Shutterstock, Inc. (SSTK) — Agentic Tribune

Item 1. Business.

Overview

Shutterstock, Inc. (referred to herein as the “Company”, “we,” “our,” and “us”) is a leading global creative platform connecting brands and businesses to high quality content.

Our platform brings together users and contributors of content by providing readily-searchable content that our customers pay to license and by compensating contributors as their content is licensed. Contributors upload their content to our web properties in exchange for royalty payments based on customer download activity. Beyond content, customers also leverage our platform to assist with the entire creative process from ideation through creative execution.

Digital content licensed to our customers for their creative needs includes images, footage, music, and 3D models (our “Content” offering). Our Content revenues represent the majority of our business and are supported by our searchable creative platform and driven by our large contributor network.

In addition, our customers have needs that are beyond traditional content license products and services. These include (i) licenses to metadata associated with our images, footage, music tracks and 3D models through our data offering, (ii) distribution and advertising services from our Giphy business, which consists of GIFs (graphics interchange format visuals) that serve as a critical ingredient in text- and message- based conversations and in contextual advertising settings, (iii) specialized solutions for high-quality content matched with production tools and services through Shutterstock Studios and (iv) other tailored white-glove services (collectively, our “Data, Distribution, and Services” offerings).

Our Content and Data, Distribution, and Services offering revenues are as follows (in thousands):

	Year Ended December 31,
	2025		2024		2023
Content	$	786,661	$	760,011	$	737,264
Data, Distribution, and Services	203,264		175,251		137,323
Total Revenue	$	989,925	$	935,262	$	874,587

Merger Agreement with Getty Images

On January 6, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine in a merger-of-equals transaction with Getty Images Holdings, Inc. (NYSE:GETY) (“Getty Images”) (such transaction referred to herein as the “Merger”). Subject to terms and conditions in the Merger Agreement, the aggregate consideration to be paid by Getty Images in respect of the outstanding shares of common stock of Shutterstock will be:

(a)An amount in cash equal to the product of $9.50 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units); and

(b)A number of shares of Getty Images common stock equal to the product of 9.17 multiplied by the number of shares of Shutterstock common stock outstanding immediately prior to the transaction close (including vested Shutterstock restricted stock units and performance stock units).

Each holder of shares of Shutterstock common stock immediately prior to the transaction close will have the option to receive, subject to proration, for each share of Shutterstock common stock held by such holder:

(a)Cash consideration of $9.50 and 9.17 shares of Getty Images common stock (a “Mixed Election”);

(b)Cash consideration of $28.8487; or

If no election is made by a holder, each of such holder’s shares of Shutterstock common stock shall be treated as having made a Mixed Election.

A majority of Shutterstock stockholders approved the adoption of the Merger Agreement at a special meeting of stockholders held on June 10, 2025 (the “Shutterstock Stockholder Approval”). The Merger is subject to the satisfaction of customary closing conditions, further described below, including receipt of required regulatory approvals. Subject to the satisfaction of the closing conditions, upon closing of the Merger, Shutterstock’s common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended. The closing of the Merger is subject to the satisfaction or waiver of certain closing conditions, including:

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•the Shutterstock Stockholder Approval, which condition was subsequently satisfied as described above, and the Getty Images stockholder approval, which condition was subsequently satisfied by the Getty Images stockholder written consent;

•Getty Images’ registration statement on Form S-4 to be filed in connection with the Merger having become effective and the mailing of an information statement to Getty Images stockholders at least 20 business days prior to the closing, which condition was subsequently satisfied on April 30, 2025;

•absence of any order, injunction or other order or law in certain jurisdictions prohibiting the Merger or making the closing of the Merger illegal;

•expiration of the applicable waiting period (and extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other regulatory approvals deemed necessary or advisable including but not limited to the U.K. Competition and Markets Authority (the “CMA”). On April 2, 2025, the Company and Getty Images each received a Request for Additional Information and Documentary Material from the U.S. Department of Justice (“DOJ”) in connection with the Merger and on November 3, 2025, the Company announced that the CMA has referred the Merger to a Phase 2 review process. The Company remains committed to the proposed Merger and will continue to engage with the DOJ and the CMA and work with Getty Images to expeditiously secure the necessary clearances;

•shares of Getty Images common stock to be issued in connection with the Merger having been approved for listing on the NYSE;

•accuracy of each party’s representations and warranties, subject to certain standards set forth in the Merger Agreement;

•performance and compliance in all material respects of each party’s agreements and covenants under the Merger Agreement;

•absence of any Getty Images material adverse effect or Shutterstock material adverse effect, as applicable and subject to the definitions thereof in the Merger Agreement;

•delivery of an opinion of tax counsel that the Second Merger and the Third Merger as defined in the Merger Agreement, taken together, will qualify as a “reorganization” within the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended; and

•Getty Images having amended or otherwise refinanced its existing term loans and senior notes to extend the maturity of each to no earlier than February 19, 2028. On September 18, 2025, the Company and Getty Images agreed to waive this condition such that it is no longer a condition to the Merger.

