90.5 million and $ 15.9 million were included in the Consolidated Statements of Operations related to Envato and Backgrid, respectively.

The aggregate purchase price for the Envato and Backgrid acquisitions have been allocated to the assets acquired and liabilities assumed as follows (in thousands):

Assets acquired and liabilities assumed:

Envato Backgrid Total

Cash and cash equivalents 1

$ 90,591 $ 1,718 $ 92,309

Accounts receivable 6,818 732 7,550

Other assets 5,404 77 5,481

Right of use asset 273 — 273

Intangible assets:

Trademark 31,000 300 31,300

Developed technology 61,000 900 61,900

Customer relationships 14,200 — 14,200

Intangible assets 106,200 1,200 107,400

Goodwill 167,572 19,843 187,415

Deferred tax asset 37,350 — 37,350

Total assets acquired $ 415,103 $ 23,570 $ 438,673

Accounts payable ( 4,173 ) — ( 4,173 )

Contributor royalties payable ( 11,917 ) ( 849 ) ( 12,766 )

Accrued expenses ( 30,233 ) ( 228 ) ( 30,461 )

Deferred revenue ( 46,888 ) — ( 46,888 )

Deferred tax liability — ( 271 ) ( 271 )

Other liabilities 1

( 71,487 ) ( 1,074 ) ( 72,561 )

Lease liability ( 190 ) — ( 190 )

Total liabilities assumed ( 164,888 ) ( 2,422 ) ( 167,310 )

Net assets acquired $ 250,215 $ 21,148 $ 271,363

1 Envato’s cash includes $ 63.4 million for the funding of Envato obligations that were triggered upon the closing of the acquisition (the “Envato Seller Obligations”).

These obligations are also reported as assumed liabilities within Other liabilities.

The Envato Obligations would not have been incurred had the acquisition not closed, and are presented “on-the-line” because they are not reflected in either the acquirer’s or acquiree’s statement of operations.

2023 Acquisition

On May 22, 2023, the Company entered into a Stock Purchase Agreement with Meta Platforms, Inc.

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The Company believes its acquisition of Giphy extends Shutterstock’s audience touchpoints beyond primarily professional marketing and advertising use cases and expands into casual conversations.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In January 2023, the United Kingdom Competition and Markets Authority (the “CMA”) issued its final order requiring Meta to divest its ownership of Giphy, which Meta acquired in 2020.

In connection with the closing of the acquisition, whose terms were preapproved by the CMA, the Company and Meta entered into a transitional services agreement (the “TSA”) pursuant to which Meta is responsible for certain costs related to retention of Giphy employees, including (i) recurring salary, bonus, and benefits through August 2024, which would be $ 35.6 million if all employees are retained through August 2024, and (ii) nonrecurring items, totaling $ 87.9 million, comprised of one-time employment inducement bonuses and the cash value of unvested Meta equity awards (the “Giphy Retention Compensation”).

The Giphy Retention Compensation will be paid to the individuals for being employees of the Company subsequent to the completion of the acquisition.

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The Giphy Retention Compensation is reflected as a reduction of the purchase price and has been funded into an escrow account.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Giphy purchase price was calculated as follows:

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2 - Relates to the cash value of replaced unvested Meta equity awards attributable to pre-combination services.

Upon closing of the acquisition, the Company also entered into an agreement with Meta whereby the Company will provide Meta with Giphy content through API services for a period of two years .

The Company allocated and deferred $ 30 million of the business combination proceeds to this agreement, which will be recognized as revenue as services are provided.

Upon closing of the acquisition, the Company also entered into an agreement with Meta whereby the Company will provide Meta with access to Giphy content that is displayed through an API for a period of two years .

The Company determined that the API arrangement represents a transaction separate from the business combination and was priced below market.

Therefore, the Company allocated $ 30 million of the purchase price to these services, which represents the step-up to fair market value.

This amount has been recognized in deferred revenue and is recognized as revenue over-time as the API is provided.

The identifiable intangible assets, which include developed technology and the trade name have weighted average useful lives of approximately 7 years and 15 years, respectively.

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Bargain purchase gain $ 50,261

1 - During the three months ended September 30, 2023, the Company revised its preliminary allocation of the Giphy purchase price to the assets acquired and liabilities assumed by $ 9.9 million associated with additional information analyzed related to the deferred income tax balances.

The measurement and allocation of the purchase price is preliminary and will be finalized within the allowable measurement period once the Company finalizes its assessment of fair value of intangible assets, income tax balances and other assets acquired and liabilities assumed.

2 - During the three months ended December 31, 2023, the Company revised its preliminary allocation of the Giphy purchase price to the assets acquired and liabilities assumed by $ 1.6 million associated with additional information analyzed related to the valuation of the Developed Technology asset.

The Company recognized a non-taxable bargain purchase gain of $ 50.3 million, representing the excess of the fair value of the net assets acquired in addition to the net consideration to be received from Meta.

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In connection with the acquisition, the Company incurred approximately $ 4.0 million of transaction costs, which is included in general and administrative expenses on the Consolidated Statements of Operations.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pond5 is a New York based company that operates a video-first content marketplace for royalty-free and editorial video.

