Executive Summary / Key Takeaways

• Getty Images is strategically shifting towards a higher-value subscription model and leveraging its proprietary, commercially safe AI technology to drive growth and build a competitive moat in the evolving visual content market.
• Recent Q1 2025 results showed modest revenue growth (0.8% reported, 2.6% CN), impacted by macro softness in agency/entertainment sectors and FX volatility, but underpinned by strong subscription momentum (57.2% of revenue, 21% subscriber growth LTM).
• The proposed merger with Shutterstock (SSTK) is a significant strategic move aimed at enhancing financial strength, deleveraging, and accelerating investment, though it faces ongoing regulatory review and associated one-off costs.
• Key risks include ongoing litigation (warrant and AI-related) with material reserves, macroeconomic uncertainty impacting customer spend, and the successful integration of the Shutterstock merger.
• Management's 2025 guidance anticipates continued low single-digit revenue growth (1% to 3% CN) and Adjusted EBITDA contraction (-7.9% to -1.4% CN), reflecting investment in SOX compliance, odd-year editorial comparisons, and lingering market impacts, while focusing on long-term value creation through subscriptions and technology.

A Legacy of Visual Content Evolution

Getty Images Holdings, Inc., founded in 1995, has spent three decades at the forefront of the visual content industry, constantly adapting to technological and market shifts. From the advent of digital photography and e-commerce to the rise of mobile content and artificial intelligence, the company has evolved its business model. This journey has shaped Getty Images into a preeminent global visual content creator and marketplace, operating through its distinct Getty Images, iStock, and Unsplash brands. Serving a diverse customer base ranging from large media outlets and advertising agencies to corporations, individual creators, and prosumers, Getty Images' strategy centers on providing high-quality, differentiated content and comprehensive solutions tailored to varying needs and budgets.

The industry landscape is characterized by a broad spectrum of competitors, from traditional stock agencies and news providers like Shutterstock and Thomson Reuters (TRI) to tech giants like Adobe (ADBE) with integrated creative suites and emerging players in the generative AI space, alongside numerous freelance marketplaces and free content sources. Against this backdrop, Getty Images positions itself by emphasizing the depth and breadth of its content library, the exclusivity of its collections, its global network of contributors and partners, and its commitment to legal and ethical content licensing. A key strategic pillar has been the significant shift towards a subscription-based model, which now constitutes over half of the company's revenue, providing a more predictable revenue stream and deeper customer integration.

The Technological Edge: Commercially Safe AI and Integrated Solutions

At the core of Getty Images' strategic response to the rapidly evolving digital landscape, particularly the advent of generative AI, is its focus on developing and deploying commercially safe and responsible technology. The company's generative AI tools, including Generative AI by Getty Images and iStock, are trained exclusively on Getty Images' vast creative content library. A critical differentiator is the commitment to compensating creators whose content is used in the training data and providing indemnification for customers licensing AI-generated visuals.

This proprietary approach offers tangible benefits over many alternative AI tools available in the market. By training on licensed, high-quality content and offering indemnification, Getty Images significantly reduces legal risks for commercial users, a major concern with AI models trained on scraped internet data. While specific quantifiable performance metrics like processing speed advantages over all competitors are not uniformly detailed, partnerships with technology leaders like NVIDIA aim to enhance speed and output quality, including improved details for high-resolution 4K outputs. The company has also rolled out capabilities allowing customers to modify existing pre-shot creative content using AI, demonstrating a focus on integrating AI into existing creative workflows rather than solely focusing on text-to-image generation. This allows customers to perform tasks like increasing copy space or inserting products into images more efficiently.

For investors, this technological differentiation is crucial. It helps build a competitive moat against rivals offering less legally robust or lower-quality AI solutions. This focus on commercially safe, indemnified AI supports Getty Images' premium positioning, particularly with enterprise customers who prioritize legal certainty and brand safety. While the revenue contribution from AI is still in the low-single-digit millions and customer adoption is in the low single-digit percentages, its consistent growth and strategic integration into subscription offerings signal its potential to become a more material contributor over time and reinforce the value proposition of Getty Images' content library in the age of AI.

Business Model Evolution and Operational Performance

Getty Images' business model is structured around its three core brands, each targeting distinct customer segments. Getty Images serves larger enterprise, agency, and media customers with premium content and comprehensive licensing options, including the Premium Access subscription. iStock caters to small and medium-sized businesses and freelancers with budget-conscious creative content available via e-commerce, offering various subscription and a la carte options. Unsplash targets the high-growth prosumer and semi-professional creator segments, offering free content alongside the paid Unsplash+ subscription for expanded access and legal protections.

