Getty Images Holdings, Inc. (GETY) Earnings

Management highlights

### Market and Segment Strategic Shifts - The agency segment, now less than 15% of total revenue, is in long-term secular decline due to shifting media mix, in-housed production, and AI adoption. Management completed a small Q1 headcount reduction to right-size sales and service resources for lower volumes, with no redeployment of the reduced headcount to other segments. - The microstock category faces headwinds from AI-integrated search engine changes, SEO-dependent affiliate traffic declines, and generative AI competition. iStock is outperforming the broader category, and management is deliberately shifting iStock marketing/merchandising to focus on high-value exclusive signature content, which reduces near-term subscriber counts but improves long-term unit economics (signature customers have 2x annual spend and 3x total revenue vs lower-value customers). - The low-quality iStock free trial new customer acquisition program was discontinued in June 2025, as converted free trial subscribers had <10% annual renewal rates, low lifetime value, and did not align with Getty Images' core high-quality content strength. Impacts from this discontinuation will persist through Q3 2026. ### Operational Highlights and Competitive Strengths - Getty Images' differentiated global scale, real-time content delivery, and end-to-end customer support for major global events was validated at the 2026 Milan Cortina Winter Olympics. These events reinforce long-term customer relationships and drive downstream revenue across all business segments. - Upcoming tentpole events (U.S. America 250th anniversary, 2026 FIFA World Cup) provide clear multi-year revenue visibility, leveraging Getty Images' unique archive, exclusive access, and custom production capabilities. - Getty Images' editorial and photography team won nearly 90 industry awards in Q1, reinforcing the quality of the company's core content offering. ### Capital Structure and M&A Update - Following an adverse court ruling in the ALTA CRCM warrant litigation, the company satisfied the ~$110.9 million judgment via a draw on its revolving credit facility. Management states the obligation is fully manageable with existing liquidity and does not change operating priorities or investment plans, and core shareholders remain fully supportive. - The pending merger with Shutterstock has received unconditional approval in all jurisdictions except the UK. The CMA is expected to issue a final decision in June 2026, and management continues to engage constructively on the review. - iStock traffic in Q1 was temporarily impacted by the exit of a low-efficiency longstanding affiliate partnership and internal changes that hurt search rankings. The company has already course-corrected, and no material full-year impact is expected. - Large one-time expenses ($115 million since the start of 2025) related to the merger process, refinancing, AI litigation, and SOX compliance are largely behind the company, and management expects free cash flow to return to historical healthy levels.

Guidance

- Full year 2026 revenue and adjusted EBITDA guidance are maintained unchanged from prior guidance: - Revenue is expected to be $948 million to $988 million, representing a year-over-year change of -3.4% to +0.6% (-4.5% to +0.5% currency-neutral). Excluding the $40 million of accelerated revenue recognized in Q4 2025 from multi-year licensing deals, underlying revenue would grow 4.9% to 7% year-over-year (-0.5% to +3.7% currency-neutral). - Adjusted EBITDA is expected to be $279 million to $295 million, representing a year-over-year change of -12.9% to -8.1% (-13.9% to -9.1% currency-neutral), with adjusted EBITDA margins expected to remain near 30%. Excluding the Q4 2025 accelerated revenue impact, adjusted EBITDA would be -2.4% to +2.9% year-over-year (-3.6% to +1.7% currency-neutral). - The expected year-over-year decline in top- and bottom-line results is entirely driven by difficult comparisons from the accelerated revenue recognition of two large multi-year licensing deals booked in Q4 2025, which more than offsets the benefit of the 2026 even-year editorial event calendar. - The full year guidance includes a $6.9 million one-time SG&A increase for accelerated SOX compliance (up from $5.6 million in prior guidance), offset by reductions in other SG&A line items. All merger-related one-time costs are excluded from adjusted EBITDA guidance. - Management expects adjusted EBITDA margins to return to the historical ~30% range in the second half of 2026, after the Q1 temporary impacts from event costs and product mix normalize.