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The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On May 28, 2022, the Company completed its acquisition of all of the outstanding shares of Splash News, for approximately $ 6.3 million.

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Net assets acquired $ 218,014 $ 6,316 $ 224,330

2021 Acquisitions

PicMonkey, LLC

On September 3, 2021, the Company completed the acquisition of substantially all of the assets and assumption of certain liabilities from PicMonkey, LLC (“PicMonkey”), for approximately $ 109.4 million.

The total purchase price was paid with existing cash on hand in the three months ended September 30, 2021.

In connection with the acquisition, the Company incurred approximately $ 2 million of transaction costs, which is included in general and administrative expenses in the Consolidated Statements of Operations.

PicMonkey is a Washington-based company that operates an online graphic design and image editing platform that enables creators of any skill level to design high-quality visual assets.

The Company believes this acquisition provides Shutterstock’s global customer community with professional-grade, easy-to-use design tools.

The identifiable intangible assets, which include customer relationships, developed technology and trade names, have weighted average useful lives of approximately 12 years, 5 years and 10 years, respectively.

The goodwill arising from the transaction is primarily attributable to expected operational synergies and is expected to be deductible for income tax purposes.

TurboSquid, Inc.

On February 1, 2021, the Company completed its acquisition of all of the outstanding shares of TurboSquid, Inc.

(“TurboSquid”), for approximately $ 77.3 million.

The total purchase price was paid with existing cash on hand in the three months ended March 31, 2021.

In connection with the acquisition, the Company incurred approximately $ 1.6 million of transaction costs, which is included in general and administrative expenses on the Consolidated Statements of Operations.

TurboSquid is a Louisiana-based company that operates a marketplace offering more than one million 3D models, a marketplace for 2 dimensional (“2D”) images derived from 3D objects and a digital asset management solution.

The Company believes this acquisition establishes Shutterstock as the premium destination for 3D models as well as 3D models in an easy-to-use 2D format.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The identifiable intangible assets, which include customer relationships, developed technology, trade names and contributor content, have weighted average useful lives of approximately 12 years, 4.7 years, 10 years and 4 years, respectively.

The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes.

The PicMonkey and TurboSquid transactions were accounted for using the acquisition method and, accordingly, the results of the acquired businesses have been included in the Company’s results of operations from the respective acquisition dates.

For the twelve months ended December 31, 2021, PicMonkey revenues of $ 8.9 million are included in the Consolidated Statements of Operations.

For the twelve months ended December 31, 2021, TurboSquid revenues of $ 25.9 million are included in the Consolidated Statements of Operations.

The identifiable intangible assets of these acquisitions are being amortized on a straight-line basis.

The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method.

The fair value of the trade names and developed technology were determined using the relief-from-royalty method, and the fair value of the contributor content was determined using the cost-to-recreate method.

Determining the fair value requires management to use significant judgment and estimates, including estimates of future revenue growth rates, research and development expense adjustments, sales and marketing expense adjustments, the discount rate, earnings before interest, taxes, and amortization (“EBITA”) margins and the customer attrition rate, among others.

The aggregate purchase price for these acquisitions have been allocated to the assets acquired and liabilities assumed as follows (in thousands):

Assets acquired and liabilities assumed (in thousands):

PicMonkey TurboSquid Total

Cash and cash equivalents $ — $ 5,165 $ 5,165

Other assets 502 1,553 2,055

Property and equipment — 472 472

Right of use asset 1,420 — 1,420

Intangible assets:

Customer relationships 28,800 9,000 37,800

Trade name 3,000 2,200 5,200

Developed technology 12,900 7,800 20,700

Contributor content — 2,500 2,500

Intangible assets 44,700 21,500 66,200

Goodwill 71,607 59,491 131,098

Deferred tax asset 2,456 — 2,456

Total assets acquired $ 120,685 $ 88,181 $ 208,866

Accounts payable, accrued expenses and other liabilities ( 780 ) ( 4,685 ) ( 5,465 )

Contributor royalties payable — ( 2,243 ) ( 2,243 )

Deferred revenue ( 8,557 ) — ( 8,557 )

Deferred tax liability ( 533 ) ( 3,923 ) ( 4,456 )

Lease liability ( 1,420 ) — ( 1,420 )

Total liabilities assumed ( 11,290 ) ( 10,851 ) ( 22,141 )

Net assets acquired $ 109,395 $ 77,330 $ 186,725

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pro-Forma Financial Information (unaudited)

The following unaudited pro forma consolidated financial information (in thousands) reflects the results of operations of the Company for the twelve months ended December 31, 2023 and 2022, as if the Giphy acquisition had been completed on January 1, 2022 and as if the Pond5 and Splash News acquisitions had been completed on January 1, 2021, after giving effect to certain purchase accounting adjustments, primarily related to bargain purchase gain, Giphy Retention Compensation - non-recurring, intangible assets and transaction costs.

The following unaudited pro forma consolidated financial information (in thousands) reflects the results of operations of the Company for the twelve months ended December 31, 2024 and 2023, as if the Backgrid and Envato acquisitions had been completed on January 1, 2023, and as if the Giphy acquisition had been completed on January 1, 2022, after giving effect to certain purchase accounting adjustments, primarily related to bargain purchase gain, Giphy Retention Compensation - non-recurring, intangible assets and transaction costs.

