DK Street Journal

Shutterstock, the New York marketplace that licenses images, video, music and 3D models through brands including Envato, Pond5 and TurboSquid, ended the second quarter with 951,000 subscribers. A year earlier it had 1,073,000.

That is the cleanest available measurement of what generative imagery has done to the paid stock-content unit, and it comes with a second number that undercuts the standard consolation. Shutterstock's Data, Distribution and Services arm — the business that sells archives and distribution rights to artificial-intelligence developers and other buyers, and which was supposed to offset erosion in image subscriptions — fell 16% to $56.1m. Content revenue fell 17%. The offset is contracting at essentially the same rate as the thing it offsets.

Group revenue fell 16.9% to $221.8m, with gross profit down 20.5% and gross margin at 57.7% against 60.3%. The decline is also getting worse, not better: full-year 2025 revenue grew 5.8%, and the last four quarters read +3.8%, −12.0%, −17.9%, −16.9%. Analysts have stopped modelling a recovery — consensus carries $783.6m of revenue in 2026, $721.0m in 2027 and $685.6m in 2028, three consecutive annual declines. The company booked a $163.4m goodwill impairment, cancelled its scheduled earnings call and withdrew guidance. Chief executive Paul Hennessy resigned on 12 July; interim chief Rik Powell has taken out more than $70m of annualized operating cost and is targeting $60m more by year-end.

Getty broke somewhere else entirely

Getty Images licenses editorial, sports and creative photography through the Getty, iStock and Unsplash brands. Its equity has been treated as the same trade as Shutterstock's, and on the licensing line it is not. Second-quarter revenue was $229.1m, down 2.5%, and gross profit rose 5.0%. Editorial revenue grew 9.2% on FIFA World Cup demand. Annual subscription revenue grew 7.1% and now supplies 58.8% of the total, up from 53.5%.

What broke was the capital structure. Getty carries $2.07bn of debt against $51.6m of cash, paid $80.4m of cash interest in the quarter, and disclosed substantial doubt about its ability to continue as a going concern. It gave no 2026 guidance and hired Guggenheim Securities to review financing alternatives. The $3.7bn merger with Shutterstock was terminated in July after Getty's board declined the UK Competition and Markets Authority's condition that Shutterstock sell its editorial arm. Getty's legal path to charging for training data also narrowed: the English High Court rejected its secondary copyright claim against Stability AI in November 2025, leaving only limited trademark findings. Getty's own reported subscriber count fell 56% to 140,000, which management attributes to deliberately abandoning low-value acquisition channels — a volume-for-cash trade it says will hurt reported metrics into 2027.

Where the money went

Adobe, which sells Creative Cloud and Document Cloud by subscription, is the visible beneficiary. Revenue growth is accelerating — 10.5% in fiscal 2025, 12.0%, then 12.7% to $6.618bn last quarter — with gross margin steady near 89%. Its AI-first annual recurring revenue more than tripled past $500m, and the durable part of that is legal rather than technical: Adobe contractually indemnifies paying subscribers against intellectual-property claims on commercial use of Firefly output, which is precisely the assurance a corporate buyer used to purchase from a stock library. Adobe has also cut its organic Digital Media recurring-revenue guide by about two points to fund a freemium push — the same volume-for-price trade Getty is making, from a stronger position.

Figma, the browser-based collaborative design platform, is the fastest-growing name here: revenue up 48.2% to $370.1m, a third straight quarter of acceleration, net dollar retention of 136%, and customers above $100,000 of annual recurring revenue up 46%. But its economics are being diluted as it scales, gross margin falling to 83.7% from 88.8%, and the shares fell after the 5 August print as cost of revenue rose 117%.

What the prices are saying

Shutterstock's shares turned down decisively in mid-May and have traded with the 50-day average below the 200-day for 60 sessions since. The valuation carries an unusual tell: price-to-gross-profit is 0.39x trailing but 0.44x forward, meaning gross profit is expected to fall faster than the share price already has. Getty at 0.17x trailing looks cheaper still, but that is a $113m equity stub sitting behind $2.07bn of debt; on an enterprise basis it trades at 11.6x trailing earnings before interest, taxes, depreciation and amortization, which is not a distressed number.

