Good morning, and welcome to Getty Images Second Quarter 2024 Earnings Conference Call. Today's call is being recorded. We have allocated 1 hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Steven Kanner, Vice President of Investor Relations and Treasury at Getty Images. Thank you. You may begin..

Good afternoon, and welcome to the Getty Images Second Quarter 2024 Earnings Call. Joining me on today's call are Craig Peters, Chief Executive Officer; and Jen Layden, 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.getimages.com.

During our call today, we will also reference 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 that 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 to 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 Getty Image's second quarter earnings call. I will touch on our performance and progress at a high level before Jen takes you through the full second quarter financial results.

I am pleased to report as expected we returned to growth in the second quarter with revenue of $229.1 million, representing a year-on-year increase of 1.5%, on a reported basis, and 2.1% on a currency-neutral basis.

Adjusted EBITDA came in at $68.8 million for the quarter, down 5.4% on a reported basis and 4.7% currency-neutral, but continuing to represent a healthy EBITDA margin of 30%. We continue to see some softness from our agency and production customers impacting both creative and editorial and most notably, our video revenues.

However, we achieve growth across each of our Getty Images iStock and on Splash brands and we continue to see strong utilization of our offerings reflected by growth in paid downloads with consumption centered on our exclusive creative, and editorial content.

It would not be an earnings call if the CEO did not speak to our embrace of AI, but I want to start by grounding us in what really sets Getty Images apart.

Our partnerships and unique access, our deep expertise embedded across our staff and exclusive contributors, our comprehensive coverage and archive, our best-in-class search and our deep customer relationships. I was extremely fortunate to spend last week in Paris and observe how this uniqueness is demonstrated in an event like the Summer Olympics.

We've been the official photographic agency of the International Olympic Committee for more than 25 years. Our experienced team of more than 140 individuals, captured every moment across more than 70 sports for both men and women's competitions.

We captured the Grandeur of the whole city and the celebrities and dignitaries performing and in attendance. We captured the action from every angle, including from the air and below the water. All told, we shot and edited more than five million images over the course of the games and we delivered this content to our customers with unmatched speed.

Our archive allowed customers to tell deeper stories about Paris and tied the Paris games and its athletes to their rightful place in history.

Our commercial team was also on the ground, delivering best-in-class service to the International Olympic Committee and its family of partners and sponsors, including NBC Universal Comcast, Coca-Cola, Procter & Gamble, Visa, Toyota, AB InBev and Samsung Electronics to name a few.

And we did all of this while covering the world beyond Paris, global elections and conflicts, climate events, the latest concert performances and movie premieres and major sporting events, such as Formula 1 and we're also their official photographic partner.

Remember in April, we announced the abbreviation of motorsport images to deepen our footprint within the sport. And I'm pleased to report we added more than 300,000 images to our archive and worked closely to support new commercial partners such as McLaren Racing and Aston Martin. I am proud of the scale and scope of what our team accomplished.

I am proud of the level of professionalism displayed. I'm reminded of what truly sets Getty Images apart and of the durable value we convey to our customers. On the technology front, we continue to innovate to bring true, commercially safe, high-quality Generative AI services to our customers.

We launched an updated model of our commercially safe Generative AI services and tools in partnership with NVIDIA. It brings lightning fast speed and higher quality visuals, including improved details for high resolution 4K outputs.

We rolled out capabilities allowing customers to use AI across our pre-shot creative library enabling customers to modify both Generative AI images and existing pre-shot creative images. We announced the option for customers to fine tune the commercially safe foundational model using their own proprietary content.

We announced our partnership with PixArt to offer a custom, commercially safe model to their millions of creators, marketers and small business customers.

We announced the renewal of our longstanding Canva relationship, providing Canva’s customers with access to millions of Getty Images award-witting creative image, and video assets and agreement to collaborate to develop responsibly trained commercially safe Generative AI for their platform. I am proud of the progress we're making on this front.

I am proud of the quality of our offerings and the legality and integrity of how they are trained. And by the company we keep, I'm reminded of the truly unique capabilities of Getty Images. I will end my remarks by saying that I'm excited to build on our momentum over the second half of 2024.

I will now turn over to Jen to take you through the more detailed financials..

As Craig mentioned, our business returned to top-line growth in Q2 with headwinds turning to tailwind, our editorial business is back to the growth we have historically seen after four consecutive quarters of decline due to Hollywood strike impacts.

