Q4 2024 Getty Images Holdings Inc Earnings Call
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Operator: Good afternoon. Welcome to Getty Images' Q4 and full year 2024 Earnings Conference Call. Today's call is being recorded. We have allocated 1 hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Steven Kanner, VP of Investor Relations and Treasury at Getty Images. Thank you. You may begin.
Speaker Change: Good afternoon, and welcome to Getty images fourth quarter and full year 2024 earnings conference call.
Speaker Change: Today's call is being recorded we have allocated one hour for prepared remarks and Q&A.
Speaker Change: At this time I'd like to turn the conference over to Steven Cantor VP of Investor Relations and Treasury at Getty images. Thank you you may begin.
Steven Kanner: Good afternoon. Welcome to the Getty Images Q4 and full year 2024 Earnings Call. Joining me on today's call are Craig Peters, Chief Executive Officer, and Jenn Leyden, Chief Financial Officer. Before we begin, we would like to note that due to the ongoing regulatory review process, we will not be able to comment on the status of the merger with Shutterstock or the Q4 Shutterstock operating results. We appreciate your understanding. We will share updates as soon as we are able. This call will include forward-looking statements with a meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks, uncertainties, and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are highlighted in the forward-looking statements section of today's press release and in our filings with the SEC.
Speaker Change: Good afternoon.
Speaker Change: Yeah.
Speaker Change: And welcome to the Getty images fourth quarter full year 2024 earnings call.
Speaker Change: Joining me on today's call are correct Peters Chief Executive Officer.
Speaker Change: And Jen Leighton Chief Financial Officer.
Speaker Change: Before we begin.
Speaker Change: We would like to note that due to the ongoing regulatory review process, we will not be able to comment on the status of the merger with Shutterstock for the fourth quarter Shutterstock operating results.
Speaker Change: We appreciate your understanding and we'll share updates as soon as variable.
Speaker Change: This call will include forward looking statements with the meaning of the private Securities Litigation Reform Act of 1995.
Speaker Change: These statements are subject to various risks uncertainties and assumptions, which could cause our actual results to differ materially from these statements.
Speaker Change: These risks uncertainties and assumptions are highlighted in the forward looking statements section of today's press release.
Speaker Change: And in our filings with the SEC.
Steven Kanner: Links to these filings in today's press release can be found on our investor relations website at investors.gettyimages.com. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA less CapEx, and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they represent our operational performance and underlying results of our business. Reconciliations of GAAP to non-GAAP measures as well as the description, limitations, and rationale for using each measure can be found in our filings for the SEC. After our prepared remarks, we will open the call for your questions. With that, I will hand the call over to our Chief Executive Officer, Craig Peters.
Speaker Change: Links to these filings in today's press release can be found on our Investor Relations website at investors Dot Getty images dot com.
Speaker Change: During our call today, we will also reference certain non-GAAP financial information.
Speaker Change: <unk> adjusted EBITDA.
Speaker Change: Adjusted EBITDA margin.
Adjusted EBITDA, less capex and free cash flow.
Speaker Change: We use non-GAAP measures and some of our financial discussions as we believe they represent our operational performance and underlying results of our business.
Speaker Change: Reconciliations of GAAP to non-GAAP measures as well as the description limitations and rationale for using each measure can be found in our filings with the SEC.
Speaker Change: After our prepared remarks, we'll open the call for your questions.
Speaker Change: With that I will hand, the call over to our Chief Executive Officer, Greg Peters.
Craig Peters: Thanks, Steven, and thanks to everyone for taking the time to join us today. I will touch on Q4 and full year 2024 business performance and progress before Jen takes you through the full results in more detail and the 2025 outlook. I want to start by briefly touching on the merger with Shutterstock. As announced earlier this year, Getty Images and Shutterstock entered into a definitive merger agreement that will result in a company with a strong financial foundation and opportunities for superior value creation for customers, creators, and our combined shareholder base. This is an exciting and transformational opportunity for our companies at a time when Getty Images is building positive organic performance momentum, as evidenced in the results we will take you through today.
Speaker Change: Thanks, Steven and thanks to everyone for taking the time to join us today.
I will touch on Q4, and full year 2020 for business performance and progress before Jen takes you through the full results in more detail and the 2025 outlook.
Speaker Change: I'll start by briefly touching on the merger with Shutterstock as announced earlier this year Getty images and charter stock entered into a definitive merger agreement that will result in a company with a strong financial foundation and opportunities for superior value creation for customers creators and our combined shareholder.
Speaker Change: Your base.
Speaker Change: This is an exciting and transformational opportunity for our companies at a time when Getty images is building positive organic performance momentum as evidenced in the results we will take you through today.
Craig Peters: I was also pleased to complete a refinancing on our term loans in this quarter, which extended maturities on $1 billion of debt to 2030. Jen will share more details on this transaction. Moving to results, in Q4, we grew revenue to $247.3 million, representing growth of 9.5% or 8.5% on a currency neutral basis. The top line performance was coupled with strong profitability, with adjusted EBITDA rising to $80.6 million, up 11.7%, or 10.4% on a currency neutral basis. For the full year 2024, revenue was $939.3 million, an increase of 2.5% on both a reported and currency neutral basis. Our adjusted EBITDA finished at $300 million for the full year, with a healthy margin at 32% of revenue. With these results, we delivered on the full year return to top line growth, exceeding the midpoint of our guidance, and finished the year with a strong Q4.
Speaker Change: I was also pleased to complete a refinancing on our term loans in this quarter, which extended maturities on $1 billion of debt to 2030 general share more details on this transaction.
Speaker Change: Moving to results in the fourth quarter, we grew revenue to $247 3 million representing growth of nine 5% or eight 5% on a currency neutral basis.