Figma's chart improved on 7 August — the session after its post-earnings drop and the day before a 77.7m-share lockup expiry covering roughly 17% of Class A stock. It is up 6.8% over three months. At 10.9x forward price-to-gross-profit it is the most expensive name in this group by a wide margin; Adobe is at 4.27x, on 10.4x forward earnings against 14.5x trailing and a 10.5% free-cash-flow yield.

The setup

Where it stands — Shutterstock's unit base and its AI-licensing offset are shrinking together; Getty's licensing revenue is roughly stable and its balance sheet is not. Would confirm — Shutterstock's third quarter shows subscribers below 951,000 and data and services revenue under $56.1m again. Would invalidate — Shutterstock's data and services line returns to year-on-year growth, or subscriber count stabilizes above 950,000. Watch next — Getty's third-quarter report and the outcome of its financing review, which management said runs through the fourth quarter. Valuation — Shutterstock 0.39x trailing and 0.44x forward price-to-gross-profit; Getty 0.17x on both, against 11.6x enterprise value to EBITDA.

The companies that do contract technology work for the US government sell almost nothing to anyone else. Their revenue arrives as billable hours and task orders paid for out of congressional appropriations, which makes the federal funding calendar a direct business input rather than background noise. In late July that calendar moved, and the shares moved first.

A funding bill, then results

The House passed a continuing resolution on 21 July, 220-205, extending federal funding at current levels through 4 December and removing the risk of a shutdown on 1 October. Over the four trading sessions ending 28 July, CACI International rose 9.1%, Leidos Holdings 10.4% and Science Applications International 4.9%. None had reported. Booz Allen Hamilton, a consulting peer outside this group, added 10.7% over the same stretch while the S&P 500 fell slightly. Senate appropriators released their own stopgap on 2 August, running to 11 December.

Then the results arrived, and two sessions did most of the remaining work. Remove each company's two best days from the month and the group's 25.5% advance falls to roughly 3.7% — CACI to 9.2%, Leidos to 10.4%, SAIC to 2.8%, and BigBear.ai to minus 7.5%.

CACI earned its session; the multiple went further

CACI, which builds signals-intelligence, cyber, electronic-warfare and counter-drone systems for the Pentagon and the intelligence agencies, reported fiscal 2026 results on 5 August. Fourth-quarter revenue of $2.71bn grew 17.6%, of which 11.6 points was organic, accelerating from 8.5% the quarter before. Funded backlog — the portion with appropriated money behind it — rose 28.6% to $5.4bn on $10.2bn of awards, a 1.1 times book-to-bill with a weighted-average duration near six years. Guidance for adjusted earnings of $32.96 to $33.86 a share sits above the $31.13 analysts model. The shares gained 22% the next day.

That is a real result. The price has run past it: 27.0 times trailing earnings and 21.1 times forward, against 21.0 times trailing in early May and a 19-24 range over the prior two years. CACI's durable advantage is incumbency on classified programs at the National Reconnaissance Office and National Security Agency, where cleared staff and long-tenured access are near-impossible to replicate — but that advantage was there at 21 times too.

Leidos is growing revenue and losing margin

Leidos, the largest here, runs national-security systems, air-traffic-control modernization for the Federal Aviation Administration and disability examinations for the Department of Veterans Affairs. Second-quarter revenue of $4.56bn grew 7.2%, free cash flow reached $761m, and full-year guidance went up to $18.20-18.40bn with backlog of $48.7bn. Book-to-bill was 1.1 times overall and 2.2 times in Defense, driven by hardware-like work: a containerized-munitions framework worth more than $1bn through 2030, a Navy unmanned surface vessel, a Golden Dome satellite payload order.

