Getty Images Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
GETY$0.08-41.0%Stored close · as of Sep 28, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001628280-24-022320
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001628280-24-036346
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 190 previous paragraphs and 230 current paragraphs.
137 unchanged; 41 reworded; 35 added; 12 removed; 0 previous and 17 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
Comparison of the Three Months Ended June 30, 2024 and 2023
Current report
Revenue by product
Current report
•Creative revenue decreased on a reported basis 2.4% (1.8% CN) to $137.9 million for the three months ended June 30, 2024, compared to $141.3 million for the three months ended June 30, 2023. At the product level, decreases for the three months ended June 30, 2024 included Getty Images Stills and Video (decreased $4.6 million), which was largely driven by our Agency customers, which are accounted for entirely within Creative revenue and purchase on mainly an ALC basis. Additionally, iStock monthly subscriptions and ALC credit sales (decreased $3.7 million), related to our continued focus on driving customers to our committed solutions. Offsetting increases were led by our iStock annual subscriptions (increased $3.9 million) and Unsplash platform (increased $1.3 million).
Current report
•Editorial revenue increased on a reported basis by $3.3 million or 4.1% to $83.6 million and 4.6% on a currency-neutral basis. The increase was driven by editorial assignments (increased $1.7 million), editorial subscriptions (increased $1.3 million) and editorial ALC (increased $0.4 million). Overall, the increase was spurred by double-digit growth in Sport driven by quadrennial soccer tournaments UEFA European Championship and the Copa America.
Current report
•Other revenue increased on a reported basis by $3.5 million or 85.4% to $7.6 million for the three months ended June 30, 2024, compared to $4.1 million for the three months ended June 30, 2023. On a currency-neutral basis, other revenue increased 86.5% compared to the same period in 2023. The increase was primarily driven by data licensing (increased $3.2 million).
Current report
Revenue Recognition
Current report
Reported SG&A expense decreased by $0.2 million or 0.2% (increased 0.1% CN) for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. SG&A fluctuations from the prior period include the following:
Current report
•decrease of $2.6 million related to staff costs for the three months ended June 30, 2024. The decrease was driven by equity-based compensation (decreased $7.9 million), which was partially offset by salaries and wages, fringe benefits and severance related expenses (increased $5.0 million).
Current report
•increase in marketing spend of 11.8% ($1.3 million) for the three months ended June 30, 2024. For the three months ended June 30, 2024, marketing spend as a percentage of sales increased to 5.2% from the three months ended June 30, 2023 ratio of 4.7% which remains in line with historical trends. The increase was due primarily to increased investment in affiliate marketing and digital marketing initiatives.
Current report
•increase in travel and entertainment of $0.5 million and professional fees of $0.5 million for the three months ended June 30, 2024.
Current report
We recognized insignificant amounts of other operating expense, net for the three months ended June 30, 2024 and 2023.
Current report
We recognized foreign exchange gains, net of $2.4 million for the three months ended June 30, 2024, compared to net losses of $3.2 million for the three months ended June 30, 2023. These changes are primarily driven by fluctuations in the EUR related to our EUR Term Loans.
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
The following table presents our results of operations for the periods indicated:
Current report
Revenue by product
Current report
•Creative revenue decreased on a reported basis by 3.8% (3.5% CN) to $276.7 million for the six months ended June 30, 2024, compared to $287.7 million for the six months ended June 30, 2023. At the product level, decreases for the six months ended June 30, 2024 included Getty Images Stills and Video (decreased $14.4 million), which was largely driven by our Agency customers, which are accounted for entirely within Creative revenue and purchase on mainly an ALC basis. Additionally, iStock monthly subscriptions and ALC credit sales (decreased $7.6 million), related to our continued focus on driving customers to our committed solutions. Lastly, we saw a decline in Premium Access partially due to higher Creative consumption in the prior period as a result of the strike impact on Editorial usage (decreased $1.7 million). Offsetting increases were led by our iStock annual subscriptions (increased $9.8 million) and Unsplash platform (increased $2.2 million).
Current report
•Editorial revenue decreased on a reported basis by 1.2% (1.1% CN) to $163.0 million for the six months ended June 30, 2024, compared to $165.0 million for the six months ended June 30, 2023. The decrease was driven by editorial ALC (decreased $2.9 million) largely due to residual impacts from 2023 Hollywood strikes. In addition, editorial subscriptions declined (decreased $0.5 million) due to lower demand from media customers impacted by the Hollywood strikes. These declines were partially offset by assignments (increased $1.5 million) which saw double-digit growth in Sport, driven by the quadrennial soccer tournament, UEFA European Championship.
Current report
•Other revenue includes music licensing, digital asset management and distribution services, print sales, and data licensing revenues. Revenue for the six months ended June 30, 2024 from our Other products increased on a reported basis by 34.8% (35.2% CN). The increase was primarily driven by data licensing (increased $2.7 million).
Current report
Revenue Recognition
Current report
Revenue, less cost of revenue, was $328.1 million for the six months ended June 30, 2024, a decrease of $6.6 million or 2.0% compared to $334.7 million for the six months ended June 30, 2023. The decline in revenue, less cost of revenue, was in line with the decrease in revenue. Revenue, less cost of revenue, represented 72.7% of total revenue for the six months ended June 30, 2024, compared to 72.5% for the six months ended June 30, 2023.
Current report
Selling, general, and administrative expense
Current report
Reported SG&A expense decreased by $1.5 million or 0.7% (0.7% CN) for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. SG&A fluctuations from the prior period include the following:
Current report
•decrease in marketing spend of 6.8% ($1.7 million) for the six months ended June 30, 2024. For the six months ended June 30, 2024, marketing spend as a percentage of sales decreased to 5.2% from the six months ended June 30, 2023 ratio of 5.5% which remains in line with historical trends. Lower investments in digital marketing initiatives drove this reduction in spend.