Our Content Offering

Our Content offering includes licenses for:

•Images - consisting of photographs, vectors and illustrations. Images are typically used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and other similar uses.

•Footage - consisting of video clips, premium footage filmed by industry experts and cinema grade video effects, available in HD and 4K formats. Footage is often integrated into websites, social media, marketing campaigns and cinematic productions.

•Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage.

•3 Dimensional (“3D”) Models - consisting of 3D models available in a variety of formats, used in a variety of industries such as advertising, media and video production, gaming, retail, education, design and architecture.

•Generative AI Content - consisting of images generated from algorithms trained with high-quality, ethically sourced content. Customers can generate images by entering a description of their desired content into model prompts.

Our Content is distributed to customers under the following brands: Shutterstock; Pond5; TurboSquid; PicMonkey; PremiumBeat; Splash News; Bigstock; and Envato. Shutterstock, our flagship brand, includes various content types such as image, footage, music and editorial.

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Loading financial statements...

Financial statements

data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-04-28 (period ending 2026-03-31).

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and with information contained in our other filings, including the audited consolidated financial statements included in our 2025 Form 10-K.

In addition to historical consolidated financial information, this discussion contains forward-looking statements including statements about our plans, estimates and beliefs. These statements involve risks and uncertainties and our actual results could differ materially from those expressed or implied in forward-looking statements. See “Forward Looking Statements” above and the “Risk Factors” disclosures contained in our 2025 Form 10-K for additional discussion of the risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.

Merger Agreement with Getty Images

(a)Cash consideration of $9.50 and 9.17 shares of Getty Images common stock (a “Mixed Election”);

(b)Cash consideration of $28.8487; or

If no election is made by a holder, each of such holder’s shares of Shutterstock common stock shall be treated as having made a Mixed Election.

•the Shutterstock Stockholder Approval, which condition was satisfied at the special meeting described above, and the Getty Images stockholder approval, which condition was subsequently satisfied by the Getty Images stockholder written consent;

•Getty Images’ registration statement on Form S-4 filed in connection with the Merger having become effective and the mailing of an information statement to Getty Images stockholders at least 20 business days prior to the closing, which condition was subsequently satisfied on April 30, 2025;

•absence of any order, injunction or other order or law in certain jurisdictions prohibiting the Merger or making the closing of the Merger illegal;

•the expiration of the applicable waiting period (and extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). On April 2, 2025, the Company and Getty Images each received a Request for Additional Information and Documentary Material from the U.S. Department of Justice (“DOJ”) in connection with the Merger. On February 23, 2026, the Company announced the DOJ had concluded its review of the Merger and the applicable waiting period under the HSR Act had expired, without conditions. As a result, the condition under the HSR Act has been satisfied;

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•the receipt of other regulatory approvals deemed necessary or advisable, including but not limited to the U.K. Competition and Markets Authority (the “CMA”):

◦on November 3, 2025, the Company announced that the CMA referred the Merger to a Phase 2 review process;

◦on February 19, 2026, the Company announced that the CMA issued its Interim Report and provisionally concluded the Merger is not expected to result in competition issues in the global stock content market, but that the Merger may result in a “substantial lessening of competition” (“SLC”) in the U.K. editorial market; and

◦on April 16, 2026, the CMA published the summary of its Interim Report on Remedies (“IRR”), following its interim report of February 19, 2026 which provisionally found that the Merger could be expected to lead to an SLC in the supply of editorial content in the U.K. The IRR states that the remedy proposal offered by Getty Images was unlikely to address the provisional SLC it had identified but that a sale of Shutterstock’s Rex Features, Backgrid and Splash News businesses would likely be acceptable. The CMA is now further consulting on that proposition including its view that Rex Features, Backgrid and Splash News could be sold to different buyers. The statutory deadline for the CMA to publish its final report is June 14, 2026.

The Company remains committed to the proposed Merger and will continue to engage with the CMA, including on its provisional SLC finding, and work with Getty Images to expeditiously secure the necessary clearances on its Editorial business.

