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01/10 17:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several challenges: weak financial guidance, operational disruptions, and increased costs. The Q&A reveals management's inability to provide clear insights on FX and tariff impacts, adding uncertainty. Despite a merger and AI developments, no share repurchase program was announced, and free cash flow turned negative. These factors, coupled with a small market cap, suggest a negative stock price reaction in the short term.
Revenue $224.1 million, growth of 0.8% year-over-year (2.6% on a currency-neutral basis). Growth impacted by early FX pressures, tariff-driven uncertainty, and softness in agency, production, and entertainment sectors.
Adjusted EBITDA $70.1 million, down 0.1% year-over-year (up 2.2% on a currency-neutral basis). Margin at 31.3%, down from 31.6% in Q1 2024.
Annual Subscription Revenue 57.2% of total revenue, up from 54.7% in Q1 2024. Total subscription revenue grew by 5.4% (7.2% currency-neutral), driven by premium access.
Paid Downloads $93 million, down slightly year-over-year.
Editorial Revenue $82.6 million, up 4% year-over-year (5.6% currency-neutral). Growth driven by global news and sports coverage.
Creative Revenue $132.2 million, down 4.8% year-over-year (3% currency-neutral). Decline primarily due to agency business downturn.
Other Revenue $9.3 million, up $5.3 million year-over-year, driven by new multiyear creative content deals.
SG&A Expense $98.3 million, down $2.7 million year-over-year. Expense rate decreased to 43.9% of revenue from 45.4% due to lower stock-based compensation.
CapEx $15.7 million, up $1.3 million year-over-year. CapEx as a percentage of revenue increased to 7% from 6.5% due to timing of performance compensation payments.
Free Cash Flow Negative $300,000, down from $7.1 million in Q1 2024, primarily due to cash outflows tied to merger-related expenses.
Balance Sheet Cash $114.6 million, down $19.6 million from Q1 2024, due to $55.2 million of voluntary debt paydowns and $12.5 million of financing outflows.
Total Debt Outstanding $1.36 billion, including $300 million of senior notes and $580 million of USD term loan at 11.25% fixed rate.
Net Leverage 4.1 times, up from 4 times at the end of 2024, reflecting refinancing impact and weaker dollar on euro term debt.
Annual Subscription Revenue Growth: Annual subscription revenue was 57.2% of total revenue in Q1 2025, up from 54.7% in Q1 2024, with total subscription revenue growing by 5.4%.
New Partnerships in Sports: Signed new exclusive partnerships with WWE, Major League Soccer, and the National Women's Soccer League, and renewed partnership with UEFA.
Custom Content Solutions: Continued popularity of custom content solutions, attracting repeat customers like 3M and Fujitsu.
Geographic Revenue Growth: Currency-neutral revenue growth of 6.4% in the Americas, while EMEA was down 3% and APAC was down less than 1%.
New Video Partnerships: Welcomed new video partner, Bader Media, enhancing video content offerings.
Adjusted EBITDA: Adjusted EBITDA was $70.1 million for Q1 2025, down 0.1% year-on-year.
Cost Management: SG&A expense decreased to $98.3 million, down $2.7 million year-on-year, with a lower expense rate of 43.9% of revenue.
Merger with Shutterstock: Ongoing regulatory review process for the merger with Shutterstock, with expectations to close in the second half of 2025.
Refinancing of Debt: Completed refinancing of term loans, extending maturity to February 2030.
Regulatory Risks: Ongoing regulatory review process regarding the merger with Shutterstock, including requests for additional information from the DOJ in the US and the CMA in the UK.
Economic Factors: Early foreign exchange (FX) pressures impacting revenue, with expectations of continued macroeconomic uncertainty affecting customer investments.
Supply Chain Challenges: Impacts from the LA fires affecting the entertainment sector and production activities, leading to revenue declines in the media business.
Competitive Pressures: Softness in the agency, production, and entertainment sectors due to macroeconomic conditions, impacting customer spending and investment.
Debt Management: Total debt outstanding of $1.36 billion with a net leverage of 4.1 times, reflecting refinancing impacts and potential cash interest expenses of $133 million for 2025.
Operational Challenges: Anticipated disruptions in production activities due to the LA fires and lag in returning to pre-Hollywood strike production levels.
Cost Increases: Expected one-off increases in SG&A expenses of approximately $8 million related to SOX compliance efforts.
Market Conditions: Potential broader impacts from trade wars and global macroeconomic conditions that may not be fully reflected in financial guidance.
Annual Subscription Revenue Growth: Annual subscription revenue was 57.2% of total revenue in Q1 2025, up from 54.7% in Q1 2024, indicating a strong growth trajectory.
New Partnerships: Signed new exclusive partnerships with WWE, Major League Soccer, and the National Women's Soccer League, and renewed partnership with UEFA.
Content Partnerships: Renewed content partnerships with Boston Globe, MTV, and welcomed new video partner, Bader Media.
Custom Content Solutions: Continued popularity of custom content solutions, which are tailored to customer-specific needs.
Merger with Shutterstock: Expecting the merger with Shutterstock to close in the second half of 2025, pending regulatory approvals.
2025 Revenue Guidance: Anticipate revenue of $931 million to $968 million, reflecting a year-over-year change of -0.9% to +3.1%.
2025 Adjusted EBITDA Guidance: Expect adjusted EBITDA of $277 million to $297 million, down 7.6% to 1.2% year-over-year.
CapEx Guidance: CapEx expected to remain within the range of 5% to 7% of revenue.
SG&A Increases: Guidance includes approximately $8 million in one-off increases in SG&A, largely concentrated in Q2 to Q4.
Free Cash Flow: Free cash flow was negative $300,000 in Q1 2025, down from $7.1 million in Q1 2024.
Share Repurchase Program: None
The earnings call reveals several challenges: revenue stagnation due to the Hollywood strike, a decline in subscription revenue retention, and significant merger financing costs. Despite some growth in creative revenue, overall financial performance is weak, with decreased EBITDA and increased SG&A expenses. The Q&A section highlights ongoing challenges in media segments and lack of transparency on key partnerships. Given the small market cap, these negative factors are likely to result in a stock price decline of -2% to -8% over the next two weeks.
The earnings call presents a mixed picture. Strong partnerships and subscription growth are positives, but weak guidance, negative free cash flow, and declining creative revenue are concerning. The Q&A highlights challenges in agency performance and ongoing litigation. Despite some positive aspects like new partnerships and subscriber growth, the weak financial metrics and uncertain outlook balance out the sentiment, leading to a neutral prediction.
The earnings call highlights several challenges: weak financial guidance, operational disruptions, and increased costs. The Q&A reveals management's inability to provide clear insights on FX and tariff impacts, adding uncertainty. Despite a merger and AI developments, no share repurchase program was announced, and free cash flow turned negative. These factors, coupled with a small market cap, suggest a negative stock price reaction in the short term.
The earnings report shows mixed results: strong Q4 revenue and EBITDA growth, but challenges like creative revenue decline and debt management concerns. The Q&A highlights cautious sentiment, with management avoiding specific guidance, which may cause uncertainty. The market cap suggests moderate reaction, likely resulting in a neutral stock price movement.
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