Current report
•decrease in professional fees of $1.2 million for the six months ended June 30, 2024. The decrease is primarily related to legal fees for litigation-related activities.
Current report
•increase of $1.4 million related to staff costs for the six months ended June 30, 2024. The increase was driven by salaries and wages, fringe benefits and severance related expenses (increased $5.9 million), which was partially offset by decreases in equity-based compensation (decreased $4.9 million).
Current report
Depreciation expense
Current report
Amortization expense
Current report
Loss on litigation
Current report
For the six months ended June 30, 2024, the Company recognized loss on litigation of $4.8 million compared to $6.4 million for the six months ended June 30, 2023. The loss on litigation consists of the interest on the summary judgment, legal fees, and amortization of fees related to appeal bond. The Company will continue to see these expenses as we navigate through the appeal of the judgment in the actions captioned by Alta Partners, LLC. V Getty Images Holdings, Inc., Case No. 1:22-cv-08916 and CRCM Institutional Master Fund (BVI) LTD. et al v. Getty Images Holdings, Inc., Case No. 1:23-cv-01074, and incur legal fees related to the additional warrant cases.
Current report
Other operating expenses – net
Current report
Interest expense
Current report
We recognized foreign exchange gains, net of $18.9 million for the six months ended June 30, 2024, compared to net losses of $14.1 million for the six months ended June 30, 2023. These changes are primarily driven by fluctuations in the EUR related to our EUR Term Loans.
Current report
Other non-operating income – net
Current report
Income tax expense
Current report
For the six months ended June 30, 2024, and 2023, cash used in investing activities was $44.7 million and $29.5 million, respectively. The increase in cash used for investing activities was driven by the acquisition of Motorsport Images LLC and Motorsport.com, Inc. as we continue to expand our depth and breadth of content and services.
Removed paragraphs (12)
Previous report
Cost of revenue (exclusive of depreciation and amortization)
Previous report
Revenue
Previous report
Revenue by products for the three months ended March 31, 2024 and 2023 is as follows:
Previous report
•Creative revenue decreased 5.2% on both a reported and currency-neutral basis to $138.9 million for the three months ended March 31, 2024, compared to $146.5 million for the three months ended March 31, 2023. Non-subscription creative revenue decreased 17.8% or $13.2 million, driven by an $8.6 million drop in Premium Royalty-Free ALC and Ultra Packs and a $2.5 million decrease in iStock credits. This decline was largely driven by our Agency customers, which are accounted for entirely within Creative Revenue and purchase on mainly an ALC basis. The decline was partially offset by creative subscription revenue, which increased 7.7% or $5.6 million. This growth was fueled by strong gains in our e-commerce subscription offerings, including a 27.7% increase in iStock subscriptions. We believe the strong uptake across these annual subscription products demonstrates our continued success in converting customers to a recurring revenue model.
Previous report
•Editorial revenue decreased on a reported basis by $5.2 million or 6.2% to $79.4 million and 6.4% on a currency-neutral basis. This decrease was driven by a $3.3 million or 10.9% decline in editorial ALC revenue, largely due to residual impacts from 2023 Hollywood strikes. Related to this, Editorial revenue faced difficult year-over-year comparisons after achieving double-digit growth in the prior year period, especially within our News, Archive, and Entertainment verticals with the prior year period being the only quarter of Editorial growth in 2023, with all other quarters impacted by the Hollywood strikes. In addition, editorial subscriptions decreased by $1.8 million or 4.1% due to lower demand from media customers impacted by the prior year Hollywood strikes.
Previous report
•Other products revenue decreased on a reported basis by $0.5 million or 11.7% to $4.0 million for the three months ended March 31, 2024, compared to $4.5 million for the three months ended March 31, 2023. On a currency-neutral basis, other revenue decreased 11.8% compared to the same period in 2023. The decrease was primarily driven by a decline in data licensing.
Previous report
Timing of Revenue Recognition
Previous report
Cost of revenue (exclusive of depreciation and amortization)
Previous report
Reported selling, general and administrative (SG&A) expenses were $100.9 million for the three months ended March 31, 2024, a decrease of $1.3 million or 1.3% compared to $102.2 million for the three months ended March 31, 2023. As a percentage of revenue, SG&A expenses increased to 45.4% for the three months ended March 31, 2024 from 43.4% for the three months ended March 31, 2023. On a percentage of revenue basis, the increase in SG&A expenses was driven by the fixed and semi-fixed nature of certain expenses against lower revenue for the three months ended March 31, 2024. On a Currency Neutral basis, SG&A expense increased 1.5% for the three months ended March 31, 2024, as compared to the same period in 2023.
Previous report
Reported SG&A expenses included adecrease of$3.0 million in marketing expenses compared to the prior year period. As a percentage of sales, marketing spend decreased to 5.2% in the three months ended March 31, 2024 from 6.2% in the three months ended March 31, 2023. Lower investments in digital marketing initiatives drove this reduction in marketing spend. SG&A expenses also included lower professional fees by $0.7 million for the three months ended March 31, 2024, compared to the same period in the prior year. Partially offsetting these decreases was an increase of$3.0 million in equity compensation expense related to shares granted as part of our earn out plan.
Previous report
We recognized foreign exchange gains, net of $16.4 million for the three months ended March 31, 2024, compared to net losses of $10.9 million for the three months ended March 31, 2023. The revaluation of our outstanding EUR-denominated debt primarily drove the foreign exchange gains. As of March 31, 2024, and 2023, we had €419 million in outstanding EUR Term Loans. Foreign exchange swung from a net loss in 2023 to a net gain in 2024, driven by the Euro strengthening against the US dollar in the current year versus weakening in the prior year comparative period.
Previous report
For the three months ended March 31, 2024, and 2023, cash used in investing activities was $14.5 million and $15.5 million, respectively. The decrease in cash used for investing activities was due to reduced capital expenditures on property and equipment, reflecting strategic investments in internal software development to enhance our digital offerings and operational efficiency.