In 2025, global Editorial revenue was $32.7 million, of which $11.7 million related to our Rex Features related content and Shutterstock brands and $21.0 million was from our Backgrid and Splash branded content. In addition, our 2025 Editorial revenue for customers in the U.K. was $10.6 million, of which $5.4 million related to our Rex Features related content and Shutterstock brands and $5.2 million was from our Backgrid and Splash branded content.

•shares of Getty Images common stock to be issued in connection with the Merger having been approved for listing on the NYSE;

•accuracy of each party’s representations and warranties, subject to certain standards set forth in the Merger Agreement;

•performance and compliance in all material respects of each party’s agreements and covenants under the Merger Agreement;

•absence of any Getty Images material adverse effect or Shutterstock material adverse effect, as applicable and subject to the definitions thereof in the Merger Agreement;

•delivery of an opinion of tax counsel that the Second Merger and the Third Merger, as defined in the Merger Agreement, taken together, will qualify as a “reorganization” within the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended; and

Overview and Recent Developments

Shutterstock, Inc. (referred to herein as the “Company”, “we,” “our,” and “us”) is a leading global creative platform connecting brands and businesses to high quality content.

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solutions for high-quality content matched with production tools and services through Shutterstock Studios and (iv) other tailored white-glove services (collectively, our “Data, Distribution, and Services” offerings).

Our Content Offering

Our Content offering includes licenses for:

•Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage.

Pond5 is a video-first content marketplace which expands the Company’s content offerings across footage, image and music. TurboSquid operates a marketplace that offers more than one million 3D models and a 2 dimensional (“2D”) marketplace derived from 3D objects. PicMonkey is a leading online graphic design and image editing platform. PremiumBeat offers exclusive high-quality music tracks and provides producers, filmmakers and marketers the ability to search handpicked production music from the world’s leading composers. Splash News provides editorial image and video content across celebrity and red carpet events. Bigstock maintains a separate content library tailored for creators seeking to incorporate cost-effective imagery into their projects. Envato enhances digital creative assets and templates.

Our Data, Distribution, and Services Offering:

Our Data, Distribution, and Services offering addresses customer demand for products and services that are beyond our Content licenses. These products and services include, among other things, the use of our metadata, leveraging our Giphy, Inc. platform, and customized Shutterstock Studios offerings.

We have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training. We offer ethically sourced and licenseable metadata at industry leading scales and quality. Our metadata customer base ranges from large technology and media companies to smaller start-up organizations.

Our Data, Distribution, and Services offering also includes high-quality production and custom content at scale provided by Shutterstock Studios (“Studios”). Studios is a cost-effective solution for brands and agencies looking to meet their content needs and create fresh dynamic digital assets. Customers can bring an idea, and our Studios team will provide a 360-degree content creation solution. We offer a whole spectrum of services at pre-production, production, live production and post-production stages.

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Key Operating Metrics

In addition to key financial metrics, we regularly review a number of key operating metrics to evaluate our business, determine the allocation of resources and make decisions regarding business strategies. We believe that these metrics can be useful for understanding the underlying trends in our business.

Subscribers, subscriber revenue and average revenue per customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Backgrid beginning February 2025. 2025 metrics include the counts and revenues from Envato for the three months ended March 31, 2025, which was acquired in July 22, 2024.

Subscribers

We define subscribers as those customers who purchase one or more of our monthly recurring products for a continuous period of at least three months, measured as of the end of the reporting period. We believe the number of subscribers is an important metric that provides insight into our monthly recurring business. We believe that an increase in our number of subscribers is an indicator of engagement in our platform and potential for future growth.

Subscriber Revenue

We define subscriber revenue as the revenue generated from subscribers during the period. We believe subscriber revenue, together with our number of subscribers, provide insight into the portion of our business driven by our monthly recurring products.

Average Revenue Per Customer

Average revenue per customer is calculated by dividing total revenue for the last twelve-month period by customers. We define customers as total active, paying customers that contributed to total revenue over the last twelve-month period. Changes in our average revenue per customer will be driven by changes in the mix of our subscription-based and transactional products as well as pricing in our transactional business.

Paid Downloads

We define paid downloads as the number of downloads that our customers make in a given period of our content. Paid downloads exclude content related to our Studios business, downloads of content that are offered to customers for no charge (including our free trials), and metadata delivered through our data deal offering. Measuring the number of paid downloads that our customers make in a given period is important because it is a measure of customer engagement on our platform and triggers the recognition of revenue and contributor royalties.

