Getty Images Holdings, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. This filing’s financial statements are for CC Neuberger Principal Holdings II (CCNB), the SPAC that completed its business combination with Getty Images on July 22, 2022. They do not report Getty Images’ operating results.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| General and administrative expense | $1.5 million | $0.8 million | $3.8 million | $1.1 million |
| Net income (loss) | $31.7 million | $(7.8) million | $48.8 million | $19.6 million |
| Net income (loss) per share | $0.29 | $(0.07) | $0.45 | $0.18 |
- Net income primarily reflected noncash gains from changes in fair value of derivative liabilities: $32.2 million in Q2 and $51.3 million for the first half of 2022. These gains are not an indication of Getty Images’ operating profitability. Margins are not meaningful because the SPAC reported no revenue.
- First-half operating cash outflow was $0.6 million, versus $0.3 million in the prior-year period. Cash at June 30 was $3,213; working capital was negative by approximately $815,000.
- The SPAC held approximately $829.9 million in its trust account at June 30. This was trust/transaction capital, not ordinary operating cash. Total liabilities were $71.2 million, including $34.4 million of derivative liabilities, a $1.1 million working-capital loan, and $29.0 million of deferred underwriting commissions. The filing does not present conventional long-term operating debt for Getty Images.
- No operating cash-flow, margin, or debt metrics for Getty Images’ business are provided in this filing.
Material changes and subsequent business combination
- Compared with Q2 2021, Q2 2022 net income swung from a loss to a profit, chiefly because derivative liabilities generated a $32.2 million fair-value gain rather than a $7.0 million loss. General and administrative costs also increased.
- On July 22, 2022, the business combination closed, after the quarter end. The transaction was based on approximately $2.9 billion aggregate equity value; eligible Getty equityholders may receive up to 65 million additional shares subject to vesting conditions.
- At closing, 82,291,689 public shares were redeemed for approximately $825.2 million, at about $10.03 per share. The filing also reports $360 million of PIPE proceeds, $200 million from the forward purchase agreement, and a $300 million backstop share purchase. The working-capital loan was repaid at closing.
Outlook, risks, and unusual items
- No Getty Images operating guidance or outlook is provided. The SPAC reported no operations or revenue through June 30 and expected operating revenue only after completion of the business combination.
- Before closing, the SPAC had approximately $3,000 of operating cash and relied on sponsor working-capital funding; it warned it would have to liquidate if it failed to complete a business combination by August 4, 2022. The combination closed before that deadline.
- Management cited uncertainty from COVID-19 and the Russia-Ukraine conflict, with specific financial effects not determinable. The filing reported no material change to previously disclosed risk factors and no legal proceedings.
- Management stated disclosure controls were effective and that a previously identified material weakness involving accounting for complex financial instruments had been remediated as of June 30, 2022.
Important facts for investors to verify
- Getty Images’ standalone and pro forma post-combination revenue, earnings, cash flow, margins, and debt—none are established by these SPAC-period statements.
- Post-redemption cash and net proceeds after transaction expenses, and how the PIPE, forward purchase, and backstop proceeds were applied.
- Final post-close share count, dilution from warrants and potential earnout shares, and the terms and vesting conditions for up to 65 million contingent shares.
- Whether the fair-value gains and the SPAC’s reported net income are clearly distinguished from recurring operating performance in subsequent reporting.