Our subscription business continues to expand, now up to 52.9% of total revenue, and our key performance metrics continue to be healthy.

Positive growth momentum across our business in spite of a still challenged agency business and a slow ramp up of post Hollywood strike activity from our media and production customers provides a solid foundation from which we continue to execute towards a strong second half of the year.

Let’s begin by highlighting some of our KPIs, which are reported on the trailing 12 month basis or LTM period ended June 30th 2024 with comparison to the LTM period ended June 30th 2023. Total purchasing customers were 740,000, down from 830,000 in the comparable LTM period.

The decrease is related to lower volume of à la carte transactions, which reflects both our continued shift into committed and annual subscriptions and a still pressured agency business, which consumes nearly entirely on an à la carte basis.

Importantly, we continue to see the benefit of higher lifetime customer value as we shift into more committed solutions with the total annual revenue per purchasing customer growing 10.7% to 1,232 from 1,113 in the comparable, LTM period.

We added 100,000 active annual subscribers to reach 282,000, representing growth of 55% over the corresponding 2023, LTM period. This metric has grown north of 50% in each of the last seven quarters.

This growth was fueled by our ecommerce offerings, including our iStock Annual, and our Unsplash+ subscription with the majority of this growth coming from customers brand new to Getty Images. Out of the 282,000 annual subscribers, over 60% were first time purchasing customers.

In addition, we continue to expand our geographic reach with over 96,000 new subscribers across our targeted growth markets in LATAM, APAC and in EMEA. Our annual subscriber revenue retention rate was 89.4% compared to 98.5% in the comparable LTM period, but held relatively steady to 90% reported for the LTM Q1 ‘24 period.

The year-on-year LTM decline was driven by the same factors that have impacted this metric over the past several quarters, including subscriber count growth in our lower retention smaller e-commerce subscribers.

Our Hollywood strike impacted reduction in incremental à la carte subscriber revenue from some of our media, broadcast and production customers and the decline related to one-time project spend in the prior periods in certain corporate customers.

On a sequential basis, the impacts in some of these items does appear to be stabilizing and our subscription revenue renewal rates remain very healthy averaging in the 90% range.

Paid download volume was up 0.9% to $95 million, an ever compelling data point, demonstrating the continued demand for high quality, differentiated commercially safe content. Our video attachment rate rose to 15.6% from 13.5% in the LTM Q2 2023 period another quarter of year-on-year growth. Turning to our financial performance.

Revenue was $229.1 million, an increase of 1.5% and 2.1% on a currency-neutral basis. Included in these results are certain impacts of the timing of revenue recognition that reduced year-on-year growth by 100 basis points. Annual subscription revenue was 52.9% of total revenue, up from 51.1% in Q2 2023.

This is our 7th consecutive quarter with subscription revenue comprising north of 50% of our total revenue. In total, subscription revenue increased 5.2% on a reported basis and 5.7% currency neutral, driven primarily by growth across our e-commerce subscription offerings.

Editorial revenue was $83.6 million, an increase of 4.1% year-on-year and 4.6% on a currency-neutral basis. We are seeing a strong rebound in editorial with the business delivering its first quarter of growth since the Hollywood strikes began impacting our financial performance in Q2 of 2023.

We saw growth across sports, news and entertainment with the largest gain in sports which was in double-digits year-on-year growth. We are seeing lift from our impressive coverage of major events such as the European soccer season and the lead up to the UEFA Championship, as well as our coverage of the US and UK election cycle.

It is great to hear editorial business back in growth and we are excited to continue this momentum into the second half of the year. Paid up revenue was $137.9 million, down 2.4% year-on-year and 1.8% on a currency-neutral basis.

Paid up performance continues to reflect that pressures in the agency business, which was down double-digits due primarily to decline at the smaller independent agencies. As we mentioned earlier, we are seeing a lag in recovery on the production side of things, which is also impacting Creative results.

Creative annual subscription revenue continues to be in growth at 5.7% year-on-year and 6.2% on a currency-neutral basis. Our customer acquisition efforts continue to drive growth and our iStock annual subscriptions, which grew 19% on both a reported and a currency-neutral basis, marking the 12th consecutive quarter of double-digit growth.

In addition, our Unsplash+ subscription, the first paid subscription for Unsplash delivered another quarter with triple-digit growth. As Craig mentioned iStock and Unsplash, largely e-commerce sites continue to grow. These sites on a combined basis, represent less than 20% of our revenue with over 50% sitting in annual subscriptions.