These pro forma results have been prepared for comparative purposes only and are based on estimates and assumptions that have been made solely for purposes of developing such pro forma information and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period.

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Pro Forma 79,347 63,071

Asset Acquisitions

In July 2021, the Company completed the acquisitions of Pattern89, Inc., Datasine Limited and assets from Shotzr, Inc.

These three entities provide data driven insights through their artificial intelligence platforms.

The aggregate purchase price for these transactions was approximately $ 35 million and is subject to customary working capital and other adjustments and was paid from existing cash on hand.

Approximately $ 3.4 million of the total purchase consideration was subject to contractual holdback provisions and was paid during 2022.

The Company has accounted for these transactions as asset acquisitions and has recorded a total of $ 41 million of developed technology intangible assets, which are being amortized on a straight-line basis over a useful life of 3 years.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(6) Property and Equipment

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There was no loss on disposal for the years ended December 31, 2024, 2023 and 2022, respectively.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 2022, the Company recorded an impairment charge of $ 2.8 million primarily related to certain of its leasehold improvements triggered by the Company’s decision to cease using certain office spaces.

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As of December 31, 2024 and 2023, the Company had capitalized internal-use software of $ 57.8 million and $ 60.3 million, respectively, net of accumulated depreciation, which was included in property and equipment, net.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(7) Goodwill and Intangible Assets

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There were no impairments of goodwill in any of the periods presented in the consolidated financial statements.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible Assets

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$ 46.0 million in 2025, $ 43.7 million in 2026, $ 37.5 million in 2027, $ 34.5 million in 2028, $ 27.2 million in 2029 and $ 59.5 million thereafter.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8) Accrued Expenses

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Total accrued expenses $ 126,643 $ 131,443

As of December 31, 2023, compensation-related accrued expenses included amounts due to Giphy employees for compensation earned pre-acquisition and severance costs associated with workforce optimizations.

As of December 31, 2024 and December 31, 2023, compensation-related accrued expenses included amounts due to Giphy employees for compensation earned pre-acquisition and severance costs associated with workforce optimizations.

For the year ended December 31, 2024, the Company recognized $ 9.5 million of severance costs associated with workforce optimizations, of which $ 1.1 million is reported in Cost of Revenues, $ 4.3 million in Sales and Marketing, $ 2.5 million in Product Development, and $ 1.6 million in General and Administrative expenses for the year ended December 31, 2024 .

Of this amount, approximately $ 5.8 million is included within accrued expenses as of December 31, 2024 and is expected to be paid to employees over the next 12 months.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On May 6, 2022, the Company entered into a five-year $ 100 million unsecured revolving loan facility (the “Credit Facility”) with Bank of America, N.A., as Administrative Agent and other lenders.

The Credit Facility includes a letter of credit sub-facility and a swingline facility and it also permits, subject to the satisfaction of certain conditions, up to $ 100 million of additional revolving loan commitments with the consent of the Administrative Agent.

At the Company’s option, revolving loans accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.125 % to 0.500 %, determined based on the Company’s consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.125 % to 1.5 %, determined based on the Company’s consolidated leverage ratio.

The Credit Facility included a letter of credit sub-facility and a swingline facility and it also permitted, subject to the satisfaction of certain conditions, up to $ 100 million of additional revolving loan commitments with the consent of the Administrative Agent.

On July 22, 2024, the Company entered into an amended and restated credit agreement (the “A&R Credit Agreement”), which was entered into among the Company, as borrower, certain direct and indirect subsidiaries of the Company as guarantors, the lenders party thereto, and Bank of America, N.A., as Administrative Agent for the lenders.

The A&R Credit Agreement provides for a five-year (i) senior unsecured term loan facility (the “Term Loan”) in an aggregate principal amount $ 125 million and (ii) senior unsecured revolving credit facility (the “Revolver”) in an aggregate principal amount of $ 250 million.

The A&R Credit Agreement also provides for a letter of credit subfacility and a swingline facility.

At the Company’s option, loans under the A&R Credit Agreement accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.375 % to 0.750 %, determined based on the Company’s consolidated net leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.375 % to 1.750 %, determined based on the Company’s consolidated net leverage ratio, plus a credit spread of 0.100%.

The Company is also required to pay an unused commitment fee ranging from 0.175 % to 0.250 %, determined based on the Company’s consolidated leverage ratio.

In connection with the execution of this agreement, the Company paid debt issuance costs of approximately $ 2.2 million.

As of December 31, 2023 and December 31, 2022, the Company had $ 30 million and $ 50 million, respectively, of outstanding borrowings under the Credit Facility.

The A&R Credit Agreement replaces the Company’s existing Credit Facility, which was fully repaid and terminated upon the effectiveness of the A&R Credit Agreement.

In connection with the closing of the Credit Facility, the Company repaid $30.0 million of existing outstanding borrowings and accrued interest.

As of December 31, 2024, the Company had a remaining borrowing capacity of $ 94 million, net of standby letters of credit.