Speaker Change: The topline performance was coupled with strong profitability with adjusted EBITDA rising to $88 6 million up 11, 7% or.
Speaker Change: Or 10, 4% on a currency neutral basis.
Speaker Change: For the full year 2024 revenue was $939 3 million an increase of two 5% on both a reported and currency neutral basis.
Speaker Change: Our adjusted EBITDA finished at $309 for the full year with a healthy margin at 32% of revenue.
Speaker Change: With these results we delivered on our full year return to topline growth exceeding the midpoint of our guidance and finished the year with a strong Q4.
Craig Peters: Just this last week, Getty Images celebrated its 30th year in business. Over those 30 years, we built a respected brand. We produced and preserved iconic imagery. We cultivated deep customer and partner relationships, delivering real value in each instance, and we embraced a spirit of continuous evolution in the face of an extremely dynamic market. Over our 30 years, we've experienced and navigated immense change, the introduction and universal embrace of digital photography, the growth of the internet and e-commerce, the introduction of the smartphone, and explosion of mobile photography, access to broadband, and the shift from print to digital media. Now, artificial intelligence. Throughout 2024, we continued to invest in the core assets of our company and evolve. We renewed and added to our roster of longstanding world-class partnerships. We produced award-winning comprehensive photo and video coverage across the world of news, sport, and entertainment.
Speaker Change: Just this last week.
Speaker Change: Getty images celebrated its 30th year in business.
Speaker Change: Over those 30 years, we built a respected brand with.
Speaker Change: We produced and preserved iconic imagery.
Speaker Change: We cultivated deep customer and partner relationships delivering real value in each instance, we embraced the spirit of continuous evolution in the face of an extremely dynamic market.
Over our 30 years, we've experienced an aggregated immense change.
Speaker Change: The introduction and universal embrace of digital photography.
Speaker Change: The growth of the Internet and E Commerce.
Speaker Change: The introduction of the smartphone an explosion of mobile photography.
Speaker Change: Access to broadband and the shift from print to digital media.
Speaker Change: Now artificial intelligence.
Speaker Change: Throughout 2024, we continue to invest in core assets of our company and a law.
Speaker Change: We renewed and added to our roster of long standing World class partnerships.
Speaker Change: We produced award winning comprehensive photo and video coverage across the World of news sports and entertainment.
Craig Peters: We added Motorsport Images talent, relationships, and archive. We conducted deep and broad-based research across cultures, demographics, industries, and creative trends. We worked closely with our exclusive network of talented contributors to develop content that reflects this research. We launched natural language search across our websites. We expanded our integrations across the broader creative and editorial ecosystems. We rolled out new commercially safe AI capabilities to our customers. We continue to grow our annual base of annual subscribers. Our delivery in 2024 serves as a foundation for 2025 and the decades to come. 2025 has already delivered its own challenges with the horrific fires in Los Angeles impacting so many individuals and businesses, just to name one.
Speaker Change: We added motorsport images talent relationships and archive.
Speaker Change: We conducted deep and broad based research across cultures demographic industries and creative trends.
Speaker Change: We work closely with our exclusive network of talented contributors to develop content that reflects this research.
Speaker Change: We launched natural language search across our websites.
Speaker Change: We expanded our integrations across the broader creative and editorial ecosystems.
Speaker Change: We rolled out new commercially safe AI capabilities to our customers.
Speaker Change: We continue to grow our annual base of annual subscribers.
Speaker Change: Our delivery in 'twenty 'twenty four serves as a foundation for 2025 in the decades to come.
Speaker Change: 2025 has already delivered its own challenges with the horrific fires in Los Angeles impacting so many individuals and businesses just to name one but.
Craig Peters: I'm confident in the future of Getty Images, given our unique position and assets and our unwavering focus on delivering sustainable customer value by helping our customers to create and engage end audiences, saving them time and money, and reducing their risk. I look forward to our announced merger with Shutterstock as a means to further delever our balance sheet, increase our margins and cash flow, and to accelerate investment where we see opportunity, and I'm extremely energized to take Getty Images into its fourth decade. With that, I'll turn the call over to Jenn to take you through more financial details.
But I am confident in the future of Getty images, given our unique position in assets and our unwavering focus on delivering sustainable customer value by helping our customers to create and engage and audiences saving them time and money and reducing their risk.
Speaker Change: I look forward to our announced merger with Shutterstock as a means to further delever, our balance sheet increase our margins and cash flow and they accelerate investment where we see opportunity.
Speaker Change: I'm extremely energized to take Getty images into its fourth decade.
Speaker Change: With that I'll turn the call over to Jen to take you through more financial details.
Jenn Leyden: We continue to build momentum as we move through 2024, culminating in a strong finish to the year with a strong Q4 financial performance. We delivered high single digit top line growth while maintaining north of 30% adjusted EBITDA margins. We surpassed both the midpoint of the updated guidance we shared on our last call and the guidance we started the year with. Q4 revenue was $247.3 million, with year-on-year growth of 9.5%, or 8.5% on a currency neutral basis. Full year revenue was $939.3 million, up 2.5% on both a reported and a currency neutral basis. Geographically, the Americas region, our largest region with respect to revenue, was up 15.9% in Q4 on a currency neutral basis, with APAC also up 0.4% and EMEA down just under 1%. Annual subscription revenue was 54.9% of total revenue in Q4.
Jen Leighton: We continued to build momentum as we move through 2024, culminating in a strong finish to the year with a strong Q4 financial performance, we delivered high single digit topline growth, while maintaining north of 30% adjusted EBITDA margin.
Jen Leighton: We surpassed both the midpoint of the updated guidance, we shared on our last call and the guidance we started the year with.
