Core Insights - Shutterstock has launched a suite of AI services aimed at model builders, providing specialized training datasets and evaluation tools to enhance the development of next-generation AI systems [1][3] - The company is transitioning from a data provider to an active partner in model construction, training, and assessment, leveraging its extensive content corpus and metadata licensing business [1][4] Group 1: AI Services Overview - The new AI services will deliver fast, high-impact, custom content and insights tailored to the specific needs of AI models, aligning with human preferences and creative intent [1][3] - Shutterstock's AI services include custom datasets, human-centered models, and enhanced AI capabilities, addressing the growing demand for high-quality, human-calibrated signals throughout the training lifecycle [2][3] Group 2: Strategic Partnerships and Collaborations - Shutterstock has established itself as a valuable partner for industry leaders such as NVIDIA, Meta, OpenAI, and Runway, contributing to the development of generative AI tools and standards across various media formats [4][5] - The company’s collaborations are focused on shaping the next generation of AI technologies, utilizing its rich content and extensive metadata [4][6] Group 3: Comprehensive Support for Model Training - Shutterstock offers end-to-end support for model training, including custom content production, creative-expert preference data, curation and annotation services, and evaluation and performance insights [4][8] - The company operates 10 production hubs with over 2 million creators across more than 150 countries, enabling the delivery of structured datasets that include production notes and metadata [8] Group 4: Unique Value Proposition - Shutterstock's unique position at the intersection of data, creativity, and technology allows it to provide model builders with essential resources to create safer and more capable AI systems [6][8] - The company’s advanced machine learning tools and human reviewers facilitate trait-specific scoring and annotations, enhancing the quality of training examples for AI models [8]

Core Insights - Three stocks in the consumer staples sector are showing signs of being overbought, which may concern momentum-focused investors [1][2]. Company Summaries - **PriceSmart Inc (NASDAQ: PSMT)**: Reported better-than-expected third-quarter financial results on July 10, with a stock gain of approximately 13% over the past month and a 52-week high of $121.50. The RSI value is 73, and shares closed at $120.94, reflecting a 3.4% increase [5]. - **United Natural Foods Inc (NYSE: UNFI)**: Upgraded by BMO Capital analyst Kelly Bania from Market Perform to Outperform on September 25, with a price target raised from $25 to $36. The stock gained around 12% over the past month, reaching a 52-week high of $34.76. The RSI value is 70.6, and shares closed at $31.62, up 4.7% [5]. - **Empro Group Inc (NASDAQ: EMPG)**: Announced the closing of a $5.5 million initial public offering on July 3. The stock surged approximately 61% over the past month, achieving a 52-week high of $16.88. The RSI value is 82.2, and shares closed at $16.88, reflecting a 6.4% increase [5].

Core Viewpoint - Enhanced trade-in deals and extended financing plans from U.S. carriers are positively impacting Apple's iPhone upgrade cycle for the iPhone 17, with analysts predicting a strong performance due to increased subsidies [1][3]. Carrier Promotions - Carriers are offering approximately $100 more in subsidies for new iPhones this year, making the devices more affordable through bundled financing with wireless service [2][3]. - Buyers can spread payments over 24 to 36 months, with some plans allowing the phone to be effectively free with eligible trade-ins [2]. Pricing and Subsidies - The entry price for the iPhone 17 Pro has increased to $1,099 for 256GB, compared to the iPhone 16 Pro's $999 for 128GB, necessitating higher subsidies [3]. - Current lead times for iPhone 17 shipping estimates are longer than last year, indicating strong demand [4]. Upgrade Cycle and Trade-in Offers - Carriers are encouraging upgrades on a two-to-four-year cycle, with trade-in credits reaching up to $1,100 for newer models [5]. - All three major carriers are accepting devices in any condition, including those that are cracked or non-working [5]. Upfront Costs - Despite trade-in offers, customers still incur upfront costs, including activation fees of $35–$40 and taxes based on the full retail price [6]. - Initial outlays for an iPhone 17 are estimated at approximately $229–$234, while the iPhone 17 Pro Max is around $380–$385 when utilizing the highest trade-in credits [6]. Carrier Conditions - Buyers must switch to specific unlimited plans, which may be more expensive than basic options, and promotional credits are applied monthly over the installment term [7]. - The typical installment terms are 24 months at T-Mobile and 36 months at Verizon and AT&T [7].