The cost is visible. Operating margin fell to 11.1% from 13.4% and operating income shrank 11.2%. Management flagged suspended incentive payments on the veterans' exam contract, a fourth vendor added to it, and the Defense Health Agency in-sourcing the MHS GENESIS integration work. At 11.6 times forward earnings and a 12.0% free-cash-flow yield, Leidos remains 19.4% below its level of a year ago while annual net income rose 16.1%.

SAIC turned, and lost a contract it had held

SAIC, the most exposed to civilian-agency and General Services Administration task orders, grew revenue 1.5% in the quarter to 1 May after four consecutive declines, with operating income up 39.2% and bookings of $2.1bn. Against that, it lost the $1.4bn CASTLE-NET Army Corps of Engineers modernization order to Accenture Federal Services, work it had held since 2021, and the Government Accountability Office denied its protest on 19 May. Consensus still models fiscal 2027 revenue down 1.2%. The stock is at 12.4 times forward earnings.

The AI name lagged the labor businesses

BigBear.ai, a 579-person decision-support software vendor in Columbia, Maryland, was the worst of the four over the month and is down over three months. Second-quarter revenue was $36.7m, up 13.2%, against an operating loss of $27.4m; adjusted losses before interest, tax, depreciation and amortization widened to $11.6m from $8.5m. Diluted shares outstanding reached 479m from 321m a year earlier. It trades at 11.4 times trailing sales, against 1.02 at Leidos and 0.73 at SAIC.

The demand story is genuine — the Pentagon's fiscal 2027 request of $1.5 trillion carries $29.5bn for command-and-control systems and $20.5bn for cyberspace. But a request is not an appropriation, and a stopgap funds agencies at last year's levels. Since 7 August the four have gone nowhere, averaging a quarter of a percent.

The setup

Where it stands — A stopgap bill and two earnings sessions produced a 25% month; the group has been flat since 7 August. Would confirm — CACI holds double-digit organic revenue growth in its September quarter with funded backlog above $5.4bn. Would invalidate — Leidos's operating margin stays near 11% or falls further as veterans' health revenue compresses. Watch next — Full-year appropriations or a further stopgap before the 4 December funding expiry. Valuation — CACI at 27.0x trailing and 21.1x forward, versus 21.0x in early May and a 19-24x two-year range.

The Trade Desk, which sells agencies and brands the software they use to buy advertising across streaming television, display and audio, told investors on 6 August that revenue this quarter would be at least $650m. That is a decline of roughly 12% from a year earlier, from a company that grew 17.7% as recently as last autumn. The shares fell about 22%.

The same week, Magnite — the independent sell-side platform that publishers use to monetize their ad inventory, and the technology partner for Disney, Netflix, Roku, Paramount and Warner Bros. Discovery — raised its full-year growth guidance to 13–14% from at least 11%. Its streaming revenue net of traffic-acquisition costs rose 36% to $97.1m.

Both companies are paid out of the same connected-television dollar. Only one of them is losing it.

The fee moved, the impressions didn't

The mechanism is price. Amazon's demand-side platform charges no fee on programmatic-guaranteed deals across Amazon-owned media and 1% on open-web publishers, against The Trade Desk's estimated 20% take rate. Amazon's share of global programmatic buying went from under 10% to just under 20% in roughly fifteen months.

Agencies have acted on it. Publicis stopped recommending The Trade Desk after an audit of its fees, billing and the behavior of Kokai, its artificial-intelligence buying tool; ad-tech sources say Omnicom agencies moved a double-digit share of third-quarter programmatic budget to Amazon. The Trade Desk kept the clients and captured less of their money — gross spend from existing customers declined year on year. Management said on the call that its take rate has been flat for a decade. That is the problem, not the defense: a flat 20% is now priced against 1%.

Magnite sits on the other side of that trade and does not care which buyer wins. Its unified ad server and exchange reach 99% of US streaming supply on a dollar-weighted basis. Second-quarter revenue rose 11.2% to $192.8m, and operating margin widened to 16.2% from 12.7%.