The following tables summarize our key operating metrics, which are unaudited, for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026		2025
Subscribers (end of period)1	993,000		1,079,000
Subscriber revenue (in millions)1	$	103.8	$	109.9
Average revenue per customer (last twelve months)1	$	284	$	244
Paid downloads (in millions)	104.1		120.9

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1 Subscribers, Subscriber Revenue and Average Revenue Per Customer from acquisitions are included in these metrics beginning twelve months after the closing of the respective business combination. Accordingly, the metrics include Subscribers, Subscriber revenue, and Average revenue per customer from Backgrid beginning February 2025. 2025 metrics include the counts and revenues from Envato, which was acquired in July 22, 2024.

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Critical Accounting Estimates

Our financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure or inclusion of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to allowance for doubtful accounts, the volume of expected unused licenses used in revenue recognition for our subscription-based products, the fair value of acquired goodwill and intangible assets and income tax provisions. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Therefore, we consider these to be our critical accounting estimates. Actual results could differ from those estimates.

A description of our critical accounting policies that involve significant management judgments appears in our 2025 Form 10-K, under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.”

See Note 3 to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a full description of the impact of the adoption of new accounting standards on our financial statements. There have been no material changes to our critical accounting estimates as compared to our critical accounting policies and estimates included in our 2025 Form 10-K.

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Key Components of Our Results of Operations

Revenue

We distribute our product offerings through two primary channels:

Content: The majority of our customers license image, video, music and 3D content for commercial purposes either directly through our self-service web properties or through our dedicated sales teams. Content customers have the flexibility to purchase subscription-based plans that are paid on a monthly or annual basis. Customers are also able to license content on a transactional basis. These customers generally license content under our standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs. Certain content customers also have unique content, licensing and workflow needs. These customers communicate with dedicated sales professionals, service and research teams which provide a number of tailored enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on the e-commerce platform.

Data, Distribution, and Services: Our Data, Distribution, and Services offering addresses customer demand for products and services that are beyond our stock image, footage music and 3D model licenses. We have seen increased demand for access to our metadata for machine learning and generative artificial intelligence model training. We offer ethically sourced and licenseable metadata at unique scales and quality. Our metadata customer base ranges from large technology and media companies to smaller start-up organizations.

The Company’s revenues by distribution channel for the three months ended March 31, 2026 and 2025 are as follows (in thousands):

	Three Months Ended March 31,
	2026		2025
Content	$	178,126	$	202,888
Data, Distribution, and Services	21,044		39,732
Total Revenues	$	199,170	$	242,620

Costs and Expenses

Cost of Revenue. Cost of revenue consists of royalties paid to contributors, credit card processing fees, content review costs, customer service expenses, infrastructure and hosting costs related to maintaining our creative platform and cloud-based software platform, depreciation and amortization of capitalized internal-use software, purchased content and acquisition-related intangible assets, allocated facility costs and other supporting overhead costs. Cost of revenue also includes employee compensation, including non-cash equity-based compensation, bonuses and benefits associated with the maintenance of our creative platform and cloud-based software platform.

Sales and Marketing. Sales and marketing expenses include third-party marketing, advertising, branding, public relations and sales expenses. Sales and marketing expenses also include associated employee compensation, including non-cash equity-based compensation, bonuses and benefits, and commissions as well as allocated facility and other supporting overhead costs.

Product Development. Product development expenses consist of employee compensation, including non-cash equity-based compensation, bonuses and benefits, and expenses related to vendors engaged in product management, design, development and testing of our websites and products. Product development costs also include software and other IT equipment costs, allocated facility expenses and other supporting overhead costs.

General and Administrative. General and administrative expenses include employee compensation, including non-cash equity-based compensation, bonuses and benefits for executive, finance, accounting, legal, human resources, internal information technology, internet security, business intelligence and other administrative personnel. In addition, general and

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administrative expenses include outside legal, tax and accounting services, bad debt expense, insurance, facilities costs, other supporting overhead costs and depreciation and amortization expense.

Interest Expense. Interest expense consists of interest on our debt and amortization of deferred financing fees.

Other (Expense) / Income, Net. Other (expense) / income, net consists of non-operating costs such as foreign currency transaction gains and losses, in addition to unrealized gains and losses on investments and interest income and expense.

Income Taxes. We compute income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted statutory income tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized.

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Results of Operations

The following table presents our results of operations for the periods indicated. The period-to-period comparisons of results are not necessarily indicative of results for future periods.