Segment performance

Total Q1 2026 revenue: $226.6 million, up 1.1% year-over-year (down 2.5% currency-neutral). - Creative: $126.2 million, 55.7% of total revenue, down 4.5% year-over-year (down 8% currency-neutral). Within Creative, custom content (including video and custom AI sets) grew over 250% year-over-year, and Unsplash Plus grew ~20% year-over-year. The segment was dragged down by a 380 bps negative revenue allocation shift to editorial, a 14% decline in the agency sub-segment, and temporary iStock traffic headwinds. - Editorial: $91.7 million, 40.5% of total revenue, up 11% year-over-year (up 7.1% currency-neutral), driven by strong Winter Olympics sports coverage, entertainment events, and archive demand. A 620 bps uplift from the creative-to-editorial revenue allocation shift contributed to this growth. - Other revenue: $8.6 million, 3.8% of total revenue, down from $9.3 million in Q1 2025. - By customer segment: Corporate revenue grew 6% year-over-year; Media revenue was flat; Agency revenue declined 14% year-over-year, consistent with prior trends. - By geography: Americas grew 1.9% currency-neutral; EMEA declined 6.9% currency-neutral; APAC declined 11.7% currency-neutral, driven by agency weakness and the absence of 2025 one-time projects. - Subscription revenue: 57.4% of total revenue (up from 57.2% in Q1 2025), grew 1.4% year-over-year (down 2% currency-neutral). Annual subscription revenue retention was 90% LTM, down from 92.7% in 2025 LTM due to non-recurring 2025 one-time events. Active annual subscribers totaled 258,000, down from 318,000 due to the deliberate discontinuation of the low-quality iStock free trial program. Adjusted EBITDA: $61.6 million, down 12.2% year-over-year (15.2% currency-neutral), with a margin of 27.2% (down from 31.3% in Q1 2025). Free cash flow improved to $24 million from negative $0.3 million in Q1 2025.

Risks & headwinds

- Global macroeconomic conditions remain uncertain, and any broader negative impacts from macro changes may not be fully reflected in current guidance. - The agency and microstock segments face ongoing secular headwinds from AI adoption, shifting customer behavior, and search engine algorithm changes that reduce affiliate traffic. - The CMA may rule that the Shutterstock merger results in a significant lessening of competition in the UK, and may require remedies that are unacceptable to the merger parties. - The low-quality customer legacy from the discontinued iStock free trial program will continue to drag annual subscription retention metrics through Q3 2026. - The company carries a high debt load following the ALTA judgment payment and merger financing, with estimated 2026 net cash interest expense of $194 million.

Analyst Q&A

• Q: With Q1's large shift in revenue mix between creative and editorial, what gives management confidence to maintain full-year guidance, and what are the next steps for the pending Shutterstock merger? /

  A: On the merger, the CMA is scheduled to issue a final decision by June 14 on whether it finds a significant lessening of competition (SLC) and what remedies would be required. Only a UK editorial business with £3.5 million in total revenue is under review, out of the combined $2 billion in total transaction revenue. Management remains committed to the merger, which it believes creates significant value, and expects full clarity by mid-June. On guidance, Q1's creative/editorial mix shift is purely a temporary consumption shift driven by the Winter Olympics (premium access customers downloaded more editorial content than usual), which is expected to repeat ahead of the end-of-year World Cup. Core business fundamentals remain strong: corporate is growing at mid-digit rates, subscriptions are growing, and custom content had its strongest quarter ever. The Q1 revenue recognition timing drag was fully expected, and the full-year impact remains consistent with prior guidance, so no change to guidance is needed. Margins are expected to return to target levels in H2 2026. (947 characters)

• Q: How are AI licensing opportunities expected to contribute to 2026 revenue, and what recurring revenue model is management pursuing for AI? Does agency right-sizing result in OpEx savings, and what are the underlying retention trends for iStock and Unsplash? /

  A: Limited AI licensing contributed almost nothing to Q1 revenue, and is expected to be a second-half 2026 contributor, but remains a small portion of overall revenue as Getty is selective in AI deals. Management's primary focus is integrating Getty's archive and editorial content into large language models and AI platforms to deliver context and accuracy, which follows the company's existing third-party content licensing model. For agency, the Q1 headcount reduction directly reduces OpEx to align with the segment's lower revenue volumes, and the reduced headcount was not redeployed. For iStock, the deliberate shift to high-value signature content (which makes up 70% of iStock revenue) will reduce near-term subscriber counts but improve long-term retention and revenue, as signature customers have far higher lifetime value than lower-value customers hurt by search and AI headwinds. (832 characters)

• Q: What was Premium Access dollar net retention in Q1, and when will overall annual subscription retention improve after the iStock free trial discontinuation? /

  A: The overall 90% LTM annual retention rate is dragged down by two temporary factors: the legacy of the discontinued low-quality free trial program, and non-recurring one-time customer spend from the prior year. Underlying core retention is very healthy: Premium Access, Getty's largest subscription, had 100% dollar retention in Q1; iStock annual retention is ~80%; and Unsplash retention is well over 90%. The drag from the free trial discontinuation will lap after the program's first anniversary in Q2, and will fully work its way out of the retention metric by Q3, leading to a 200-300 bps improvement in the overall annual retention rate once the noise is removed. (681 characters)