Getty Images Holdings Inc ((GETY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Getty Images Holdings Inc recently held its earnings call, presenting a mixed outlook for the company. While there were positive developments in subscription growth, editorial revenue, and AI integration, these were offset by challenges in creative revenue, a decline in adjusted EBITDA, and negative free cash flow. The company is facing ongoing macroeconomic challenges impacting its agency business and increased expenses related to compliance and litigation.
Subscription Revenue Growth
Getty Images reported an increase in annual subscription revenue, which now accounts for 53.5% of total revenue, up from 52.9% in the previous year. Total subscription revenue grew by 3.7% or 3% on a currency-neutral basis, driven by the growth in their premium access offering.
Strong Editorial Revenue Growth
The company experienced a 5.6% year-on-year growth in editorial revenue, or 4.6% on a currency-neutral basis. This growth was fueled by the demand for news and sports content, with significant contributions from major events like FIFA’s Club World Cup and Formula 1 racing.
Increased Annual Subscriber Count
Getty Images added 39,000 active annual subscribers, reaching a total of 321,000. This represents a growth of approximately 14% over the comparable period in 2024, highlighting the company’s expanding customer base.
Successful AI Integration
The company successfully upgraded its AI suite of services and launched bundles of AI capabilities directly into image subscriptions on iStock. This enhancement adds significant value for customers, indicating Getty Images’ commitment to technological advancement.
Premium Access Retention Rate Improvement
The annual subscription revenue retention rate improved to 93.4% in the Q2 LTM period, up 400 basis points from 89.4% in the corresponding period of 2024. This improvement underscores the company’s success in retaining its premium access customers.
Decline in Creative Revenue
Creative revenue was reported at $130.8 million, marking a 5.1% year-on-year decline, or 5.7% on a currency-neutral basis. This decline is largely attributed to macroeconomic challenges impacting the agency business.
Decrease in Adjusted EBITDA
Adjusted EBITDA for the quarter was $68 million, a decrease of 1.2% or 2.2% on a currency-neutral basis. The adjusted EBITDA margin also fell to 28.9% from 30% in Q2 2024, reflecting the financial pressures faced by the company.
Negative Free Cash Flow
The company reported a negative free cash flow of $9.6 million, a significant drop from the positive $31.1 million in Q2 2024. This was primarily due to cash outflows related to merger and legal-related expenses.
Continued Challenges in Agency Business
Getty Images continues to face challenges in its agency business, which has impacted the creative revenue performance. The agency segment was down 10% in Q2, highlighting the ongoing difficulties in this area.
Increased SG&A Expenses
SG&A expenses rose to $105.1 million, up $3.8 million year-on-year. This increase is related to professional fees for SOX compliance efforts and ongoing litigation, adding to the company’s financial burdens.
Forward-Looking Guidance
Looking ahead, Getty Images provided guidance for the full year 2025, anticipating revenue to range between $931 million and $968 million, with adjusted EBITDA expected to be between $277 million and $297 million. The company remains focused on subscription growth and strategic partnerships while navigating macroeconomic uncertainties and regulatory processes related to the proposed merger with Shutterstock.
In summary, Getty Images’ earnings call reflected a mixed sentiment, with notable achievements in subscription and editorial revenue growth, and AI integration. However, these positives were tempered by declines in creative revenue and adjusted EBITDA, alongside negative free cash flow and ongoing challenges in the agency business. The company remains committed to navigating these challenges while focusing on growth opportunities.