A key operational achievement has been the successful acceleration of the shift towards annual subscriptions. In the three months ended March 31, 2025, annual subscriptions accounted for 57.2% of total revenue, up from 54.7% in the prior year period. This strategic focus has driven significant growth in the active annual subscriber base, which increased by 21.2% to 318,000 for the LTM ended March 31, 2025. Much of this growth is attributed to expanded e-commerce subscriptions on iStock and Unsplash+, with a notable portion coming from new customers and targeted growth markets. This shift, while sometimes impacting a la carte transaction volume, has positively influenced the annual revenue per purchasing customer, which grew by 13.2% to $1329 for the LTM ended March 31, 2025. The annual subscriber revenue retention rate has also strengthened, reaching 92.7% for the LTM ended March 31, 2025, up from 90.0% in the prior year period, underscoring the value and stickiness of the subscription offerings.

Operational metrics also highlight evolving customer engagement. Paid download volume was down slightly (2.7%) for the LTM ended March 31, 2025, but management views this as reasonably steady given macroeconomic challenges. The video attachment rate, however, continues its growth trajectory, increasing to 16.7% for the LTM ended March 31, 2025, reflecting increasing customer demand for video content and successful efforts to integrate video into subscription offerings and improve its discoverability. The company's extensive content library, comprising over 615 million visual assets (582 million images, 34 million videos) as of March 31, 2025, with over 12 million new assets added quarterly, ensures a constant supply of fresh content to meet evolving customer needs.

Financial Performance and Health

Getty Images' financial performance in the first quarter of 2025 reflected a mix of strategic progress and external pressures. Revenue for the three months ended March 31, 2025, was $224.1 million, a modest increase of 0.8% reported and 2.6% on a currency-neutral basis compared to $222.3 million in Q1 2024. This growth was influenced by a timing impact from revenue recognition (contributing ~320 basis points) and currency headwinds early in the quarter.

Segment performance showed divergence. Creative revenue decreased by 4.8% reported (-3.0% CN) to $132.2 million, primarily due to declines in a la carte sales and iStock monthly subscriptions, largely attributable to reduced spending from Agency customers. Editorial revenue, however, increased by 4.0% reported (5.6% CN) to $82.6 million, driven by subscription growth and strong performance in Sport and News coverage, partially offset by a decrease in Entertainment due to the LA fires. The "Other" category saw significant growth (131.7% reported, 135.5% CN) to $9.3 million, primarily from data access and new licensing agreements with heavier upfront revenue recognition.

Profitability metrics were impacted by various factors. Cost of revenue as a percentage of revenue remained stable at 26.9% in Q1 2025. Selling, general, and administrative (SG&A) expenses decreased by 2.7% reported, driven by lower equity-based compensation, although professional fees increased due to ongoing litigation. Other operating expenses net increased significantly to $18.4 million, primarily due to $18 million in costs related to the proposed Shutterstock merger. The company reported a net loss of $102.6 million in Q1 2025, compared to net income of $13.6 million in Q1 2024. This shift was largely driven by a substantial foreign exchange loss of $25.1 million (versus a $16.4 million gain in Q1 2024) and a significant income tax expense of $64.6 million (versus $11.2 million in Q1 2024), influenced by the pre-tax loss and non-analogous tax items. Adjusted EBITDA was $70.1 million, a slight decrease of 0.1% reported, but an increase of 2.2% currency-neutral, maintaining a healthy margin of 31.3%.

From a liquidity standpoint, cash and cash equivalents stood at $114.6 million as of March 31, 2025. Cash provided by operating activities decreased to $15.4 million in Q1 2025 from $21.5 million in Q1 2024, mainly due to changes in working capital. Cash used in investing activities was $15.7 million, primarily for capital expenditures related to internal software development. Financing activities resulted in a net cash outflow of $12.5 million, impacted by debt issuance costs and principal payments related to the term loan refinancing. Management expects existing liquidity and cash flow to be sufficient for operations and investments for the foreseeable future.

Total debt outstanding was $1.36 billion as of March 31, 2025. The company successfully refinanced its term loans in February 2025, extending maturities to 2030, and completed a Permitted Debt Exchange Offer in May 2025. Net leverage increased slightly to 4.1x at March 31, 2025, from 4.0x at the end of 2024, reflecting the refinancing and FX impact on Euro debt.

Outlook and Strategic Path Forward

Management remains on track to deliver its full-year 2025 outlook, which anticipates continued low single-digit revenue growth and Adjusted EBITDA contraction. The guidance reflects a currency-neutral revenue growth range of -1% to 3%, translating to a reported range of $931 million to $968 million, assuming full-year FX rates of EUR 1.10 and GBP 1.30. Adjusted EBITDA is projected between $277 million and $297 million, representing a currency-neutral decrease of 7.9% to 1.4%.

