Growing E-Commerce Sales Boost Getty Images' Strong First Quarter Results
PR Newswire, Wednesday, May 05, 1999 at 00:40
Increase in E-Commerce Sales Results in Significant Overall Revenue Growth
For Leading Global Visual Content Provider
SEATTLE, May 5 /PRNewswire/ -- Getty Images, Inc. (NASDAQ:GETY), a
leading global provider of visual content, today announced financial results
for the first quarter of 1999. Sales for the quarter increased by 38 percent
over the first quarter of 1998 to $52.2 million and reported EBITDA (earnings
before interest, taxes, exchange gains/(losses), depreciation, amortization,
non-recurring integration and restructuring costs, legal settlement and
extraordinary items) increased by 46 percent to $9.6 million.
Digital sales in the quarter, consisting of e-commerce and CD-ROM sales,
amounted to $20.1 million or 39 percent of sales, compared with 23 percent of
sales for the first quarter of 1998. E-commerce sales for the quarter
increased by more than 100 percent over the first quarter of 1998 to more than
$10.4 million. E-commerce sales as a percentage of total sales increased to
approximately 20 percent from approximately 10 percent in the first quarter of
1998.
Getty Images' first quarter success was fueled by its fully e-commerce
enabled web sites, which continue to drive sales and increase margins. The
www.photodisc.com site reported a nearly 80 percent increase in e-commerce
sales over the first quarter of 1998. Sales on the site represented
40 percent of total sales for the brand. E-commerce sales on the
www.tonystone.com site have increased approximately eightfold since the fourth
quarter of 1998 and accounted for 15 percent of total North American sales for
the brand in the first quarter of 1999. Registrations on the www.allsport.com
web site are up nearly 20 percent over the fourth quarter of 1998.
In April of this year, Getty Images made its imagery available to a
consumer audience for the first time as PhotoDisc became the premier provider
of contemporary royalty-free photography to Amazon.com's new electronic
greeting-card site. In a separate announcement today, the company announced
an agreement to acquire Art.com, a premier online destination for art. The
acquisition marks Getty Images' expansion into the growing online consumer
marketplace, a move that will significantly increase the company's potential
customer base.
The company's e-commerce achievements were recently recognized as it
ranked number 19 on the May issue of Business 2.0's "100 Hottest Companies on
the Net," joined in the top 20 by market leaders including Dell Computer,
America Online, Amazon.com, Yahoo!, Charles Schwab and eBay.
"With the expansion of our e-commerce business, we continue to strive to
create a more user-friendly experience for our customers and a more efficient
and cost-effective platform for getting our images to our customers," said
Mark Getty, co-founder and executive chairman. "As the next step in this
direction, we plan to launch a hub web site that will allow our customers to
search across all our creative collections in the second half of the year.
Furthermore, we intend to continue to build on our success in this area by
expanding and diversifying not only our e-commerce offerings, but also our
customer base."
"We are very pleased with the growth we have achieved in the first quarter
of this year, particularly the strong growth of our e-commerce sales," said
Jonathan Klein, co-founder and chief executive officer. "With our brands, we
continue to create solutions that increase our market share and broaden our
potential customer base. With our corporate headquarters moving to Seattle
later this year, we will be better able to focus on developing our technology
resources and we will continue to make the investments in technology and in
marketing necessary to support our growing e-commerce operations."
Highlights of the first quarter 1999
-- Digital sales in the quarter, consisting of e-commerce and CD-ROM
sales, amounted to $20.1 million or 39 percent of sales, compared with
23 percent of sales in the first quarter of 1998. E-commerce sales for
the quarter increased by more than 100 percent over the first quarter
of 1998 to more than $10.4 million. Registered web customers on all
Getty Images full e-commerce web sites grew to more than 93,000.
E-commerce sales for all Getty brands doubled to approximately 20
percent of sales in the first quarter of 1999 from approximately 10
percent in the first quarter of 1998.
-- Getty Images' leading contemporary stock photography brand, Tony Stone
Images, increased sales for the first quarter of 1999 by more than 10
percent over the first quarter of 1998. Approximately 25 percent of
the sales on the www.tonystone.com web site were to new customers.
E-commerce sales for the brand continue to exceed expectations in both
North America and Europe. E-commerce sales in North America accounted
for 15 percent of the total North American sales for the quarter, while
UK e-commerce sales accounted for 6 percent of the brand's total UK
sales for the month of March 1999.
-- The average license price on the www.tonystone.com web site is closely
in line with the brand's average price in the analog model, which
demonstrates that e-commerce is also having no adverse impact on
pricing for our products.
-- Getty Images' leading digital, royalty-free imagery brand, PhotoDisc,
reported sales growth of more than 30 percent over the first quarter of
1998. Following the launch of a redesigned e-commerce web site
featuring enhanced functionality, PhotoDisc achieved an increase in
e-commerce sales of nearly 80 percent over the first quarter of 1998.
E-commerce sales accounted for 40 percent of total PhotoDisc sales,
with more than half of total North American sales and nearly 20 percent
of European sales on the web.
-- Allsport, the company's leading sports photography brand, ended the
quarter with more than 1,000 subscribers for its www.allsport.com web
site, and in addition to renewing its existing contracts, signed a
number of new contracts. Allsport has contracts with a number of
leading online businesses, including CBS Sportsline, America Online and
Compuserve.