Across our major geographies, on a currency-neutral basis, we saw a year-on-year increase of 1.7% in the Americas, 2.4% in EMEA and 3% in APAC, all of our major geographic regions were in growth. Fantastic to see. Revenue versus cost of revenue as a percentage of revenue remained consistently strong at 72.5% in Q2, up from 71.9% in Q2 of 2023.

Total SG&A expense was $101.2 million, down from $101.5 in the prior year. As a percentage of revenue, our expense rate was 44.2%, down from 45% last year. The lower expense rate was driven primarily by the increase in revenues and lower stock-based compensation in the quarter.

Excluding stock-based compensation, SG&A rose to $97.2 million in the quarter or 42.4% of revenue up from $89.6 million or 39.7% of revenue in Q2 2023.

The increase in spend reflects our planned reinvestments in the business, primarily across staffing and marketing in addition to higher commissions tied to revenue delivery and the inclusion of motorsport imaging operating cost. This quarter also included some elevated severance cost as we continue to optimize our resource allocation.

These costs should be offset by savings in the balance of the year and higher net annualized savings going forward. Adjusted EBITDA was $68.8 million, down 5.4% year-over-year and 4.7% on a currency-neutral basis. Adjusted EBITDA margin was 30%, down from 32.2% in Q2 of 2023. CapEx was $15.4 million in Q2, up $1.5 million year-over-year.

CapEx as a percentage of revenue was 6.7%, compared to 6.2% in the prior year period and well, within our expected range of 5% to 7% of revenue. The year-on-year increase is largely tied to timing within the year. Free cash flow was $31.1 million, up from $27.9 million is Q2 of 2023.

The increase in free cash flow reflects working capital changes related to the timing of receivables and payables. Free cash flow is stated net of cash interest expense of $26 million and cash taxes paid of $12.8 million in the second quarter.

We finished the quarter with $121.7 million of balance sheet cash down, $12.5 million in Q1 2024 and up $0.4 million from Q2 2023. This includes $32.6 million in voluntary debt repayments in the second quarter of 2024.

As of June 30th, we had total debt outstanding of $1.35 billion, which include $300 million of 9.75% senior notes, $601.8 million USD term loan with an applicable interest rate of 9.94%, 448.5 million euro converted using exchange rate as of June 30th 2024, with an applicable rate of 8.69%. We also have a 150 million revolver that remains undrawn.

Our net leverage was 4.2 times at the end of Q2, unchanged from both Q1 and year-end 2023. We remain committed to utilizing our cash flow to further deleverge the balance sheet and we will continue to proactively explore opportunities to refinance our debt.

Based on the foreign exchange rate and applicable interest rates on our debt balance as of June, 30th, our 2024 cash interest expense is estimated to be $131 million. Of course, our actual annual interest expense remains subject to changes in the interest rate environment, which we outline in more detail within our SEC filings.

In summary, it is good to see our business back in growth with healthy underlying key metrics. We remain fiscally disciplined. We continue to invest in this business and we look forward to building on our Q2 momentum. Now turning for outlook for full year 2024.

Taking into consideration, the estimated impact of the stronger US dollar and assuming current FX rate hold we are updating our reported revenue guidance range to $924 million to $943 million, representing year-on-year growth of 0.9% to 2.9%.

On a currency-neutral basis, this represents growth of 1% to 3%, which remains unchanged from our prior guidance. We now expect adjusted EBITDA of $290 million to $294 million, which translates to a year-on-year decrease of 3.8% to 2.5% or 3.6% to 2.3% currency-neutral.

The update to our adjusted EBITDA outlook reflects a $2 million impact from current borrowing currency pressure, approximately $2 million of integration-related expenses that are more one-time in nature and some higher-than expected employee health insurance costs.

Please note the estimated FX impacts include an assumption that FX rates remain consistent with those as of August 1st 2024, with the euro at 1.08 and the GDP at 1.29 for the remainder of the year.

Despite these unplanned impacts, our operating efficiency remains strong with adjusted EBITDA margins expected to be north of 31% with positive momentum building we remain optimistic for our full year return to growth, while maintaining the fiscal discipline that has long been embedded in our business.

With that, operator, please open the call for questions..

[Operator Instructions] We'll take our first question from Cory Carpenter with JPMorgan. Please go ahead..

Good morning. Thanks for the questions. Craig, one for you and one for Jen. Maybe Craig just on Generative AI, you rolled out a lot this quarter, you made a lot of progress.

