Stock Sonar #8 - 5/24/2023

Getty Images Holdings (NYSE:GETY) mrkt cap $2.5B; Price $6.32; trailing P/E 24

PASS. GETY owns one of the largest stock photo libraries in the world with over 500mm digital assets. These images are extremely high quality, labeled, and exclusive to GETY. Getty’s platform works by photographers and videographers submitting their content to GETY, once approved by GETY, content creators will then receive a royalty ranging from 20-45% of content revenue. Although forecasting high growth technologies is difficult, we believe generative AI will cause an inflection in content generation and GETY could be a prime beneficiary of this trend given the assets they own. Although GETY is trading at too high of a multiple for us, we will keep it on our watchlist in case of retracement.

SteelCase (NYSE: SCS) mrkt cap $820mm; Price $7.19; trailing P/E 22

PASS. Steelcase is a designer and manufacturer of workspace solutions ranging from ergonomic office chairs to desks. Although the office industry has seen significant fallout (office REITS are down 75% from highs in 2021) we believe hybrid workspaces will supplant the traditional office set up. It is possible we could even see demand for office equipment increase as hybrid workspaces result in more offices as volume is at the heart of their business model. SCS saw revenues organically increase in 2022. Although SCS is a great brand, its FCF is anemic at around 2% net margins. Given management with a more focused eye on cost optimization we would take a closer look at SCS but currently it is a pass.

Thryv Holdings (NAS:THRY) mrkt cap $817mm; Price $23.47; trailing P/E 17

PASS. THRY owns online business directories like (formerly known as the Yellow Pages) that are heavily cash flow generative but deteriorating quickly. THRY has seen success upselling small businesses on its all-in-one SAAS solution Thryv: payments, reviews, task automation, payroll etc. all in one place. Subscriber growth has been trending at double digits per annum but online reviews seem to indicate a heavily promotional sales team. Disaggregating their subscriber base from the different tiers in their offering has also proven difficult. They have begun to expand internationally and it is curious with such a massive TAM domestically (400k+ small businesses in U.S.) why management would divert resources to expanding elsewhere. Even still, if we had spoken to long time SAAS users that loved the product we might have reconsidered this but still haven’t come across them. Ultimately, we cannot fully get behind the product-market fit and are passing.

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