Core Points - The Department of Health and Human Services (HHS) and the White House have shared a 2017 tweet from Tylenol, reigniting discussions about a potential link between the drug and autism in children [2][4] - Kenvue, the parent company of Tylenol, stated that the tweet was taken out of context and emphasized that acetaminophen is considered the safest pain reliever during pregnancy [3][4] - A recent study from the Icahn School of Medicine at Mount Sinai supports evidence of a link between prenatal acetaminophen use and increased risks of autism and ADHD, analyzing data from over 100,000 participants [5] Company Impact - Following the renewed controversy, Kenvue's stock experienced a significant decline, dropping over 11% in the past five days due to fears of potential litigation stemming from the discussions [6] - HHS Secretary Robert F. Kennedy Jr. announced plans for a nationwide campaign advising clinicians to prescribe the lowest effective dose of acetaminophen during pregnancy [7] - Kenvue's stock is currently showing a weak price trend across short, medium, and long-term periods, with a poor momentum ranking of 9.67% [7]

Core Viewpoint - General Dynamics Information Technology (GDIT) has been awarded a $1.5 billion contract to modernize the IT infrastructure of the U.S. Strategic Command (STRATCOM), enhancing its operational readiness and national security capabilities [1][5]. Group 1: Contract Details - The contract includes a one-year base period and six option years, focusing on strategic deterrence, global strike, nuclear command and control, and electromagnetic spectrum operations [1]. - The command requires a resilient and secure network environment to connect systems and data for decision-makers and deployed forces globally [2]. Group 2: Technological Enhancements - GDIT plans to implement digital engineering to streamline operations, reduce costs, and improve collaboration with mission partners [3]. - The program aims to refresh enterprise infrastructure and standardize tools to support faster and better-informed decisions [3]. - The company will integrate artificial intelligence and machine learning into STRATCOM's enterprise data to enhance insights and automate workflows [4]. Group 3: Infrastructure and Security - GDIT will transition STRATCOM to a hybrid-cloud architecture for increased flexibility and scalability, while also deploying advanced cyber defenses and zero-trust approaches to address evolving threats [5]. - The modernization of STRATCOM's IT capabilities is deemed critical for maintaining the strategic deterrence edge and protecting national security [5]. Group 4: Market Performance - General Dynamics' stock has increased over 7% in the past year, with shares trading at $323.70 [4][6].

Group 1 - Trump Media & Technology Group Corp. announced the launch of five new exchange-traded funds (ETFs) focused on "America First" themes, expanding its fintech and streaming divisions beyond social media and digital assets [1][3] - The new ETFs will be branded as the Truth Social Funds and are part of a broader strategy to enhance the company's investment offerings [1][3] - The ETFs include: Truth Social American Icons ETF, Truth Social American Security & Defense ETF, Truth Social American Next Frontiers ETF, Truth Social American Energy Security ETF, and Truth Social American Red State REITs ETF, each aligned with the Truth Social brand [3] Group 2 - Yorkville America Equities will sponsor the ETFs and act as the registered investment advisor, with a screening framework developed in partnership with the 1792 Exchange to support the group's political and cultural positioning [3][4] - The ETFs are expected to debut later this year on NYSE Arca, pending regulatory approval, and will be available through mainstream brokerages and investing platforms [4] - As of the latest trading session, DJT shares were down 0.3% to $16.85 [4]

Financial Data and Key Metrics Changes - Q2 2025 revenue was $234.9 million, representing a year-on-year growth of 2.5% or 1.8% on a currency neutral basis [4][12] - Adjusted EBITDA for the quarter was $68 million, down 1.2% reported and 2.2% on a currency neutral basis [4][17] - Free cash flow was negative $9.6 million compared to positive $31.1 million in Q2 2024, primarily due to cash outflows related to merger and legal expenses [19] - The company finished the quarter with $110.3 million in cash, down $11.4 million from Q2 2024 [19] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 53.5% of total revenue, up from 52.9% in Q2 2024, with a growth of 3.7% or 3% on a currency neutral basis [12] - Annual subscriber count reached 321,000, representing a growth of approximately 14% over the comparable 2024 