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Good afternoon, and welcome to Getty Images' Third Quarter 2024 Earnings Conference Call. Today's call is being recorded. We have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Steven Kanner, VP of Investor Relations and Treasury at Getty Images. Thank you. You may begin.

Good afternoon, and welcome to the Getty Images Third Quarter 2024 Earnings Call. Joining me on today's call are Craig Peters, Chief Executive Officer; and Jenn Leyden, Chief Financial Officer. Before we begin, we would like to remind you that this call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks, uncertainties and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties and assumptions are highlighted in the forward-looking statements section of today's press release and in our filings with the SEC. Links to these filings and today's press release can be found on our Investor Relations website at investors.gettyimages.com. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA less CapEx and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they represent our operational performance and underlying results of our business. Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations and rationale for using each measure, can be found in our filings with the SEC. After our prepared remarks, we'll open the call for your questions. With that, I will hand the call over to our Chief Executive Officer, Craig Peters.

Thanks, Steven, and thank you to everyone for joining us on today's call. I will touch on our performance and progress at a high level before Jenn takes you through the more complete full third quarter financial results. I am pleased to report we delivered a strong performance in the third quarter with revenue of $240.5 million, representing a year-on-year increase of 4.9% on a reported basis and 5.4% on a currency-neutral basis. Adjusted EBITDA came in at $80.6 million for the quarter, up 0.4% on a reported basis and up 0.8% on a currency-neutral basis with a healthy EBITDA margin of 33.5%. These positive results reflect growth across each of Getty Images, iStock and Unsplash+. Our team continues to execute on the opportunity in front of us, and we were pleased to see improvements with our agency and production customers. In line with these improvements, we drove growth across all customer categories, agency, media and corporate, within the quarter. Our subscription business saw outstanding performance, growing subscribers by nearly 50% versus the comparable LTM period, powered by our unique and differentiated iStock and Unsplash+ e-commerce offerings across a breadth of geographic markets. With subscriptions now accounting for more than 50% of our revenue and many of these subscriptions including the full breadth of our offering across editorial and creative, we also saw higher download, and therefore, revenue allocations to editorial content during major events like the Paris Olympics and the run-up to the U.S. election, as customers consume more content from these events. While product-level revenue attribution can be impacted by this shift in consumption, it really showcases the unique strength of our Premium Access subscription offering. This product delivers real-time, broad-based, high-quality editorial coverage, in combination with our highly-differentiated, impactful pre-shot creative content. This is why we continue to see subscriptions as a core driver of our overall growth on back of the strong demand for these offerings, strong renewals and the continued opportunity to upsell and cross-sell to these customers. One offering we continue to see success in cross-selling is our Custom Content offering. In the quarter, we saw brands such as Citi, Mitsubishi Motors, HSBC, Asahi and 3M trust Getty Images to be the engine of their product and brand-specific content needs via Custom Content. It was also great to see commercial activations by global brands leveraging our unique historical archive. Prime Video was just one of many examples of that within the quarter. On the AI front, we partnered with Sony Pictures on an activation in support of their latest release of the Venom series. We custom fine-tuned our commercially-safe, high-quality generative AI model, built with privacy, responsible content use and brand safety at its core, to help launch Venomize My Pet, a promotional consumer activation that allows fans to interact with branded content in a fun, safe and responsible way. Back to pre-shot, we continue to see strong demand for our creative offerings. This is not only demonstrated by the sustained growth of iStock and Unsplash+, but also through our API integrations. We were pleased to announce our Canva integration renewal in Q2. And continuing on that, we are pleased in Q3 to renew with brands like website builder, Squarespace. As we look ahead to closing out the year and into 2025, I'm incredibly confident in our trajectory. Our differentiation, execution and commitment to providing durable value to our customers through all of our offerings will continue to drive our success. I'm excited to further capitalize on our strengths going forward. And with that, I'll turn it over to Jenn.

