Good afternoon, and welcome to Getty Images First 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, VP of Investor Relations and Treasury at Getty Images.

Good afternoon, and welcome to the Getty Images First 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 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 Getty Image's first quarter earnings call. I will touch on our performance and progress at a high level before Jen takes you through the full first quarter financial results. As expected, our financial performance in the first quarter was soft due to macroeconomic challenges we outlined in our last call, residual impacts from the Hollywood strikes and the pressured agency business. Within editorial, we also faced a tougher year-on-year compare with Q1 of 2023 being the only quarter of year-over-year editorial growth before the strike impacted the balance of the year. For the first quarter, 2024 revenue was $222.3 million, representing a year-on-year decrease of 5.7% on a reported and currency-neutral basis. Adjusted EBITDA came in just over $70.2 million for the quarter, down 7.9% reported or 7.7% currency-neutral and representing 31.6% of revenue. On April 1, we closed on and funded the acquisition of Motorsport images. Motorsport images represents a truly iconic archive of automotive imagery and video that augments Getty Images existing offerings. Motorsport images also brings deep relationships across racing series such as FormulaE, teams such as McLaren Racing, races and sponsors. In combination with Getty Images established position as the official photographic partner of Formula One. We are excited for what this addition can offer the growing number of Motorsports stakeholders. Continuing on the content front, we were pleased to announce renewals with Bloomberg and the English Football Association. Earlier this week, we exclusively covered the Metgalla for its sixth consecutive time. We also added new content partnerships with the Saudi Pro League, Visual Capitalist Film pack, spec and niche sports media. The Motorsport acquisition and these partners stand as a testament to our continued commitment to deliver the very best visual content to our customers.…

 Our Q1 results broadly reflects the slow start to the year that we anticipated and described on our Q4 earnings call. We expected some of our known challenges to be most acute in the first quarter with continued headwinds from the residual effects of last year's Hollywood strike, ongoing pressures in our agency business and the broader macroeconomic environment. We also had a challenging year-on-year comp in editorial in Q1, with Q1 of last year being the only quarter of growth for our editorial business as the remainder of 2023 was adversely impacted by the strike. All of that said, looking ahead, we remain steadfastly confident in our ability to return to growth in 2024 as our headwinds turn into tailwinds and we flipped the calendar to a robust editorial season in the second half of the year. I'll start by highlighting some of our KPIs, which are reported on the trailing 12-month basis or LTM period ended March 31, 2024, with comparison to the LTM period ended March 31, 2023. Total purchasing customers were $769,000, down from $829,000 in the comparable LTM period. This decrease can be attributed to lower a la carte transaction volume, primarily due to both the ongoing shift of our customers into more committed annual subscription products and a still pressured agency business, which consumes nearly entirely on an a la carte basis. Importantly, the shift into more committed solutions continues to have a positive impact on annual revenue per purchasing customer, which grew by 4.5% to 1,174 from 1,123 in the comparable LTM period. We again saw a tremendous growth in our active annual subscribers, up 79% to $262,000 from $147,000 in the 2023 LTM period. This is now the sixth consecutive quarter with growth well in excess of 50%. This performance continues…

[Operator Instructions]  Our first question from Ron Josey with Citi.

Craig, I wanted to start out with you. I think you talked about some macro challenges in 1Q, and this is a few things, but Hollywood Strikes was also in there as those are now finished and winding down, I guess. Just can you talk to us about the progress here? When do you think things sort of normalise to a certain extent going forward? Is that going to be 2Q or maybe in the back half? And then, Jen, I wanted to follow up. You had some interesting comments on the subscriber retention rate. I think you talked about smaller e-commerce subs, lower a la carte, onetime spending changes. But maybe if you could unpack those a little bit more to better understand this retention rate? And do you think these can like level off at this 90% level? Or should we expect continued declines..

  So I'll take first and then defer to Jen on the super tension side of things. So macro, I'd say in the production side of things, we continue to see a bit of slowness throughout Q1 as those schedules and try to reline up after the strike. I would say we probably expect maybe a little bit more of that into Q2, and then we probably expect it to be kind of back at what I'd say normal levels within the second half of the year. I don't think we fully expect, given some of the streaming items and such to necessarily come back to where it was fully pre strike. But in terms of what we expected within our guidance and our budgeting this year, I think we're largely tracking to kind of expectations from a timing standpoint.

