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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 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.
Revenue Second quarter revenue for 2025 was $234.9 million, representing reported growth of 2.5% and 1.8% on a currency-neutral basis. The growth was driven by gains in annual subscription business, premium access, Unsplash+, and strong demand for video, news, and sport content. However, the agency business faced challenges due to the ad industry's struggles and macroeconomic pressures.
Adjusted EBITDA Adjusted EBITDA was $68 million for the quarter, down 1.2% reported and 2.2% on a currency-neutral basis. The decline was attributed to ongoing macroeconomic uncertainty and challenges in the agency business.
Annual Subscription Revenue Annual subscription revenue was 53.5% of total revenue, up from 52.9% in Q2 of last year. Subscription revenue grew by 3.7% or 3% on a currency-neutral basis, primarily driven by growth in the premium access offering.
Annual Subscribers The company added 39,000 active annual subscribers, reaching 321,000 in the Q2 LTM period, representing growth of approximately 14% over the comparable 2024 LTM period. Growth was driven by e-commerce businesses, iStock, and Unsplash+.
Creative Revenue Creative revenue was $130.8 million, down 5.1% year-on-year and 5.7% on a currency-neutral basis. The decline was primarily driven by macroeconomic challenges impacting the agency business, which was down 10% in Q2.
Editorial Revenue Editorial revenue was $88.3 million, growing 5.6% year-on-year and 4.6% on a currency-neutral basis. Growth was driven by strong demand for news and sport coverage of major events such as FIFA's Club World Cup and Formula 1 racing.
Other Revenue Other revenue was $15.7 million, an increase of $8.1 million from Q2 '24, driven primarily by three new multiyear creative content deals that included some level of AI rights.
SG&A Expense SG&A expense was $105.1 million, up $3.8 million year-on-year, with the expense rate increasing to 44.7% of revenue from 44.2% last year. The increase was primarily due to professional fees tied to SOX compliance efforts and ongoing litigation with Stability AI.
Adjusted EBITDA Margin Adjusted EBITDA margin was 28.9% compared to 30% in Q2 2024, reflecting a slight decline due to macroeconomic challenges and increased SG&A expenses.
Free Cash Flow Free cash flow was negative $9.6 million, compared to positive $31.1 million in Q2 2024. The decline was primarily due to cash outflows tied to merger and legal-related expenses and an increase in cash taxes paid.
AI suite upgrade: Getty Images upgraded its AI suite of services to generate higher quality outputs with better prompt adherence. These services are based on a foundational model trained only from licensed creative content, respecting IP rights. Bundles of these AI capabilities were launched directly into image subscriptions on iStock.
VisualGPS insights: The VisualGPS platform launched new insights to help customers align their visual storytelling with evolving consumer expectations, particularly around sustainability messaging.
Subscription growth: Annual subscription revenue grew by 3.7% year-on-year, driven by premium access offerings. The company added 39,000 active annual subscribers, reaching 321,000, with 52% being new customers and 26% from growth markets in EMEA, APAC, and LatAm.
Editorial revenue growth: Editorial revenue grew by 5.6% year-on-year, driven by strong demand for news and sports coverage, including major events like FIFA's Club World Cup and Formula 1 racing.
Revenue performance: Q2 2025 revenue was $234.9 million, a 2.5% year-on-year growth. Adjusted EBITDA was $68 million, down 1.2% year-on-year.
Cost management: SG&A expenses increased to $105.1 million, primarily due to SOX compliance efforts and ongoing litigation costs.
Merger with Shutterstock: Shutterstock shareholders approved the merger agreement with Getty Images. Regulatory approvals in the U.S. and U.K. are pending, with the transaction expected to close by the end of 2025.
Regulatory Review Process: The ongoing regulatory review process for the merger with Shutterstock creates uncertainty and limits the company's ability to comment on the merger status, potentially delaying strategic plans.
Macroeconomic Uncertainty: The company faces ongoing macroeconomic challenges, which are impacting its agency business and overall financial performance.
Agency Business Challenges: The agency business continues to be soft due to challenges in the advertising industry and broader macroeconomic pressures, leading to a 10% decline in Q2.
Hollywood Strikes and Production Lag: The Hollywood strikes and lag in production activity have disrupted revenue growth in the media and production segments, with lingering effects expected in the second half of 2025.
Legal and Compliance Costs: Increased SG&A expenses are tied to professional fees for SOX compliance efforts and ongoing litigation with Stability AI, adding financial strain.
Foreign Exchange Impacts: Fluctuations in foreign exchange rates have negatively impacted revenue and debt leverage, creating additional financial risks.
Debt and Interest Expenses: The company has significant debt obligations, with high interest rates and cash interest expenses impacting free cash flow and financial flexibility.
Editorial Events Calendar: The odd-year editorial events calendar presents tougher year-on-year comparisons, particularly in the second half of 2025, affecting revenue growth.
Tariffs and Global Conditions: Potential broader impacts from tariffs and other global macroeconomic conditions remain unknown, adding uncertainty to the company's outlook.
Revenue Outlook: Getty Images anticipates full-year 2025 revenue to range between $931 million and $968 million, representing a year-on-year change of -0.9% to +3.1%. On a currency-neutral basis, this equates to a decrease of 1% to an increase of 3%.
Adjusted EBITDA Outlook: The company expects adjusted EBITDA for 2025 to be between $277 million and $297 million, reflecting a year-on-year change of -7.6% to -1.2% or -7.9% to -1.4% on a currency-neutral basis.
Currency Impact: The guidance incorporates a $1 million FX impact for the full year, with a $2.5 million headwind in the first half offset by a $2 million benefit in the second half of 2025.
Second Half 2025 Performance: The company expects tougher year-on-year comparisons to flatten growth in the second half of 2025, influenced by editorial event calendar comparisons and disruptions in production activity due to Los Angeles fires and post-Hollywood strike recovery.
SG&A Costs: Guidance includes approximately $8 million in one-off SG&A increases for SOX compliance acceleration efforts, with $5.5 million expected in the second half of 2025.
Market Conditions: The guidance reflects potential impacts from tariffs and global macroeconomic conditions, though broader impacts remain uncertain.
The selected topic was not discussed during the call.
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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