We continue to build positive momentum, delivering strong revenue growth and an adjusted EBITDA margin north of 33%. As Craig mentioned, all 3 of our industry categories, corporate, media and agency, are in growth. Getty Images, iStock and Unsplash+ are in growth. Our annual subscription business comprises north of half of our total revenue, with Q3 adding to 9 consecutive quarters of high-double digit growth on annual subscriber count, and our e-commerce business is thriving. Now, it would be easy to misinterpret this quarter's results as being only about the post-Hollywood strike compares or about a robust editorial event calendar. But the fact is, we have momentum across the business. And this quarter is a testament to the strength of both our creative and our editorial business and to our ability to execute with our differentiated, high-quality, powerful content with our steadfast customer focus at the very core of our financial performance. Let's dive into those results. Revenue was $240.5 million, growth of 4.9%, or 5.4% on a currency-neutral basis. Across our major geographies, on a currency-neutral basis, we saw year-on-year increases of 9.9% in the Americas, our largest region, 1.3% in APAC and with EMEA down less than 1%. Underpinning this strong revenue growth is continued resiliency and health across many of our KPIs. Our annual subscription revenue was 52.4% of total revenue. We added 96,000 active annual subscribers to reach 298,000, an increase of approximately 48% over the comparable LTM period. Subscriber growth was driven by our e-commerce business, iStock and Unsplash+. And we continue to execute on our geographic growth plans with approximately 18,000 brand-new customers from our targeted growth markets in EMEA, LATAM and APAC. Our annual subscription revenue retention rate has begun to stabilize, coming in at 92.2% in LTM Q3 '24, down from 94.5% in the corresponding LTM period, but up from 89.4% in the LTM Q2 '24 period and up from 90% in LTM Q1 '24. Relative to the LTM Q3 '23 period, the decline from 94.5% was primarily driven by growth in our lower-retention smaller e-commerce subscribers, who tend to start out with lower revenue retention rates. Paid downloads were essentially flat at 94 million, while our video attachment rate rose to 16.4% from 13.7% in the LTM Q3 2023 period. Editorial revenue was $92.8 million, an increase of 16.1% year-on-year and 16.3% on a currency-neutral basis. This is our second straight quarter of a return to year-on-year growth for editorial after 4 consecutive quarters of decline, driven primarily by the Hollywood strike's impact. At approximately 1/3 of our total revenue, editorial returning to growth is a core contributor to our momentum. We've previously described the impact from major events during even years as adding approximately 1% of growth to total company revenue, equating to around a 3% lift to editorial revenue. That is consistent with what we are seeing this year. However, we are reporting a higher lift to editorial, given strike compares, and as Craig mentioned, a large concentration of revenue with our Premium Access subscription due to a shift in consumption towards editorial content within those fixed value subscriptions as a result of our major editorial event coverage. This consumption shift contributed approximately 10 points of impact to editorial growth in the quarter, with the shift having an inverse impact on creative results, which I will touch on next. Creative revenue was $133.7 million, down 7.9% year-on-year and 7.4% on a currency-neutral basis, with the decrease largely driven by that shift in Premium Access revenue allocation I just spoke to with an adverse impact of 5.4 points. When your account for this impact and some year-over-year revenue recognition differences, creative revenue is actually in growth with strong signals for sustained growth, which include our agency business, which has been in year-on-year decline for the past 12 consecutive quarters, returned to growth with a 5% year-on-year increase and 5.9% on a currency-neutral basis in Q3, driven by good performance across both the networks and the independent agencies. Our customer acquisition efforts continue to deliver positive results with iStock annual subscriptions growing approximately 17% on both a reported and a currency-neutral basis and our Unsplash+ subscription growing triple digits. Our e-commerce business, which represents approximately 25% of total creative revenue, continues to grow and was up 4.5% on a reported basis and 4.9% currency-neutral. Other revenue, which is historically a smaller revenue category for us, was $14.1 million, an increase of $9.9 million or about 240% from Q3 '23. This growth can be attributed to an expanded 5-year creative content deal with an existing customer, where we included some level of AI rights, which received accelerated revenue recognition in accordance with ASC 606 guidelines. Despite the heavy upfront revenue recognition, we will see cash flow evenly distributed over the 5-year term, very much aligning to our positioning on the importance of longer-term recurring elements for these types of deals. While this is just one of many large commitments we see from our customers, the power of our creative content sits at the very heart of this deal. Revenue less our cost of revenue as a percentage of revenue remained consistently strong at 73.4% in Q3, unchanged from Q3 2023. We have seen this metric be north of 72% for 17 of the last 18 quarters, indeed, one of the most resilient and compelling components of our business model. Total SG&A expense was $100.1 million in Q3, up from $97.3 million in the prior year. As a percentage of revenue, our expense rate was 41.6%, down from 42.4% last year. The lower expense rate was driven primarily by the increase in revenue and lower stock-based compensation in the quarter. Excluding stock-based compensation, SG&A rose to $95.8 million in the quarter or 39.8% of revenue, up from $88.1 million or 38.4% of revenue in Q3 2023. The increase in spend year-on-year reflects our planned reinvestment in the business as we entered 2024, primarily across staffing and marketing, following a pullback in spend as we navigated the Hollywood strike impacts in 2023, as well as higher commissions tied to strong revenue performance this quarter and the inclusion of operating costs for the recently acquired Motorsport Images. Adjusted EBITDA was $80.6 million for the quarter, up 0.4% year-over-year and 0.8% on a currency-neutral basis. Adjusted EBITDA margin was 33.5%, down from 35% in Q3 '23 but still incredibly strong. CapEx was $12.5 million in Q3, up $0.1 million year-over-year. CapEx as a percentage of revenue was 5.2%, down slightly from 5.4% in the prior year. Free cash flow showed a deficit of $1.8 million in Q3 compared to the $12.8 million generated in Q3 2023. The decrease in free cash flow reflects working capital changes related to the timing of receivables and payables, as well as higher cash interest expense and cash taxes paid. Free cash flow is stated net of cash interest expense of $40.8 million, an increase of $2.5 million over the prior year. Cash taxes for the quarter were $10.3 million, an increase of $2.7 million over Q3 2023. We finished the quarter with $109.9 million of balance sheet cash, down $11.8 million from Q2 2024 and down $3.6 million from Q3 2023. The lower cash balance is net of a voluntary $20 million debt repayment in the third quarter. Year-to-date, we have applied $55.2 million towards voluntary debt paydown, demonstrating our continued commitment to pay down debt and reduce our net leverage. As of September 30, we had total debt outstanding of $1.35 billion, which included: $300 million of 9.75% senior notes; $581.8 million USD term loan with an applicable rate of 8.85%; $467.6 million of euro term loan, converted using exchange rates as of September 30, 2024 with an applicable rate of 8.4%. Our $150 million revolver remains undrawn. We ended the quarter with a net leverage of 4.2x, unchanged from Q2. As I mentioned a moment ago, we remain committed to continuing to utilize our strong cash flow generation to further deleverage the balance sheet, and we will continue to explore opportunities to refinance our debt. Based on the foreign exchange rates and applicable interest rates on our debt balance as of September 30, our 2024 cash interest expense is estimated to be approximately $129 million. Now, turning to our outlook for the full year 2024. Taking into consideration our financial performance year-to-date and the impact of current FX rates, we are increasing our reported revenue guidance range to $934 million to $943 million, representing year-on-year growth of 1.9% to 2.9%, or 1.6% to 2.6% currency-neutral. We are also increasing guidance on our adjusted EBITDA range to $292 million to $294 million, which translates to a year-on-year decrease of 3.1% to 2.5%, or 3.4% to 2.8% currency-neutral. Please note, this includes an assumption that FX rates remain consistent with those as of November 1, 2024, with the euro at $1.09 and the GBP at $1.31 for the remainder of the year. In summary, we are committed to strong execution, driving full year top line growth and strategically investing in our business, while maintaining fiscal discipline and paying down our debts. As we look ahead, we are excited about our prospects for the fourth quarter of 2024 and beyond. With that operator, please open the call for questions.