Reworded paragraphs (41)
Previous wording
We qualify as a “smaller reporting company” because the market value of our shares of Class A common stock held by non-affiliates was less than $200 million as of the end of our most recently completed second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.
Current wording
We qualify as a “smaller reporting company” because the market value of our shares of Class A common stock held by non-affiliates was less than $250 million as of the end of our most recently completed first fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.
Previous wording
•the risk that any prolonged strike by, or lockout of, one or more of the unions that provide personnel essential to the production of films or television programs, such as the 2023 strike by the writers’ union and the actors' unions, could further impact our entertainment business;
Current wording
•the risk that any prolonged strike by, or lockout of, one or more of the unions that provide personnel essential to the production of films or television programs, such as the 2023 strike by the writers’ union and the actors' unions and including its lingering effects, could further impact our entertainment business;
Previous wording
•other risks and uncertainties identified in “Item 1A. Risk Factors” of our most recently filed Annual Report on Form 10-K.
Current wording
•other risks and uncertainties identified in “Item 1A. Risk Factors” of our 2023 Form 10-K.
Previous wording
Through Getty Images, iStock, and Unsplash, we offer a full range of content solutions to meet the needs of any customer—no matter their size—around the globe, with over 572 million visual assets available through its industry-leading sites. New content and coverage are added daily, with over 10 million new assets added each quarter and over 2.7 billion searches annually. The Company has more than 750,000 purchasing customers, with customers from almost every country in the world with websites in 23 languages bringing the world’s best content to media outlets, advertising agencies, and corporations of all sizes and, increasingly, serving individual creators and prosumers.
Current wording
Through Getty Images, iStock, and Unsplash, we offer a full range of content solutions to meet the needs of any customer—no matter their size—around the globe, with over 582 million visual assets available through its industry-leading sites. New content and coverage are added daily, with over 10 million new assets added each quarter and over 2.7 billion searches annually. The Company has almost 750,000 purchasing customers, with customers from almost every country in the world with websites in 23 languages bringing the world’s best content to media outlets, advertising agencies, and corporations of all sizes and, increasingly, serving individual creators and prosumers.
Previous wording
In support of its content, Getty Images employs over 110 staff photographers and videographers and distributes the content of over 564,000 contributors and more than 320 premium content partners. Over 80,000 of our contributors are exclusive to the Company, creating content that cannot be found anywhere else. Each year, we cover more than 160,000 global events across news, sport, and entertainment, providing a depth and breadth of coverage that is unmatched. Getty Images also maintains one of the largest and best privately-owned photographic archives in the world, with over 135 million images across geographies, periods, and verticals.
Current wording
In support of its content, Getty Images employs over 110 staff photographers and videographers and distributes the content of almost 570,000 contributors and more than 340 premium content partners. Over 81,000 of our contributors are exclusive to the Company, creating content that cannot be found anywhere else. Each year, we cover more than 160,000 global events across news, sport, and entertainment, providing a depth and breadth of coverage that is unmatched. Getty Images also maintains one of the largest and best privately-owned photographic archives in the world, with just under 145 million images across geographies, periods, and verticals.
Previous wording
Creative is comprised of royalty-free (“RF”) photos, illustrations, vectors, videos, and generative AI-services that are released for commercial use and cover a wide variety of commercial, conceptual, and contemporary subjects, including lifestyle, business, science, health, wellness, beauty, sports, transportation and travel. This content is available for immediate use by a wide range of customers with depth, breadth, and quality, allowing our customers to produce impactful websites, digital media, social media, marketing campaigns, corporate collateral, textbooks, movies, television, and online video content relevant to their target geographies and audiences. We primarily source Creative content from a broad network of professional, semi-professional, and amateur creators, many exclusive to Getty Images. We have a global creative insights team dedicated to providing briefing and art direction to our exclusive contributor community. Creative represents 62.5% and 62.2% of our revenue, of which 56.2% and 49.5% is generated through our annual subscription products for the three months ended March 31, 2024, and 2023, respectively. Annual Subscription products include products and subscriptions for 12 months or longer, Unsplash API, and Custom Content.
Current wording
Creative is comprised of royalty-free (“RF”) photos, illustrations, vectors, videos, and generative AI-services that are released for commercial use and cover a wide variety of commercial, conceptual, and contemporary subjects, including lifestyle, business, science, health, wellness, beauty, sports, transportation and travel. This content is available for immediate use by a wide range of customers with depth, breadth, and quality, allowing our customers to produce impactful websites, digital media, social media, marketing campaigns, corporate collateral, textbooks, movies, television, and online video content relevant to their target geographies and audiences. We primarily source Creative content from a broad network of professional, semi-professional, and amateur creators, many exclusive to Getty Images. We have a global creative insights team dedicated to providing briefing and art direction to our exclusive contributor community. Creative represents 61.3% and 62.4% of our revenue, of which 55.2% and 49.7%1 is generated through our annual subscription products for the six months ended June 30, 2024, and 2023, respectively. Annual Subscription products include products and subscriptions for 12 months or longer, Unsplash API, and Custom Content.
Previous wording
Editorial is comprised of photos and videos covering the world of entertainment, sports, and news. We combine contemporary coverage of events around the globe with one of the largest privately held archives globally, with access to images from the beginning of photography. We invest in a dedicated editorial team that includes over 110 staff photographers and videographers to generate our own coverage in addition to coverage from our network of content partners. Editorial represents 35.7% and 35.9% of our revenue, of which 54.6% and 53.4%is generated through our annual subscription products for the three months ended March 31, 2024, and 2023, respectively. Annual Subscription products include subscriptions with a duration of 12 months or longer.