period [13] - Paid downloads decreased slightly to 93 million, while video attachment rate increased to 16.7% from 15.6% in the prior year [14] - Editorial revenue grew by 5.6% year-on-year to $88.3 million, driven by strong demand for news and sports coverage [15] Market Data and Key Metrics Changes - Revenue growth in The Americas was 7.2% on a currency neutral basis, while EMEA was down 6% and APAC down 1.1% [16] - The agency business faced challenges, with a 10% decline in Q2, impacting overall creative performance [14][11] Company Strategy and Development Direction - The company continues to focus on expanding its subscription business and enhancing its AI capabilities, which are integrated into its image subscriptions [8][9] - The merger with Shutterstock is progressing, with shareholder approval received and regulatory reviews ongoing [10][9] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic uncertainty and challenges in the agency business but expressed confidence in the corporate and media segments [11] - The company anticipates tougher year-on-year comparisons in the second half of 2025 due to the impacts of the Hollywood strikes and production disruptions [22][23] Other Important Information - SG&A expenses increased to $105.1 million, primarily due to professional fees related to compliance efforts and ongoing litigation [17] - Adjusted EBITDA less CapEx was $51.9 million, down 3% year-on-year [18] Q&A Session Summary Question: Comments on strength in corporate media relative to subscription results - Management indicated that the creative decline is primarily due to agency challenges, while corporate and media segments are performing well [26][28] Question: Clarification on agency weakness versus a la carte strength - Management clarified that agency weakness impacts a la carte performance, and editorial a la carte continues to perform well [32][34] Question: Drivers of subscription mix shift and retention rate increase - Management highlighted growth in e-commerce subscriptions and noted that retention rates are stabilizing, particularly in Premium Access [38][42] Question: Update on litigation with Stability AI - Management explained the strategic differences in litigation between the US and UK, emphasizing ongoing efforts in the US case [40][46]

Core Insights - The performance of Shutterstock's international operations is critical for understanding its financial strength and growth potential [1][2] - Analyzing international revenues provides insights into the company's earnings stability and ability to navigate diverse economic cycles [2][3] Financial Performance - Shutterstock's total revenue for the quarter reached $266.99 million, reflecting a 21.3% increase year-over-year [4] - Europe contributed 24.1% of total revenue, amounting to $64.39 million, which was a -5.16% surprise compared to expectations [5] - The Rest of the World generated $54.72 million, accounting for 20.5% of total revenue, also falling short of projections by -7.9% [6] Revenue Projections - Analysts forecast total revenue of $268.97 million for the current fiscal quarter, a 7.3% increase from the previous year, with Europe and Rest of the World expected to contribute 28.2% and 24.6% respectively [7] - For the full year, total revenue is projected at $1.07 billion, a 14.3% increase, with Europe and Rest of the World expected to contribute 26.6% and 23.4% respectively [8] Market Trends and Challenges - The reliance on global markets presents both opportunities and challenges for Shutterstock, making the analysis of international revenue trends essential for future forecasts [9] - Global interconnections and geopolitical issues are increasingly influencing earnings predictions for companies with overseas operations [10] Stock Performance - Over the past month, Shutterstock's stock has declined by 6.6%, contrasting with a 0.6% increase in the S&P 500 [13] - In the last three months, the stock price has seen a slight increase of 0.2%, while the S&P 500 rose by 11.7% [13]

Core Insights - Shutterstock reported quarterly earnings of $1.19 per share, missing the Zacks Consensus Estimate of $1.65 per share, and showing an increase from $1 per share a year ago [1] - The company posted revenues of $266.99 million for the quarter, missing the Zacks Consensus Estimate by 2.83%, and up from $220.05 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was -27.88%, with the company having surpassed consensus EPS estimates only once in the last four quarters [2] - The previous quarter also saw a negative surprise, with actual earnings of $1.03 per share against an expectation of $1.26, resulting in a surprise of -18.25% [2] Stock Performance - Shutterstock shares have declined approximately 