For the year ended December 31, 2023 and 2022, the Company recognized interest expense of $ 1.9 million and $ 1.3 million, respectively.

The Credit Facility contains financial covenants and requirements restricting certain of the Company’s activities, which are usual and customary for this type of credit facility.

The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the Credit Facility.

The A&R Credit Agreement contains financial covenants and requirements restricting certain of the Company’s activities, which are customary for this type of credit facility.

As of December 31, 2024, the Company was in compliance with these covenants.

The Company’s outstanding debt (in thousands) is reflected in the table below.

The Company classifies the Revolver as a current liability since the Company could draw upon and repay the outstanding amount as needed.

The maturity of the Revolver is in 2029.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2024 As of December 31, 2023

Current Debt:

Revolver - Credit Facility — 30,000

Revolver - A&R Credit Agreement 155,000 —

Term Loan - A&R Credit Agreement 3,106 —

Non-Current Debt:

Term Loan - A&R Credit Agreement 119,598 —

Based on Level 2 inputs, the carrying value of the Company’s debt approximates its fair value, as borrowings are subject to variable interest rates that adjust with changes in market rates and market conditions and the current interest rate approximates that which would be available under similar financial arrangements.

For the year ended December 31, 2024, the Company recognized interest expense of $ 10.6 million.

As of December 31, 2024, the unamortized debt issuance cost related to the Term Loan - A&R Credit Agreement is $ 0.7 million.

(10) Stockholders’ Equity

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Treasury Stock

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In October 2015, the Company’s Board of Directors approved a share repurchase program, authorizing the Company to repurchase up to $ 100 million of its common stock and in February 2017, the Company’s Board of Directors approved an increase to the share repurchase program (collectively, the “2015 and 2017 Share Repurchase Programs”), authorizing the Company to repurchase up to an additional $ 100 million of its outstanding common stock.

As of December 31, 2022, the Company had fully utilized its authorization for repurchases under the 2015 and 2017 Share Repurchase Programs.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2023, the Company’s Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”), providing authorization to repurchase up to $ 100 million of its common stock.

During 2023 and 2022, the Company repurchased approximately 634,500 and 983,700 shares of its common stock, respectively, at an average per share cost of $ 44.45 and $ 74.02 , respectively.

During 2024 and 2023, the Company repurchased approximately 1.1 million and 635,000 shares of its common stock, respectively, at an average per share cost of $ 37.42 and $ 44.45 , respectively.

As of December 31, 2024, the Company had $ 30 million of remaining authorization for purchases under the 2023 Share Repurchase Program.

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Under the share repurchase program, management is authorized to purchase shares of the Company’s common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors

As of December 31, 2023, in total the Company has repurchased approximately 4.4 million shares of its common stock under the 2015 and 2017 Share Repurchase Programs and the 2023 Share Repurchase Program at an average per-share cost of $ 51.74 .

As of December 31, 2024, the Company has repurchased approximately 5.5 million shares of its common stock in total since 2015 under the repurchase programs (including the 2015 and 2017 Share Repurchase Programs and the 2023 Share Repurchase Program) at an average per-share cost of $ 48.86 .

On February 11, 2020, the Board of Directors approved the initiation of a quarterly cash dividend.

The Company declared and paid cash dividends totaling $ 1.20 and $ 1.08 per share of common stock, or $ 42.4 million and $ 38.7 million, during the years ended December 31, 2024 and 2023, respectively.

On January 29, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.30 per share of outstanding common stock payable on March 14, 2024 to stockholders of record at the close of business on February 29, 2024.

On January 27, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.33 per share of outstanding common stock payable on March 20, 2025 to stockholders of record at the close of business on March 6, 2025.

Future declaration of dividends are subject to the final determination of the Board of Directors, and will depend on, among other things, the Company’s future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors the Board of Directors may deem relevant.

In the fourth quarter of 2023, management reevaluated and changed its revenue disaggregation from a sales channel categorization to a product offering categorization of Content and Data, Distribution, and Services.

This new categorization is aligned with how the Company measures revenue performance.

Management believes this new classification better represents the nature, amount, and timing of revenue from customer contracts, and aligned with the growth of its Data, Distribution, and Services offering.

The Company distributes its products through two primary offerings:

The majority of the Company’s customers license image, video, music and 3D content for commercial purposes either directly through the Company’s self-service web properties or through the Company’s dedicated sales teams.

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Data, Distribution, and Services :

Revenues from this offering grew significantly during 2023, and represents 16 % of the full year 2023 revenue.

Our Data, Distribution, and Services offerings address customer demand for products and services that are beyond our stock image, footage music and 3D model licenses.

We have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training.

We offer ethically sourced and licenseable metadata

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

at unique scales and quality.

Our metadata customer base ranges from large technology and media companies to smaller start-up organizations.

In 2023, we completed our acquisition of Giphy, Inc.

Giphy is a content platform that allows used to personalize casual conversations with GIFs, and generates billions of monthly impressions through over 14,000 API partners.

We believe customers in all industries will look to use Giphy in marketing campaigns as another advertising outlet.

Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”).

Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets.

Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution.