Current wording
Editorial is comprised of photos and videos covering the world of entertainment, sports, and news. We combine contemporary coverage of events around the globe with one of the largest privately held archives globally, with access to images from the beginning of photography. We invest in a dedicated editorial team that includes over 110 staff photographers and videographers to generate our own coverage in addition to coverage from our network of content partners. Editorial represents 36.1% and 35.8% of our revenue, of which 52.6% and 52.3% is generated through our annual subscription products for the six months ended June 30, 2024, and 2023, respectively. Annual Subscription products include subscriptions with a duration of 12 months or longer.
Previous wording
Other represents 1.8% and 1.9% of our revenue for the three months ended March 31, 2024 and 2023, respectively. This includes music licensing, digital asset management, distribution services, print sales, and data licensing.
Current wording
Other represents 2.6% and 1.9% of our revenue for the six months ended June 30, 2024 and 2023, respectively. This includes music licensing, digital asset management, distribution services, print sales, and data licensing.
Previous wording
Gettyimages.com offers premium creative content and editorial coverage, including video, with exclusive content, and customizable rights and protections. This site primarily serves more prominent enterprise agency, media, and corporate customers with global customer support from our sales and service teams. Customers can purchase on an ALC basis or through our content subscriptions, including our “Premium Access” subscription, where we uniquely offer frictionless access across all of our content in one solution.
Current wording
Gettyimages.com offers premium creative content and editorial coverage, including video, with exclusive content, and customizable rights and protections. This site primarily serves more prominent enterprise agency, media, and corporate customers with global customer support from our sales and service teams. Customers can purchase on an ALC basis or through our content subscriptions, including our “Premium Access” subscription, where we uniquely offer frictionless access across all of the Getty Images and iStock content in one solution.
Previous wording
Unsplash.com is a platform offering free stock photo downloads and paid subscriptions targeted to the high-growth prosumer and semi-professional creator segments. The Unsplash website reaches a significant and geographically diverse audience with more than 110 million image downloads every month.
Current wording
Unsplash.com is a platform offering free stock photo downloads and paid subscriptions targeted to the high-growth prosumer and semi-professional creator segments. The Unsplash website reaches a significant and geographically diverse audience with more than 108 million image downloads every month.
Previous wording
(1)Certain prior year amounts have been reclassified to conform to the current year presentation.
Current wording
1 Prior year percentage has been restated to conform to the current year presentation.
Previous wording
A significant portion of the business has transitioned to a subscription model with strong retention characteristics. Subscriptions now comprises approximately 55% of total revenue, and we continue to focus on growing subscription revenue.
Current wording
A significant portion of the business has transitioned to a subscription model with strong retention characteristics. Annual subscriptions now comprise approximately 54% of total revenue for the six months ended June 30, 2024, and we continue to focus on growing subscription revenue.
Previous wording
Assets and liabilities for subsidiaries with functional currencies other than the U.S. dollar are recorded in foreign currencies and translated at the exchange rate on the Balance Sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to “Other comprehensive income (loss)”, as a separate component of stockholder’s deficit. The Company recognized net foreign currency translation adjustment losses of $15.6 million during the three months ended March 31, 2024 and net foreign currency translation adjustment gains of $8.4 million during the three months ended March 31, 2023.
Current wording
Assets and liabilities for subsidiaries with functional currencies other than the U.S. dollar are recorded in foreign currencies and translated at the exchange rate on the Balance Sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to “Other comprehensive income (loss)”, as a separate component of stockholder’s equity. The Company recognized net foreign currency translation adjustment losses of $18.4 million during the six months ended June 30, 2024 and net foreign currency translation adjustment gains of $10.8 million during the six months ended June 30, 2023.
Previous wording
Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in “Foreign exchange gain (losses) — net” in the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2024, the Company recognized net foreign currency transaction gains of $16.4 million. For the three months ended March 31, 2023, the Company recognized net foreign currency transaction losses of $10.9 million.
Current wording
Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in “Unrealized foreign exchange gain (losses) — net” in the condensed consolidated statements of operations. For the six months ended June 30, 2024, the Company recognized net unrealized foreign currency transaction gains of $18.9 million. For the six months ended June 30, 2023, the Company recognized net unrealized foreign currency transaction losses of $14.1 million.
Previous wording
For the three months ended March 31, 2024, total revenue on a reported basis was $222.3 million as compared to $235.6 million for the three months ended March 31, 2023. On both a reported and Currency Neutral basis, revenue decreased by 5.7% for the three months ended March 31, 2024. Included in these results are certain impacts of the timing of revenue recognition, which reduced year-on-year growth by approximately 360 basis points in the first quarter of 2024.
Current wording
For the three months ended June 30, 2024, total revenue on a reported basis was $229.1 million as compared to $225.7 million for the three months ended June 30, 2023. On a reported basis, revenue increased by 1.5% (2.1% CN) for the three months ended June 30, 2024. Included in these results are certain impacts of the timing of revenue recognition, which reduced year-on-year growth by approximately 100 basis points in the second quarter of 2024.
Previous wording
Cost of revenue for the three months ended March 31, 2024 was $60.3 million compared to $63.3 million in the same prior year period. As a percentage of total revenue, cost of revenue was 27.1% for the three months ended March 31, 2024, compared to 26.9% for the three months ended March 31, 2023. The increase in cost of revenue as a percentage of revenue compared to the prior year was due primarily to revenue mix by product. Generally, cost of revenue rates vary modestly period over period based on changes in revenue mix by product, as royalty rates vary depending on the license model and use of content.
Current wording
Cost of revenue for the three months ended June 30, 2024 was $63.1 million compared to $63.4 million in the same prior year period. As a percentage of total revenue, cost of revenue was 27.5% for the three months June 30, 2024, compared to 28.1% for the three months ended June 30, 2023. The change in cost of revenue as a percentage of revenue compared to the prior year was due primarily to revenue mix by product. Generally, cost of revenue rates vary modestly period over period based on changes in revenue mix by product, as royalty rates vary depending on the license model and use of content.
