Getty Images Holdings, Inc. (NYSE: GETY) unveiled its Q3 2023 financials, spotlighting a remarkable transformation driven by a robust surge in subscription-based services. Notably, the company’s annual subscription revenue surged to an impressive 55.9% of its total revenue, marking a substantial leap and reflecting the growing momentum of its subscription-focused strategy.
Revenue and Financial Metrics
The third-quarter revenue stood at $229.3 million, registering a slight decline of 0.5% year-over-year. The company’s revenue mix saw an upward trend in the proportion of annual subscription revenue, reaching 55.9% of the total revenue, up from 49.4% in Q3 2022. This shift underscores Getty’s concerted efforts to fortify its subscription-based model.
Additionally, the company reported a net loss of $18.4 million, a significant improvement compared to the net loss of $118.1 million in Q3 2022. Adjusted EBITDA climbed to $80.3 million, reflecting a 3.4% increase year-over-year, and exhibiting robust fiscal discipline and proactive cost management.
Getty Images forged significant partnerships during the quarter, such as its collaboration with NVIDIA to introduce Generative AI by Getty Images. This service, leveraging the company’s content library, offers high-quality, commercially safe imagery with uncapped indemnification, ensuring legality and commercial viability. Getty Images also extended its agreement as an Authorized Photographic Agency with the Rugby World Cup and launching a platform in conjunction with BBC Studios, expanding its content library.
The company acknowledged challenges stemming from the Hollywood strikes and pressures on the agency business, along with unexpected currency fluctuations. As a result, the revised guidance for 2023 anticipates continued market challenges, leading to a lowered revenue projection of $900 million to $910 million, down approximately 2.8% to 1.8% year-over-year.
Subscription Expansion and Growth Strategy
Getty Images remains committed to expanding its subscription base, emphasizing its efforts in geographic expansion, and adding subscribers from growth markets worldwide.
These stats (from the earnings announcement and investor earnings call) highlight Getty Images’ impressive growth in annual subscribers, the increasing revenue share from subscription models, and the geographical diversification of their subscription customer base.
Annual Subscription Revenue Growth:
- Annual Subscription Revenue as a percentage of total revenue grew to 55.9%, up from 49.4% in Q3’22 and up from a finish of 49.0% for the full year 2022.
Annual Subscriber Growth:
- Getty Images grew annual subscribers by more than 88%, with more than 35,000 of these new subscribers from targeted growth markets outside North America and Western Europe.
- Added 95,000 subscribers to reach 202,000, an increase of approximately 88% over the corresponding period in 2022, marking the fourth consecutive quarter of annual subscriber growth in excess of 50%.
Revenue Retention Rate for Annual Subscribers:
- The revenue retention rate for annual subscribers was 94.5%, compared to 103% in the 2022 LTM (Last Twelve Months) period.
Subscription Revenue Segments:
- Creative revenue from annual subscription products grew 16.9% year-on-year and 16% on a currency-neutral basis.
- E-commerce subscription products, including the iStock annual and Unsplash Plus subscription, led the growth with a reported increase of 15.2% and 14.2% on a currency-neutral basis.
- 8.1% year-on-year or 8.3% currency-neutral growth in our custom content subscription.
- Editorial revenue from annual subscription products increased 3.8% in EMEA, while the Americas and APAC were down 3.7% and 3.9%, respectively.
Subscription Business Expansion:
- Approximately 35,000 new annual subscribers in growth markets across LATAM, APAC, and EMEA.
- Added approximately 60,000 new annual subscribers in core markets, including the U.S., Canada, France, Germany, the U.K., Japan, and Australia.
INSIDER TAKE
Getty Images’ commitment to expanding its subscription base, coupled with the significant increase in subscriber numbers across diverse markets, underlines a deliberate strategy to diversify and capture opportunities globally. The robust retention rate for annual subscribers further affirms the value proposition offered by its subscription services.
The company’s emphasis on leveraging partnerships and innovative services like Generative AI showcases a proactive stance in delivering high-quality, legally sound imagery to meet evolving customer demands.
Despite acknowledging challenges stemming from industry disruptions and currency fluctuations, Getty Images’ steadfast dedication to its subscription-oriented approach positions it as a frontrunner in the visual content market. This adaptability and focus on subscription models signal a resilient path forward in an ever-evolving content consumption landscape.