We offer a whole spectrum of services at pre-production, production and post-production stages.

The Company’s Data, Distribution, and Services offerings address customer demand for products and services that are beyond the stock image, footage music and 3D model licenses.

These offerings include access to the Company’s metadata for machine learning and generative artificial intelligence model training and high-quality production and custom content at scale provided by Shutterstock Studios.

The Company’s Content and Data, Distribution, and Services revenues for the years ended December 31, 2024, 2023 and 2022 are as follows (in thousands):

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Total Revenues $ 935,262 $ 874,587 $ 827,826

Historically, the Company analyzed revenue using the E-Commerce and Enterprise sales channels.

E-Commerce revenues are derived from customers who license content directly through the Company’s self-service web properties.

The Enterprise revenues are derived from customers with unique content, licensing and workflow needs and engage with the Company’s sales team.

The Company’s revenues using the historical E-Commerce and Enterprise disaggregation for the years ended December 31, 2023, 2022 and 2021 are as follows (in thousands):

Year Ended December 31,

2023 2022 2021

E-commerce $ 439,941 $ 501,384 $ 490,212

Enterprise 434,646 326,442 283,203

Total Revenues $ 874,587 $ 827,826 $ 773,415

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred revenue reported on the balance sheet represents unfulfilled performance obligations for which the Company has either received payment or has outstanding receivables.

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$ 192.8 million of total revenue recognized for the year ended December 31, 2024 was reflected in deferred revenue as of December 31, 2023.

In addition, as of December 31, 2023, the Company has approximately $ 59.6 million of contracted but unsatisfied performance obligations relating primarily to our data offering, which are not included as a component of deferred revenue and that the Company expects to recognize over a five year period.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, as of December 31, 2024, the Company has approximately $ 36.4 million of contracted but unsatisfied performance obligations relating primarily to our data offerings, which are not included as a component of deferred revenue and that the Company expects to recognize over a five year period.

In certain of the Company’s data deal contracts, the Company has provided customers with the right to cancel.

As of December 31, 2024, the total refund reserve related to these contracts is $ 7.3 million and $ 5.7 million and is recorded in Other current liabilities and Other non-current liabilities, respectively.

Should these cancellation rights not be exercised, this refund reserve would convert to revenue.

For the twelve months ended December 31, 2024, the Company recognized $ 32.8 million of revenue from the reversal of refund reserves.

(12) Equity-Based Compensation

The Company recognizes stock-based compensation expense for all share-based payment awards including employee stock options and RSUs granted under either the 2012 Plan or the 2022 Plan based on the fair value of each award on the grant date.

The Company recognizes stock-based compensation expense for all share-based payment awards including employee stock options and RSUs granted under either the 2012 Plan, the 2022 Plan or the 2022 Amended and Restated Plan based on the fair value of each award on the grant date.

The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by line item included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 (in thousands):

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Any awards issued under the 2012 Plan that are forfeited by the participant will become available for future grant under the 2012 Plan.

The number of shares of common stock available under the 2012 Plan was automatically increased by approximately 1,093,000 and 1,087,000 shares on January 1, 2022 and 2021, respectively, pursuant to the automatic increase provisions of the 2012 Plan.

The number of shares of common stock available under the 2012 Plan was automatically increased by approximately 1,093,000 shares on January 1, 2022, pursuant to the automatic increase provisions of the 2012 Plan.

This plan expired on June 2, 2022.

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The maximum aggregate number of shares that may be issued under the 2022 Plan is 4,000,000 shares of our common stock and is subject to adjustment in connection with changes in capitalization, reorganization and change in control events.

Shares subject to Awards granted under the 2022 Plan that expire unexercised or are forfeited, will become available for future grant under 2022 Plan.

However, shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will not become available for future grant under the 2022 Plan.

Awards granted subsequent to June 2, 2022 were granted under the 2022 Plan.

Shares subject to Awards granted

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

under the 2022 Plan that expire unexercised or are forfeited, will become available for future grant under 2022 Plan.

However, shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will not become available for future grant under the 2022 Plan.

Awards granted subsequent to June 2, 2022 were granted under the 2022 Plan.

Amended and Restated 2022 Omnibus Equity Incentive Plan

On June 6, 2024, the Company’s stockholders approved the Amended and Restated 2022 Omnibus Equity Incentive Plan (the “2022 Amended and Restated Plan”).

The 2022 Amended and Restated Plan provides for the grant of incentive stock options to Company employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares (collectively, “Awards”) to employees, officers, directors, consultants and advisors of the Company.

The maximum aggregate number of shares that may be issued under the 2022 Amended and Restated Plan is 7,500,000 shares of our common stock and is subject to adjustment in connection with changes in capitalization, reorganization and change in control events.

Shares subject to Awards granted under the 2022 Amended and Restated Plan that expire unexercised or are forfeited, will become available for future grant under 2022 Amended and Restated Plan.

However, shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will not become available for future grant under the 2022 Amended and Restated Plan.

Awards granted subsequent to June 6, 2024 were granted under the 2022 Amended and Restated Plan.