Previous wording
Revenue, less cost of revenue, was $162.0 million for the three months ended March 31, 2024, a decrease of $10.3 million or 6.0% compared to $172.4 million for the three months ended March 31, 2023. The decline in revenue, less cost of revenue, was in line with the decrease in revenue. Revenue, less cost of revenue, represented 72.9% of total revenue for the three months ended March 31, 2024, compared to 73.1% for the three months ended March 31, 2023.
Current wording
Revenue, less cost of revenue, was $166.0 million for the three months ended June 30, 2024, an increase of $3.7 million or 2.3% compared to $162.3 million for the three months ended June 30, 2023. The increase in revenue, less cost of revenue, was in line with the increase in revenue. Revenue, less cost of revenue, represented 72.5% of total revenue for the three months ended June 30, 2024, compared to 71.9% for the three months ended June 30, 2023.
Previous wording
Depreciation expense was $14.4 million for the three months ended March 31, 2024, an increase of $1.3 million or 10.3% compared to $13.0 million for the three months ended March 31, 2023. The increase is due to capital investments made that are primarily related to internal software development as we continue to innovate and invest in the design, user experience and performance of our websites.
Current wording
Depreciation expense was $14.7 million for the three months ended June 30, 2024, an increase of $1.1 million or 8.5% compared to $13.5 million for the three months ended June 30, 2023. The increase is due to capital investments made that are primarily related to internally software development as we continue to innovate and invest in the design, user experience and performance of our websites.
Previous wording
For the three months ended March 31, 2024, amortization expense was $0.5 million, which was a decrease of $6.7 million or 92.6% compared to $7.2 million for the three months ended March 31, 2023. The decline was attributed to several of the Company’s intangible assets becoming fully amortized in the prior year.
Current wording
For the three months ended June 30, 2024, amortization expense was $0.6 million, which was a decrease of $6.7 million or 91.8% compared to $7.3 million for the three months ended June 30, 2023. The decline was attributed to several of the Company’s intangible assets becoming fully amortized in the prior year.
Previous wording
For the three months ended March 31, 2024 and 2023, respectively, the Company recognized loss on litigation of $2.0 million and $0.2 million, respectively. The loss on litigation consists of the interest on the summary judgment, legal fees, and amortization of fees related to appeal bond. The Company will continue to see these expenses as we navigate through the appeal of the judgment.
Current wording
For the three months ended June 30, 2024 and 2023, respectively, the Company recognized loss on litigation of $2.8 million and $6.3 million, respectively. The loss on litigation consists of the interest on the summary judgment, legal fees, and amortization of fees related to an appeal bond. The Company will continue to see these expenses as we navigate through the appeal of the judgment in the actions captioned by Alta Partners, LLC. V Getty Images Holdings, Inc., Case No. 1:22-cv-08916 and CRCM Institutional Master Fund (BVI) LTD. et al v. Getty Images Holdings, Inc., Case No. 1:23-cv-01074, and incur legal fees related to the additional warrant cases.
Previous wording
We recognized interest expense of $32.7 million and $30.5 million for the three months ended March 31, 2024, and March 31, 2023, respectively. Our interest expense primarily consists of interest charges on our outstanding U.S. dollar and Euro term loans (the “Term Loans”), $300.0 million of Senior Unsecured Notes (the “Senior Notes”), and the unused portion of our revolving credit facility as well as the amortization of original issue discount on our Term Loans and amortization of deferred debt financing fees. The increase in interest expense from the prior year period was due to the rise in interest rates.
Current wording
We recognized interest expense of $33.9 million and $31.7 million for the three months ended June 30, 2024, and June 30, 2023, respectively. Our interest expense primarily consists of interest charges on our outstanding U.S. dollar and Euro term loans (the “Term Loans”), Senior Unsecured Notes (the “Senior Notes”), and our revolving credit facility which remains undrawn, as well as the amortization of original issue discount on our Term Loans and amortization of deferred debt financing fees. The increase in interest expense from the prior year period was due to the maturity of our interest rate swap and the rise in interest rates.
Previous wording
Although we may experience volatility in the fair value adjustments on our derivative instruments, we believe hedging allows us to reduce our exposure to interest rate and foreign currency risks. We will continue to evaluate opportunities to utilize swaps, forwards, and other instruments to mitigate financial risks associated with our business.
Current wording
While we have experienced volatility in the fair value adjustments on our derivative instruments, we believe hedging allows us to reduce our exposure to interest rate and foreign currency risks. We will continue to evaluate opportunities to utilize swaps, forwards, and other instruments to mitigate financial risks associated with our business.
Previous wording
We recognized other non-operating income, net of $1.5 million and $0.5 million for the three months ended March 31, 2024, and March 31, 2023, respectively. The increase was primarily due to higher interest income of $1.0 million, driven by a significant increase in U.S. interest rates between March 31, 2023 and March 31, 2024. We also recorded minimal dividend income received from certain cost-method investments in both periods presented.
Current wording
We recognized other non-operating income, net of $1.2 million and $0.6 million for the three months ended June 30, 2024, and June 30, 2023, respectively. The increase was primarily due to higher interest income, driven by an increase in U.S. interest rates. We also recorded minimal dividend income received from certain cost-method investments in both periods presented.
Previous wording
The Company’s income tax expense increased by $8.0 million to an expense of $11.2 million for three months ended March 31, 2024, as compared to $3.2 million for the three months ended March 31, 2023. The Company’s effective income tax rate for the three months ended March 31, 2024 is 45.2%, compared to 50.2% for the three months ended March 31, 2023. The increase in income tax expense is due to increases in pre-tax income (loss) and a release of valuation allowance in the prior year.