Jen Leighton: Q4 revenue was 247 3 million with ear on aircrafts at nine 5% or eight 5% on a currency neutral basis.
Jen Leighton: Full year revenue was $939 3 million up two 5%.
Jen Leighton: Sorted and currency neutral basis.
Jen Leighton: Geographically the Americas region, our largest region with respect to revenue was up 15, 9% in Q4 on a currency neutral basis with APAC also up 24% and EMEA down just under 1%.
Jen Leighton: Annual subscription revenue was 54, 9% of total revenue in the fourth quarter.
Jenn Leyden: Subscription revenue grew approximately 11% on both a reported and a currency neutral basis. This growth was driven by our Premium Access and our e-commerce subscription offerings. We added 78,000 active annual subscribers to reach 314,000 in the Q4 LTM period, an increase of approximately 33% over the comparable LTM period. This was driven by our e-commerce businesses, iStock, and Unsplash+. Of the 314,000 annual subscribers in the LTM period, 54% were brand new customers and 32% were customers in our key growth markets across LATAM, APAC, and EMEA. Our annual subscription revenue retention rate continues to strengthen at 92.9% in the 2024 LTM period, up from 92.4% in the corresponding 2023 period, and also up from 92.2% in LTM Q3 2024.
Jen Leighton: Subscription revenue grew approximately 11% on both a reported and currency neutral basis. This growth was driven by our premium access and our e-commerce subscription offerings.
Jen Leighton: We added 78000 active annual subscribers to reach 314000 in the Q4 LTM period, an increase of approximately 33% over the comparable LTM period.
Jen Leighton: This was driven by our e-commerce businesses I stopped and slashed left.
Jen Leighton: Of the 314000 annual subscribers in the LTM period, 54% were brand, new customers and 32% where customers in our key growth markets across Latam APAC and EMEA.
Jen Leighton: Our annual subscription revenue retention rate continues to strengthen at 92, 9% in the 2024 LTM period from.
Jen Leighton: From 92, 4% and the corresponding spring 'twenty three period and also up from 92, 2% in LTM Q3 'twenty four.
Jenn Leyden: Paid downloads were down slightly at $93 million, while our video attachment rate remains in growth, rising to 16.5% from 14.1% in the Q4 2023 LTM period. Q4 editorial was $90.1 million, an increase of 19% year-on-year and 17.7% on a currency neutral basis. This performance was a continuation of the trends we discussed last quarter, with elevated demand for our editorial content fueled by major even year events, which drove a shift in downloads towards editorial amongst our Premium Access subscribers. Key drivers this quarter included our coverage of the US elections, global sporting events, as well as good compares for our entertainment and archive verticals, which were materially impacted in 2023 by the Hollywood strikes. Creative revenue was $142.4 million, down 2.4% year-on-year and 3.1% on a currency neutral basis.
Jen Leighton: Paid downloads were down slightly at 93 million, while our video attachment rate remains in Grad rising to 16, 5% from 14, 1% in the Q4 two.
Jen Leighton: 2023 LTM period.
Jen Leighton: Yeah.
Jen Leighton: Q4 editorial was $90 1 million, an increase of 19% year on year and 17, 7% on a currency neutral basis.
Jen Leighton: This performance was a continuation of the trends, we discussed last quarter with elevated demand for editorial content fueled by major even here events, which drove a shift in downloads towards editorial amongst our premium access subscribers.
Jen Leighton: Key drivers first quarter included our coverage of the U S elections global sporting events as well as good compares for entertainment and archived verticals, which were materially impacted in 2023 at the Hollywood strikes.
Jen Leighton: Data revenue was $142 4 million down two 4% year on year, and three 1% on a currency neutral basis.
Jenn Leyden: This decrease was primarily due to that shift in download consumption from creative to editorial, given the robust editorial event calendar, which I just mentioned. This is an impact we discussed last quarter as well. In Q4, this represented approximately 3.2 points of downward pressure on creative results. Adjusting for that impact, on a pro forma basis, creative revenue was in growth. Digging in a bit further to some of the revenue performance trends we saw in Q4. Within our creative business, we continue to see positive momentum in our iStock annual subscriptions, which grew by 10.7% on a reported basis and 9.9% currency neutral. Our Unsplash+ subscription grew once again by double digits, as this newer subscription offering continues to thrive. Corporate remains healthy and in growth for the quarter.
Jen Leighton: This decrease was primarily due to that shift in downloads consumption from creative to editorial given the robust editorial calendar, which I just mentioned.
Jen Leighton: This is an impact we discussed last quarter as well.
Jen Leighton: In the fourth quarter. This represented approximately 3.2 points of downward pressure on credit that's herself.
Jen Leighton: Adjusting for that impact on a pro forma basis creative revenue was named Brett.
Jen Leighton: Yeah.
Jen Leighton: Digging in a bit further extended the revenue performance trends we saw in Q4.
Jen Leighton: Within our creative business, we continued to see positive momentum in our ice stock annual subscriptions, which grew by 10, 7% on a reported basis and nine 9% currency neutral.
Jen Leighton: Our <unk> plus subscription grew once again by double digits assist anywhere subscription offer continues to thrive.
Jen Leighton: Corporate remains healthy and bank growth for the quarter.
Jenn Leyden: Within media, we saw double-digit growth across our broadcast and motion picture production customers, which reflects the ongoing recovery from the 2023 Hollywood strikes impact. Agency, which saw some strengthening in Q3, was in high single-digit decline in Q4, impacting our creative a la carte revenue. While we did see a decline in Q4, this still represents improvement from the double-digit declines we have seen in agency over the past several years. Other revenue was $14.8 million, an increase of $10.4 million from Q4 2023, primarily due to two new multi-year creative content deals that included some level of AI rights. The growth was also driven by ongoing revenue recognition in the quarter from deals signed in previous quarters. Revenue, less our cost of revenue as a percentage of revenue, remained strong at 73.5% in Q4, compared with 72.3% in Q4 2023.