The outlook incorporates several key assumptions and strategic considerations. Growth is expected to continue from the subscription business, particularly in Q2, but the second half of 2025 faces tougher year-on-year comparisons following the post-strike recovery seen in late 2024. The guidance accounts for the impact of the odd-year editorial event calendar compared to the robust 2024, as well as lingering disruptions from the LA fires and the gradual return to pre-Hollywood strike production levels. On the cost side, the outlook includes approximately $8 million in one-off SG&A increases concentrated in Q2-Q4 2025, primarily to accelerate SOX compliance efforts in preparation for the Shutterstock merger. Other merger-related costs are excluded from Adjusted EBITDA. Estimated cash interest expense for 2025 is projected at $133 million.

The proposed merger with Shutterstock, expected to close in the second half of 2025 pending regulatory and stockholder approvals, is a central strategic initiative. It is intended to create a stronger combined entity with enhanced financial stability and opportunities for accelerated investment and deleveraging. The company is actively working with regulatory bodies like the DOJ and UK CMA to secure necessary approvals.

Key Risks and Challenges

Despite strategic progress, Getty Images faces several significant risks and challenges. The ongoing legal proceedings related to former public warrant holders represent a material financial exposure. As of March 31, 2025, the company had litigation reserves of $112.4 million and a related insurance recovery receivable of $40 million. The company is appealing a judgment in the Initial Warrant Litigation and expects to appeal a recent summary judgment in the BernerLapp Actions, while also defending against additional lawsuits. The ultimate resolution of these matters is uncertain and could materially impact financial condition and cash flows.

Litigation against Stability AI regarding the alleged unauthorized use of content for AI training is another critical risk, potentially impacting the company's ability to protect its intellectual property and the value of its content library in the AI era. Furthermore, the company is contesting tax assessments in Canada, which could require a payment of up to $17.8 million as part of the appeal process, with a potential maximum outcome of $25.9 million if the tax authority prevails.

Macroeconomic uncertainty, including geopolitical tensions, inflation, interest rates, and potential trade wars, continues to pose a risk, particularly impacting the sensitive agency business segment. The lingering effects of the Hollywood strikes and disruptions like the LA fires also present ongoing challenges to revenue in the entertainment and media sectors. Finally, the successful completion and integration of the proposed merger with Shutterstock are subject to regulatory approvals and execution risks, which could impact the anticipated benefits of the transaction.

Competitive Landscape and Positioning

Getty Images operates in a highly competitive market, vying for customers and contributors against a diverse set of players. Direct competitors like Shutterstock offer broad content libraries and increasingly sophisticated AI tools, while tech giants like Adobe leverage integrated creative software ecosystems and advanced AI capabilities like Firefly. Traditional news agencies such as Thomson Reuters maintain strong positions in editorial content licensing. The market also includes numerous smaller stock agencies, freelance platforms, and free content sources, contributing to pricing pressures in certain segments.

Getty Images differentiates itself through its curated, high-quality, and often exclusive content library, particularly strong in editorial coverage of global events and unique archival assets. Its strategic emphasis on a subscription model provides a more stable revenue base compared to purely transactional competitors. Critically, Getty Images' approach to generative AI, offering commercially safe, indemnified tools trained on licensed content, stands in contrast to many competitors whose AI offerings may carry higher legal risks for users. This indemnification and the ability to compensate creators provide a competitive advantage, particularly with enterprise clients prioritizing legal compliance and ethical sourcing.

While competitors like Adobe may possess greater scale and potentially faster AI processing speeds through deep software integration, Getty Images' focus on the content marketplace and its specific AI indemnification offer a distinct value proposition. Compared to Shutterstock, Getty Images emphasizes its premium positioning and exclusive content partnerships, which can command higher pricing in certain segments, although Shutterstock may demonstrate greater operational efficiency in broader market segments. The ongoing litigation against Stability AI is a key battleground in defining the legal boundaries of AI training, which could have significant implications for the competitive landscape and the value of copyrighted content. Getty Images' strategy is to leverage its unique content assets and responsible AI approach to capture value in the evolving market, seeking to maintain its leadership position amidst intense competition and technological disruption.

Conclusion

Getty Images is navigating a dynamic market landscape marked by technological disruption, macroeconomic uncertainty, and significant litigation. The company's strategic pivot towards a subscription-heavy model is yielding positive results in subscriber growth and revenue retention, providing a more resilient foundation. Its investment in commercially safe, indemnified generative AI technology represents a forward-looking effort to build a competitive moat and capture new opportunities in the evolving content creation workflow.

While recent financial performance reflects the impact of external headwinds and one-off costs associated with strategic initiatives like the proposed Shutterstock merger, the underlying trends in subscription adoption and operational focus areas like video suggest continued momentum in core business areas. The success of the Shutterstock merger and the resolution of ongoing legal challenges, particularly the warrant litigation and the Stability AI case, are critical factors for investors to monitor. By leveraging its unique content library, expanding its subscription base, and executing on its responsible AI strategy, Getty Images aims to unlock long-term value, positioning itself for growth in the next phase of the visual content industry's evolution.