Hoping you could talk about the consumer engagement you are seeing and then also, I know it's still early, but your thought leaders thoughts on the potential monetization, the fact over time? And Jen, for you, just could you touch more on the drivers of the acceleration in the second half of year, any assumptions you're making, in particular around the agency channel.

Thank you, both..

Thanks for the question, Cory. On the Gen AI front, we continue to see really positive feedback from our customers across each and every segment of the business. And that's really due to the quality of the model and services that we’re providing, but also the truly commercially safe nature of how these are built and what these can do.

It's still early days in the adoption curve though within the within the commercial set. And so, it's not material to the business. We expect over time. It can be a meaningful contributor to the revenues of the business. But it's still early days and fairly limited contribution to the business at this point.

But it is, on a growth trajectory and as that becomes more material there we will be something we'll probably report back to you.

Jen?.

Yeah, and on guidance and just as you know the acceleration into the second half. So there's a few things there for top-line performance. One, as we mentioned, we're still seeing certainly through the first half, Q2 some continued lack on that production side of things recovering so. So a bit of continuing improvement there.

We have seen those declines start to taper off, but you know, largely still a slower recovery than we anticipated. So bit of pick up there. Agency side of things, we're not necessarily expecting any material changes there, but again slow gradual improvement to those double-digit decline that we're seeing.

Other big piece of it which we've spent some time talking about before is the editorial side of our business we are just using, woven in there. One obviously, as we move into the second half of the year, we've got a really favorable year-on-year comp with those strike impacts starting to impact us largely in Q3 and the second half of last year.

So we've got built-in favorable comp there and then our editorial event calendar, largely stacked in the second half of the year. So that big events like the Olympics and the US political cycle, both of those shaping up to be pretty healthy size events for us. So those are the primary drivers of that top-line performance in the second half..

Thank you..

Our next question comes from Ron Josey with Citi. Please go ahead..

Great, thanks for taking the question, and I wanted to double down on it more and understand on the subscription side. Craig and Jen and specifically, clearly over 50% of revenue for the past four quarters that's a good thing here. I want to understand about the drivers.

So you mentioned iStock Unsplash, now, 20% of revenue, 50% of that from subscribers. Just tell us more about what you're doing to drive that subscription from iStock or call it, contributing benefit from iStock and Unsplash but then also the strength in iStock and Unsplash.

And then, back to the subscription side, growth good decel here in 2Q from a revenue - from an annual active subscriber perspective. Can you provide any insights on the decel in growth and then from a retention rate, it looks like retention rates been relatively steady. Should we assume this is the right rate going forward here.

Thanks for the questions..

Great. Thanks, Ron, and Jen, I’ll take a stab at this upfront and then Jen can fill in on anything that I might have missed. In terms of the, kind of Unsplash and iStock side of things, we've been making a concerted effort over the last really two years to drive more annual subscriptions across those products. It results in higher ARPU.

It results in ultimately higher lifetime values. And then we think we deliver more value to our customers through those offerings and become more embedded in their day-to-day use and workflows. So we think it's a good thing for the customers, and it's a good thing for Getty Images overall.

The way we've been doing that, obviously, Unsplash, we introduced a paid subscription in Unsplash+ that had not sat there before. And it brings new value to those customers that brings indemnification. It brings higher end content in there that is fully released content. So, ultimately it’s providing additional value to the Unsplash universe.

On iStock, we've introduced more SKUs within the paid or sorry within the subscription product side of things. And we've been increasing the use of free trials against that. I'd say, it's been largely positive. There is a slightly lower retention coming out of the free trial.

But it's been one that we're getting people to try the product that are largely new to the iStock platform as Jen mentioned. And we think that's a good thing and it's been largely net positive. We are obviously going through test cycle to continue to optimize that by geo and traffic source.

But that's been a driver behind that in addition to offering lower and annual subscriptions like 10 downloads per month. That has led to great growth across those two platforms in terms of their annual subscription revenues and ultimately as a percentage of the overall business.

Those do with as mentioned on previous calls, they do with lower net retention. Obviously, we're dealing with small businesses and freelancers and those have higher degrees of churn in and out of products. And so that's been impacting that retention rate that you referenced, which has kind of come down a bit.

But again, I still think it's a net trade positive to the business. And so I think on go-forward basis yeah, you should expect to probably see revenue retention rates for subscribers to kind of maintain in that kind of 90% range and we'll continue to test and learn and optimize.