Where the open web is actually shrinking

Criteo, the Paris-based firm paid per retargeted click and per retail-media placement on retailer websites, is the clearest damage. Revenue fell 11.3% to $428.0m and operating income halved. It cut its outlook to a 10–12% constant-currency decline, the third position on that number in six months and each worse than the last, after two retail-media clients pulled $75m of scope. Strip those two and retail-media contribution still grew 20%, with 85 retailers now running auction-based display against 60 a year ago.

DoubleVerify, which is paid per impression it verifies as viewable and fraud-free, chose the exit: Nielsen agreed on 6 August to buy it for $13.60 a share in cash, about $2.15bn including debt. Revenue had grown 2.5%. At $13.27 the shares are a merger spread, not a verdict on advertising.

Digital Turbine, which pre-installs and recommends apps on carrier and handset-maker devices, supplied the cleanest description of where the audience went: management put open-web traffic down about 10% year on year on artificial-intelligence displacement, with some categories off 20–40%. Its revenue grew 26.8% to $166.0m and adjusted margin widened 640 basis points, though it remains loss-making on a reported basis. None of this is a boom. The Interactive Advertising Bureau (IAB) forecasts 9.5% US ad-spend growth this year; dentsu cut its global figure to 5.0%. Growth here is share, taken from somebody.

Does the price leave room

The Trade Desk at 13.45x forward and 15.79x trailing earnings, 7.02x trailing EV/EBITDA and a 13.6% free-cash-flow yield looks like the cheapest cash flow in advertising technology. The forward number is an artifact. Consensus 2026 revenue of $3.184bn against first-half actuals of $1.404bn and a third quarter guided to $650m would require about $1.13bn in the fourth quarter — a 33% jump, in a year the company is guiding down. What is real: $1.5bn of cash, $269m of buyback authorization left after $78m repurchased, and founder-CEO Jeff Green's roughly $148m open-market purchase in March, the largest insider buy in company history. It has not worked yet: the shares have held a downtrend since 13 November, 187 sessions with the 50-day average below the 200-day.

Magnite carries the opposite risk. Up 97.5% in 90 days, it trades at 23.09x trailing EV/EBITDA with a forward earnings multiple above its trailing one — the richest name here, against Criteo's 3.17x EV/EBITDA and 0.79x book. And its month is thin: remove Magnite's two best sessions, both in the week of 4 August, and a 29% gain becomes 1.7%.

The setup

Where it stands — The Trade Desk is losing fee share to Amazon's near-free DSP while Magnite, on the sell side, keeps earning on the same streaming impressions. Would confirm — Magnite's streaming revenue net of traffic costs holding above 25% growth next quarter while The Trade Desk prints at or below its $650m guide. Would invalidate — The Trade Desk reporting gross spend from existing clients back in growth, or a take-rate cut that stabilizes revenue. Watch next — Third-quarter results from both companies in early November; Nielsen expects to close the DoubleVerify purchase by the first quarter of 2027. Valuation — The Trade Desk 13.45x forward against 15.79x trailing on an unreachable estimate; Magnite 21.81x forward, above its 20.97x trailing.

Ituran Location & Control reported the largest quarter in its history on 12 August. Its shares are lower now than they were in mid-May.

The Israeli company is not a hardware vendor, despite sitting alongside two device makers. It sells a monthly subscription: stolen-vehicle recovery, fleet management and connected-car data, billed to insurers, dealers, carmakers and individual drivers in Israel, Brazil and across Latin America. Second-quarter revenue was a record $104.8m, up 21%, with net income up 29% to $17.3m. The mix is improving where it matters: subscription revenue grew 25% to $79.8m and now carries 76% of the total, while low-margin product sales grew 8%. Earnings before interest, taxes, depreciation and amortization (EBITDA) margin widened to 27.2% from 26.4%.

