Getty Images - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered modest top-line growth with subscriptions and editorial offsetting agency softness; revenue was $234.9M (+2.5% reported, +1.8% currency neutral) and adjusted EBITDA was $68.0M with a 28.9% margin.
• EPS beat vs Street: Primary EPS came in at $0.05 vs consensus ~$0.014; revenue slightly beat and adjusted EBITDA missed consensus modestly; FY25 guidance was reaffirmed ($931–$968M revenue; $277–$297M adj. EBITDA). Estimates: values from S&P Global*.
• Management emphasized momentum in corporate and a return to growth in media; subscriptions rose to 53.5% of revenue and annual subscriber retention improved to 93.4% LTM.
• Headwinds included agency weakness, FX-driven GAAP net loss (-$0.08 diluted EPS) and elevated legal/merger-related costs; “Other” revenue surged on multi-year content deals with AI rights, carrying heavier upfront recognition.

What Went Well and What Went Wrong

What Went Well

• Subscription strength and mix: Annual subscription revenue grew 3.7% (3.0% CN) and reached 53.5% of total; retention improved to 93.4% LTM. “We delivered solid growth…momentum in our subscription business” (CEO).
• Editorial resilience: Editorial revenue rose to $88.3M (+5.6% YoY; +4.6% CN) on strong demand in news and sports coverage (FIFA Club World Cup, Formula One).
• AI product progress: Upgraded AI suite with better prompt adherence and bundled pre-shot modification capabilities into iStock subscriptions to offer “clean” AI services trained on licensed content.

What Went Wrong

• Agency-driven Creative softness: Creative revenue fell to $130.8M (-5.1% YoY; -5.7% CN) due to ad industry challenges; CFO called out agency weakness within Creative.
• GAAP loss and FX volatility: GAAP diluted EPS was -$0.08 with a $57.2M FX loss (Euro term loan revaluation) and lower operating income on ~$14.4M merger-related expenses.
• Cash flow pressure: Free cash flow was -$9.6M (vs $31.1M prior year), largely from merger/legal costs and higher cash taxes; operating cash flow fell to $6.5M.

Transcript

Speaker 3

Good afternoon and welcome to the Getty Images second quarter 2025 earnings call. Joining me on today's call are Craig Peters, Chief Executive Officer, and Jen Leyden, Chief Financial Officer. Before we begin, we would like to note that due to the ongoing regulatory review process, we will not be able to comment on the status of the merger with Shutterstock or the Q2 2025 Shutterstock operating results. We appreciate your understanding and will share updates as soon as we are able. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks, uncertainties, and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are highlighted in the forward-looking statements section of today's press release and in our filings with the SEC.

Links to these filings and today's press release can be found on our investor relations website at investors.gettyimages.com. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA less CapEx, and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they represent our operational performance and underlying results of our business. Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure, can be found in our filings with the SEC. After our prepared remarks, we'll open the call for your questions. With that, I will hand the call over to our Chief Executive Officer, Craig Peters.

Speaker 2

Thanks, Steven, and thanks to everyone for taking the time to join us today. I'll begin with a high-level view of the quarter, after which Jen will dive into the details of our performance. Second quarter revenue for 2025 was $234.9 million, representing reported growth of 2.5% and 1.8% on a currency-neutral basis. Adjusted EBITDA was $68 million for the quarter, down 1.2% reported and 2.2% on a currency-neutral basis. We continue to see growth in our annual subscription business, with gains across Premium Access and Unsplash Plus, and strong demand for video, news, and sport content. We saw an acceleration in corporate growth, as well as a return to growth in media, despite some continuing buildback in production and entertainment. As expected, the agency business continues to be soft, in light of ad industry's challenges and macro-economic pressures. It was another strong quarter for our sport coverage.

Our specialist motorsport team delivered exclusive imagery of the Formula One 75th anniversary season, including iconic races in Miami, Silverstone, and Monaco, as well as coverage of the F1 Academy and Formula E seasons. Our golf photographers were on the green at the PGA Championship, while our football photography teams were crisscrossing Europe for the UEFA Champions League and here in the U.S. for the FIFA Club World Cup. In entertainment, our team once again demonstrated why we are their trusted partner for the world's most prestigious events. As the exclusive photography partner, we delivered stunning imagery and seamless operation at Coachella Valley Music and Arts Festival, the Met Gala, BAFTA Television Awards, and the Tribeca Film Festival. This commitment to high quality and service is why the British Film Institute just named Getty Images as its official photography partner.

It's also why our designated royal photographer, Chris Jackson, was selected to take portraits of the UK's King and Queen to commemorate their 20th wedding anniversary and the Queen's birthday portrait. On the news front, we expanded our Bloomberg partnership to include Bloomberg Video content in our offering. While still behind peak activity in 2023, our production business continues to support producers with our premium archival footage and stills featured in a range of recent scripted and unscripted film and television productions, including The Fantastic Four: The First Steps, Captain America, F1: The Movie, The Billy Joel Documentary, and The Drive to Survive Series 7. These productions highlight the enduring value of our archive and the strength of our relationships across the production industry.

Our insights platform, Visual GPS, continues to be a strategic differentiator by providing data-backed guidance to customers across industries, helping them drive engagement by aligning their visual storytelling with evolving consumer expectations. Our latest insights, launched this quarter, help customers navigate evolving consumer sentiment around sustainability messaging in their visual narratives. In Q2, we upgraded our AI suite of services to generate even higher quality outputs with better prompt adherence, still based on a foundational model only trained from licensed creative content that respects the rights of IP holders and artists. Based on the utilization of the model for preshot modifications, representing over 70% of the usage, we launched bundles of these AI capabilities directly into our image subscriptions on iStock, so customers can access our preshot creative library and our clean suite of AI services to use in concert with those images in one simple plan.

In terms of the proposed merger with Shutterstock, within the quarter, Shutterstock shareholders approved the adoption of the merger agreement between Shutterstock and Getty Images. We continue to work with regulators in the U.S. and the UK to obtain the necessary approvals and expect the transaction to close by the end of 2025. We have no other active regulatory review of the transaction. I'm excited for the close of the transaction and for the second half of the year. With that, I'll turn it over to Jen to take you through the more detailed financials.

Speaker 4

Q2 marked our fifth consecutive quarter of top-line growth with continued expansion of our subscription business and healthy key performance metrics. We executed a solid quarter, navigating through ongoing macroeconomic uncertainty and continued headwinds in our agency business. While agency continues to be a challenge, we saw good performance from both our corporate and our media business, which represent roughly 58% and 29% of total revenue, respectively. Corporate was strong with high single-digit growth, fueled by good performance in technology, business services, sport, and fashion, as well as benefits from creative content deals that include some level of AI rights. Media was in low single-digit growth, with broadcast and production performance still not fully returned to 2023 levels. Q2 revenue was $234.9 million, with year-on-year growth of 2.5% or 1.8% on a currency-neutral basis.

Included in these results are certain impacts of the timing of revenue recognition, which contributed approximately 70 basis points to Q2 growth. Annual subscription revenue was 53.5% of total revenue, up from 52.9% in Q2 of last year. In total, subscription revenue grew by 3.7% or 3% on a currency-neutral basis, driven primarily by growth in our Premium Access offering. We added 39,000 active annual subscribers to reach 321,000 in the Q2 LTM period, representing growth of approximately 14% over the comparable 2024 LTM period. Annual subscriber growth continued to be driven by our e-commerce businesses, iStock and Unsplash Plus. Out of the 321,000 annual subscribers in the period, 52% were brand new customers and 26% were customers in our growth markets across EMEA, APAC, and LATAM.

The annual subscription revenue retention rate was 93.4% in the Q2 LTM period, up 400 basis points from 89.4% in the corresponding 2024 period, and also up from 92.7% in the Q1 LTM period. This metric is continuing to normalize as we lap the adverse impacts from the dual Hollywood strikes, see the benefits from the acceleration in our corporate business, as well as the anticipated impacts from a leveling off of the growth rate of smaller e-commerce subscribers, which have lower revenue retention rates. We should continue to see stabilization in this metric relative to 2024 as we navigate through the balance of 2025. Paid downloads were down slightly at 93 million, while our video attachment rate continues to steadily grow, rising to 16.7% from 15.6% in the prior year period. Creative revenue was $130.8 million, down 5.1% year-on-year and 5.7% on a currency-neutral basis.

This decline is primarily driven by continued macro challenges impacting our agency business, which sits entirely within Creative and was down 10% in Q2. Outside of agency, we see steady momentum in Creative across Premium Access, Video, and our Unsplash Plus subscription. Editorial revenue was $88.3 million, growing 5.6% year-on-year and 4.6% on a currency-neutral basis. Strong demand for news and sport was primarily driven by our outstanding coverage, as Craig noted, of major events such as the FIFA Club World Cup and Formula One, as well as global news events such as the election of Pope Leo XIV. Other revenue was $15.7 million, an increase of $8.1 million from Q2 2024, driven primarily by three new multi-year creative content deals that included some level of AI rights. As with other similar agreements signed over this past year, these deals carry heavier upfront revenue recognition.

Across our major geographies, we posted currency-neutral revenue growth of 7.2% in the Americas, with growth across corporate and media, including some of the creative content with AI rights deals in the quarter, while EMEA was down 6% as the prior year benefited from revenue from a large non-recurring assignment, and APAC was down 1.1%. Revenue less our cost of revenue as a percentage of revenue remains strong at 72.1% compared with 72.5% in Q2 of 2024. SG&A expense was $105.1 million, up $3.8 million year-on-year, with our expense rate increasing to 44.7% of revenue from 44.2% last year. Excluding stock-based compensation, SG&A increased to $101.3 million in the quarter, or 43.1% of revenue, up from $97.2 million or 42.4% of revenue in Q2 of 2024.

This increase in SG&A relates primarily to professional fees tied to the acceleration of our SOCs compliance efforts and for the ongoing litigation with Stability AI, with the trial portion of the UK lawsuit in Q2. Adjusted EBITDA was $68 million for the quarter, down 1.2% or 2.2% on a currency-neutral basis. Adjusted EBITDA margin was 28.9% compared to 30% in Q2 2024. CapEx was $16.1 million, up $0.7 million year over year. CapEx as a percentage of revenue was 6.9% compared to 6.7% in the prior year period, still well within our expected range of 5% to 7% of revenue. This year-on-year increase reflects the timing of payments for routine CapEx spend. Adjusted EBITDA less CapEx was $51.9 million, down $1.5 million year over year, representing a decrease of 3% or 2% on a currency-neutral basis.

Adjusted EBITDA less CapEx margin was 22.1% compared to 23.3% in Q2 of 2024. Free cash flow was negative $9.6 million compared to positive $31.1 million in Q2 2024, primarily due to the impact of cash outflows tied to merger and legal-related expenses and an increase in cash taxes paid. Free cash flow is stated net of cash interest expense of $17.5 million and cash taxes paid of $18.9 million. We finished the quarter with $110.3 million of balance sheet cash, down $11.4 million from the Q2 2024 ending balance and down $4.3 million from Q1 2025. The lower cash balance relative to Q2 of 2024 primarily reflects the impacts of voluntary debt paydowns, quarterly amortization payment on our Euro term loan, and fees related to the refinancing transactions, all of this partially offset by the positive impact from FX.

In May, we completed a voluntary loan to Bond Exchange, replacing $540 million of the 11.25% USD term loan with equivalent 11.25% senior notes maturing in February 2030. As of June 30, we had total debt outstanding of $1.39 billion, which includes $540 million of 11.25% senior notes, $510 million of Euro term loan converted using exchange rates as of June 30, 2025, with an applicable rate of 7.94%, $40 million of USD term loan at 11.25% fixed rate, and $300 million of 9.75% senior notes. We have a $150 million revolver that remains undrawn. Our net leverage was 4.3 times at the end of Q2 compared to 4.2 times in Q2 2024. That slight uptick in net leverage primarily reflects the impact of the weaker dollar on the value of our Euro term loan.

We continue to assess market conditions with respect to any potential refinancing or redemption of the $300 million of bonds, which are set to mature in March of 2027. Considering the foreign exchange rates and applicable interest rates on our debt balance as of June 30, and factoring in the quarterly amortization payment on the Euro term loan, our estimated cash interest expense for 2025 is $123.1 million. This reflects approximately a $10 million reduction from the Q1 earnings call estimate due to the timing impacts of the loan to Bond Exchange, which shifted a portion of interest payments from monthly or quarterly payments to semi-annual payments, effectively moving some payments from 2025 into 2026. In summary, we feel good about financial performance this quarter, and we will continue to emphasize execution, fiscal discipline, and momentum building into the back half of this year.

Turning to our outlook for the full year 2025, which with respect to year-on-year currency-neutral performance remains unchanged from the guidance provided in Q1 2025. Taking into consideration the impact of the weaker dollar and assuming full-year 2025 FX rates with the Euro at 1.10 and the GBP at 1.30, we anticipate revenue of $931 million to $968 million, down 0.9% to up 3.1% year-on-year. On a currency-neutral basis, this represents a decrease of 1% to an increase of 3%. As we think about cadence, we expect tougher year-on-year comparisons to flatten growth in the second half of 2025. In addition, our guidance reflects a $1 million impact from FX, inclusive of the $2.5 million headwind in the first half, which will be offset by a benefit for the rest of 2025, including an estimated $2 million in the third quarter.

We expect adjusted EBITDA of $277 million to $297 million, down 7.6% to 1.2% year-on-year and down 7.9% to 1.4% currency-neutral. Included in the adjusted EBITDA expectations is a similar cadence for the estimated FX impact, with an approximate $0.5 million tailwind in 2025, inclusive of a $0.9 million headwind from the first half of 2025, offset by a tailwind across the remainder of the year, including an estimated $0.7 million in the third quarter. Please note, this guidance reflects the anticipated impacts of the odd-year versus even-year editorial event calendar comparisons, largely impacting the second half of 2025, as well as the impact from disruptions in production activity due to the Los Angeles fires and some continued lag in a return to pre-Hollywood strike production levels.

The Hollywood strikes will also present tougher year-on-year comparison in the second half of 2025, as year-on-year growth in the second half of 2024 benefited from the comp to a strike-impacted 2023. On the cost side, our guidance continues to include approximately $8 million in one-off increases in SG&A for SOCs acceleration efforts, which were previously disclosed in our Q4 earnings calls. These are largely concentrated in the Q2 through Q4 periods, with approximately $5.5 million expected in the second half of 2025. Please note, all other merger-related costs are excluded from this guidance, as they are considered one-time in nature and therefore excluded from adjusted EBITDA. Finally, any potential broader impacts which may result from tariffs and other global macro-economic conditions remain unknown and may not be fully reflected in this guidance. With that, operator, please open the call for questions.

Speaker 5

Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, you may press star one on your touch-tone phone now. To remove yourself from the queue, you may press star two. Again, that is star one to ask a question. We'll take our first question from Martin Kostalski with Benchmark.

Speaker 1

Hi. Jen, just a couple of top-line questions. One, it looks like we've been witnessing sort of a dichotomy the past couple of quarters between weakening creative and strengthening data licensing. I was hoping you could maybe rectify comments that you made in terms of strength in corporate media relative to the subscription results that you saw in the quarter. What's implied in the second half for creative and data licensing in your 2025 guide? I just had one quick follow-up. Thanks.

Speaker 4

Yeah. I think, you know, creative decline of about 5%, fairly consistent with what we saw Q1. Drivers there are really going to be the same as what we talked about in Q1. It is predominantly going to be agency impacting that creative performance for us in these two quarters so far. Year to date, our agency sits entirely within that creative number. Editorial, you know, last year, as you know, we had a pretty, pretty hefty event calendar year. We have some events that are falling into the first half of this year, but certainly to a lesser degree. As we mentioned in the prepared remarks, as we get into that second half, you're going to start to see a more challenging year-on-year comp on the editorial side of the business.

That other revenue, you know, you're right, that continues to be, you know, a good, good performance for us. That $16 million this quarter, I think that's the highest we have seen for that other revenue bucket, although we've come close in prior quarters. Those are deals with existing customers for the most part who sit in that corporate space. Those are going to be, you know, content licensing deals with some expansion into AI rights. There is a little bit of a convergence there between creative, other corporate, all sitting, you know, within our ability to get those bigger other deals done. Not expecting, you know, anything different than what we've said in the past in terms of that other revenue bucket in 2025 being, you know, very low single digits in terms of % of total revenue. No change there from prior comments.

Creative, you know, agency, we'll see what happens there. I think, you know, if you listen to, and I know you do, Mark, and follow some of those bigger agency performances, it's a challenge. We are certainly seeing that there. I think we continue to see good momentum outside of agency and creative. That is, again, on that corporate side of the business and subscriptions, right? We're seeing those subscriptions continue to grow. A good majority of those do sit in that corporate space.

Speaker 1

OK, thanks. Jen, maybe just on the flip side of that, you talk about agency weakness, but you also saw some really strong growth on the non-subscription side or a la carte side. Can you perhaps rectify the comment on just, you know, overall seeing agency weakness but yet seeing relatively good a la carte strength?

Speaker 4

I don't think I said we saw good a la carte performance. The agency business is practically all a la carte, so as the agency goes, largely so does a la carte on the creative side of things. Editorial a la carte continues to perform well. That agency impact is felt pretty materially in that creative a la carte number. I don't think I said a la carte performed well.

Speaker 1

OK. I was just looking at your non—so, backing out your non-subscription revenue, which I assume most of it's a la carte. Overall, that was at a healthy uptick in the June quarter by a good, I don't know, $15 million or so.

Speaker 4

Yeah, we can work through that, Mark, perhaps in the post-call follow-up. I think those are creative a la carte. That definitely wasn't in growth.

Speaker 1

OK, thank you.

Speaker 5

Thank you. We'll take our next question from Ron Josey with Citi.

Speaker 0

Hey, thanks for taking the question. This is Jake. I'm for Ron. First, I wanted to ask about the subscription makeshift. We saw a nice uptick in the subscription makeshift, and the retention rate kept ticking back up to, I think, 93.4%. I first just really wanted to dig into the key drivers of that uptick. The second question on the litigation with Stability AI. Understood, can't really get into specifics. With Getty dropping the copyright infringement claims in the UK, I really just wanted to better understand the strategic differences between the jurisdictions and whether there's anything to share about your competence level in the US case. Thanks.

Speaker 1

Sure, Jake. We hope Ron is somewhere nice on a beach somewhere. Jen, do you want to take the first, and I'll take the second?

Speaker 4

Yep. On the subscription side of things, that continues to be us tracking to continue to inch that higher and higher over the 50% mark. We saw that again this quarter, really seeing that growth come largely from our e-commerce subscriptions. On the iStock side of things, continuing to see good momentum on the Unsplash Plus subscription, which is the newest of our subscription offerings, so to speak. Premium Access, our largest subscription, just about a third of our revenues, continues to grow nicely as well. It's a bit of a continuation of the story there on the creative side of things, that corporate growth that we're seeing this quarter certainly underpins that subscription momentum. On revenue retention, this was a good uptick for us to see. I think we've been hinting at seeing this metric start to come back. It's good to see those numbers sit where they are.

At about 93%, prior year period, same time, about 89%. We cited some of the drivers there, certainly seeing us lapping the impact from those Hollywood strikes, that corporate growth. As we see that growth in subscriber count on those smaller e-commerce subs start to stabilize, they come with a lower revenue retention rate. That'll help that mix. I think an interesting thing here, you might know, Jake, you've been following us for a while. We have seen this metric be 100% plus in our history. Seeing that dip below 90% was quite unusual. When we look in this number in this quarter, Premium Access, again, our largest subscription, we actually got that revenue retention for Premium Access back up over 100%. Premium Access revenue retention hasn't been over 100% since 2023. That's where you can really see some of those production impacts, strike impacts, right?

Those big enterprise customers seeing that revenue retention rate really start to come back. That's a very good sign for us.

Speaker 0

Great, thanks, Jen. On the litigation front, Jake, it's one of the, you know, the world is not transparent with respect to the models and what they're training on. When we launched litigation against Stability, we launched it in two markets, the U.S. and the UK. What we found through discovery in the UK as that case progressed, we found that there were clear indications that Stability did train on our material. However, we did not have clear facts that that training happened in the UK. That was the primary item that we dropped in the UK suit because, obviously, given the law there, we didn't have the facts in order to support that. We did ultimately get visibility to where that training did take place. We dropped it in the UK. We continue in the U.S.

That claim will come into play within the U.S., and we're hopeful to get a positive outcome in the UK on other aspects of that, but really pursuing the training itself within the U.S. I know it can be a bit complex. Believe me, as the CEO and Jen, as the CFO of a company, have to spend in order to pursue these cases in two markets, and that's less than ideal. That's the state of our world where there aren't transparency requirements against these model providers. We have to kind of go on a hunting expedition in order to get that and spend money in order to do that. Understood. Thanks a lot.

Speaker 5

Thank you. As a quick reminder, if you'd like to ask a question, you may press star one now. Showing no additional questions at this time, this will now conclude our second quarter Getty Images Holdings Inc. 2025 earnings call. You may now disconnect.