But again I go back that we had growth across Getty Images, growth across iStock and growth across Unsplash in the quarter. And I think the annual subscription component of that was a big driver to ultimately achieving growth across each of these brands.

Jen is there anything to add?.

Yeah, I think the only thing I’d add is Ron, you asked specifically I think if that 89 90% retention rate is sort of a go-forward. I think probably, if we cycle through this year, it'll hover somewhere around there and then start to ramp up to low mid 90s over time.

And one of the things that we are seeing when we've touched on here one of the other drivers of that retention rate is we're seeing a little bit of contraction in spend from these subscribers outside of their subscription. And that is very much a Hollywood strike impact.

If you go back to last year, pre-Hollywood strike expense number was in those low to mid-0s. So we're starting to see that consumption level, that a la carte spends outside of subscriptions start to kick back up. Again, we're far from full recovery on that, but that's one of the drivers of this.

But I think, slowly over time, we'll start to see that come back a bit..

Super helpful on both. Could you - and one quick follow-up just talking to the writer strike and the recovery. We still have, I think we're still recovering, would you say we're beyond the heavy lifting, so to speak and now it's a matter of time. Or would you have expected the recovery to be faster, slower any thoughts there would be helpful.

Thank you very much..

Yeah Ron. I think we're beyond heavy lifting, but we're just in a gradual reramp over time. And so we're hopeful that, we'll continue to see that over the second half and into 2025. It's one where that will impact kind of all of our product lines. So it's not just an editorial item, it's an editorial plus Creative.

In fact, a lot of the content that is consumed in a productions is Creative. So, yeah, we expect that we'll see that clearly following the media sector, it's one where that's been a bit more gradual by all reports. But all expectations are that by 2025, we should probably be back to where we were.

But, yeah, we're kind of past the heavylifting side of things and should be in a situation where it's just a gradual return over time. And again, we've got deep embedded relationships within that community and those customers face and are in tight conversations with them.

So, I think that expectation is one that's grounded in good solid customer communication and feedback..

Thank you, Craig. Thank you, Jen..

I’d just add there just to give some numbers. If we look at specifically from that production side of things, when we were in the heart of strike impact last year, we saw that industry down double-digits as we move into the first half of the year still indefine, but now sort of in that lower single-digit range.

So, if you look at those numbers, we've gone from double-digit declines down to single-digit-declines. So, seeing some improvement that as Craig noted, we expect that recovery to continue on a bit longer..

Thank you..

Our next question comes from Mark Zgutowicz with Benchmark. Please go ahead..

Thank you. Good morning, Craig and Jen. Couple from me on one premium access, just curious how that performed in the quarter and your expectations for the ecom product. Basically, I think it's roughly a 20% base today. So just growth in the second half.

And then, also curious, I might have missed it, but I was curious what drove the big quarter-over-quarter growth within the other segment. Thanks..

Thanks, Mark. On PA, premium. Access is our largest subscription offering. It's our primary subscription offering. It includes a lot of our really premium content across editorial and creative and video and stills, it can bring our archive into play.

We continue to see really strong performance in that product, not just in and take up of new customers, but more importantly on the retention side of things and the utilization side of things. So it's a really strong product and we haven't really seen any moderation in its performance at any point in the last couple of years.

It’s just, it's really about building the strength of that deep customer embedded workflows and utilization. And that's kind of what we're bringing to the e-commerce side of things to those subscriptions on iStock and Unsplash. With respect to the performance going forward on iStock cock and Unsplash, we continue to expect them to be in growth.

These are platforms that are again really offering a differentiated content offering relative to competition. And it's one that we believe fundamentally resonates with our customers. We see them consuming that content relative to non-exclusive or other sources at a much higher level.

And it's one that we think that's a durable point of differentiation and we've believed based off of paid download metrics, revenue metrics, customer metrics that we're taking share within those spaces through those platforms given their unique positioning and fundamentally the content that underpins that and we expect that to continue.

With respect to other, that includes our media managing - a media manager offering and music offering, but also some data licensing.

And we did some small data licensing deals that are consistent with our view of about really how we bring our content into the data licensing market or if we burn our content in the data licensing market, which is, really staying away from one time kind of perpetual licenses. And trying to do it more in a partnership model.

So there was some slight data licensing that's consistent with that framework in Q2 off of a very small base historically. So, that that's what drives that in the quarter.