34.7% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [4] - The current Zacks Rank for Shutterstock is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $1.47 on revenues of $268.97 million, and for the current fiscal year, it is $5.39 on revenues of $1.07 billion [8] - The outlook for the industry, particularly the Internet - Content sector, is currently in the bottom 30% of Zacks industries, which may impact stock performance [9]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The company's financial statements for the period ended June 30, 2025, show significant year-over-year growth in revenue and net income, largely driven by the Envato acquisition and expansion in data offerings [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $1.376 billion, an increase from $1.309 billion at December 31, 2024, primarily driven by increases in accounts receivable and other assets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,376,451** | **$1,309,156** | | Cash and cash equivalents | $116,410 | $111,251 | | Goodwill | $575,249 | $569,668 | | **Total Liabilities** | **$790,288** | **$790,806** | | Deferred revenue | $226,719 | $225,489 | | Debt (Current & Long-term) | $276,227 | $277,704 | | **Total Stockholders' Equity** | **$586,163** | **$518,350** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, revenue grew 21.3% year-over-year to $267.0 million, and net income surged to $29.4 million, driven by higher revenue and a substantial gain from other income Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$266,990** | **$220,053** | **$509,610** | **$434,368** | | Income from operations | $34,731 | $20,666 | $44,932 | $37,412 | | **Net income** | **$29,440** | **$3,625** | **$48,128** | **$19,746** | | Diluted EPS | $0.82 | $0.10 | $1.35 | $0.55 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $52.1 million, while cash used in financing activities decreased due to lower share repurchases Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $52,083 | $36,265 | | Net cash used in investing activities | ($26,199) | ($8,227) | | Net cash used in financing activities | ($29,699) | ($50,778) | | **Net increase / (decrease) in cash** | **$5,159** | **($25,619)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant events and accounting policies, including the pending merger with Getty Images, a $5.0 million investment impairment, and revenue breakdown by offering - On January 6, 2025, the Company entered into a merger agreement with Getty Images, which received stockholder approval on June 10, 2025, and is subject to customary closing conditions, including regulatory approvals[32](index=32&type=chunk)[33](index=33&type=chunk) - In Q2 2025, the company recorded a **$5.0 million impairment charge** on a long-term equity security, offset by a significant unrealized gain on its investment in Meitu, Inc., which had a fair value of **$51.9 million** at June 30, 2025[60](index=60&type=chunk)[63](index=63&type=chunk) - The company is involved in stockholder litigation related to the proxy statement for the Getty Images merger, believing the claims are without merit but making supplemental disclosures to avoid delays[132](index=132&type=chunk)[268](index=268&type=chunk) Revenue by Offering (in thousands) | Offering | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Content | $199,796 | $169,951 | $402,684 | $343,781 | | Data, Distribution, and Services | $67,194 | $50,102 | $106,926 | $90,587 | | **Total Revenue** | **$266,990** | **$220,053** | **$509,610** | **$434,368** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 21% year-over-year revenue growth in Q2 2025 primarily to the Envato acquisition and strong performance in the Data, Distribution, and Services offering, with operating income rising 68% to $34.7 million - The number of subscribers more than doubled to **1,073,000** at the end of Q2 2025 from **490,000** a year prior, primarily due to the inclusion of Envato, which was acquired in July 2024[156](index=156&type=chunk)[161](index=161&type=chunk) - General and Administrative expenses in Q2 2025 increased by **$12.0 million**, or **33%**, driven by **$8.7 million** of expenses associated with the Getty merger and costs from the Envato acquisition[189](index=189&type=chunk) - Other income in Q2 2025 was **$12.6 million**, primarily driven by an **$18.0 million unrealized gain** on the company's investment in Meitu, Inc., partially offset by a **$5.0 million investment impairment**[191](index=191&type=chunk) Key Operating Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Subscribers (end of period) | 1,073,000 | 490,000 | | Subscriber revenue (in millions) | $108.0 | $80.3 | | Average revenue per customer (LTM) | $266 | $434 | | Paid