Jen Leighton: In media, we saw double digit growth across our broadcast and motion picture production customers, which reflects the ongoing recovery from the 2023 Hollywood stripes impact.
Jen Leighton: HSE, which saw some strengthening in Q3 was in high single digit decline in Q4 impacting our creative Ala Carte revenue.
Jen Leighton: While we did see a decline in Q4, there's still represents an improvement from the double digit declines we have seen an agency over the past several years.
Jen Leighton: Other revenue was $14 million, an increase of 10 4 million from Q4 of 23.
Jen Leighton: Primarily due to two new multiyear creative content deals that included some level of AI rights.
Jen Leighton: Growth was also driven by ongoing revenue recognition in the quarter from deals signed in previous quarters.
Jen Leighton: Revenue less cost of revenue as a percentage of revenue remained strong at 73, 5% in Q4 compared with 72, 3% in Q4 2023.
Jenn Leyden: For the full year, 73.1%, up from 72.7% in 2023. Q4 SG&A expense was $105.5 million, up $3.9 million year-on-year, with our expense rate decreasing to 42.7% of revenue from 45% last year. The lower expense rate was due primarily to a $6 million decrease in stock-based compensation. For the full year, SG&A increased by $5.3 million to 43.4% of revenue, down from 43.9% last year, with that decrease in rate also driven by the decrease in stock-based compensation. Excluding stock-based compensation, SG&A increased to $101.1 million in the quarter, or 40.9% of revenue, up from $91.1 million or 40.3% of revenue in Q4 2023. The higher year-on-year spend reflects an increase in incentive-based staff compensation and commissions tied to our strong financial performance. For the full year, adjusted SG&A increased to $385.9 million, or 41.1% of revenue, compared to 39.8% of revenue in the prior year.
Jen Leighton: And for the full year 73, 1% up from 72, 7% in 2023.
Jen Leighton: Q4, SG&A expense was 105 5 million up $3 9 million year on year with our expense rate decreasing to 42, 7% of revenue.
Jen Leighton: 45% last year.
Jen Leighton: The lower expense rate was due primarily to a $6 million decrease in stock based compensation.
Jen Leighton: For the full year SG&A increased by $5 3 million to 43, 4% of revenue down from 43, 9% last year.
Jen Leighton: With that decrease in rate also driven by the decrease in stock based compensation.
Jen Leighton: Excluding stock based compensation SG&A increased to $101 1 million in the quarter or 49% of revenue up from $91 1 million or 43% of revenue in Q4 of 2023.
Jen Leighton: The higher year on year spend reflects an increase in incentive based staff compensation and commissions tied to our strong financial performance.
Jen Leighton: For the full year adjusted SG&A increased to 385 9 million or 41, 1% of revenue compared to 39, 8% of revenue in the prior year.
Jenn Leyden: Adjusted EBITDA was $80.6 million for the quarter, up 11.7% year over year and 10.4% on a currency neutral basis. Adjusted EBITDA margin was 32.6%, up from 31.9% in Q4 2023. For 2024, adjusted EBITDA was $300.3 million, down 0.4% reported and 0.3% on a currency neutral basis. Adjusted EBITDA margin was 32% compared to 32.9% in 2023. CapEx was $15.1 million in Q4, essentially flat to the prior year. CapEx as a percentage of revenue was 6.1%, down from 6.7% in the prior year period. For the full year, CapEx was $57.4 million, or 6.1% of revenue, again, fairly flat to prior year and well within our range of 5% to 7% of revenue.
Jen Leighton: Adjusted EBITDA was 86 million for the quarter.
Jen Leighton: 11, 7% year over year, and 10, 4% on a currency neutral basis.
Jen Leighton: Adjusted EBITDA margin was 32, 6% up from 31, 9% in Q4 23.
Jen Leighton: For 2024, adjusted EBITDA was $300 3 million down 4% reported and three.
Jen Leighton: <unk>, 3% on a currency neutral basis.
Jen Leighton: Adjusted EBITDA margin was 32% compared to 32, 9% in 2023.
Jen Leighton: Capex was $15 1 million in Q4, essentially flat to the prior year.
Jen Leighton: Capex as a percentage of revenue was six 1% down from six 7% in the prior year period.
Jen Leighton: For the full year, Capex was $57 4 million or six 1% of revenue again fairly flat to prior year and well within our range of 5% to 7% of revenue.
Jenn Leyden: Adjusted EBIT less CapEx was $65.5 million, up $8.4 million year-over-year, representing an increase of 14.8% or 12.2% on a currency neutral basis. Adjusted EBITDA less CapEx margin was 26.5% in Q4, an increase from 25.2% in Q4 2023. For the full year, adjusted EBITDA less CapEx was $242.8 million, a decrease of 0.7% on both a reported and a currency neutral basis. Free cash flow was $24.6 million in Q4, compared to $18.6 million in Q4 2023. The increase in free cash flow during Q4 was largely driven by the increase in EBITDA. Free cash flow is stated net of cash interest expense of $22.7 million and cash taxes paid of $13.3 million in Q4.
Jen Leighton: Adjusted EBITDA less Capex was $65 5 million up $8 4 million year over year, representing an increase of 14, 8% or 12, 2% on a currency neutral basis.
Jen Leighton: Adjusted EBITDA less Capex margin was 26, 5% in Q4, an increase from 25, 2% in Q4 of 2023.