Jen, anything to add there?.

No, I think you touched on it. There are some other smaller individually immature immaterial contributors there. Our French business, our music business, both of those also in growth but again, these are fairly small numbers as is that other grouping overall..

That's helpful and just on the license, the data licensing side. Is that how would you characterize that growth as more one-time in nature versus carry-forward over the next 12 months.

Just maybe if you could frame that Craig?. And one last one for me, just in terms of Political and the Olympics. If you could maybe quantify that your expected contribution relative to the last cycle to be durable. Thanks..

Yeah, thanks, Mark. It should be, there's a bit of accounting with 606 and revenue recognition that makes that a little bit of a pull-forward on some of the on the data licensing. But these are kind of within the model that we've always stress, which is kind of more recurring in nature, kind of more partnership in nature.

So, I would see, some level of lumpiness just to do the different recognition in that aspects relative to kind of the linear time-based recognition. But for the most part, we're trying to build recurring durable revenue streams over time that that is our focus as a leadership team and as a business, and how we're entering this.

So, probably a little bit of lumpiness, but ultimately, you can think about it is something that we're building relationships and revenue that we believe will be recurring over time. But how they're recognized might vary a little bit.

And as for the editorial calendar in terms of the elections and the Olympics and euros, we expected that to be slightly lower than the historic contribution on a four-year cycle – Presidential so, 2020 versus ’24. We were probably closer to 10 million to 12 million in and the previous cycle, largely driven by the political side of things.

And we expected this year to be around 8, to 10 and again, largely driven by a differential on the political side of things. We'll see how that plays out. We believe that that might be a conservative point of view, given how the election is now shaping up in the US.

And I can tell you having come out of Paris and South a lot of our commercial partners in Paris there's a lot of activities that is that is flowing out of that. So, hopeful that there might be some upside relative to what we set in our initial guidance within. But I think you can think about it in that 8 to 10 million range..

Excellent..

Certainly, we're certainly seeing consumption of that content out of that premium access subscription offering and it just speaks to again the quality of the content covers that that team - our team, the Getty Images team, pull together in Paris. The speed the quality, the depth, the breadth.

The innovation around how we're covering games, I think, some of the, the new content and new content types we are producing, we're just fantastic and customers are really reacting to them well, so..

And one thing I would add there, specifically, on the political side, that, that incremental revenue for us, that'll be a lift to those creative and editorial. The historically, when, we look back at political spend, it's roughly 50/50 in terms of how it hits creative editorial. Sometimes, it skews even highly on the creative side of things.

So that political impact well, we talk about it in the editorial side of the business. That impacts our creative revenue, as well..

Good points..

Thanks, Jen..

Yep..

Thanks, Mark..

Our next question comes from Tim Nolan with Macquarie. Please go ahead..

Hi, I like to get back to the agencies topic please. The agencies themselves that they kind of mixed-ish results.

Just wondering what gives you the optimism going into the second half of the year? I mean, I think it’s unstable overall, but I'm talking to larger agencies that with we cover on the public side, maybe you're focused more on the smaller agencies. So, just wondering where the optimism comes from there.

And then, secondly, and relatedly, I think last time we were, we're talking a bit about agencies adopting more of the Generative AI tools and I'm wondering if there's any indication yet that they are shifting away from an a la carte to more of a subscription payment model as they adopt these tools. Thanks..

Thanks Tim. On the agency front, I would say that, what we’re really seeing is a stabilization within that portion of the business. This was, again, a segment where we were seeing double-digit declines.

And we're seeing that start to moderate as we see some of the economic certainties start to improve, as we see some of the sectors of the economy like the tech sector kind of bring back some spend and investment that flows through the agencies. So, it's not anything that we're expecting in terms of heroic change as Jen referenced in her remarks.

But it is one that we are seeing that the trends of normalization. That's kind of led out through the large network agencies and we're seeing early signs of that in the agencies.

So, we don't see a major shift to AI or subscription within those agencies and that's largely again because of how they work with their clients and what that means in terms of how they need to build back to their clients. They still need to build back on per project basis. So, we're not seeing a shift into subscription.

We're not really seeing any major shift into AI there in terms of end project needs. But we are seeing experimentation. And that is certainly something that we see in there and in many cases, that's in partnership with Getty Images so..

Okay. Thank you..

Thank you..

Thank you. And this will conclude our Q&A session, as well as our conference call. Thank you all for your participation and you may disconnect at any time..

Thank you..