	Three Months Ended March 31,
	2026		2025
	(in thousands)
Consolidated Statements of Operations:
Revenue	$	199,170	$	242,620
Operating expenses:
Cost of revenue	94,788		100,888
Sales and marketing	48,346		53,359
Product development	19,405		19,865
General and administrative	67,585		58,307
Total operating expenses	230,124		232,419
(Loss) / income from operations	(30,954)		10,201
Interest expense	(3,760)		(4,298)
Other (expense) / income, net	(14,661)		14,515
(Loss) / income before income taxes	(49,375)		20,418
(Benefit) / provision for income taxes	(1,806)		1,730
Net (loss) / income	$	(47,569)	$	18,688

The following table presents the components of our results of operations for the periods indicated as a percentage of revenue:

	Three Months Ended March 31,
	2026		2025
Consolidated Statements of Operations:
Revenue	100	%	100	%
Operating expenses:
Cost of revenue	48	%	42	%
Sales and marketing	24	%	22	%
Product development	10	%	8	%
General and administrative	34	%	24	%
Total operating expenses	116	%	96	%
(Loss) / income from operations	(16)	%	4	%
Interest expense	(2)	%	(2)	%
Other (expense) / income, net	(7)	%	6	%
(Loss) / Income before income taxes	(25)	%	8	%
(Benefit) / (provision) for income taxes	(1)	%	1	%
Net (loss) / income	(24)	%	8	%

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Note: Due to rounding, percentages may not sum to totals.

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Comparison of the Three Months Ended March 31, 2026 and 2025

The following table presents our results of operations for the periods indicated (in thousands):

	Three Months Ended March 31,
	2026		2025		$ Change		% Change
Consolidated Statements of Operations:
Revenue	$	199,170	$	242,620	$	(43,450)	(18)	%
Operating expenses:
Cost of revenue	94,788		100,888		(6,100)		(6)
Sales and marketing	48,346		53,359		(5,013)		(9)
Product development	19,405		19,865		(460)		(2)
General and administrative	67,585		58,307		9,278		16
Total operating expenses	230,124		232,419		(2,295)		(1)
(Loss) / income from operations	(30,954)		10,201		(41,155)		(403)
Interest expense	(3,760)		(4,298)		538		(13)
Other (expense) / income, net	(14,661)		14,515		(29,176)		(201)
(Loss) / Income before income taxes	(49,375)		20,418		(69,793)		(342)
(Benefit) / provision for income taxes	(1,806)		1,730		(3,536)		(204)
Net (loss) / income	$	(47,569)	$	18,688	$	(66,257)	(355)	%

Revenue

Revenue decreased by $43.5 million, or 18%, to $199.2 million for the three months ended March 31, 2026, compared to the same period in 2025. On a constant currency basis, revenue decreased by 19% in the three months ended March 31, 2026, compared to the same period in 2025.

Our Content revenues decreased by 12%, to $178.1 million in the three months ended March 31, 2026, compared to the same period in 2025. On a constant currency basis, content revenue decreased by 14% in the three months ended March 31, 2026, compared to the same period in 2025. During the three months ended March 31, 2026, the reduction in our Content revenue was driven primarily by weakness in new customer acquisition.

Our Data, Distribution, and Services revenues decreased by 47%, to $21.0 million in the three months ended March 31, 2026, compared to the same period in 2025. Data, Distribution, and Services revenues were not impacted on a constant currency basis in the three months ended March 31, 2026, compared to the same period in 2025. The decrease in Data, Distribution, and Services revenues was primarily driven by a decline in our data offering, which decreased by 63% in the three months ended March 31, 2026 compared to the same period in 2025. Revenue recognition in our data offering may vary from quarter-to-quarter based on the delivery timing of metadata licenses.

Changes in our revenue by region were as follows: revenue from North America decreased by $31.2 million, or 26%, to $89.0 million, revenue from Europe decreased by $3.5 million, or 5%, to $62.7 million and revenue from outside Europe and North America decreased by $8.8 million, or 16%, to $47.4 million, in the three months ended March 31, 2026 compared to the same period in 2025.

Costs and Expenses

Cost of Revenue. Cost of revenue decreased by $6.1 million to $94.8 million in the three months ended March 31, 2026 compared to the same period in 2025. This decrease is primarily due to lower royalty expenses as a result of the decline in revenue for the quarter. As a percentage of revenue, cost of revenue increased to 48% for the three months ended March 31, 2026, from 42% for the same period in 2025, and this increase relate to AI token usage fees and website hosting costs which do not fluctuate with revenue. We expect that our cost of revenue will continue to fluctuate in-line with changes in revenue.

Sales and Marketing. Sales and marketing expenses decreased by $5.0 million, or 9%, to $48.3 million in the three months ended March 31, 2026 compared to the same period in 2025. This was driven by a decrease in brand and performance-based marketing expenses. As a percentage of revenue, sales and marketing expenses increased to 24% for the three months ended March 31, 2026, from 22% for the same period in 2025. We expect sales and marketing expenses to continue to fluctuate as we optimize our sales channels and invest in new customer acquisition, products and geographies.