Stock Option Awards

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Stock options vested and expected to vest $ — $ 4,232

The intrinsic value of stock options exercised for the years ended December 31, 2023, 2022 and 2021 was approximately $ 33 thousand, $ 1.1 million and $ 3.0 million, respectively.

No stock option awards were granted during the years ended December 31, 2023, 2022 and 2021.

On April 24, 2014, the Company granted 500,000 stock options with a market-based condition to its Founder and Executive Chairman.

In 2018, the number of stock options was adjusted from 500,000 stock options to approximately 527,000 and the exercise price of each option was adjusted from $ 80.94 to $ 76.73 , in connection with a special dividend and pursuant to the anti-dilution provisions of the 2012 Plan.

The stock options will not vest or become exercisable unless (i) the Founder and Executive Chairman remains continuously employed by the Company until the fifth anniversary of the date of grant and (ii) the average 90-day closing price of the Company’s common stock equals or exceeds $ 161.88 per share for any 90 consecutive calendar days during the period commencing on the fifth anniversary of the date of grant and ending on the tenth anniversary of the date of grant, inclusive provided that the Founder and Executive Chairman remains continuously employed by the Company until the date of satisfaction of such condition.

The derived requisite service period was determined to be six years based on a valuation technique.

The total fair value of the grant is $ 21.6 million and is being recognized over the derived requisite service period.

In the event that the market condition remains unsatisfied upon completion of the requisite service period, no charge will be reversed.

There were no stock options exercised for the year ended December 31, 2024, For the years ended December 31, 2023 and 2022, the intrinsic value of stock options exercised was approximately $ 33 thousand and $ 1.1 million, respectively.

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

No stock option awards were granted during the years ended December 31, 2024, 2023 and 2022.

Restricted Stock Units Awards (including PRSUs)

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Non-vested and deferred balance at December 31, 2024 2,948 $ 51.70

On April 24, 2014, the Company granted 100,000 restricted stock units with a market-based condition to its Founder and Executive Chairman.

In 2018, the number of RSUs was adjusted to approximately 105,000 , in connection with a special dividend and pursuant to the anti-dilution provisions of the 2012 Plan.

The restricted stock units will vest only if (i) the reporting person remains continuously employed by the Company until the fifth anniversary of the date of grant and (ii) the average 90-day closing price of the Company's common stock equals or exceeds $ 161.88 for any 90 consecutive calendar days during the period commencing on the fifth anniversary of the date of grant and ending on the tenth anniversary of the date of grant, inclusive;

provided that the reporting person remains continuously employed by the Company until the date of satisfaction of such condition.

The derived requisite service period was determined to be six years based on a valuation technique.

The total fair value of the grant is $ 5.8 million and is being recognized over the derived requisite service period.

In the event that the market condition remains unsatisfied upon completion of the requisite service period, no charge will be reversed.

As of December 31, 2024, the total unrecognized compensation charge related to the restricted stock units is approximately $ 78.9 million, which is expected to be recognized through fiscal 2028.

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2024 2023 2022

Foreign currency gain / (loss) $ 879 $ ( 1,338 ) $ ( 3,303 )

Interest expense ( 1,856 ) ( 1,336 ) —

Interest income / (expense) and other 4,784 87 ( 67 )

Foreign currency (loss) / gain $ ( 1,831 ) $ 879 $ ( 1,338 )

Interest income and other 6,232 4,785 87

Other income / (expense), net $ 4,401 $ 5,664 $ ( 1,251 )

33 unchanged sentences

Bargain purchase gain — ( 8.6 ) —

Capitalized transaction costs 2.2 — —

Equity-based compensation award expiration 10.2 — —

Non-deductible—other 1.1 — 0.2

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Net deferred tax assets $ 68,808 $ 20,692

The non-cash equity-based compensation for the Company includes a deferred tax asset of $ 6.2 million associated with the performance-based grant of stock options and restricted stock units to the Company’s Founder and Executive Chairman.

If the performance targets are not met in the second quarter of 2024, this deferred tax asset will be reversed.

The non-cash equity-based compensation for the Company included a deferred tax asset of $ 6.2 million in 2023 associated with the performance-based grant of stock options and restricted stock units to the Company’s Founder and Executive Chairman.

The performance targets were not met in the second quarter of 2024, and the deferred tax asset was reversed.

In addition, the $ 8.8 million valuation allowance relates to certain foreign net operating loss carryforwards, where the Company has determined that there is sufficient uncertainty regarding the future realization of these net operating losses.

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and various foreign jurisdictions.

The Company is currently under examination by the U.S.

Internal Revenue Service for the tax years 2017 through 2021, and expects the examinations for these years to be concluded in the next twelve months.

The Company no longer subject to U.S.

federal, state, local and foreign tax examinations by tax authorities for years before 2015.

During the tax year ending December 31, 2024 the U.S.

Internal Revenue Service closed the audit for tax years 2017 through 2021 with $ 0.9 million of additional tax and interest assessed.

The Company is currently under examination by the state of California for

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the tax years 2021 through 2022.

The Company is no longer subject to U.S.

federal, state, local and foreign tax examinations by tax authorities for years before 2017.