Current wording
The Company’s income tax expense increased by $9.6 million to an expense of $12.5 million for three months ended June 30, 2024, as compared to $2.9 million for the three months ended June 30, 2023. The Company’s effective income tax rate for the three months ended June 30, 2024 is 77.2%, compared to (208.1%) for the three months ended June 30, 2023. The increase in tax expense compared to prior year is primarily due to increases in pre-tax income (loss) and a release of valuation allowance in the prior year.
Previous wording
Other operating expenses - net was $3.1 million for the three months ended March 31, 2024, compared to $0.3 million for the three months ended March 31, 2023. Acquisition costs, settlements of claims, and pre-acquisition Unsplash employment tax obligations drove the increase. We expect other operating expenses to fluctuate from period to period as this line item is heavily influenced by non-recurring events such as claims, settlements, and gains/losses on asset disposals.
Current wording
Other operating expenses - net was $3.4 million for the six months ended June 30, 2024, compared to $0.6 million for the six months ended June 30, 2023. Acquisition costs, settlements of claims, and pre-acquisition Unsplash employment tax obligations drove the increase. We expect other operating expenses to fluctuate from period to period as this line item is heavily influenced by non-recurring events such as claims, settlements, and gains/losses on asset disposals.
Previous wording
We recognized fair value adjustment net losses for our swaps of $1.5 million for the three months ended March 31, 2024. During the three months ended March 31, 2023 we recognized net losses of $2.1 million for our swaps. The losses were driven by changes in interest and foreign exchange rates relative to the rates in our derivatives.
Current wording
We recognized fair value adjustment net losses for our swaps of $1.5 million for the six months ended June 30, 2024. During the six months ended June 30, 2023 we recognized net losses of $2.7 million for our swaps. The losses were driven by changes in interest rates relative to the rates in our derivatives.
Previous wording
Our sources of liquidity are our existing cash and cash equivalents, cash provided by operations and amounts available under our revolving credit facility. As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $134.2 million and $136.6 million, respectively, and availability under our revolving credit facility of $150.0 million, which expires May 4, 2028. Our principal liquidity needs include debt service and capital expenditures, as well as those required to support working capital, internal growth, and strategic acquisitions and investments. Deferred revenue represents the majority of our current liabilities, which given its nature is not expected to require cash settlement. We also continue to look for the optimal opportunity and market conditions to refinance our debt.
Current wording
Our sources of liquidity are our existing cash and cash equivalents, cash provided by operations and amounts available under our revolving credit facility. As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $121.7 million and $136.6 million, respectively, and availability under our unused revolving credit facility of $150.0 million, which expires May 4, 2028. For the quarter ended June 30, 2024, we used $32.6 million of cash to prepay a portion of our USD Term Loans. Our principal liquidity needs include debt service and capital expenditures, as well as those required to support working capital, internal growth, and strategic acquisitions and investments. Deferred revenue represents the majority of our current liabilities, which given its nature is not expected to require cash settlement. We also continue to look for the optimal opportunity and market conditions to refinance our debt.
Previous wording
For the three months ended March 31, 2024 cash provided by operating activities was $21.5 million, as compared to cash provided by operating activities of $31.9 million for the three months ended March 31, 2023. The decrease in cash provided by operating activities was primarily driven by lower Adjusted EBITDA, and to a lesser extent increased interest and tax payments.
Current wording
For the six months ended June 30, 2024 cash provided by operating activities was $68.0 million, as compared to cash provided by operating activities of $73.8 million for the six months ended June 30, 2023. The decrease in cash provided by operating activities was primarily driven by an increase in cash paid for interest and taxes.
Previous wording
The changes in cash flows from investing activities relate to purchases of property and equipment and internal software development as part of our ongoing efforts to innovate in the design, user experience, and performance of our websites.
Current wording
The changes in cash flows from investing activities relate to purchases of property and equipment and internal software development as part of our ongoing efforts to innovate in the design, user experience, and performance of our websites. Additionally, on April 1, 2024, the Company acquired Motorsport Images LLC and Motorsport.com, Inc.
Previous wording
For the three months ended March 31, 2024, cash used in financing was $5.3 million, compared to less than $0.1 million for the three months ended March 31, 2023. Financing activities for the three months ended March 31, 2024 included debt issuance costs, principal payments on our Term Loans and cash paid for settlement of employee tax related to equity-based awards, partially offset by the proceeds from common stock issuance.
Current wording
For the six months ended June 30, 2024, cash used in financing was $34.8 million, compared to $24.6 million for six months ended June 30, 2023. Financing activities for the six months ended June 30, 2024 included debt issuance costs, principal payments on our Term Loans and cash paid for settlement of employee tax related to equity-based awards, partially offset by the proceeds from common stock issuance.
Previous wording
KPI comparisons for the last twelve months ended March 31, 2024 reflect Hollywood strike impact. For the twelve months ended March 31, 2023, the KPI comparisons reflect some COVID-19 impact.
Current wording
KPI comparisons for the last twelve months ended June 30, 2024 reflect Hollywood strike impact.
Previous wording
Total purchasing customers decreased 7.2% to 769,000 for the last twelve months ended March 31, 2024, compared to 829,000 for the twelve months ended March 31, 2023. This decrease can be attributed to lower ALC transaction volume primarily due to both the ongoing shift of our customers to more committed annual subscription products and a still pressured Agency business which purchases nearly entirely on an ALC basis. Importantly, the shift into more committed solutions continues to have a positive impact on annual revenue per purchasing customer, which grew by 4.5% to $1,174 from $1,123 in the comparable LTM period.
Current wording
Total purchasing customers decreased 10.8% to 740 thousand for the last twelve months ended June 30, 2024, compared to 830 thousand for the twelve months ended June 30, 2023. This decrease can be attributed to lower ALC transaction volume primarily due to both the ongoing shift of our customers to more committed annual subscription products and a still pressured Agency business which purchases nearly entirely on an ALC basis. Importantly, the shift into more committed solutions continues to have a positive impact on annual revenue per purchasing customer, which grew by 10.7% to $1,232 from $1,113 in the comparable LTM period.
