News
Getty Posts Improved Sales, Flat EBITDA for 1Q ‘06, Stock Declines
Getty Images reported gross revenue of $200.9MM for the first quarter of 2006, a 13% increase over the $178.1MM the company posted for the same quarter in '05. CEO Jonathan Klein attributed the increase to "strong growth rates in non-English speaking countries far exceeding our overall growth." At the same time, the cost of revenue rose by only 2% allowing for a three percentage point improvement in the gross profit margin from 71% on 1Q05 to 74% in 1Q06. Management attributes this growth in the gross margin to the increase in its inventory of wholly-owned material which generates no commissions payable to contributors or suppliers.
A significant increase in Selling, General and Administrative expenses more than offset the gross margin improvement, however, resulting in a minute decline in the company's operating margin as reflected by its earnings before interest, taxes, depreciation and amortization (EBITDA) which dropped from 37.5% in the first quarter of 2005 to 37.38% in the first quarter of 2006. According to management, the sharp increase in SG&A was due to a front-loaded hiring schedule this year as well as the inclusion of $3.3MM in stock-based compensation. With the help of additional income from investments, Getty's net profit margin improved slightly from 19.15% in the 05 period to 19.58% in 06. Actual net income was $39.3MM in the first quarter of this year vs. $34.1MM in the first quarter of last year.
In addition to this mixed news, the company announced it plans to spend more on marketing in the US in 2006 in the face of a more competitive RF market, which may reduce projected earnings per share. Wall Street reacted to the 1Q results by sending the stock to a new 52-week low of $65.66 at the close of business on Friday, April 21st, 31% down from its 52-week high of $95.03.
| Getty Images 1Q 06 Income Statement |
|
|
|
|
|
| $000s |
| $000s |
|
|
| 1Q06 | % | 1Q05 | % |
| Revenue | $200,929 | 100.00% | $178,094 | 100.00% |
| COGS
| -$52,266 | -26.01% | -$51,254 | -28.78% |
| Gross Profit | $148,663 | 73.99% | $126,840 | 71.22% |
| SG&A | -$74,275 | -36.97% | -$60,065 | -33.73% |
| Other Operating Income | $729 | 0.36% | $16 | 0.01% |
| Operating Profit/EBITDA | $75,117 | 37.38% | $66,791 | 37.50% |
| Other Income and Expenses | -$35,769 | -17.80% | -$32,694 | -18.36% |
| Net Income | $39,348 | 19.58% | $34,097 | 19.15% |
Click here to view the original press release from Getty Images.
Posted in: News, Stock Photography Subscriptions