Product Development. Product development expenses decreased by $0.5 million to $19.4 million in the three months ended March 31, 2026 compared to the same period in 2025. The decrease in product development was driven by a decrease in

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employee-related costs. This was partially offset by increases in software licenses and third-party contractor related costs, net of capitalized labor. We expect product development expenses, of which a portion will be capitalized, to continue in the foreseeable future, as we pursue opportunities to invest in developing new products and internal tools and enhance the functionality of our existing products and technologies.

General and Administrative. General and administrative expenses increased by $9.3 million to $67.6 million in the three months ended March 31, 2026 compared to the same period in 2025. This increase was driven by increases in legal contingencies of $28.0 million (see Item 1 of Part I, “Financial Statements — Note 15 — Commitments and Contingencies — Legal Matters” for more information) offset by a decrease in employee-related expenses.

Interest Expense. In the three months ended March 31, 2026 and March 31, 2025, we recognized interest expense of $3.8 million and $4.3 million, respectively, related to our credit facility and the amortization of deferred financing fees. Interest expense for the three months ended March 31, 2026 decreased due to lower interest rates in the three months ended March 31, 2026 as compared to the same period in 2025.

Other (Expense) / Income, Net. In the three months ended March 31, 2026, other (expense) / income, net was driven by $15.3 million of unrealized losses related to our investment in Meitu, Inc. In addition, other income, net had $0.8 million of interest income and $0.2 million of unrealized foreign currency losses. In the three months ended March 31, 2025, other income, net was primarily driven by $13.3 million of unrealized gains related to our investment in Meitu, Inc. In addition, other income, net had $0.9 million of interest income and $0.3 million of unrealized foreign currency gains. As we increase the volume of business transacted in foreign currencies resulting from international expansion and as currency rates fluctuate, we expect foreign currency gains and losses to continue to fluctuate.

Income Taxes. The income tax expense decreased by $3.5 million for the three months ended March 31, 2026, compared to the same period in 2025. Our effective tax rates were a net benefit of 3.7% and 8.5% for the three months ended March 31, 2026 and 2025, respectively.

For the three months ended March 31, 2026, the net effect of discrete items decreased the effective tax rate by 33.2%. The discrete items for the three months ended March 31, 2026 primarily relate to an increase in the UK valuation allowance due to the mark-to-market loss on the Meitu investment, a one-time charge related to the expiration of an equity award, and the establishment of a tax reserve for the proposed FTC settlement. Excluding discrete items, our effective tax rate would have been 36.9% for the three months ended March 31, 2026.

For the three months ended March 31, 2025, the net effect of discrete items decreased the effective tax rate by 19.6%. The discrete items for the three months ended March 31, 2025 primarily relate to decreases for the UK valuation and tax reserve releases. Excluding discrete items, our effective tax rate would have been 28.1% for the three months ended March 31, 2025.

As we continue to expand our operations outside of the United States, we have been and may continue to become subject to taxation in additional non-U.S. jurisdictions and our effective tax rate could fluctuate accordingly.

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Quarterly Trends

Our operating results have in the past fluctuated from quarter to quarter as a result of a variety of factors, including the effects of some seasonal trends in customer behavior, timing of acquisitions and the timing of revenue recognition associated with data deal partnerships.

In addition, expenditures on content by customers tend to be discretionary in nature, reflecting overall economic conditions, the economic prospects of specific industries, budgeting constraints, buying patterns and a variety of other factors, many of which are outside our control. As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indicators of our future operating performance.

Liquidity and Capital Resources

As of March 31, 2026, we had cash and cash equivalents totaling $162.5 million which consisted primarily of bank balances. Since inception, we have financed our operations primarily through cash flows generated from operations. In addition, if necessary, we have the ability to draw on our A&R Credit Agreement dated July 22, 2024.

Historically, our principal uses of cash have included funding our operations, capital expenditures, and content acquisitions. In addition, our capital allocation strategies also include funding business combinations and asset acquisitions that enhance our strategic position, cash dividend payments, principle and interest payments under our credit facilities and share purchases under our share repurchase programs. We plan to finance our operations, capital expenditures and corporate actions largely through cash generated by our operations and our credit facility. Since our results of operations are sensitive to the level of competition we face, increased competition could adversely affect our liquidity and capital resources.

Dividends

We declared and paid cash dividends of $0.36 per share of common stock, or $12.8 million during the three months ended March 31, 2026.