downloads (in millions) | 112.6 | 33.4 | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Comparing Q2 2025 to Q2 2024, revenue increased 21% to $267.0 million, driven by the Envato acquisition and a 34% increase in Data, Distribution, and Services revenue, leading to a 68% growth in income from operations Comparison of Three Months Ended June 30 (in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$266,990** | **$220,053** | **$46,937** | **21%** | | Cost of revenue | $105,994 | $91,254 | $14,740 | 16% | | Sales and marketing | $57,077 | $51,881 | $5,196 | 10% | | General and administrative | $48,434 | $36,393 | $12,041 | 33% | | **Income from operations** | **$34,731** | **$20,666** | **$14,065** | **68%** | | **Net income** | **$29,440** | **$3,625** | **$25,815** | **712%** | Comparison of Six Months Ended June 30 (in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$509,610** | **$434,368** | **$75,242** | **17%** | | General and administrative | $106,741 | $68,471 | $38,270 | 56% | | **Income from operations** | **$44,932** | **$37,412** | **$7,520** | **20%** | | **Net income** | **$48,128** | **$19,746** | **$28,382** | **144%** | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $116.4 million in cash and cash equivalents, financing operations primarily through cash flow and a credit facility with approximately $276 million in outstanding debt - The company had cash and cash equivalents of **$116.4 million** as of June 30, 2025[214](index=214&type=chunk) - In the first six months of 2025, the company paid cash dividends of **$23.1 million** (**$0.66 per share**) and did not repurchase any common stock, with **$30.2 million** remaining authorized under the share repurchase program[216](index=216&type=chunk)[220](index=220&type=chunk) - The company has a senior unsecured term loan and revolving credit facility under its A&R Credit Agreement, with total outstanding debt of approximately **$276.2 million** as of June 30, 2025[222](index=222&type=chunk)[226](index=226&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) Management uses non-GAAP measures like Adjusted EBITDA, which was $82.2 million for Q2 2025 (30.8% margin), and Adjusted Net Income of $42.9 million, to evaluate business performance Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $29,440 | $3,625 | $48,128 | $19,746 | | Adjustments (Depreciation, Amortization, Interest, Taxes, etc.) | $39,449 | $33,571 | $67,213 | $61,023 | | Non-cash equity-based compensation | $15,625 | $14,976 | $33,509 | $26,126 | | Merger related costs | $8,710 | $0 | $20,571 | $0 | | Unrealized (gain) / loss on investment | ($18,029) | $3,625 | ($31,289) | ($130) | | **Adjusted EBITDA** | **$82,236** | **$62,072** | **$145,600** | **$118,049** | Reconciliation of Net Income to Adjusted Net Income (in thousands) | Line Item | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $29,440 | $3,625 | $48,128 | $19,746 | | Non-GAAP adjustments (net of tax) | $13,432 | $32,272 | $31,036 | $49,272 | | **Adjusted net income** | **$42,872** | **$35,897** | **$79,164** | **$69,018** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and interest rates, with approximately 26% of revenue denominated in foreign currencies - Revenue denominated in foreign currencies was **26%** of total revenue for the six months ended June 30, 2025, with a hypothetical **10% change** in the U.S. dollar exchange rate impacting revenue by approximately **3%**[258](index=258&type=chunk) - The company's debt under the A&R Credit Agreement accrues interest at variable rates tied to the base rate or SOFR, exposing it to interest rate fluctuation risk[262](index=262&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[265](index=265&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[266](index=266&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is facing two stockholder complaints alleging the proxy statement for the Getty Images merger contained false or misleading information, which Shutterstock denies but has supplemented to avoid delays - Two complaints have been filed against Shutterstock and its board of directors alleging the proxy statement for the Getty Images merger was false and misleading[268](index=268&type=chunk)[132](index=132&type=chunk) - The company denies all allegations but has voluntarily supplemented the proxy statement to mitigate litigation risk and avoid delays to the merger[270](index=270&type=chunk)[134](index=134&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - During the three months ended June 30, 2025, there were no material changes to the risk factors as described in the company's 2024 Form 10-K[271](index=271&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[272](index=272&type=chunk)