Growth is accelerating rather than fading — year-on-year revenue gains ran 10.5%, 12.8%, 18.8% and 20.7% across the last four quarters. The subscriber base added 163,000 over twelve months, helped by original-equipment programs: an exclusive Connect Fiat launch on the Stellantis-built Fiat Strada, plus Yamaha and BMW motorcycle fitments in Brazil. In Israel, roughly one in three vehicles on the road is already an Ituran subscriber, a density management is now trying to monetize as a data business after concluding a contract with the Ministry of Transportation.

None of that stopped the de-rating. Trailing earnings per share rose to $3.24 from $3.04 since mid-May while the price fell, taking the trailing multiple to 16.1x from about 18.8x. The shares change hands at 14.7x forward earnings, 8.9x EV/EBITDA and an 8.0% trailing free-cash-flow yield, with $103.7m of net cash and no debt against a $1.03bn market value. The plausible explanations are unglamorous: management gives no numeric guidance, only "continued growth and profitability"; shekel strength cost $1.3m on the financial line even as it helped operating profit by about $1m; and forward estimates rest on a single analyst, which makes the forward multiple thinly anchored. Its trend readings were cut from strongly positive to neutral over the same span in which subscribers, margins and revenue all improved.

The two that gapped

Zebra Technologies, the Illinois maker of barcode scanners, rugged handhelds and radio-frequency identification (RFID) readers, lifted its 2026 outlook on 4 August and rose 26.5% that session. The quarter was real — sales up 20.4% to $1.557bn, gross margin 53.0% against 47.6% a year earlier — though 9.2% was organic and $73m came from tariffs recovered under a court ruling. The constraint is supply, not demand: Gartner expects 2026 DRAM prices up 125% as memory makers divert output to AI data centers, and Zebra is qualifying ten new suppliers while guiding below underlying demand. Growth came from retail, manufacturing and healthcare; transport and logistics was flat. That matters, because its freight customers sold off hard over the same month — largely after Amazon expanded its less-than-truckload service, a competitive shock to carriers rather than evidence they are cutting warehouse spending. Zebra trades at 34.3x trailing and 17.6x forward.

Digi International, which sells cellular routers, embedded radio modules and the Opengear console servers used to manage data-center racks, is the strongest operator of the three and the most expensively priced. Fiscal third-quarter revenue rose 29% with gross margin at 64.8%, and annualized recurring revenue reached $191m, up 52% — roughly twice the pace of total sales. At 30.7x forward earnings and 9.62x price-to-gross-profit, up from 7.18x on 3 May, Digi has re-rated 34% on top of that growth, against consensus that has revenue growth halving to 8.6% next fiscal year.

Strip the two best sessions from each name over the past month and Zebra's gain becomes 0.1%, Digi's 6.4%, Ituran's still minus 6.7%. What looked like a broad advance in edge connectivity was two earnings gaps and one company being sold into a record.

The setup

Where it stands — Ituran's subscriptions, margins and cash generation all improved through Q2 while the shares fell 9% since mid-May. Would confirm — Q3 net subscriber adds at or above 41,000 with subscription revenue growth holding above 20%. Would invalidate — Subscriber adds falling below 25,000 or subscription revenue growth dropping into single digits on Brazilian weakness. Watch next — Ituran's third-quarter results, due November, and whether management attaches numeric 2027 guidance. Valuation — 16.1x trailing and 14.7x forward earnings, against roughly 18.8x trailing in mid-May; Zebra 34.3x/17.6x, Digi 62.3x/30.7x.

Gilat Satellite Networks, an Israeli maker of the ground half of satellite systems — antennas, modems, amplifiers and the software that ties a network together — reported June-quarter revenue of $122.7m, up 17% on a year earlier, reiterated full-year guidance of $500–520m and disclosed $43m of additional orders for its Sidewinder electronically steered antennas from an in-flight connectivity provider, plus $11m from the US Department of War. It is the only profitable company among the listed satellite and broadband names. Since mid-May its shares are down about 26%.

Money inside the same industry went somewhere else entirely.

