Licensing Deals And AI Adoption Will Transform Market Position

Key Takeaways

• Successful shift toward multi-year licensing deals with AI rights and strong exclusive partnerships is securing diversified, recurring revenue and reinforcing competitive strength.
  
• Ongoing tech investments in AI-driven tools and user experience are increasing client retention, enabling premium pricing, and supporting overall margin growth.
  
• Structural decline in core creative revenue, mounting legal risks, intense competition, high debt, and shifting market trends threaten overall financial stability and long-term growth prospects.

Catalysts

Provides creative and editorial visual content solutions in the Americas, Europe, the Middle East, Africa, and Asia-Pacific.

• Getty Images is seeing growing demand from technology and corporate clients for multi-year content licensing deals that include AI rights, positioning the company to generate new and diversified revenue streams as generative AI adoption expands and firms require large, copyright-cleared image libraries.
  
• Ongoing investments in proprietary technology-such as improved AI-powered image modification tools and enhanced search capabilities-are supporting user experience differentiation, helping boost retention, conversion rates, and ARPU, ultimately driving up revenues and net margins.
  
• A consistent increase in subscription revenue, now exceeding 53% of total revenue, and robust annual subscriber growth (up 14% year-over-year) are transitioning the business toward more stable, recurring revenue, potentially reducing earnings volatility going forward.
  
• The continued emphasis on exclusive content, major event partnerships, and expansion into specialized sectors (e.g., sports, entertainment, news) is strengthening Getty Images' competitive position, enabling premium pricing tiers that can support sustainable net margin growth.
  
• Rising importance of intellectual property protection and brand safety for enterprise clients, as reflected by high-profile partnerships and customer wins, is likely to reinforce Getty's pricing power and drive recurring enterprise contracts, supporting both revenue and margin expansion.

Getty Images Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Getty Images Holdings's revenue will grow by 1.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -12.2% today to 11.3% in 3 years time.
• Analysts expect earnings to reach $112.3 million (and earnings per share of $0.13) by about August 2028, up from $-115.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.9x on those 2028 earnings, up from -6.6x today. This future PE is greater than the current PE for the US Interactive Media and Services industry at 13.6x.
• Analysts expect the number of shares outstanding to grow by 1.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Getty Images Holdings Future Earnings Per Share Growth

Risks

• Persistent contraction in the agency business, driven by macroeconomic pressures and declining demand for traditional creative services, continues to drag on creative revenue, which was down 5.1% year-over-year and shows no signs of near-term recovery-this poses a long-term risk to overall revenue growth and earnings as the agency segment remains structurally challenged.
  
• Ongoing legal and copyright disputes, particularly with Stability AI and other generative AI companies, are resulting in elevated SG&A costs for litigation and compliance; this legal overhang introduces material uncertainty, could lead to significant settlements or adverse rulings, and continues to weigh on net margins and free cash flow.
  
• Increased competition from free or low-cost content providers (e.g., Unsplash, Pixabay), plus generative AI enabling end users to create custom imagery, threatens pricing power and market share-raising the risk of further downward pressure on ARPU and gross margins over the long term.
  
• Getty maintains a highly leveraged balance sheet with $1.39 billion in total debt and net leverage at 4.3x, leaving the company vulnerable to rising interest costs, refinancing risk, and limited flexibility to absorb operating shocks; this constrains earnings and may imperil shareholder returns if growth stalls or declines.
  
• Weakness in global economic conditions, continued production delays, and shifting media consumption trends toward short-form, video, and immersive content rather than static imagery may further decrease the addressable market for Getty's core offerings-potentially suppressing future revenue growth and harming long-term financial performance.

Valuation

• The analysts have a consensus price target of $4.425 for Getty Images Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $1.85.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $991.2 million, earnings will come to $112.3 million, and it would be trading on a PE ratio of 23.9x, assuming you use a discount rate of 12.3%.
  
• Given the current share price of $1.83, the analyst price target of $4.42 is 58.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.