Getty Images (GETY)

Visual content marketplace Getty Images (NYSE:GETY) missed Wall Street’s revenue expectations in Q1 CY2025, with sales flat year on year at $224.1 million. On the other hand, the company’s full-year revenue guidance of $949.5 million at the midpoint came in 0.7% above analysts’ estimates. Its non-GAAP loss of $0.14 per share was significantly below analysts’ consensus estimates.

Company Overview

With a vast library of over 562 million visual assets documenting everything from breaking news to iconic historical moments, Getty Images (NYSE:GETY) is a global visual content marketplace that licenses photos, videos, illustrations, and music to businesses, media outlets, and creative professionals.

AI-driven content creation, personalized media experiences, and digital advertising are evolving, which could benefit companies investing in these themes. For example, companies with a portfolio of licensed visual content or platforms facilitating direct monetization models could see increased demand for years. On the other hand, headwinds include growing regulatory scrutiny on AI-generated content, with many publishers balking at anything that gets no human oversight. Additional areas to navigate include the phasing out of third-party cookies, which could make traditional ways of tracking the online behavior of consumers (a secret sauce in digital marketing) much less effective.

Getty Images competes with visual content marketplaces like Shutterstock (NYSE:SSTK), Adobe Stock (part of Adobe Inc., NASDAQ:ADBE), and privately-held companies such as Alamy and VCG. The company also faces competition from user-generated content platforms and AI image generation services.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $941.1 million in revenue over the past 12 months, Getty Images is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels.

As you can see below, Getty Images’s 3.2% annualized revenue growth over the last four years was tepid. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

Long-term growth is the most important, but within business services, a stretched historical view may miss new innovations or demand cycles. Getty Images’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, Getty Images’s $224.1 million of revenue was flat year on year, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.

Getty Images has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average operating margin of 19%.

Analyzing the trend in its profitability, Getty Images’s operating margin decreased by 2.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Getty Images generated an operating profit margin of 12.2%, down 6.3 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Getty Images’s full-year earnings are still negative, it reduced its losses and improved its EPS by 41.1% annually over the last two years. The next few quarters will be critical for assessing its long-term profitability.

In Q1, Getty Images reported EPS at negative $0.14, down from $0.01 in the same quarter last year. This print missed analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Getty Images has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.1% over the last five years, quite impressive for a business services business.

Taking a step back, we can see that Getty Images’s margin dropped by 7.3 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Getty Images broke even from a free cash flow perspective in Q1. The company’s cash profitability regressed as it was 3.3 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Getty Images historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 11.6%, somewhat low compared to the best business services companies that consistently pump out 25%+.

Getty Images reported $114.6 million of cash and $1.33 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $300.2 million of EBITDA over the last 12 months, we view Getty Images’s 4.0× net-debt-to-EBITDA ratio as safe. We also see its $132.9 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Getty Images provide full-year revenue and EBITDA guidance that slightly beat analysts’ expectations. On the other hand, this quarter's revenue, EPS and EBITDA missed. Overall, this was a softer print. The stock traded down 3.7% to $1.97 immediately following the results.

Updated: May 22, 2025 at 10:29 PM EDT

Before deciding whether to buy Getty Images or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We cheer for all companies serving everyday consumers, but in the case of Getty Images, we’ll be cheering from the sidelines. First off, its revenue growth was uninspiring over the last four years, and analysts don’t see anything changing over the next 12 months. And while its astounding EPS growth over the last two years shows its profits are trickling down to shareholders, the downside is its cash profitability fell over the last five years. On top of that, its diminishing returns show management's prior bets haven't worked out.

Getty Images’s EV-to-EBITDA ratio based on the next 12 months is 2.5x. While this valuation is reasonable, we don’t see a big opportunity at the moment. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $4.42 on the company (compared to the current share price of $1.78).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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