Financial Data and Key Metrics Changes - Reported revenues for Q3 2022 were $230.5 million, down 2.8% year-on-year, but up 2.8% on a currency-neutral basis [8] - Adjusted EBITDA was $77.7 million, down 4.8% year-on-year, but up 2.3% on a currency-neutral basis [8][35] - Annual subscription revenue as a percentage of total revenue grew to 49.4%, up from 47.1% in Q3 2021 [28] - Free cash flow was $33.2 million in Q3 compared to $31.2 million in Q3 2021 [37] Business Line Data and Key Metrics Changes - Total purchasing customers increased to 837,000, a 9.3% year-on-year increase [23] - Net total active annual subscribers rose to 107,000, up approximately 53% year-on-year [23] - Paid download volume increased by approximately 7.4% to 94 million [24] - Video attachment rate increased to 12.7%, up from 12.1% in Q3 2021 [25] Market Data and Key Metrics Changes - Revenue grew across all major geographies on a currency-neutral basis, with year-on-year growth of 2.8% in the Americas, 0.7% in EMEA, and 9.2% in APAC [33] - Creative revenue was $145.2 million, down 2.1% year-on-year but up 3.2% on a currency-neutral basis [29] - Editorial revenue was $81.8 million, down 3% year-on-year but up 3.1% on a currency-neutral basis [32] Company Strategy and Development Direction - The company is focusing on driving customer growth through annual subscriptions and enhancing the value of its offerings [9] - Multi-year agreements with major companies like Amazon and Microsoft were announced, indicating a strategic focus on partnerships [12] - The launch of Unsplash+ aims to expand the customer base and service content needs [15] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic headwinds, particularly in Europe, but emphasized the countercyclical nature of their offerings [11] - The company expects ongoing foreign currency headwinds to impact results for the remainder of 2022 [26] - Guidance for full-year 2022 remains unchanged, with currency-neutral revenues expected between $955 million and $980 million [41] Other Important Information - The company announced it would not accept AI-generated content on its platform due to copyright concerns [17] - Total SG&A expense was $91.6 million, down $2.9 million year-on-year [34] - The company ended the quarter with $71.9 million in cash, a significant decrease due to a $300 million debt paydown [38] Q&A Session Summary Question: Macro pressures and agency revenue - Management acknowledged softness in certain geographies, particularly Europe, but highlighted the cost-saving nature of their offerings [47] Question: Debt retirement plans - The company remains committed to paying down debt, aiming for net leverage of 2.5x to 3x over the next 24 to 36 months [49] Question: Demand for custom content - Management noted strong demand for custom content, leveraging existing sales teams and infrastructure [55] Question: Average revenue per customer trends - The transition from a la carte to subscription models may lower average revenue per customer, but overall customer growth is prioritized [58] Question: Advertising revenue exposure - Unsplash's advertising revenue is less than 5% of total revenue, showing strong growth despite broader advertising market weaknesses [67] Question: Seasonal and structural effects on KPIs - Management clarified that purchasing customer metrics may fluctuate due to the interplay with annual subscriptions [74] Question: Future trends for subscription and video attachment rates - Management expects subscription rates to potentially reach around 60% in the coming years, with video usage also anticipated to grow [80][82]
Getty Images (GETY) - 2022 Q3 - Earnings Call Transcript