- Revenue: $229.1 million, up 1.5% year-on-year and 2.1% on a currency-neutral basis.
- Adjusted EBITDA: $68.8 million, down 5.4% year-on-year and 4.7% currency-neutral, with an EBITDA margin of 30%.
- Annual Subscription Revenue: 52.9% of total revenue, up from 51.1% in Q2 2023.
- Editorial Revenue: $83.6 million, up 4.1% year-on-year and 4.6% on a currency-neutral basis.
- Creative Revenue: $137.9 million, down 2.4% year-on-year and 1.8% on a currency-neutral basis.
- Total Purchasing Customers: 740,000, down from 830,000 in the comparable LTM period.
- Annual Revenue per Purchasing Customer: $1,232, up 10.7% from $1,113 in the comparable LTM period.
- Active Annual Subscribers: 282,000, up 55% over the corresponding 2023 LTM period.
- Paid Download Volume: Up 0.9% to 95 million.
- Video Attachment Rate: 15.6%, up from 13.5% in the LTM Q2 2023 period.
- SG&A Expense: $101.2 million, down from $101.5 million in the prior year.
- CapEx: $15.4 million, up $1.5 million year-on-year.
- Free Cash Flow: $31.1 million, up from $27.9 million in Q2 2023.
- Balance Sheet Cash: $121.7 million, down $12.5 million from Q1 2024.
- Total Debt Outstanding: $1.35 billion.
- Net Leverage: 4.2 times at the end of Q2.
- Full Year 2024 Revenue Guidance: $924 million to $943 million, representing growth of 0.9% to 2.9% year-on-year.
- Full Year 2024 Adjusted EBITDA Guidance: $290 million to $294 million, a decrease of 3.8% to 2.5% year-on-year.
Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Getty Images Holdings Inc (GETY, Financial) returned to growth in Q2 2024 with revenue of $229.1 million, a year-on-year increase of 1.5% on a reported basis and 2.1% on a currency-neutral basis.
- The company saw growth across its Getty Images, iStock, and Unsplash brands, with strong utilization reflected by growth in paid downloads.
- Getty Images Holdings Inc (GETY) continues to innovate in AI, launching an updated model of its commercially safe Generative AI services and tools in partnership with NVIDIA.
- The company reported a strong rebound in its editorial business, with a 4.1% year-on-year increase in editorial revenue, driven by major events and a favorable year-on-year comparison due to the Hollywood strikes.
- Getty Images Holdings Inc (GETY) added 100,000 active annual subscribers, representing a 55% growth over the corresponding 2023 LTM period, with over 60% being first-time purchasing customers.
Negative Points
- Adjusted EBITDA for the quarter was $68.8 million, down 5.4% on a reported basis and 4.7% currency-neutral, with an EBITDA margin of 30%, down from 32.2% in Q2 2023.
- The company continues to see softness from its agency and production customers, impacting both creative and editorial revenues, particularly in video.
- Total purchasing customers decreased to 740,000 from 830,000 in the comparable LTM period, reflecting a lower volume of à la carte transactions.
- The annual subscriber revenue retention rate declined to 89.4% from 98.5% in the comparable LTM period, driven by factors such as the Hollywood strike and lower retention among smaller e-commerce subscribers.
- Getty Images Holdings Inc (GETY) reported an increase in SG&A expenses, excluding stock-based compensation, to $97.2 million, or 42.4% of revenue, up from $89.6 million or 39.7% of revenue in Q2 2023, reflecting planned reinvestments and higher commissions.
Q & A Highlights
Q: Craig, just on Generative AI. You rolled out a lot this quarter, you made a lot of progress. Hoping you could talk about the consumer engagement you are seeing and then also, I know it's still early, but your latest thoughts on the potential monetization of that over time?
A: On the Gen AI front, we continue to see really positive feedback from our customers across each and every segment of the business. It's still early days in the adoption curve though within the commercial sector. We expect over time it can be a meaningful contributor to the revenues of the business, but it's still early days and fairly limited contribution to the business at this point.
Q: Jen, could you touch more on the drivers of the reacceleration in the second half of the year, any assumptions you're making, in particular, around the agency channel?
A: There's a few things there for top-line performance. We are seeing continued improvement on the production side of things recovery. Agency side of things, we're not necessarily expecting any material changes there, but again slow gradual improvement to those double-digit declines that we're seeing. The editorial side of our business has a favorable year-on-year comp with those strike impacts starting to impact us largely in Q3 and the second half of last year. Our editorial event calendar is largely stacked in the second half of the year with big events like the Olympics and the U.S. political cycle.
Q: I want to understand about the drivers behind the subscription growth from iStock and Unsplash, and also the strength in iStock and Unsplash. Can you provide any insights on the deceleration in growth and retention rates?
A: We've been making a concerted effort over the last two years to drive more annual subscriptions across those products. It results in higher ARPU and higher lifetime values. On iStock, we've introduced more SKUs within the subscription product side of things and increased the use of free trials. There is a slightly lower retention coming out of the free trial, but it's been largely positive. We are seeing a little bit of contraction in spend from these subscribers outside of their subscription, which is very much a Hollywood strike impact.
Q: Could you provide more details on the performance of Premium Access in the quarter and your expectations for the e-commerce product?
A: Premium Access is our largest subscription offering and includes a lot of our premium content. We continue to see strong performance in that product, not just in the take-up of new customers, but more importantly on the retention and utilization side of things. We expect iStock and Unsplash to continue to be in growth, offering differentiated content that resonates with our customers.
Q: On the data licensing side, is the growth more one-time in nature or carry-forward over the next 12 months?
A: There is a bit of accounting with 606 and revenue recognition that makes it a little bit of a pull-forward on some of the data licensing. But these are within the model that we've always stressed, which is more recurring in nature and partnership-based. So, while there might be some lumpiness, we are building relationships and revenue that we believe will be recurring over time.
Q: What are your expectations for the contribution from the political and Olympics events relative to the last cycle?
A: We expect the contribution to be slightly lower than the historic cycle, around $8 to $10 million, largely driven by the political side of things. However, given how the election is shaping up in the US and the commercial activities flowing out of the Olympics, there might be some upside relative to our initial guidance.
Q: What gives you optimism about the agency segment going into the second half of the year?
A: We are seeing stabilization within that portion of the business. The trends of normalization are starting to moderate as we see some economic certainties improve and sectors like the tech sector bring back some spend and investment. We don't see a major shift to AI or subscription within those agencies, but we are seeing experimentation, often in partnership with Getty Images.
Q: Are agencies adopting more of the Generative AI tools and shifting away from an a la carte to more of a subscription payment model?
A: We are not seeing a major shift into subscription or AI within agencies. They still need to bill back on a per-project basis. However, there is experimentation with AI, often in partnership with Getty Images.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
