Why Getty Images gambled on a SPAC to go public after a 14-year absence from public markets

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Good morning,

U.S. companies going public through a special purpose acquisition company (SPAC) was a hot trend in 2021. But many investors have since soured on those businesses amid the recent market downturn and the increased threat of regulation of SPACs.

Yet Getty Images, the photo and video licensing library, plowed ahead with a SPAC anyway instead of the more traditional initial public offering. On July 25, it completed a SPAC deal with CC Neuberger Principal Holdings II and began trading under the ticker GETY.

“Obviously, this market is very different now than what it was a year and a half ago when we started this process, but we actually think it’s a great time for Getty Images to return to the public markets,” Jennifer Leyden, SVP and CFO at Getty Images told me after she joined CEO Craig Peters and other colleagues and photographers on Monday morning to ring the opening bell at the New York Stock Exchange. “We’re 27 years old, and we’re profitable.”

“The reason we set out to do this was essentially to clear out some debt from our balance sheets and deleverage the business,” Leyden says. “So, in spite of market conditions, we’ve done exactly what we set out to do.” 

Courtesy of Getty Images

Getty Images announced plans for its SPAC in December in a deal valued at $4.8 billion, according to the company. On the day the deal closed, its shares finished at $27.73. On Monday, they closed at $30.37, marking a sizable gain during a time that the broader market has started to rebound.

Getty Images was founded in 1995 and listed on the Nasdaq National Market in July 1996. But it went private when acquired by private equity firm Hellman & Friedman in 2008. It was then bought by the Getty family in 2018. The company’s key customers are ad and graphic design companies, print and online media, and corporate marketing, communications, and in-house design departments.

In Q2, Getty Images reported revenue of $233.3 million, an increase of 4.1% year over year. Editorial revenue reached $82.9 million, up 15% year over year and 19.8% on a currency-neutral basis. Getty Images has photographers covering events all over the world, and you’ve probably seen their work in the news. I asked Leyden, CFO since January, but with the company since 2016 in various financial leadership roles, how the company deals with the risk of dispatching photographers covering the war in Ukraine, for example. 

“That is a region in conflict, and quite dangerous,” she explains. “We do have some staff there actively shooting content. We do keep their safety top of mind. Obviously, we want to get the content and the coverage, and we want to be there. But if there’s ever a situation that poses a greater risk for our staff, we would prioritize that over getting the shot.” 

The tech space

Getty Images’ library of owned content, includes “an archive with about 135 million images dating back to the beginning of photography,” which will be an asset when it comes to Web3.0 and NFT (non-fungible tokens), Leyden says. NFTs can be used to represent photos on the blockchain.

The company has formed a multi-year partnership with Candy Digital, a digital collectible company, to become the exclusive developer and marketplace for Getty Images NFTs. “We’ll start with some of our own content, and basically sell [that] content as NFTs with Candy Digital being marketplace,” Leyden says. I asked Getty Images if they will split revenue from image sales with Candy Digital, but was told: “the terms of the deal are not something we can disclose.”

Speaking of technology, there are now platforms that let users generate images using artificial intelligence (A.I.). For example, last week Charlie Warzel, a freelancer who writes a newsletter for The Atlantic, used the service Midjourney to create an A.I. image of Alex Jones, the conspiracy theorist and podcast host. Warzel claimed he was “momentarily tired of using the same image of Jones” via the Getty Images account he has access to. Some social media users pointed out that using A.I. art in reported content raised ethical questions. Although Warzel later said on Twitter he wouldn’t use this method again. 

I asked Leyden if A.I. image generation could be a potential threat to Getty Images’ business. “We’re watching that space, like everyone else is, pretty closely,” she told me. “We don’t think about it as competition. We think of it as further evidence that the demand for visual content is just growing.”

Getty Images considers licensing its library to the creator economy as a big opportunity that, according to Leyden, is “growing exponentially.” Offerings creators can use include Visual GPS research, which shows you what kind of visual content engages customers, and its technology and data platform, she says. In 2021, Getty Images acquired Unsplash, which offers “widely accessed,” free creative photography; its website is ad-supported with over 17,000 users of its API. “That’s a big focus for us and really monetizing that creator economy that Unsplash taps into,” Leyden says.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

When it comes to reaching Gen Z consumers on social media, Facebook might not be your best bet, a new Pew Research Center report found. About 95% of teens (ages 13-17) surveyed said they’ve used YouTube, followed by TikTok (67%), Instagram (62%) and Snapchat (59%). In the past decade, there’s been a steep decline in the share of teens using Facebook. Today, 32% of teens report ever using Facebook, down from 71% in 2014-15, according to Pew. Meanwhile, there’s also been a decrease in Twitter (33% to 23%) and Tumblr (14% to 5%) usage by teens. The findings are based on a survey an online survey of 1,316 U.S. teens. 

Courtesy of Pew Research Center

Going deeper

“Keeping hybrid employees engaged,” a new report in Harvard Business Review, explains how managers are in the best position to help tackle issues such as employee burnout, attrition or low engagement because of the personal relationships they have with each member of their team. “Company leaders and HR teams must support managers with specialized onboarding, training, metrics, and ready-to-use FAQs and playbooks,” according to the report. “In these dynamic times, corporate leaders also need to grant managers greater autonomy to cut through some of the bureaucratic red tape and make the right decisions to support their employees in real-time.”

Leaderboard

Dominic Bardos was named CFO at Shoals Technologies Group, Inc. (Nasdaq: SHLS), a provider of electrical balance of systems solutions for solar, storage, and electric vehicle charging infrastructure, effective October 3. Before joining Shoals, Bardos served as CFO of Holley Inc. (NYSE: HLLY), a manufacturer and distributor of performance automotive products. Prior to Holley Inc., he served in senior finance positions including VP of finance at Tractor Supply Company (Nasdaq: TSCO), CFO at Cambridge Franchise Holdings, and VP of finance and divisional CFO of Terminix. 

Ronen Stein was named CFO at Ceragon Networks Ltd. (Nasdaq: CRNT), a global solutions provider of 5G wireless transport, effective Sept. 21, 2022. Stein has more than 20 years of experience as a finance chief having held a variety of CFO roles in both private and U.S. listed public companies. Most recently, Stein was CFO of Siklu, an Israel-based company in the telecommunications sector. Previously he served as the CFO of 10bis, Enercon technologies, Knock N’Lock, and Pointer Telocation.

Overheard

“Not only did moving to a four-day workweek not degrade our productivity, but the months following the shift were among the most productive in our history. A year after moving to a four-day workweek, we had grown annual recurring revenue by nearly 100%.”

—Mike Melillo, CEO of the Wanderlust Group, wrote in a Fortune opinion piece the results of his decision to “kill Mondays” two years ago, in the middle of the pandemic. At the time, he thought it would be temporary, but then “the company grew.”