On April 20, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share of outstanding common stock payable on June 18, 2026 to stockholders of record at the close of business on June 4, 2026. The Company currently expects to continue to pay comparable cash dividends on a quarterly basis in the future. Future declarations of dividends are subject to the final determination of our Board of Directors, and will depend on, among other things, our future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors our Board of Directors may deem relevant.

Share Repurchase Program

In June 2023, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”), providing authorization to repurchase up to $100 million of our common stock.

We expect to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, our Share Repurchase Program is subject to us having available cash to fund repurchases. Under the share repurchase program, management is authorized to purchase shares of our common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.

As of March 31, 2026, we have repurchased approximately 5.5 million shares of our common stock in total since 2015 under the Share repurchase programs (including the 2015 and 2017 Share Repurchase Programs and the 2023 Share Repurchase Program) at an average per-share cost of $48.86. During the three months ended March 31, 2026 and 2025, we did not repurchase shares of our common stock. As of March 31, 2026, we had $30.2 million of remaining authorization for repurchases under the Share Repurchase Program.

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Credit Facility and A&R Credit Agreement

On May 6, 2022, we entered into a five-year $100 million unsecured revolving loan facility (the “Credit Facility”) with Bank of America, N.A., as Administrative Agent and other lenders. The Credit Facility includes a letter of credit sub-facility and a swingline facility and it also permitted, subject to the satisfaction of certain conditions, up to $100 million of additional revolving loan commitments with the consent of the Administrative Agent.

On July 22, 2024, we entered into an amended and restated credit agreement (the “A&R Credit Agreement”), which was entered into among us, as borrower, certain direct and indirect subsidiaries of our as guarantors, the lenders party thereto, and Bank of America, N.A., as Administrative Agent for the lenders. The A&R Credit Agreement provides for a five-year (i) senior unsecured term loan facility (the “Term Loan”) in an aggregate principal amount $125 million and (ii) senior unsecured revolving credit facility (the “Revolver”) in an aggregate principal amount of $250 million. The A&R Credit Agreement provides for a letter of credit subfacility and a swingline facility.

At our option, loans under the A&R Credit Agreement accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.375% to 0.750%, determined based on our consolidated leverage ratio or (ii) the Term Secured Overnight Financing Rate (“SOFR”) (for interest periods of 1, 3 or 6 months) plus a margin ranging from 1.375% to 1.750%, determined based on our consolidated leverage ratio, plus a credit spread of 0.100%. We are also required to pay an unused commitment fee ranging from 0.175% to 0.250%, determined based on our consolidated leverage ratio. In connection with the execution of this agreement, we paid debt issuance costs of approximately $2.2 million.

The A&R Credit Agreement replaces our existing Credit Facility, which was fully repaid and terminated upon the effectiveness of the A&R Credit Agreement. In connection with the closing of the Credit Facility, we repaid $30 million of existing outstanding borrowings and accrued interest.

As of March 31, 2026, we had a remaining borrowing capacity of $94 million, net of standby letters of credit.

The A&R Credit Agreement contains financial covenants and requirements restricting certain of our activities, which are customary for this type of credit facility. We are also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the A&R Credit Agreement. As of March 31, 2026, we were in compliance with these covenants.

Our outstanding debt (in thousands) is reflected in the table below. We classify the Revolver as a current liability since we could draw upon and repay the outstanding amount as needed. The maturity of the Revolver is in 2029.

Our debt consists of the following (in thousands):

	As of March 31, 2026	As of December 31, 2025
Current Debt:
Revolver - A&R Credit Agreement	155,000	155,000
Term Loan - A&R Credit Agreement	3,111	3,110
Non-Current Debt:
Term Loan - A&R Credit Agreement	115,898	116,639

Based on Level 2 inputs, the carrying value of our debt approximates its fair value, as borrowings are subject to variable interest rates that adjust with changes in market rates and market conditions and the current interest rate approximates that which would be available under similar financial arrangements.

For the three months ended March 31, 2026 and March 31, 2025, we recognized interest expense of $3.8 million and $4.3 million, respectively. As of March 31, 2026, unamortized debt issuance cost related to the Term Loan - A&R Credit Agreement is $0.5 million.

Sources and Uses of Funds

We believe, based on our current operating plan, that our cash and cash equivalents, and cash from operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our longer-term liquidity is contingent upon future operating performance. Future capital expenditures will generally relate to building enhancements to the functionality of our current platform, the acquisition of additional storage, servers, network connectivity hardware, security apparatus and software, leasehold improvements and furniture and fixtures related to office expansion and relocation, content and general corporate infrastructure.