Previous wording
Total active annual subscribers increased 79.0% to 262,000 for the last twelve months ended March 31, 2024 compared to 147,000 for the twelve months ended March 31, 2023. Expanded e-commerce subscriptions including iStock and Unsplash+ subscriptions primarily drove growth. This reflects our strategic focus on subscription offerings to provide comprehensive content solutions. A significant portion of the annual subscribers were new customers, with many coming from our growth expansion markets across LATAM, APAC, and EMEA, and a substantial number of new subscribers also coming from our Core markets. We have a strong pipeline of new customers as demand for visual content continues growing, while also helping existing customers evolve with their expanding visual narratives.
Current wording
Total active annual subscribers increased 54.7% to 282 thousand for the last twelve months ended June 30, 2024 compared to 182 thousand for the twelve months ended June 30, 2023. Expanded e-commerce subscriptions including iStock and Unsplash+ subscriptions primarily drove growth. This reflects our strategic focus on subscription offerings to provide comprehensive content solutions. A significant portion of the annual subscribers were new customers, with many coming from our growth expansion markets across LATAM, APAC, and EMEA, and a substantial number of new subscribers also coming from our Core markets. We have a strong pipeline of new customers as demand for visual content remains strong, while also helping existing customers evolve with their expanding visual narratives.
Previous wording
Paid download volume is a count of the number of paid downloads by our customers in the reported period. This metric informs both management and investors about the volumes at which customers are engaging with our content over time. The steadiness in paid download volumes signals that our content is continuing to meet the evolving needs of our customers.
Current wording
Paid download volume is a count of the number of paid downloads by our customers in the reported period. This metric informs both management and investors about the volumes at which customers are engaging with our content over time.
Previous wording
Paid download volume was flat at 95 million downloads for the last twelve months ended March 31, 2024 and March 31, 2023.
Current wording
Paid download volume was up 0.9% to 95 million downloads for the last twelve months ended June 30, 2024 compared to 94 million for the last twelve months ended June 30, 2023. We believe that the steady demand in paid download volumes during the last twelve month period that had a myriad of macro-economic challenges, is a strong outcome and signals that our content continues to meet our customers evolving needs.
Previous wording
The annual subscriber revenue retention rate calculates retention of total revenue for customers on annual subscription products, comparing the customer’s total booked revenue (inclusive of spend for annual subscription and non-annual subscription products) in the LTM period to the prior twelve month period. For example, LTM annual subscriber booked revenue (the amount of revenue invoiced to customers) for the period ended March 31, 2024 was 90.0% of revenue from these customers in the period ended March 31, 2023. The revenue retention rate informs management and investors on the degree to which we are maintaining or growing revenue from our annual subscriber base. As we continue to focus on growing subscriptions as percentage of total revenue, revenue retention for these customers is a key driver of the predictability of our financial model with respect to revenue.
Current wording
The annual subscriber revenue retention rate calculates retention of total revenue for customers on annual subscription products, comparing the customer’s total booked revenue (inclusive of spend for annual subscription and non-annual subscription products) in the LTM period to the prior twelve month period. For example, LTM annual subscriber booked revenue (the amount of revenue invoiced to customers) for the period ended June 30, 2024 was 89.4% of revenue from these customers in the period ended June 30, 2023. The revenue retention rate informs management and investors on the degree to which we are maintaining or growing revenue from our annual subscriber base. As we continue to focus on growing subscriptions as percentage of total revenue, revenue retention for these customers is a key driver of the predictability of our financial model with respect to revenue.
Previous wording
The annual subscriber revenue retention rate decreased to 90.0% for the last twelve months ended March 31, 2024 from 99.8% over the twelve months ended March 31, 2023. The decline was due primarily to both an expected lower revenue retention rate on some of our smaller E-commerce subscribers, and a reduction in incremental ALC subscriber revenue due to residual strike impacts across some of our media, broadcast and production customers. We also experienced a decline related to one-time project spend in the prior period from certain corporate customers. Broadly speaking, we believe our subscription business is very healthy with revenue renewal rates generally averaging over 90%, and with our Enterprise customer subscriptions generally averaging north of 100%.
Current wording
The annual subscriber revenue retention rate decreased to 89.4% for the last twelve months ended June 30, 2024 from 98.5% over the twelve months ended June 30, 2023. The decline was due primarily to both an expected lower revenue retention rate on some of our smaller E-commerce subscribers, and a reduction in incremental ALC revenue due to residual strike impacts across some of our media, broadcast and production customers as the strike impacted the demand for content from those customers. Broadly speaking, we believe our subscription business is healthy with revenue renewal rates generally averaging in the 90% range.
Previous wording
Image and Video collection is a count of the total images and videos in our content library as of the reporting date. Management and investors can view growth in the size, both depth and breadth, of the content library as an indication of our ability to continue to expand our content offering with premium, high quality, contemporary content to meet the evolving needs of our customers. Image and video collections increased as of March 31, 2024 compared to March 31, 2023. Our image collection grew 6.7% to 544 million images as of March 31, 2024 compared to 510 million as of March 31, 2023. Our video collection grew 15.3% to 29 million videos over the same period.
Current wording
Image and Video collection is a count of the total images and videos in our content library as of the reporting date. Management and investors can view growth in the size, both depth and breadth, of the content library as an indication of our ability to continue to expand our content offering with premium, high quality, contemporary content to meet the evolving needs of our customers. Image and video collections increased as of June 30, 2024 compared to June 30, 2023.