Jen Leighton: For the full year adjusted EBITDA less Capex was $242 8 million a decrease of <unk>, 7% on both reported and a currency neutral basis.
Jen Leighton: Yeah.
Jen Leighton: Free cash flow was $24 6 million in Q4.
Jen Leighton: Compared to $18 6 million in Q4 of 2023.
Jen Leighton: The increase in free cash flow during Q4 was largely driven by the increase in EBITDA.
Jen Leighton: Great Costello is stated net of cash interest expense of $22 7 million and cash taxes paid $13 3 million in the fourth quarter.
Jenn Leyden: For the full year, we generated $60.9 million in free cash flow compared to $75.7 million in 2023, with that full year decrease primarily driven by an increase in cash paid for interest and taxes. We finished the year with $121.2 million of balance sheet cash, up $11.3 million from the end of Q3 and down $15.4 million from Q4 2023. The lower cash balance relative to 2023 is due to $57.8 million of voluntary debt paydowns executed during the year. This includes $2.6 million in Q4. As of 31 December, we had total debt outstanding of $1.3 billion, which included $300 million of 9.75% senior notes, $579.2 million of USD term loan with an applicable interest rate of 8.85%, and EUR 435.2 million of euro term loan converted using exchange rates as of 31 December 2024, with an applicable rate of 7.88%.
Jen Leighton: For the full year, we generated $68 9 million in free cash flow compared to $75 7 million in 2023.
Jen Leighton: With that full year, a decrease primarily driven by an increase in cash paid for interest and taxes.
Jen Leighton: We finished the year with $121 2 million of balance sheet cash up $11 3 million from the end of the third quarter and down $15 4 million from Q4 2023.
Jen Leighton: Our cash balance relative to 2023 is due to 57.8 million voluntary debt pay downs executed during the year.
This includes $2 6 million in the fourth quarter.
Jen Leighton: Yeah.
Jen Leighton: As of December 31st we had total debt outstanding of one 3 billion, which included $300 million of 975% senior notes.
Jen Leighton: <unk> hundred $79 2 million of USB term loan with an applicable interest rate of eight 5%.
Jen Leighton: $435 2 million of Euro term loan converted using exchange rates as of December 31, 2024 within the applicable rate of seven 8%.
Jenn Leyden: We also have a $150 million revolver that remains undrawn. We ended the quarter with a net leverage of 3.97 times. This is down from 4.2 times at year-end 2023. This marked the first time in over a decade that our net leverage has fallen below four times. While we remain focused on continuing to bring down our leverage, we are extremely proud of crossing below that four times net leverage mark, given that this company has, in its 30 years, seen its leverage be as high as 10 times. As Craig mentioned, in February, we completed the refinancing of our existing term loan structure. We replaced our old term loans, which were set to mature in February 2026, with new loans now maturing in February 2030. We maintain roughly $1 billion of term loans outstanding.
Jen Leighton: We also have a $150 million revolver that remains undrawn.
Jen Leighton: We ended the quarter with a net leverage of 397 times.
Jen Leighton: This is down from four two times at year end 2023.
Jen Leighton: This marks the first time in over a decade that our net leverage has fallen below four times.
Jen Leighton: While we remain focused on continuing to bring down our leverage we are extremely proud that's crossing below that four times net leverage Mark given that this company has and that's 30 years Phoenix leverage be as high as 10 times.
Jen Leighton: As Craig mentioned in February we completed the refinancing of our existing term loan structure.
We replaced our old term loans, which were set to mature in February 2026, with new loans now maturing in February 2030.
Jen Leighton: We maintain roughly 1 billion of term loans outstanding.
Jenn Leyden: Our new facilities include $580 million of USD term loan with an 11.25% fixed rate and EUR 440 million of euro term loan with an applicable interest rate of 600 basis points plus EURIBOR, equivalent to 8.63% as of 21 February 2025. We will continue to assess market conditions with respect to any future potential refinancing or redemption of our $300 million of bonds. In addition, as we advance on the regulatory front and gain clearer insight into the merger timeline, we will decide on any additional financing actions required to close the Shutterstock transaction. Considering the foreign exchange rates and applicable interest rates on our debt balance as of 31 December 2024, also factoring in the impact of the debt refinancing, including mandatory amortization on the euro term loan, our estimated cash interest expense for 2025 is projected to be $133 million.
Jen Leighton: Our new facilities include 580 million or USD term loan with an 11.25% fixed rate and $440 million of euro term loan.
With an applicable interest rate of 600 basis points, plus Europe or equivalent to $8 six 3% as of February 21 2025.
Jen Leighton: We will continue to assess market conditions with respect to any future potential refinancing or redemption of our 300 million of bonds.
Jen Leighton: In addition, as we advance on the regulatory front end game clearer insight into the murder timeline, we will decide on any additional financing actions required to close the shutterstock transaction.
Jen Leighton: Considering the foreign exchange rates applicable interest rates on our debt balance as of December 31st and also factoring in the impact of the debt refinancing, including mandatory amortization on the euro term loan our estimated cash interest expense for 2025.
Jen Leighton: As projected to be $133 million.
Jenn Leyden: To recap, we finished 2024 by delivering on the guidance we shared at the beginning of the year. We returned our business to top line growth while maintaining strong profitability margins. We drove meaningful subscriber growth, and we ended the year with a net leverage below 4x. As we approach the end of Q1 2025, we are excited to continue to build on the momentum with which we closed 2024. With that, let's move into our 2025 guidance. We anticipate revenue of USD 918 million to 955 million, down 2.3% to up 1.6% year over year and down 1% to up 3% on a currency neutral basis. Embedded in this guidance is an assumption for FX rates with the EUR at 1.05 and the GBP at 1.26, which implies a headwind on revenue of USD 12.5 million, of which approximately USD 3 million is expected in Q1.
