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01/10 17:10
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Q4 Revenue $247.3 million, up 9.5% year-over-year (8.5% currency-neutral). Growth driven by strong performance in the Americas region, which was up 15.9% on a currency-neutral basis.
Full Year Revenue $939.3 million, up 2.5% year-over-year (both reported and currency-neutral). Return to top-line growth exceeding guidance.
Q4 Adjusted EBITDA $80.6 million, up 11.7% year-over-year (10.4% currency-neutral). Strong profitability contributed to the increase.
Full Year Adjusted EBITDA $300 million, down 0.4% year-over-year (0.3% currency-neutral). Margins slightly decreased to 32% from 32.9% in 2023.
Q4 Adjusted EBITDA Margin 32.6%, up from 31.9% in Q4 2023. Improvement attributed to strong revenue growth.
Q4 SG&A Expense $105.5 million, up $3.9 million year-over-year. Expense rate decreased to 42.7% of revenue from 45% last year due to a decrease in stock-based compensation.
Full Year SG&A Expense $385.9 million, up $5.3 million year-over-year. Adjusted SG&A increased to 41.1% of revenue compared to 39.8% in the prior year.
Q4 Free Cash Flow $24.6 million, up from $18.6 million in Q4 2023. Increase driven by higher EBITDA.
Full Year Free Cash Flow $60.9 million, down from $75.7 million in 2023. Decrease primarily due to increased cash paid for interest and taxes.
Q4 CapEx $15.1 million, flat year-over-year. CapEx as a percentage of revenue decreased to 6.1% from 6.7% in the prior year.
Full Year CapEx $57.4 million, flat year-over-year and within the range of 5% to 7% of revenue.
Q4 Net Leverage 3.97 times, down from 4.2 times at year-end 2023. First time in over a decade below four times.
Total Debt Outstanding $1.3 billion, including $300 million of senior notes and term loans with varying interest rates. Refinancing extended maturities to 2030.
Q4 Paid Downloads $93 million, down slightly year-over-year.
Q4 Editorial Revenue $90.1 million, up 19% year-on-year, driven by demand for editorial content from major events.
Q4 Creative Revenue $142.4 million, down 2.4% year-on-year, primarily due to a shift in download consumption from creative to editorial.
Annual Subscription Revenue 54.9% of total revenue in Q4, up approximately 11% year-on-year, driven by premium access and e-commerce offerings.
Annual Subscription Retention Rate 92.9%, up from 92.4% in 2023.
Video Attachment Rate 16.5%, up from 14.1% in Q4 2023.
Other Revenue $14.8 million, up $10.4 million from Q4 2023, due to new multiyear creative content deals.
New Product Launches: Launched natural language search across websites and rolled out new commercially safe AI capabilities to customers.
Subscription Growth: Added 78,000 active annual subscribers, reaching 314,000, a 33% increase year-over-year.
Market Expansion: Expanded integrations across the broader creative and editorial ecosystems.
Geographic Revenue Growth: Americas region revenue increased by 15.9% in Q4 on a currency-neutral basis.
Operational Efficiency: Refinanced $1 billion of debt, extending maturities to 2030.
Cost Management: SG&A expense decreased to 42.7% of revenue from 45% year-on-year.
Merger Strategy: Announced merger with Shutterstock to create a company with strong financial foundation and superior value creation opportunities.
Focus on Customer Value: Emphasized delivering sustainable customer value by helping customers create and engage end audiences.
Regulatory Issues: Ongoing regulatory review process regarding the merger with Shutterstock, limiting comments on the merger's status.
Economic Factors: Projected revenue guidance for 2025 indicates a potential decline of 2.3% to an increase of 1.6% year-over-year, influenced by foreign exchange rates.
Supply Chain Challenges: Disruptions in production activity due to the Los Angeles fires, impacting business operations.
Competitive Pressures: Shift in download consumption from creative to editorial content due to a robust editorial event calendar, affecting creative revenue.
Debt Management: Total debt outstanding of $1.3 billion, with a focus on reducing net leverage, which is currently at 3.97 times.
Cost Increases: Anticipated one-off increases in SG&A of approximately $8 million in 2025 to accelerate SOX compliance efforts.
Merger with Shutterstock: Getty Images and Shutterstock entered into a definitive merger agreement aimed at creating a company with a strong financial foundation and opportunities for superior value creation.
Refinancing of Debt: Completed refinancing on $1 billion of term loans, extending maturities to 2030.
Investment in Core Assets: Continued investment in core assets, including partnerships, content development, and AI capabilities.
Subscriber Growth: Grew annual subscribers to 314,000, an increase of approximately 33% year-on-year.
AI Capabilities: Rolled out new commercially safe AI capabilities to customers.
2025 Revenue Guidance: Anticipate revenue of $918 million to $955 million, down 2.3% to up 1.6% year-over-year.
2025 Adjusted EBITDA Guidance: Expect adjusted EBITDA of $272 million to $290 million, down 9.5% to 3.3% year-over-year.
Impact of FX Rates: Guidance includes an estimated $12.5 million revenue headwind due to FX rates.
Increased SG&A Costs: Guidance includes approximately $8 million in one-off increases in SG&A for SOX compliance efforts.
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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