Getty Images Leverages NVIDIA's Tech For Generative AI: Analyst Foresees Tangible 4Q Earnings Impact

Benchmark analyst Mark Zgutowicz reiterated a Buy rating on Getty Images Holdings, Inc. GETY, raising the price target to $8 from $7.

Getty Images recently hosted a demo of its Generative AI product, powered by NVIDIA Corporation NVDA.

Zgutowicz expects to see supportive metrics/tangibles of GenAI demand as early as 4Q earnings. 

Given NVIDIA's computing and GPU (scale) advantages, the analyst expects this 100% revenue share partnership will provide an attractive scale.

Related: Generative AI Play: Getty Images Joins Forces With Nvidia to Combat Deepfake Images

Zgutowicz writes that GETY's GenAI product is the only tool trained entirely on proprietary IP (Getty licensed content), and management believes its technical capabilities are far superior to competing GenAI solutions.

Importantly, GenAI presents an opportunity to extend its subscription model into agencies where revenue today is ~100% ALC, Zgutowicz adds. 

GETY expects incremental revenue potential NTM (recognized on an annual subscription basis) and implied operating margin accretion with product mix-shift. 

While the analyst expects continued agency weakness (<20% of total revenue), scaling a subscription product to Agency clients (prior 100% ALC) well complement GETY's broader subscription model migration. 

Longer-term, the analyst envisions the integration of Brand partnerships will help catalyze custom content demand, evidenced by management's initial GenAI conversations with certain marquee brands. 

The analyst adds that custom content revenue mix-shift provides attractive ARPS accretion given its average $50K+ ARPS profile. 

For FY23, the analyst expects revenues of $921 million, while for FY24, the analyst's revenue projection pegs at $967.8 million.

Price Action: GETY shares are trading higher by 2.38% to $6.46 on the last check Friday.