Jen Leighton: To recap we finished 2024 by delivering on the guidance we shared at the beginning of the year.
Jen Leighton: We returned our business to topline growth, while maintaining strong profitability margins.
Jen Leighton: Meaningful subscriber growth.
Jen Leighton: We ended the year with a net leverage below four times.
Jen Leighton: As we approach the end of the first quarter of 2025, we are excited to continue to build on the momentum with which we close 2024.
Jen Leighton: With that let's move into our 2025 guidance.
Jen Leighton: We anticipate revenue of $918 million to $955 million down 2.3% to up one 6% year over year and down 1% to up 3% on a currency neutral basis.
Jen Leighton: Embedded in this guidance is an assumption for FX rates with the euro at 1.05, and the GBT at 1.26, which implies a headwind on revenue of $12 5 million of which approximately $3 million was expected in the first quarter.
Jenn Leyden: However, in recent days, we have seen increased volatility in FX rates following the ECB rate decision, with the dollar weakening relative to both the euro and the GBP. This change may lessen the impact of FX on our financial results in the Q2 through Q4 periods. We expect adjusted EBITDA of $272 million to $290 million. Down 9.5% to 3.3% year over year, or down 8% to 1.7% currency neutral. Included in the adjusted EBITDA expectations is a similar cadence for estimated FX impact, with an approximate $5 million headwind in 2025, of which approximately $1.5 million is expected in Q1. Please note this guidance includes the anticipated impacts of the odd year versus even year event calendar comparisons, as well as impacts from disruptions in production activity due to the Los Angeles fires and some continued lag in a return to pre-Hollywood strike production levels.
Jen Leighton: However in recent days, we have seen increased volatility in FX rates.
Jen Leighton: Owing the ECB rate decision with the dollar weakening relative to both the euro and the GDP.
Jen Leighton: This change may lessen the impact of FX on our financial results and the Q2 through Q4 periods.
Jen Leighton: Yeah.
Jen Leighton: We expect adjusted EBITDA of $272 million to $290 million.
Jen Leighton: Down nine 5% to three 3% year over year or down 8% to one 7% currency neutral.
Included in the adjusted EBITDA expectations is a similar cadence for estimated FX impact with an approximate $5 million headwind in 2025 of which approximately one 5 million is expected in the first quarter.
Jen Leighton: Please note. This guidance includes the anticipated impact of the odd year versus even year event calendar comparisons as well as impact from disruptions in production activity due to the Los Angeles fires and some continued lag and a return to pre Hollywood strike production levels.
Jenn Leyden: On the cost side, our guidance includes approximately $8 million in one-off increases in SG&A as we accelerate our SOX compliance efforts in 2025. This acceleration is to prepare for what we anticipate being a necessary shift in resources and focus on merger and integration-related activities upon the close of the transaction. Please note all other merger-related costs are not included in this guidance, as they are considered one-time in nature and therefore are excluded from adjusted EBITDA. With that, operator, please open the call for questions.
Jen Leighton: On the cost side, our guidance includes approximately $8 million and one off increases in SG&A as we accelerate our sox compliance efforts in 2025.
Jen Leighton: This acceleration is to prepare for what we anticipate being a necessary shift in resources and focus on merger and integration related activities. Upon the close of the transaction.
Jen Leighton: Please note all other merger related costs are not included in this guidance as they are considered one time in nature and therefore are excluded from adjusted EBITDA.
Speaker Change: With that operator, please open the call for questions.
Operator: At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two. Once more, for your questions, that is star and one. We'll take our first question from Cory Carpenter with J.P. Morgan. Your line is open.
Speaker Change: At this time, if he would like to ask a question. Please press the star and one on your telephone keypad you may withdraw yourself from the queue at any time by pressing star two.
Speaker Change: Yeah once more for your questions that is star one.
Speaker Change: We'll take our first question from Cory Carpenter with J P. Morgan Your line is open.
Cory Carpenter: Good afternoon. Thank you. I think, Craig, one for you and one for you, Jenn. Craig, just generative AI, hoping for an update on the consumer uptake that you're seeing and your latest thoughts on how you expect monetization to ramp. Jenn, on the financials, just could you expand a bit on what drove the outperformance in Q4 relative to the guide you gave last quarter, on revenue, but especially on EBITDA? Thank you.
Cory Carpenter: Good afternoon. Thank you I think Greg one for you and one for you Jim.
Cory Carpenter: So Greg this generative AI, hoping for an update on the consumer uptake that youre seeing in your latest thoughts on how you expect monetization to ran.
Cory Carpenter: And Jim on the financials, just could you expand a bit on what drove the outperformance in <unk>.
Speaker Change: Because the guide you gave last quarter on revenue, but especially on EBITDA. Thank you.
Craig Peters: Great. Thanks, Cory. I will take the first and leave the second to Jenn. On the AI take-up, we continue to see take-up of the AI service, both on Getty Images and on iStock. I would say it continues to grow, but at a relatively modest pace, which from all accounts, seems to match corporate adoption of generative, generally in terms of end deployment within the business versus internal deployment within the business. Where we're seeing that take-up is largely with existing customers using the capability not to generate from a text prompt, but to utilize the technology to modify the imagery. That's been something that has kind of exceeded our expectations in terms of how customers are adopting it and using it. In the fall, we launched the ability to insert products into the imagery, and that's been really received well across the customer base.
Speaker Change: Great. Thanks, Thanks Corey.
Cory Carpenter: I will take the first and then there's the set.
Jan.
Cory Carpenter: We continue to see.
Cory Carpenter: Take up of of the AI service, both on Getty images and on stock.
Cory Carpenter: Stock.