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As of March 31, 2026, we had approximately $151 million in unconditional cash obligations, consisting primarily of purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, of which the majority is due to be paid within the next two years. In addition, as of March 31, 2026, we had approximately $26 million in operating lease obligations with lease payments extending through 2029.

See Note 15 to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding our existing capital commitments as of March 31, 2026.

Cash Flows

The following table summarizes our cash flow data for the three months ended March 31, 2026 and 2025 (in thousands):

	Three Months Ended March 31,
	2026		2025
Net cash provided by operating activities	$	17,370	$	25,247
Net cash used in investing activities	$	(11,146)	$	(11,234)
Net cash used in financing activities	$	(19,950)	$	(15,821)

Operating Activities

Our primary source of cash from operating activities is cash collections from our customers. The majority of our revenue is generated from credit card transactions and is typically settled within one to five business days. Our primary uses of cash for operating activities are for the payment of royalties to content contributors, employee-related expenditures and the payment of other operating expenses incurred in the ordinary course of business.

Net cash provided by operating activities was $17.4 million for the three months ended March 31, 2026, compared to $25.2 million for the three months ended March 31, 2025. The decline in cash flows for the three months ended March 31, 2026, compared to the prior year, is primarily attributed to the year-over-year decline in revenue. First quarter operating cash flows are also impacted by payments of year-end bonuses and commissions.

In the three months ended March 31, 2025, operating cash flows were unfavorably impacted from payments of year-end bonuses and commissions, which are typical first quarter cash outflows.

Investing Activities

Cash used in investing activities for the three months ended March 31, 2026 was $11.1 million, consisting primarily of (i) capital expenditures of $11.6 million for internal-use software and website development costs and purchases of software and equipment; and (ii) $0.2 million paid to acquire the rights to distribute certain digital content into perpetuity. These cash outflows were partially offset by $0.4 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.

Cash used in investing activities in the three months ended March 31, 2025 was $11.2 million, consisting primarily of (i) capital expenditures of $10.8 million for internal-use software and website development costs and purchases of software and equipment; and (ii) $0.9 million paid to acquire the rights to distribute certain digital content in perpetuity. These cash outflows were partially offset by $0.5 million of Giphy Retention Compensation, as reimbursed by the Giphy seller.

Financing Activities

Cash used in financing activities for the three months ended March 31, 2026 was $20.0 million, consisting of (i) $12.8 million, related to the payment of the quarterly cash dividend; (ii) $6.4 million paid in the settlement of tax withholding obligations related to employee stock-based compensation awards; and (ii) $0.8 million used for the repayment of our A&R Credit Agreement.

Cash used in financing activities in the three months ended March 31, 2025 was $15.8 million, consisting of (i) $11.5 million related to the payment of the quarterly cash dividend; (ii) $3.5 million paid in settlement of tax withholding obligations related to employee stock-based compensation awards; and (II) $0.8 million used for the repayment of our A&R Credit Agreement.

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Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with the accounting principles generally accepted in the United States, or GAAP, our management considers certain financial measures that are not prepared in accordance with GAAP, collectively referred to as non-GAAP financial measures, including adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, adjusted EBITDA margin, revenue growth / (decline) (including by product offering) on a constant currency basis (expressed as a percentage), and adjusted free cash flow. These non-GAAP financial measures are included solely to provide investors with additional information regarding our financial results and are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

	Three Months Ended March 31,
	2026		2025
Non-GAAP Financial Measures (in thousands):
Adjusted net income	$	20,730	$	36,291
Adjusted EBITDA	$	42,706	$	63,363
Adjusted free cash flow	$	13,132	$	23,384
Revenue (decline) / growth on a constant currency basis	(19)

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Next expected filings

~2026-08-04 10-Q expected by 2026-08-14 (in 26 days)
~2026-11-11 10-Q expected by 2026-11-21 (in 125 days)
~2027-02-16 10-K expected by 2027-02-22 (in 222 days)
~2027-05-04 10-Q expected by 2027-05-14 (in 299 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-07-09 8-K Material Agreement Terminated
2026-07-01 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2026-05-15 8-K Other Events; Financial Statements and Exhibits
2026-05-14 8-K Other Events
2026-04-28 10-Q Quarterly Report
2026-04-28 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-04-24 10-K/A Annual Report (Amended)
2026-04-20 8-K Other Events
2026-02-23 8-K Other Events; Financial Statements and Exhibits
2026-02-19 8-K Other Events; Financial Statements and Exhibits
2026-02-17 10-K Annual Report
2026-02-17 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-01-27 8-K Other Events
2025-12-02 8-K Officer/Director Change
2025-11-06 8-K Other Events

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