As of December 31, 2024, the Company has $ 77.4 million in tax net operating loss carryforwards in U.S.

and foreign tax jurisdictions which are available to reduce future income taxes and the majority of this amount relates to jurisdictions with an indefinite carryforward period.

As of December 31, 2023, the Company had approximately $ 32.4 million of undistributed earnings attributable to its foreign subsidiaries.

The Company has no plans to indefinitely reinvest the earnings of its foreign subsidiaries in those operations.

An estimate of the associated taxes related to repatriation of these undistributed earnings is not material.

(15) Net Income Per Share

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Anti-dilutive shares excluded from the calculation 1,551 944 464

(14) Geographic Financial Information

(16) Segment and Geographic Information

The Company is currently organized and operates as one operating and reportable segment on a consolidated basis.

The Company’s revenues are supported by its searchable creative platform and driven by its large contributor network.

The Company’s chief executive officer, who is its chief operating decision maker (“CODM”), evaluates the performance of the Company’s operating segment based on net income.

The CODM considers budget-to-actual variances when making decisions about capital allocation to the segment.

Asset information is not provided to the Company’s CODM as that information is not used in the determination of resource allocation or in assessing the performance of the Company’s segment.

The following table reconciles the company’s revenues and significant operating expense categories used to evaluate the business and allocate resources to Net income:

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31,

(in thousands) 2024 2023 2022

Revenue $ 935,262 $ 874,587 $ 827,826

Technology costs 69,883 58,853 48,777

Advertising costs 91,845 93,109 97,194

Adjusted cost of revenue 1

355,074 318,281 288,303

Adjusted sales and marketing 1

125,802 116,821 101,194

Adjusted product and development 1

80,876 90,255 60,401

Adjusted general and administrative 1

143,074 128,868 119,669

Impairment of lease and related assets — — 18,664

Total operating expenses 866,554 806,187 734,202

Income from operations 68,708 68,400 93,624

Bargain purchase gain — 50,261 —

Interest expense ( 10,561 ) ( 1,857 ) ( 1,336 )

Other income / (expense), net 4,401 5,664 ( 1,251 )

Income before income taxes 62,548 122,468 91,037

Provision for income taxes 26,616 12,199 14,934

Net income 35,932 110,269 76,103

1 Excludes technology and advertising costs

The following represents the Company’s depreciation and amortization by expense category:

Year Ended December 31,

($ in thousands) 2024 2023 2022

Cost of revenue $ 80,805 $ 74,824 $ 63,128

General and administrative 6,821 4,905 5,342

Total depreciation and amortization $ 87,626 $ 79,729 $ 68,470

The following represents the Company’s geographic revenue based on customer location (in thousands):

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In addition, for the years ended December 31, 2024 and 2023, the Company recorded right-of-use assets of $ 2.9 million and $ 1.9 million, respectively, which were obtained in exchange for lease obligations.

For the years ended December 31, 2023 and 2022, the Company’s operating leases have a weighted average remaining lease term of 4.8 years and 5.7 years, respectively, and a weighted average discount rate of 6.3 %.

For the years ended December 31, 2024 and 2023, the Company’s operating leases have a weighted average remaining lease term of 4.1 years and 4.8 years, respectively, and a weighted average discount rate of 6.5 % and 6.3 %, respectively.

Balance sheet information for the Company’s leases as of December 31, 2024, is as follows:

10 unchanged sentences

Year ending December 31,

Thereafter 2,615

Total undiscounted lease payments 37,755

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Total non-lease unconditional obligations $ 55,700

SHUTTERSTOCK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Legal Matters

11 unchanged sentences

The standard maximum aggregate obligation and liability to any one customer for all claims is generally limited to ten thousand dollars.

The Company offers certain of its customers greater levels of indemnification, including unlimited indemnification.

As of December 31, 2023, the Company has recorded no liabilities related to indemnification for loss contingencies.

Additionally, the Company believes that it has the appropriate insurance coverage in place to adequately cover such indemnification obligations, if necessary.

The Company offers certain of its customers greater levels of indemnification, including unlimited indemnification and believes that it has appropriate insurance coverage in place to adequately cover indemnification claims, if necessary.

As of and for the year ended December 31, 2024, the Company made no material payments for losses on customer indemnification claims and recorded no liabilities related to indemnification for loss contingencies, before considering any insurance recoveries.

Employment Agreements and Indemnification Agreements

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The agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause.

(17) Subsequent Events

On February 1, 2024, the Company completed its acquisition of Backgrid USA, Inc.

and Backgrid London LTD (collectively, “Backgrid”) for approximately $ 20 million, subject to customary working capital adjustments.

The purchase price was paid with existing cash on hand.

Backgrid supplies media organization with real-time celebrity content, and expands the Company’s offering of editorial images and footage across celebrity, red carpet and live-events.

EXHIBIT INDEX

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8-K 001-35669 2.1 May 23, 2023

2.5 Stock Purchase Agreement, dated May 1, 2024

8-K 001-35669 2.1 May 2, 2024

2.6 Voting and Support Agreement, dated as of January 6, 2025, by and between Getty Images and Jonathan Oringer.

8-K 001-35669 10.1 January 7, 2025

2.7 Significant Stockholder Agreement, dated as of January 6, 2025, by and among Getty Images, the Getty Family Stockholders, the Koch Stockholder and Jonathan Oringer.