Cory Carpenter: I would say, it's it continues to grow but at a relatively.
Cory Carpenter: Modest pace.
Which from all accounts seems to match kind of corporate adoption of generative generally in terms of and deployment within the business versus internal deployment within the business.
Cory Carpenter: And where we're seeing that take up is is largely with existing customers using the capability not to generate from the tax from but to utilize the technology to modify the imagery.
Cory Carpenter: And that's been something that.
Cory Carpenter: It's kind of exceeded our expectations in terms of how customers are adopting and using it.
Cory Carpenter: <unk>, we launched the ability to insert products into the imagery.
Cory Carpenter: And that's been really received well.
Cory Carpenter: Across the customer base.
Craig Peters: It's addressing something that they haven't historically been able to do with our imagery on the creative side of things, and at least do that without significant effort. This is something that really simplifies that down. It continues to be there, but the core value that we continue to deliver is on pre-shot, and we see those two really being complementary with the customer base. We're pleased to kind of continue to roll out those capabilities, leveraging the technology that really help our customers save time and money.
Addressing something that they haven't historically been able to do with.
Cory Carpenter: With our imagery on the creative side of things and ill.
Cory Carpenter: Do that without significant effort and so this is something they really simplified that down but it's it continues to be there, but the core value that we continue to deliver as long.
Cory Carpenter: I appreciate it.
Cory Carpenter: And we see those to really be inventory.
Cory Carpenter: With the customer base, and and and so we're pleased to kind of continue to rollout those.
Cory Carpenter: Capabilities, leveraging the technology that really help our customers save time and money.
Jenn Leyden: Hey, Corey, I'll take the question on Q4. The good part about the Q4 performance is really it was driven by a strong top line. You mentioned a bit of improvement on EBITDA. That's really mostly about a drop-through of strong top-line performance. A bit of favorability on the gross margin side, which is almost always for us a product mix story, and that can vary a bit quarter to quarter, but as you know, we're always within roughly that 72% to 73% range, some favorability there on margin. That top line was a few different things. Obviously, as we moved through the year, we continued, as we indicated, to see that production side of things start to come back. Still not quite fully back to pre-strike levels, but for sure, we saw that come back in Q3, Q4.
Cory Carpenter: Hey, Cory I'll take the question on Q4, so I mean, the the good part about the Q4 performances.
Cory Carpenter: Really it was driven by strong topline. So you mentioned a bit of improvement on EBITDA, that's really mostly about a drop through of strong top line performance a bit of favorability on the gross margin side, which is almost always for us the product back story.
Cory Carpenter: And that can vary a bit quarter to quarter, but you know as you know, we're always within roughly that 72% to 73% range. So some favorability there.
Cory Carpenter: Margin and then that top line.
Cory Carpenter: <unk> was a few different things obviously as we move through the year. You know we continued as we indicated to see that production.
Production side of things start to come back still not quite fully back to pre strike levels, but for sure.
Cory Carpenter: You know we saw that come back in Q3 Q4.
Jenn Leyden: Some nice year-on-year comps there as we comp to the second half of 2023, that was really adversely impacted by the strikes. Event year calendar, continued to see some strong momentum from that in Q4 as well as Q3. We mentioned a couple of content deals that included an AI licensing element that also impacted Q4. As we've spoken about before, those tend to come with heavy upfront revenue recognition. A few different things driving revenue, but ultimately, that profitability story is a drop through of strong top line.
Cory Carpenter: Some nice year on year comps there as we come up to the 2023.
Cory Carpenter: Second half of 2023 that was really adversely impacted by the strikes that ear calendar. If you know continue to see some strong momentum from that AR in Q4 as well as Q3.
Cory Carpenter: And we mentioned some of the a couple of.
Content deals that included an AI licensing.
Cory Carpenter: Element that also impacted Q4 as we've spoken about before those tend to come with heavy upfront revenue recognition. So a few different things driving revenue, but ultimately profitability story is it's a drop through of strong top line.
Cory Carpenter: Yeah.
Cory Carpenter: Great. Thank you both.
Speaker Change: Great. Thank you Beth.
Cory Carpenter: Yes.
Operator: We'll take our next question from Mark Zgutowicz with The Benchmark Company. Your line is open.
Speaker Change: We'll take our next question from Mark <unk> with the benchmark Company. Your line is open.
Mark Zgutowicz: Thank you. Good evening, Craig and Jenn. Maybe a three-parter, if I could, on the outlook for 2025. Just looking for revenue growth by segment. Jenn, I don't know if you can provide a little color there. Also curious how much data licensing revenue is expected next 12 months, then just in terms of your visibility this year for agency, corporate, and media client spend, just if you can compare that to this time last year, that'd be helpful. Thanks.
Mark: Thank you good evening, Greg and John maybe a three part if I could on the outlook for 'twenty five.
Mark: Just looking for revenue growth by segment, John I know, if you can provide a little color there.
Speaker Change: So curious how much data licensing revenue is expected next 12 months and then.
Mark: Just in terms of your visibility.
Mark: This year for agency corporate media clients span just if you can compare that to.
Mark: At this time last year that'd be helpful. Thanks.
Craig Peters: Jenn, do you want to take the first two, and I can maybe provide some commentary on the agency front?
Speaker Change: Jim do you want to take the first two and I can maybe provide some commentary on the agency front.
Jenn Leyden: Yeah. Hey, Mark. We don't guide at that segment or product level. Broadly speaking, I think agency for us, we've spoken before, we don't anticipate agency suddenly flipping into a growth part of our business. We'd hope to see sort of a continued stabilization on that side of things. Media, I mentioned we're still not back to pre-Hollywood strike levels. That's more broadly the industry, not just us. Probably still a little bit of improvement to go there as we navigate through that. We do have, unfortunately, the new impact from the LA fires on that segment. We'll see what that does, but definitely seeing a bit of slowdown, delays on the production side of things as it relates to the impact of those fires.