Previous wording
The video attachment rate increased to 14.0% for the last twelve months ended March 31, 2024 from 13.4% for the last twelve months ended March 31, 2023. The video attachment rate provides management and investors with an indication of our customers’ level of engagement with our video content offering. Our expansion of video across our subscription products is focused on further increasing the attachment rate over time. The increase in video attachment rates from the LTM period ending March 31, 2024 compared to the period ending March 31, 2023 reflects increased customer awareness of our video offering, improved search and site prominence for video content, and upselling of video into subscriptions.
Current wording
The video attachment rate increased to 15.6% for the last twelve months ended June 30, 2024 from 13.5% for the last twelve months ended June 30, 2023. The video attachment rate provides management and investors with an indication of our customers’ level of engagement with our video content offering. Our expansion of video across our subscription products is focused on further increasing the attachment rate over time. The increase in video attachment rates from the LTM period ending June 30, 2024 compared to the period ending June 30, 2023 reflects increased customer awareness of our video offering, improved search and site prominence for video content, and upselling of video into subscriptions.
Previous wording
We define Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, equity-based compensation, other operating expenses-net, and certain other expenses not directly related to the core operations of our business. A reconciliation is provided below to the most comparable financial measure stated in accordance with GAAP. We define Adjusted EBITDA Margin as the ratio of Adjusted EBITDA to revenue.
Current wording
We define Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, equity-based compensation, other operating expenses-net, and certain other expenses not directly related to the core operations of our business. A reconciliation is provided below to the most comparable financial measure stated in accordance with U.S. GAAP. We define Adjusted EBITDA Margin as the ratio of Adjusted EBITDA to revenue.
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Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
We did not recognize any fair value adjustments for our swaps for the three months ended June 30, 2024, as our interest rate swap matured in February 2024. During the three months ended June 30, 2023 we recognized net losses of $0.6 million for our swaps. The losses were driven by changes in interest rates relative to the rates in our derivatives.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, total revenue on a reported basis was $451.4 million as compared to $461.3 million for the six months ended June 30, 2023. On a reported basis, revenue decreased by 2.1% (1.9% CN) for the six months ended June 30, 2024. Included in these results are certain impacts of the timing of revenue recognition, which reduced year-on-year growth by approximately 230 basis points in the first six months of 2024.
Current report — wording carried from elsewhere
The timing of our revenue recognition can be influenced by several factors, including the nature of the contract with the customer, and the Company's estimates regarding unused content and customer download patterns. These factors can lead to variability in the timing and amount of revenue recognized in a given period. The weakening or strengthening of our reporting currency, the U.S. dollar, during any given period compared to currencies we collect revenues in, most notably, the Euro and British pound, impacts our reported revenues.
Current report — wording carried from elsewhere
Cost of revenue for the six months ended June 30, 2024 was $123.4 million compared to $126.6 million in the same prior year period. As a percentage of total revenue, cost of revenue was 27.3% for the six months June 30, 2024, compared to 27.5% for the six months ended June 30, 2023. The change in cost of revenue as a percentage of revenue compared to the prior year was due primarily to revenue mix by product. Generally, cost of revenue rates vary modestly period over period based on changes in revenue mix by product, as royalty rates vary depending on the license model and use of content.
Current report — wording carried from elsewhere
Depreciation expense was $29.0 million for the six months ended June 30, 2024, an increase of $2.5 million or 9.4% compared to $26.6 million for the six months ended June 30, 2023. The increase is due to capital investments made that are primarily related to internal software development as we continue to innovate and invest in the design, user experience and performance of our websites.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, amortization expense was $1.1 million, which was a decrease of $13.3 million or 92.2% compared to $14.5 million for the six months ended June 30, 2023. The decline was attributed to several of the Company’s intangible assets becoming fully amortized in the prior year.
Current report — wording carried from elsewhere
We recognized interest expense of $66.6 million and $62.2 million for the six months ended June 30, 2024, and June 30, 2023, respectively. Our interest expense primarily consists of interest charges on our outstanding U.S. dollar and Euro term loans
Current report — wording carried from elsewhere
(the “Term Loans”), Senior Unsecured Notes (the “Senior Notes”), and our revolving credit facility which remains undrawn, as well as the amortization of original issue discount on our Term Loans and amortization of deferred debt financing fees. The increase in interest expense from the prior year period was due to the maturity of our interest rate swap and the rise in interest rates.
Current report — wording carried from elsewhere
Loss on fair value adjustment for swaps – net
Current report — wording carried from elsewhere
While we have experienced volatility in the fair value adjustments on our derivative instruments, we believe hedging allows us to reduce our exposure to interest rate and foreign currency risks. We will continue to evaluate opportunities to utilize swaps, forwards, and other instruments to mitigate financial risks associated with our business.
Current report — wording carried from elsewhere
Unrealized foreign exchange gains (loss) – net
Current report — wording carried from elsewhere
We expect continued volatility in foreign exchange gains and losses each period based on fluctuations in exchange rates impacting our foreign currency exposures.
Current report — wording carried from elsewhere
We recognized other non-operating income, net of $2.7 million and $1.1 million for the six ended June 30, 2024, and June 30, 2023, respectively. The increase was primarily due to higher interest income, driven by an increase in U.S. interest rates. We also recorded minimal dividend income received from certain cost-method investments in both periods presented.
Current report — wording carried from elsewhere
We expect continued fluctuation in this line item based on market interest rates and the amount of cash available for investment.
Current report — wording carried from elsewhere
The Company’s income tax expense increased by $17.6 million to an expense of $23.7 million for six months ended June 30, 2024, as compared to $6.1 million for the six months ended June 30, 2023. The Company’s effective income tax rate for the six months ended June 30, 2024 is 57.8%, compared to 121.3% for the six months ended June 30, 2023. The increase in tax expense compared to prior year is primarily due to increases in pre-tax income (loss) and a release of valuation allowance in the prior year.
Current report — wording carried from elsewhere
Our image collection grew 7.7% to 553 million images as of June 30, 2024 compared to 513 million as of June 30, 2023. Our video collection grew 17.5% to 30 million videos over the same period.