Getty: Revs Up, Profits Down

Posted on 2/1/2008 by Jim Pickerell | Printable Version | Comments (0)

Getty Images reported revenue of $218.1 million for Q4 2007, up from $208.9 in Q3 and a 7% increase from $203.5 in Q4 2006. (Excluding the effects of changes in currency exchange rates the revenue increase was 1%.) All lines of business were up for the quarter. Particularly notable was the improvement in RM and RF sales that had been in decline for the last two quarters. However, RM is still down 16% from its high in Q1 2006. RF reached about the same point as it was in Q1 2007. Getty Images CEO Jonathan Klein said that the shift of advertising to the Internet and the growth of text-only paid search advertising are creating a decline in volume of RM use.

Net profit for Q4 fell to $28.5 million or $0.48 per diluted share from $30.9 million, or $0.51 per diluted share in Q4 2006.

The $218.1 was a recovery from a poor third quarter and up only $100,000 from second-quarter revenue. Klein, in a conference call with investment analysts, attributed the weak Q3 showing to problems the company had with the launch of its new Web site in the summer, but said the problems have been solved.

Revenue for the year grew 6.3% to $857.6 million, compared to $806.6 million in 2006. As a percentage of revenue, cost of revenue was 26.6% in 2007, compared to 25.6 % in the prior year. Cash provided by operating activities was $78.7 million in the quarter with cash and short-term investments of $364 million at year-end.

"We experienced sequential growth in every product line compared to the third quarter of 2007," said Klein, who sees "strong progress on our many initiatives to stabilize our traditional creative stills business." He adds the company is growing revenue "across all other areas of our business."

Business Outlook

The outlook for 2008 can best be described as guarded. For Q1 2008, the company expects revenue of approximately $220 million and diluted earnings per share of $0.45. Slow growth is anticipated for the first half of the year with the hope of additional growth toward the end of the year. Klein pointed out that since Easter falls in Q1, there will be fewer business days in this quarter to benefit from the Olympics and U.S. presidential elections.

For 2008, the company expects revenue of approximately $900 million and diluted earnings per share of $2.00 to $2.10. Certain professional fees associated with the company's exploration of strategic alternatives are included in the guidance for the first quarter and full year.

Two years ago, over 80% of Getty's revenue came from Stock Photo licensing (RM and RF imagery combined). In Q4, it was down to 71% of total revenue or $154.85 million in sales. Investors seem generally pleased with the results and have bid the share price up $2.15 by mid-day on Friday.

Copyright © 2008 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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