-- In March, Getty Images announced the relocation of its corporate
headquarters to Seattle from London, based on the company's increasing
emphasis on e-commerce. The move will bring the company closer to the
majority of its customers and shareholders in the U.S.
-- PhotoDisc executed a reseller agreement with amana, the parent company
of Photonica, which gives access and product endorsement to amana's
more than 60,000 licensed stock customers in Japan.
-- Energy Film Library's sales increased more than 20 percent over the
fourth quarter of 1998, largely as a result of increased marketing and
outreach programs by the Los Angeles office.
-- Liaison Agency's press division delivered solid growth in the first
quarter, assisted by extensive news coverage of the Clinton impeachment
trial and the war in Kosovo.
-- Hulton Getty sales grew more than 20 percent in the UK in the first
quarter, partly due to an excellent performance at the Hulton Getty
Gallery.
Financial results for the first quarter 1999
-- Getty Images' reported sales increased by 38 percent to $52.2 million
in the first quarter of 1999, compared with $37.9 million in the first
quarter of 1998.
-- Gross margin for the first quarter improved to 73.5 percent of sales
from 69.4 percent in the first quarter of 1998 and 72.5 percent in the
fourth quarter of 1998. The increase was due to the continuing shift
to web sales and an increase of sales of wholly-owned content. The
increases also demonstrate the effectiveness of the strategies the
company has put into place to increase gross margins.
-- Selling, general and administrative expenses were $28.7 million,
representing 55.1 percent of sales compared with 52.1 percent in the
first quarter of 1998. The increase in SG&A was largely due to
continued and accelerated investment in marketing associated with the
launch of new web sites and increased investment in management, new
sales offices and new business systems.
-- EBITDA for the first quarter increased by 46 percent to $9.6 million,
compared to $6.6 million in the first quarter of 1998. On a pro forma
basis, EBITDA increased by $6.5 million or 210 percent over the first
quarter of 1998. EBITDA as a percentage of sales increased from 17.3
percent in the first quarter of 1998 to 18.4 percent.
About Getty Images, Inc.
Getty Images, Inc., with 30 million photographs and more than 13,000 hours
of film, is a leading international provider of visual content to a diverse
range of professionals in advertising and graphic design, magazine, book and
newspaper publishing, broadcasting, production and new media publishing.
Getty Images markets rights to images and footage through its web sites, its
international network of wholly owned offices in 17 countries and agents in
more than 50 counties. The company has approximately 1,350 employees
worldwide and reported revenues of approximately $185 million in 1998.
Getty Images' strategy is to use electronic commerce to enhance its
services and extend its market and this effort is well underway with three
successful business-to-business web sites already available:
tonystone.com, photodisc.com, allsport.com.
The company plans to launch a hub web site for all its content brands as a
first step towards a complete desktop working environment for the global
creative market.
Art.com, Getty Images' newly acquired consumer content brand, is the
number one online destination for art. The web site features the world's
largest collection of framed and unframed art, discounted at 20 to 50 percent
below traditional costs. Art.com's galleries feature works by famous artists,
such as Monet, van Gogh and Matisse, as well as original artists, including
Ronnie Wood. Prints can be purchased unframed or framed, using Art.com's
proprietary software. Art.com also offers Art Print Index
(http://www.artprintindex.com), the art industry standard for sourcing and
buying art.
The company's market leading business-to-business visual content brands
include: Tony Stone Images, the world's leading contemporary stock photography
brand; PhotoDisc, the world leader in digital, royalty-free stock photography;
Allsport, the world leading sports photography brand; Hulton Getty
(http://www.hulton-getty.com), one of the largest privately owned collections
of archival photography in the world; Liaison Agency
(http://www.liaisonphoto.com), a leading North American news and reportage
brand; and Energy Film Library (http:/www.digital-energy.com), one of the
world's leading stock footage brands. Further information is available from
Getty Images' web site at (http://www.getty-images.com).
CONSOLIDATED INCOME STATEMENT HIGHLIGHTS
(Unaudited, in thousands)
First quarter
Getty Images Inc. Getty Images Inc.
Three Months Ended Three Months Ended
March 1998 March 1999
$'000 $'000
Sales $37,931 $52,150
Cost of sales 11,607 13,841
Gross profit 26,324 38,309
Selling, general and
administrative expenses 19,748 28,724
Amortization 6,897 10,224
Depreciation 2,897 4,606
Operating loss (3,218) (5,245)
Net interest expensed (551) (811)
Exchange losses (356) (391)
Loss before tax (4,125) (6,447)
Income taxes (1,080) (1,435)
Net loss (5,205) (7,882)
EBITDA (a) $6,576 $9,585
Notes: (a) EBITDA is defined as earnings before interest, taxes,
exchange losses, depreciation and amortization.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
Audited Unaudited
Getty Images Inc. Getty Images Inc.
At December 31, At March 31,
1998 1999
$'000 $'000
Cash and cash equivalents $16,150 $8,249
Other current assets 53,059 62,886
Total current assets 69,209 71,135
Fixed assets, net 62,757 63,669
Intangible assets 325,861 315,637
Deferred assets 5,036 4,969
TOTAL ASSETS $462,863 $455,410
Short term borrowings $202 $108
Other current liabilities 46,380 47,675
Total current liabilities 46,582 47,783
Long term debt 72,354 72,532
Shareholders' equity 343,927 335,095
TOTAL LIABILITIES & SHAREHOLDERS
EQUITY $462,863 $455,410
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