Ron, on the revenue retention rate, yes, so there's a few things to unpack in there. I'll start with, I think, the end of your question, which is where do we see this kind of trending to or normalizing back to. And I think the answer there is that we'll start to see this over time, start to tick back up into that mid-90% range. And the reason for that is, as we're talking about that's really phenomenal subscriber growth, where we're seeing that growth, as we commented on, is really in those smaller e-commerce subscriptions. -- with a lot of that coming from brand-new customers and markets of the world that we're just starting to tap into. So with that comes, those are lower commitment, lower price point subscription products, newer customers, as you can imagine, those do come at the start with lower revenue retention rates. Now each and every one of those provides an opportunity for us to upsell and grow with the customer over time as their content needs, expand as their budgets expand. So they start off low, but that is a really nice opportunity for us to grow those customers over time. But that mix to what we're seeing to 90% now, a good chunk of that driver is that mix of growth in those smaller e-commerce predominantly new customers. The other thing I commented on there to this metric, as you know, it counts not just the subscription revenue, but revenue that these subscribers are spending outside of their subscription. So what we're seeing here is a bit of a contraction in essentially a la carte spend outside of the subscription in this period. And we think that's largely due to some of that residual impact from Hollywood strikes, some macro impacts just a contraction of budgets related to some of those dynamics. So a little bit less spend outside of subscription, which, again, as Craig just commented, we start to see those conditions improve. We'd expect to see that improve as well.

[Operator Instructions] we'll take our next question from Mark Zgutowicz with the Benchmark Company.

 Jen, maybe just a quick follow-up on -- when you talk about the subscription and are reverting back up to the mid-90s. Is that something we should expect that sort of baked into your guidance? Or is that more of a -- into the '25 time frame? And then just if you could confirm that enterprise remained at roughly 100% in 1Q.

Yes. So I think that's something that we'd expect to see more as an exit rate as we start to come out of 2024, we really start to unwind some of these bigger strike and macro impact. So I don't think we'd expect to see that really jump right back up in Q2 per se, but something that we start to see start picking up as we exit the year. And then on enterprise, yes, as we noted we see the revenue renewal rates for enterprise subscribers still averaging north of 100%.

And then maybe just a couple of quick follow-ups. Looking at corporate and agency separately in terms of how they trended in the quarter, corporate re-accelerated in 4Q. I was just curious whether that moderated a bit this quarter and then agency, which was down mid-single digits year-over-year exiting the year. Did that stabilize in 1Q? And then one just last one, if I could, on video attach rate. I noticed that was sort of flattish in the quarter. Just curious, given that's a nice upsell opportunity for you guys, how we should be thinking about that trend line over the next, call it, 2 years or so?

Yes, sure. So on corporate good memory, Mark, we exited 2023 with Q4 corporate was back in growth. I'm happy to say that Q1 corporate remained in growth. So continuing to see those trend lines. for agency, Q1 was back down low double-digit declines again. So more or less in line what we were receiving as we exited the year. We saw that improve a bit higher single-digit declines in Q4, but that 11% decline is broadly speaking, what we saw. Just remind me again what your other question was.

Yes, sorry. It's on the video attach rate. Curious that... So what are the drivers of that climbing up over what period of time should we be thinking about maybe milestones of that growing?

 Yes. Yes. So that's one where we have seen pretty much every quarter, we've seen that pick up this quarter kind of flattening out a bit. So there's a few things there. When we think about what the opportunities are, I mean, that's really an upsell opportunity, right? Beat's an upsell opportunity as you just noted, for us to make sure our customers know we have videomaker merchandising video well, make sure all of our subscription customers know that video is an option. I'll be talking about video. When you come to the site, you see video, do you see imagery all of those things that just come with sort of packaging, marketing, upselling, customer conversations. So that continues to be a focus for us. I think when we think about the math that goes into this equation, you have to correlate this back to some of that annual subscriber growth, where we commented a big amount of that growth is new customers, a big amount of that growth is sitting in e-commerce subscriptions. Broadly speaking, those smaller e-commerce subs don't have video turned on yet, right? So there's a bit of a math equation here as you bring in some of those new customers who are just not in video yet within the Getty ecosystem. That plays into the math of that attach rate. And again, that's opportunity for us over time to migrate those customers as they grow in both budget and content needs.

 I would just add to that, that the unplaced subscription doesn't have video on -- as an option today on the site. So as to Jen's point, as we continue to grow those subs we basically don't have current opportunity for attachment. Although we did launch illustrations this week on -- as part of that subscription and that initial take-up is going well, and you can certainly expect video downstream at some point. But those are all opportunities.

We have no further questions in the queue at this time. I would like to thank everyone for your participation. You may disconnect at any time. This does conclude today's program. Thank you all.