Paul Hennessy: Yeah. I think it’s all the things you would normally suspect in an acquisition like that. When we’ve got more subscribers that are more retentive, that’s great for the business. To the extent that we have content that’s not currently offered to Envato customers, that becomes upside levels of retention. We’ve talked kind of clearly about we believe that this could fit very, very nicely into our small and medium-sized customer offering sitting in between packs and larger subscriptions. There’s a lot to like in this acquisition, and I’d just say, you combine that with a great company that’s really well run by a great leadership team with a talented set of employees, we really like the combination of Shutterstock and Envato.
Unidentified Participant: Thank you so much.
Paul Hennessy: Thank you.
Operator: Your next question comes from the line of Agnieszka Pustula. Please go ahead.
Agnieszka Pustula: Hi, and thank you for taking my question. I’ve got a couple. The first one is a follow-up on your new guidance. So just wanted to clarify, do you assume in that guidance that Envato will be added to your revenues and EBITDA from the start of Q3? And secondly, on your content business, if you could maybe talk a little bit more about the trend within the quarter. Is there any month-on-month improvement already and what trend are you seeing in April so far? Thank you.
Jarrod Yahes: Sure. So thank you so much for your question. I’ll take the first part and then we’ll talk a little bit about trends in April. So I think it’s probably unlikely the acquisition is going to close in July. So I think to your point, the back part of Q3 is more likely with respect to the acquisition. We feel really good about this deal, I think, as we mentioned, and we’re really excited to be able to offer this to our customers and to include this into our overall business.
Paul Hennessy: And regarding — if I heard the question properly, it was what are we seeing on the content business in the — in April timeframe. You heard in my prepared remarks that there’s some really positive trends in our small and medium business. And it starts with the idea of, amazingly, if you charge customers rather than give away our very valuable content, they actually pay, and not only do they pay, but they download and come back. And so we’re very encouraged. And then I gave more insight into our level of encouragement by saying that we expect our business to kind of return to growth in the back half of the year. We’re seeing good signs on the content business and while we won’t call this turnaround complete, we’re very encouraged, and all of that is reflected in an increase in our overall guidance.
Jarrod Yahes: One other point I would add on that is, you should fully expect the year-over-year growth in content to improve over the course of the year each and every quarter both in terms of year-over-year growth percentage, but also in terms of sequential revenue contribution. And I think that’s really important to note. We feel quite good about that. And I think April is looking good. So we’re excited about what we’re seeing. And I think Paul’s point on the way we’ve extracted ourselves from the free trial is spot on. This was the right strategic move for Shutterstock and it’s going to create a more durable, longer term, faster growing content business for us.
Agnieszka Pustula: That’s fantastic. Thank you.
Operator: Your next question comes from the line of Nitin Bansal with Bank of America. Please go ahead.
Nitin Bansal: Thank you for taking my question. As the pace of building GenAI applications accelerate across verticals, can you throw some light on where you are seeing the demand for your data beyond the LLMs? And how has your go-to-market strategy evolved in the last few months to monetize this data opportunity?
Jarrod Yahes: Sure. So let me just give a little bit of a perspective of some of the demand that we’re seeing. And by the way, what I would call out is we’re seeing demand increases from both new customers as well as existing customers. Existing customers are asking us for more, so greater scale in existing content types. They’re asking us for specific types of metadata as well as specific types of content. So we’re increasingly being asked for — to source specialized types of content for those customers. And there is a common misperception that visual media content is only needed for companies that are training image generators or video generators as outputs. It is the case that multimodal models, broadly speaking, require visual media training data in order to create inputs as well as generate outputs.
And I think that’s something that’s not well understood. The perception is that if the output is chat-based that visual media is not needed as a training input. That is incorrect. Visual media is a critical component of training chat-based output models or large language models. So we’re seeing demand across the spectrum for the various model types, particularly as things go multimodal, more broadly defined. In terms of the way the pipeline and distribution are trending, Paul, any thoughts?
Paul Hennessy: Well, we’re not giving a lot of insight into that that you haven’t already covered, Jarrod. And I mentioned on to the prior question, we’re seeing lots of strong demand across channels.
Nitin Bansal: Thank you. One more. On the Giphy business, what are some of the challenges that you are encountering in scaling up this business? And by when do you think we can start to see like a more meaningful impact from the Giphy on your top line?
Paul Hennessy: Yeah. The challenge of restarting any business from a cold start is all of the things you would expect is reaching back out and telling our story to the tens of thousands of interested advertisers getting in front of them, getting in front of their budgets. But when they hear the story, it’s a very compelling story. So again, we believe that market’s coming our way. We’re not giving an exact date of when meaningful revenue comes in. We’re already seeing, again, high interest and ascending AOV. Those are the trends of a critical advertising model. And so again, we feel very good about overcoming any of the hurdles of moving a business from a cold start to a bonafide ad platform, but we’re — every single month that goes by, we’re making headway, and you heard we’re investing in that business with more salespeople because we see the demand.
Nitin Bansal: Given it is an advertising business, do you think a potential third-party partnership with a bigger platform similar to something that Pinterest did can expedite the monetization of this asset?
Paul Hennessy: Yeah. I like the way you think. I think that’s spot on. And we’re — as you might expect, we’re exploring those opportunities and have interested folks that are talking to us about just that. I can’t say much more about that, but you can imagine a large-scaled, high use platform has interest from a lot of folks.
Nitin Bansal: Okay. Thank you.
Operator: Your next question comes from the line of Kieran Kenny with Morgan Stanley. Please go ahead.