[Operator Instructions] And your first question comes from Alex Lavigne from The Benchmark Company.

Hey, guys. Thanks for taking the questions. This is Alex on for Mark. Two quick ones for me. Just curious if you could provide an update on the GenAI front, whether or not clients broadly remain in the testing phase and how you see that adoption curve perhaps scaling in '25 alongside revenue. And then, separately, curious if you could provide an update just as you think about data licensing opportunities, whether or not the demand is there to take advantage of balanced against obvious competitive considerations as well. So, just curious on those 2.

Thanks, Alex. Appreciate the question. I'll take those. On the GenAI front, we continue to integrate the services out into our websites. We've launched, obviously, the stand-alone generative model, but we've also launched the capabilities to utilize AI in order to modify our existing pre-shot creative. Most recently, we just launched the ability to insert product-based imagery into our pre-shot imagery using AI. The take-up of these services is incremental to the business. I would say, it's still early in its overall take-up. We're in the single-digit percentages of customers that are adopting these capabilities. But it is one that we expect to continue to be additive to the business over 2025, and we think we'll start to see that become a more material contributor. It is interesting to note that where we're seeing adoption of the generative AI packages, we're seeing a good demand from new customers coming into the business that haven't been traditional customers of our brands or of our pre-shot offerings, which is nice. And we're seeing that as an opportunity to actually cross-sell to them the pre-shot offerings based off the merits of that -- those products stand-alone. So I'd say, still early days. Clearly, deals like the deal I mentioned on fine-tuning for the Venom movie promotion, those are interesting and more material into the business, but they aren't as recurring in nature. But I do believe there's going to be a lot of those activations out there and where our capabilities, not just in terms of the tool that we've created and offered, but our capabilities as a business and our deep relationships with those companies, are going to bring those to bear. So, I think we'll see more contribution from AI over 2025 as those types of activations get out and we continue to roll out more and more product features like the insert -- your product capability that we just rolled out last week. On the data licensing side of things, Jenn touched on it. We've done -- in Q2, we announced some small data licensing with an existing partner. We've done a little bit of data licensing in Q3, again, with an existing long-standing partner of ours. Those are deals where we have a belief that we will do deals that are aligned to the interest of the business and the interest of our creators over the long haul. And that's not every deal that's out there. We have passed on a large number of deals that we don't think align to the long-term interest of this company and to our creators. In many cases, again, we've partnered with companies to develop services jointly and then bring them to market as an alternative. But the world of AI is a big place, and it's not just all about simple generative models of imagery or video. There's a lot of applications to AI, and our quality content and metadata has relevance to that. So I think you'll see us continue to expand on the data licensing, but again, continuing to have a very long-term view on that and one that we think ultimately is highly accretive to the business and aligns to the interest of our creators.