What the market paid for instead

Telesat, an Ottawa operator running fourteen geostationary satellites while it builds the Lightspeed low-Earth-orbit constellation, saw revenue fall 25% year on year to $79.5m — the third consecutive quarter of roughly that magnitude. On 4 August it won a C$2.3bn Arctic military satellite communications contract, the largest in its six-decade history, and the shares rose 36% in a session. The contract funds a 69-satellite expansion but pays service revenue from 2028; Telesat simultaneously raised planned 2026 Lightspeed spending by $300m to $1.3–1.5bn, against $1.7bn of geostationary debt maturing in December. The equity is worth roughly $700m. It is an option on refinancing.

AST SpaceMobile, a Texas builder of satellites that connect directly to ordinary unmodified phones, doubled revenue sequentially to $31.5m and now has thirteen spacecraft in orbit against a target of about 45 by early 2027. The operating loss widened to $297.6m, consensus models a $464m net loss this year, and the stock trades at 236.7x trailing sales. That is down from roughly 500x in May, which is the honest way to put it: the multiple has compressed and remains extreme.

Viasat, the Carlsbad multi-orbit operator, is genuinely moving in two directions. Revenue slipped 1.2% to $1.157bn. Defense and Advanced Technologies awards rose 22% to $524m and total backlog rose 19% to $4.2bn after it won the next phase of the Protected Tactical SATCOM-Global program. Meanwhile fixed consumer broadband revenue fell 27%, to a base of 115,000 subscribers paying $111 a month. Net debt is 3.2x EBITDA, down from 3.6x, and free cash flow was $72m in the quarter.

The mechanism is capacity, and it is arriving

What connects these is cheap low-orbit bandwidth landing on incumbents built for scarcity. EchoStar's Hughes unit filed for Chapter 11 on 3 August after failing to repay $1.5bn of bonds, citing competition from low-earth-orbit providers; it serves about 622,000 broadband homes. Sentiment for the whole complex now also runs through SpaceX's own listed stock, which fell to an all-time low around $108 ahead of its first lockup expiry on 6 August, when the public float more than doubled.

Gilat sits outside that. It owns no spacecraft and is paid per terminal, modem and defense order — including by the constellations themselves. Its $157.5m purchase of Comtech's satellite and space communications business, agreed in June and awaiting antitrust and Committee on Foreign Investment in the United States clearance, would lift military work from a quarter of revenue to over 40%.

The counterweight is real: operating income fell 31% to $3.9m and operating margin compressed to 3.2% from 5.4%. Adjusted earnings before interest, taxes, depreciation and amortization rose 31% to $15.4m, so the two measures disagree, and the disagreement is integration cost. Gilat is buying growth. At 23.6x trailing and 17.3x forward earnings, and 12.6x trailing EV/EBITDA, the shares price consensus 2026 earnings per share of $0.63 against $0.34 reported for 2025 — nearly a doubling. Viasat, on the lens its leverage demands, trades at 8.74x trailing EV/EBITDA with a 5.5% free-cash-flow yield.

The month was four sessions

The group's roughly 21% gain over the thirty days to 17 August looks like a steady recovery and is not one. Strip each name's two best sessions and the average turns negative, near -4%: Telesat -5.8%, Gilat -10.6%, Viasat -0.5%, with only AST SpaceMobile still positive. Over three months the same names are down about 12%, and Gilat's fifty-day average remains below its two-hundred-day. On 18 August every member fell between 3.9% and 8.7% in one session with no company news attached.

The setup

Where it stands — Gilat is the only profitable satellite name in the group and the worst performer of it over three months. Would confirm — Full-year revenue tracking to the reiterated $500–520m with operating margin recovering above 5%. Would invalidate — Guidance cut, or the Comtech deal failing US regulatory clearance before year-end. Watch next — Third-quarter results in November, and Telesat's December geostationary debt maturity. Valuation — 17.3x forward earnings against 23.6x trailing and 12.6x trailing EV/EBITDA.