GETY Q1 Earnings Call: Subscription Growth, AI Adoption, and Agency Headwinds

Visual content marketplace Getty Images (NYSE:GETY) fell short of the market’s revenue expectations in Q1 CY2025, with sales flat year on year at $224.1 million. Its non-GAAP loss of $0.14 per share was significantly below analysts’ consensus estimates.

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StockStory’s Take

Getty Images’ first quarter results were influenced by ongoing macroeconomic challenges, including agency and entertainment sector softness and disruptions from the Los Angeles fires. CEO Craig Peters emphasized that annual subscription growth—particularly from corporate clients and premium access products—remained a bright spot. The company pointed to rising video demand and new partnerships in sports and editorial as contributors to resilience in certain business lines. CFO Jenn Leyden cited minor revenue headwinds from foreign exchange and tariff-driven uncertainty, along with a slight year-on-year decline in paid downloads. Management acknowledged that the creative segment, especially agency clients, experienced a pullback in spending, which is typical during periods of economic uncertainty.

Looking forward, Getty Images’ guidance assumes gradual improvement in production and media segments as the effects of the LA fires subside and some post-Hollywood strike normalization occurs. Management sees opportunities in expanding its annual subscription base, geographic reach, and video monetization. Peters noted, “We continue to see growing adoption of our AI offering, particularly as customers use AI to modify pre-shot content.” Leyden indicated that macroeconomic and tariff uncertainties are factored into the outlook, while one-off SG&A increases related to compliance will weigh on costs throughout the year. The company remains focused on defending its copyrighted content in ongoing AI-related litigation and does not expect material changes in data licensing contributions for 2025.

Key Insights from Management’s Remarks

Management attributed first quarter performance to continued subscription growth, demand for video and sports content, and targeted product innovation, while highlighting ongoing challenges in agency and entertainment sectors.

• Subscription business momentum: Getty Images reported continued expansion in annual subscriptions, with active annual subscribers in the Q1 LTM period increasing approximately 21% over the comparable LTM period in 2024, primarily from e-commerce platforms like iStock and Unsplash+. The corporate sector remained a key source of new sign-ups and retention rates rose to 92.7%.

• Video and sports content growth: Demand for video and sports coverage increased, with new and renewed partnerships in sports, including exclusive deals with WWE, Major League Soccer, and the National Women’s Soccer League. Video attachment rates climbed, helping to offset softness elsewhere.

• Entertainment and agency headwinds: The entertainment segment was negatively affected by the Los Angeles fires, while agency business within the creative segment declined due to macroeconomic uncertainty. Management noted that agency clients typically reduce spending in uncertain conditions, leading to high single-digit declines.

• Emerging AI product adoption: Getty Images observed steady, though not rapid, adoption of its AI-powered content modification tools. These capabilities are being bundled into subscriptions, reflecting early but growing interest among clients for AI-driven editing features.

• Geographic and product mix shifts: Currency-neutral revenue growth was strongest in the Americas (up 6.4%), while EMEA (down 3% currency-neutral) and APAC (down less than 1% currency-neutral) regions lagged. The company also noted a shift toward subscription-based products and away from à la carte offerings, especially in small and medium business segments.

Drivers of Future Performance

Getty Images expects future performance to be shaped by ongoing subscription expansion, AI-driven product enhancements, and recovery in production and media activities.

• Subscription and geographic expansion: Management highlighted plans to further grow the subscription base, particularly among new customers and in under-penetrated geographic markets such as Latin America and Asia-Pacific. The company believes this will provide more stability amid market uncertainty.

• AI integration and legal clarity: Getty Images is bundling AI content modification tools into its offerings, responding to customer preferences for editing existing content rather than generating new images. Management also emphasized the importance of legal outcomes from ongoing litigation with AI companies, which could impact the company's ability to protect and monetize its intellectual property.

• Editorial and production normalization: Improvement is expected in production and media segments as the impacts from the LA fires and Hollywood strikes wane. However, management noted that full recovery to pre-strike levels may take additional time, and that one-off compliance costs will temporarily pressure margins.

Catalysts in Upcoming Quarters

Over the coming quarters, key areas to watch for include (1) sustained growth in the subscription base and customer retention improvements, (2) greater traction and monetization of AI-powered content tools, and (3) normalization in entertainment and production revenue as temporary disruptions ease. Additional attention will be given to legal developments regarding AI copyright protections and their implications for Getty Images’ competitive positioning.

Getty Images currently trades at a forward EV-to-EBITDA ratio of 2.5×. At this valuation, is it a buy or sell post earnings? See for yourself in our full research report (it’s free).

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