Speaker Change: Yeah, Hey, Mark So we don't we don't guide you know at that segment or a product level.
Speaker Change: <unk> speaking I think you know agency for US we've spoken before you know we don't anticipate.
Speaker Change: Agency suddenly flipping into a growth part of our business and we hope to see sort of a continued stabilization on that side of things.
Speaker Change: Media you know I mentioned, we're still not back to pre Hollywood strike levels.
Speaker Change: More broadly the industry not just us so probably still a little bit of improvement to go there as we navigate through that but we do have you know unfortunately, the new impact.
Speaker Change: Our friendly L. A fire on that segment. So you know, we'll see what that does but <unk> definitely seen a bit of slowdown a delay from the production side of things as it relates to.
Speaker Change: So the the impact of those fires and of course corporate for US you know always our biggest opportunity for growth should we would expect to continue to see that into growth.
Jenn Leyden: Of course, corporate for us, always our biggest opportunity for growth, we'd expect to continue to see that into growth. On the data licensing side, again, we don't guide to a specific number there. Nothing heroic assumed in our guidance there. A bit of a continuation of the levels that we saw in 2024, which by all accounts is fairly modest. The guidance is not dependent on that becoming a very large piece of our business.
Speaker Change: The data licensing side again, there you know we don't guide to a specific number there nothing heroic are assumed in our guidance. There you know a bit of a continuation of the levels that we saw in 2024, which by all accounts is fairly modest.
Speaker Change: But the guidance is not dependent on that becoming a very large piece of our business.
Craig Peters: Thanks, Jenn. Yeah. Low single digits there. I would say just one of the things that we're watching is we are watching the creative agencies, Mark. WPP put out their performance for Q4 and for the full year. Their full year creative agency part of their business was down about 4%, but their Q4 was down around 6.5%. It looked like it got a little softer in Q4, and it seems like that we're still kind of processing across the full agency space, but that seems indicative. Which aligns to kind of some commentary that Jenn had about our Q4, where we continue to see that portion of our business down. We're kind of watching a little bit. Obviously, right now, there's a lot of uncertainty in the macro sense, and so that tends to show up first in the agency side of things.
Speaker Change: Thanks, Dan, Yes, low single digits, there and then.
Speaker Change: I would say just one of the things that.
Speaker Change: We're watching as we are watching the creative agencies Mark.
Speaker Change: W. P P you've put out there.
Speaker Change: Their performance for Q4 and for the full year. They are full year creative agency part of their business was down.
Speaker Change: <unk>, 4%, but Q4 was down around six 5%.
Speaker Change: And so it looks like you got a little softer in Q4 and it seems like that that we're still kind of processing.
Speaker Change: No.
Speaker Change: They're in the across the full agency space, but that seems indicative so.
Speaker Change: Which aligns to kind of southern commentary that Jan had about our Q4, where we continue to see that that portion of our business down.
And.
Speaker Change: And so we're kind of watching a little bit obviously right now the.
Speaker Change: There is a lot of uncertainty in the macro sense and so that tends to show up first in the agency side of things so.
Craig Peters: As Jenn highlighted, we've kind of factored those into our guidance to our best of ability at this point. That is typically the area where we see impacts more earlier and more acute, where the rest of our business is much more heavily weighted into subscriptions and much more stable in terms of the usage and everything there.
Speaker Change: But as Dan highlighted we've kind of factored those into our guidance.
Speaker Change: So our massive ability at this point, but that is typically the area where we see.
Speaker Change: Impacts.
Speaker Change: Sure.
Speaker Change: Earlier and more acute.
Speaker Change: Where the rest of our business is much more heavily weighted into subscriptions and much more stable in terms of the usage and everything there.
Mark Zgutowicz: That's helpful. Yeah, on the subscription side, it was nice to see that net retention number continue to improve. Appreciate all the color. Thanks.
Speaker Change: Okay. That's helpful.
Speaker Change: Subscription side, it was nice to see that.
Speaker Change: Net retention number continued to improve so I appreciate all the color. Thanks.
Craig Peters: Yeah. That should continue. Again, we're getting, as we kind of mentioned within our e-commerce business, we were pushing a lot into first-year cohorts. We don't retain at the same level as later-stage cohorts. We're seeing that already within the cohorts as we move into kind of year 2 and such. The cohorts look identical to more seasoned cohorts, older cohorts in the business. Yeah, should continue to see that.
Speaker Change: Yeah.
Speaker Change: And that should continue again, we're getting as we can.
Speaker Change: Mentioned within our E Commerce business, we were we were pushing a lot in the first year cohort two that those cohorts just arent is.
Speaker Change: We don't retain at the same level as later stage cohorts and we're seeing that already.
Speaker Change: Within the cohorts as we move into kind of year or two and so all the cohorts look identical.
Speaker Change: Two more seasoned cohorts.
Speaker Change: Older cohorts in the business. So yeah should continue to see that.
Mark Zgutowicz: Great. Thank you.
Speaker Change: Great. Thank you.
Operator: Once more for your questions, that is star and one. We'll pause a moment to allow any further questions to queue. It does appear that there are no further questions at this time. This does conclude today's program. Thank you for joining. You may disconnect at any time.
Speaker Change: And once more for your questions that is star and one will pause a moment to allow any further questions to queue.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: And it does appear that there are no further questions. At this time. This does conclude today's program. Thank you for joining you may disconnect at any time.
Craig Peters: Thank you.
Speaker Change: Thank you.
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