8-K 001-35669 10.2 January 7, 2025

2.8 Agreement and Plan of Merger, dated as of January 6, 2025, by and among Getty Images, Merger Sub 2, Merger Sub 3, Shutterstock, HoldCo and Merger Sub 1.

8-K 001-35669 2.1 January 7, 2025

3.1 Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect.

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Director Compensation Policy

10-K 001-35669 10.1 February 26, 2019

10-Q 001-35669 10.1 May 2, 2024

10.11 § Shutterstock, Inc.

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10-Q 001-35669 10.1 November 4, 2016

Number Incorporated by Reference

Form File No.

Exhibit Filing Date

10.16 § Shutterstock, Inc.

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10-Q 001-35669 10.1 April 27, 2021

Number Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date

10.20(a) § Employment Agreement, dated August 5, 2019, by and between the Company and Steven Ciardiello

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10-Q 001-35669 10.4 November 5, 2019

10.21(a) § Employment Agreement, dated March 13, 2019, by and between the Company and Stan Pavlovsky

10-Q 001-35669 10.1 April 25, 2019

10.21(b) § Amendment to Employment Agreement, dated November 5, 2019, by and between the Company and Stan Pavlovsky

10-Q 001-35669 10.1 November 5, 2019

10.21(c) § Second Amendment to Employment Agreement, dated February 11, 2020, by and between Stan Pavlovsky and Shutterstock, Inc.

10-K 001-35669 10.25(c) February 13, 2020

10.22 § Employment Agreement, dated November 7, 2019, by and between the Company and Jarrod Yahes

8-K 001-35669 10.1 November 18, 2019

10.23(a) § Employment Agreement, dated November 4, 2019, between the Company and Pietro Silvio

10-Q 001-35669 10.2 July 28, 2020

10.23(b) § Separation Agreement and General Release, between the Company and Peter Silvio, dated September 1, 2022

8-K 001-35669 10.1 September 7, 2022

10.24 § Employment Agreement, dated May 8, 2022, by and between the Company and Paul J.

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10-Q 001-35669 10.2 October 25, 2022

10.28 §** Employment Agreement, dated January 13, 2025, by and between the Company and Matthew Furlong

10-K 001-35669 10.1 February 25, 2025

10.29 § Shutterstock Inc.

Amended and Restated 2022 Omnibus Equity Incentive Plan

10-Q 001-35669 10.1 June 7, 2024

10.30 § Amendment to the Employment Agreement, dated June 28, 2024, by and between Shutterstock, Inc.

10-Q 001-35669 10.1 July 3, 2024

10.31 § Shutterstock, Inc.

Form of Amended and Restated 2022 Omnibus Equity Incentive Plan Restricted Stock Unit Award Agreement

10-Q 001-35669 10.2 July 3, 2024

10.32 § Shutterstock, Inc.

Form of Amended and Restated 2022 Omnibus Equity Incentive Plan Performance Stock Unit Award Agreement

10-Q 001-35669 10.3 July 3, 2024

10.33 Amended and Restated Credit Agreement, dated as of July 22, 2024, by and among Shutterstock, Inc., as borrower, certain subsidiary guarantors, certain financial institutions, as lenders and Bank of America, N.A., as administrative agent for such lenders.

10-Q 001-35669 10.1 July 22, 2024

10.34 § Transition Agreement by and between Jarrod Yahes and Shutterstock, Inc., dated October 31, 2024.

10-Q 001-35669 10.1 November 1, 2024

10.35 § Employment Agreement by and between Rik Powell and Shutterstock, Inc., dated October 30, 2024.

10-Q 001-35669 10.2 November 1, 2024

10.36 Letter Agreement, dated as of January 6, 2025, by and among Getty Images and the Getty Family Stockholders.

8-K 001-35669 10.3 January 7, 2025

10.37 Letter Agreement, dated as of January 6, 2025, by and between Getty Images and the Koch Stockholder.

8-K 001-35669 10.4 January 7, 2025

19 ** Insider Trading Policy

21.1 ** List of Subsidiaries.

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31.2 ** Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Number Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date

32 #** Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.

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97 ** 2023 Executive Compensation Clawback Policy

10-K 001-35669 97 February 26, 2024

101.INS * XBRL Instance Document.

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Each person whose individual signature appears below hereby authorizes and appoints Paul J.

Hennessy and Jarrod Yahes, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Hennessy and Rik Powell, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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HENNESSY Chief Executive Officer and Director (Principal Executive Officer) February 25, 2025

/s/ JARROD YAHES Chief Financial Officer (Principal Financial Officer) February 26, 2024

/s/ RIK POWELL Chief Financial Officer (Principal Financial Officer) February 25, 2025

/s/ STEVEN CIARDIELLO Chief Accounting Officer (Principal Accounting Officer) February 25, 2025

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EVANS Director February 25, 2025

/s/ JAIME TEEVAN Director February 25, 2025

/s/ ALFONSE UPSHAW Director February 25, 2025

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures