Getty Images (US:GETY)2025-11-10 21:25Merger and Acquisition - Getty Images entered into a merger agreement with Shutterstock on January 6, 2025, with Getty stockholders expected to own approximately 53.5% of the combined company[137][138]. - The total cash consideration for the merger is set at $9.50 per share of Shutterstock common stock, with additional stock options based on a fixed ratio[144]. - Getty Images incurred $9.9 million and $38.3 million in legal and other costs related to the merger during the three and nine months ended September 30, 2025, respectively[139]. - The company closed an offering of $628.4 million in 10.500% Senior Secured Notes due 2030, intended to fund the cash portion of the merger consideration[150]. - Other operating expenses increased significantly to $39.3 million, driven by costs related to the proposed merger with Shutterstock[220]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $240.0 million, a decrease of 0.2% compared to $240.5 million in the same period of 2024[187]. - Total revenue for the nine months ended September 30, 2025, was $699.0 million, a 1.0% increase from $692.0 million in the same period of 2024[208]. - Creative revenue increased by 8.4% to $144.9 million, driven by a $10.4 million increase in Premium Access subscriptions[188]. - Editorial revenue decreased by 3.7% to $89.3 million, primarily due to declines in Sport and News segments[189][190]. - Other revenue decreased significantly by 58.5% to $5.8 million, attributed to a prior year expanded content deal recognized upfront[191]. - Creative revenue decreased by 0.6% to $407.9 million, primarily due to declines in ALC credit sales and subscriptions, offset by a $14.8 million increase in Creative subscriptions[211]. - Editorial revenue increased by $4.4 million, or 1.7%, to $260.3 million, driven by growth in Editorial subscriptions and assignments[212]. - Other revenue rose by $5.2 million, or 20.1%, to $30.8 million, primarily due to new data access and licensing agreements[213]. Expenses and Costs - Cost of revenue for the three months ended September 30, 2025, was $64.3 million, representing 26.8% of total revenue[193]. - Cost of revenue for the nine months ended September 30, 2025, was $190.1 million, representing 27.2% of total revenue, slightly up from 27.1% in the prior year[215]. - Selling, general, and administrative expenses increased by 0.9% to $101.0 million, driven by higher professional fees[194]. - Selling, general, and administrative (SG&A) expenses increased by $2.1 million, or 0.7%, to $308.0 million, with depreciation expense rising by 5.7% to $46.5 million[216]. - The company expects cost of revenue to trend higher in absolute dollars as revenue grows, with variations based on product mix[174]. - The company recognized a loss on litigation of $9.0 million for the nine months ended September 30, 2025, compared to $8.0 million in the prior year[219]. - The company incurred $10,420,000 in other operating expenses for Q3 2025, a significant increase from $219,000 in Q3 2024[270]. Cash Flow and Financing - The company had cash and cash equivalents of $109.5 million as of September 30, 2025, down from $121.2 million at the end of 2024[234]. - Cash provided by operating activities decreased by 43.3% to $44.6 million for the nine months ended September 30, 2025, compared to $78.6 million for the same period in 2024, primarily due to merger-related costs of $33.2 million[247]. - Cash used in investing activities decreased to $46.6 million for the nine months ended September 30, 2025, from $57.4 million for the same period in 2024[249]. - Cash used in financing activities decreased to $28.1 million for the nine months ended September 30, 2025, compared to $53.9 million for the same period in 2024[250]. - Interest expense rose to $105.0 million for the nine months ended September 30, 2025, compared to $100.6 million in the same period of 2024[221]. Customer Metrics - Total purchasing customers decreased by 2.3% to 703,000 for the last twelve months ended September 30, 2025, compared to 719,000 for the same period in 2024[257]. - Total active annual subscribers increased by 1.7% to 304,000 for the last twelve months ended September 30, 2025, driven by Unsplash+ subscriptions[261]. - Paid download volume was down 1.3% to 93 million downloads for the last twelve months ended September 30, 2025, compared to 94 million for the same period in 2024[263]. - Annual subscriber revenue retention rate decreased to 90.3% for the last twelve months ended September 30, 2025, from 92.2% for the same period in 2024[264]. Content and Innovation - The company has a diverse collection of high-quality visual content, including photos, videos, and music licensing, serving businesses and media organizations globally[151]. - Getty Images has embraced innovation over 30 years, transitioning from analog to digital and expanding into AI-generated content[152]. - The company offers comprehensive content solutions, including subscription access, generative AI services, and digital asset management tools[153]. - The company offers nearly 635 million visual assets, adding over 11 million new assets each quarter and conducting over 2.7 billion searches annually[156]. - Creative content represents 58.4% of revenue for the nine months ended September 30, 2025, with 59.5% of that generated through annual subscription products[158]. - Editorial content accounts for 37.2% of revenue for the nine months ended September 30, 2025, with 55.4% generated through annual subscription products[159]. - Other revenue, including data access and licensing, represents 4.4% of total revenue for the nine months ended September 30, 2025[160]. - Approximately 56% of total revenue now comes from annual subscriptions, which have strong revenue retention characteristics[171]. Tax and Legal Matters - The company recognized a foreign exchange gain of $1.5 million, a significant improvement from a loss of $28.7 million in the prior year[201]. - The company recorded an income tax benefit of $10.1 million for the three months ended September 30, 2025, compared to $1.2 million in the same period of 2024[205]. - The One Big Beautiful Bill Act is expected to reduce the company's annual U.S. tax liability by approximately $4.0 million to $7.0 million in 2025[206]. - The company estimates a potential tax assessment payment of up to $19.0 million in 2025 related to ongoing tax audits in Canada[244]. Earnings and Margins - For the three months ended September 30, 2025, the net income was $21,618,000 compared to a net loss of $2,527,000 for the same period in 2024[270]. - Adjusted EBITDA for the three months ended September 30, 2025, was $78,710,000, slightly down from $80,629,000 in 2024, resulting in an adjusted EBITDA margin of 32.8%[270]. - The company reported a net loss income margin of 9.0% for Q3 2025, compared to a negative margin of 1.1% in Q3 2024[270]. - Adjusted net income for Q3 2025 was $33,475,000, compared to $24,022,000 in Q3 2024, indicating a significant improvement[273]. - The diluted earnings per share for Q3 2025 was $0.05, compared to a loss of $0.01 per share in Q3 2024[273]. - The total interest expense for the nine months ended September 30, 2025, was $104,977,000, up from $100,618,000 in the same period of 2024[270]. - The company reported a loss on litigation of $2,614,000 for Q3 2025, compared to $3,199,000 in Q3 2024[270]. Market Risk - There were no material changes in market risk exposures for the quarters ended September 30, 2025, and September 30, 2024[275].