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01/11 11:29
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
While Zedge has shown positive signs, such as subscription revenue growth and restructuring benefits, challenges like macroeconomic volatility and user acquisition issues persist. The Q&A revealed management's reluctance to provide specific guidance, raising concerns. The stock buyback program and restructuring savings are positive, but the lack of clear guidance and competitive pressures balance out the positives, leading to a neutral sentiment.
Total Revenue $7.8 million, up 1.3% year-over-year; growth was restrained due to the partial quarter of TikTok returning to the advertising market and continued expected declines at GuruShots.
Subscription Revenue Up 13.4% year-over-year; driven by improved net active subscriber growth trend, up 37% year-over-year.
Deferred Revenue $4.9 million, up 111% over the past 7 quarters; primarily related to subscription revenue with a 100% gross margin.
Zedge Premium Revenue More than doubled year-over-year; driven by a shift towards higher lifetime value users.
Average Revenue per Monthly Active User (ARPU) $0.10, up 33% year-over-year; indicates more efficient monetization of users.
GuruShots Revenue Down 45% year-over-year; decline was expected due to reduced user acquisition spending as part of cost-saving initiatives.
Cost of Revenue 5.8%, roughly flat year-over-year; despite the increase in revenue.
SG&A Expenses $6.3 million, down 6% year-over-year; decrease driven by restructuring initiatives and lower marketing spend.
GAAP Income from Operations $0.2 million, compared to negative $0.1 million last year; reflects return to profitability.
GAAP Net Income $0.2 million, compared to $0.1 million last year; EPS remained at $0.01.
Non-GAAP Net Income $0.9 million, compared to $0.5 million last year; Non-GAAP EPS increased to $0.06 from $0.03.
Cash Flow from Operations $0.9 million; impacted by restructuring and retention bonuses.
Free Cash Flow $0.8 million; negatively impacted by approximately $1 million in restructuring-related payments.
Adjusted EBITDA $1.2 million, up 46% year-over-year; driven by cost savings and improved revenue.
Cash and Cash Equivalents $20.4 million, up 2% sequentially; despite share buyback of 219,000 shares for about $530,000.
New Product Launch: Zedge announced the launch of DataSeeds.AI, a B2B content marketplace focused on supplying enterprise customers with on-demand and off-the-shelf data sets, initially targeting images for AI training.
AI Audio Generator: Zedge is rolling out an AI audio generator as part of its pAInt suite, allowing users to generate custom ringtones and notification sounds using text prompts.
Market Expansion: Zedge+ subscriber base grew to nearly 900,000, a 37% year-over-year increase, and deferred revenue reached $5 million, up 83% year-over-year.
Operational Efficiency: Zedge achieved $4 million in annualized gross cost savings from global restructuring, leading to a return to profitability on a GAAP basis.
Free Cash Flow: Generated $0.8 million in free cash flow despite $1 million in restructuring-related payments.
Strategic Shift: Focus on attracting higher lifetime value (LTV) users, leading to a 33% increase in average revenue per monthly active user.
Future Plans: Zedge aims to expand DataSeeds.AI beyond images to include video and audio, and is ideating on the next generation of GuruShots.
Ad Market Disruption: The ad market experienced disruption due to TikTok's absence from the U.S. until mid-February, which impacted revenue growth.
Macroeconomic Volatility: Tariff-related uncertainty contributed to macroeconomic volatility, affecting business operations and revenue.
User Acquisition Challenges: Expected softness at GuruShots due to scaled-back user acquisition efforts, which were necessary to focus on the future of GuruShots 2.0.
Decline in GuruShots Revenue: GuruShots revenue declined by 45% year-over-year, primarily due to reduced user acquisition spending.
Restructuring Costs: Restructuring initiatives incurred costs of $0.6 million, impacting overall financial performance.
Cash Flow Impact: Cash flow was negatively impacted by approximately $1 million in payments related to restructuring and retention bonuses.
Market Competition: The competitive landscape remains challenging, particularly with the presence of major players like TikTok.
Focus on High LTV Users: While focusing on attracting higher lifetime value users, there is a risk of losing lower LTV users, which could affect overall user metrics.
Zedge+ Subscriber Growth: Grew to an all-time high of nearly $900,000, a 37% year-over-year increase.
Zedge Premium Revenue: More than doubled, driven by expanding the offering to web users and increased usage of pAInt AI image generator.
DataSeeds.AI Launch: A B2B content marketplace aimed at supplying enterprise customers with on-demand and off-the-shelf data sets.
AI Audio Generator Rollout: Part of pAInt, allowing users to generate custom ring tones and notification sounds.
GuruShots 2.0 Development: Planning for the next generation of GuruShots to drive growth.
Core Strategic Priorities: Focus on AI innovation, user growth, creator community empowerment, and scaling DataSeeds.AI.
Q4 Free Cash Flow: Expected to improve with a total of about $600,000 in restructuring-related severance payments.
Fiscal Year 2026 Outlook: Full impact of $4 million in annualized cost reduction initiatives expected to show through.
Deferred Revenue Growth: Deferred revenue reached $4.9 million, growing by 111% over the past 7 quarters.
Average Revenue per User: Increased by 33% year-over-year, indicating improved monetization.
GAAP Income from Operations: GAAP income from operations was $0.2 million for the quarter.
Non-GAAP Net Income: Increased to $0.9 million for the quarter.
Share Repurchase: Repurchased 219,000 shares for approximately $530,000 under a previously announced $5 million buyback authorization. Fiscal year-to-date, nearly 700,000 shares have been repurchased.
The earnings report shows mixed signals: strong revenue growth and improved financial health, but challenges with early-stage initiatives and unclear guidance on key projects like DataSeeds and Emojipedia. The Q&A revealed management's avoidance of direct answers, particularly concerning conversion times and outlooks, raising uncertainties. While dividend payments and share repurchases are positives, dependency on specific platforms for ad revenue and losses in GuruShots pose risks. These factors collectively suggest a neutral sentiment, with potential for slight positive movement if uncertainties resolve favorably.
The earnings call presents a mixed picture: while subscription revenue and deferred revenue showed strong growth, significant declines in other areas like GuruShots and Emojipedia due to competitive pressures and cost-cutting measures are concerning. The Q&A session reveals some uncertainty in management's responses, particularly around strategic initiatives and addressing competitive challenges. Despite restructuring costs impacting financials, the company is reinvesting in growth areas and share repurchases. The overall sentiment remains neutral, as positive subscription trends are offset by operational losses and competitive pressures.
While Zedge has shown positive signs, such as subscription revenue growth and restructuring benefits, challenges like macroeconomic volatility and user acquisition issues persist. The Q&A revealed management's reluctance to provide specific guidance, raising concerns. The stock buyback program and restructuring savings are positive, but the lack of clear guidance and competitive pressures balance out the positives, leading to a neutral sentiment.
The earnings call presents a mixed picture with some positive developments like subscription growth and share repurchases. However, significant challenges include a 10% revenue decline, restructuring costs, and cash flow concerns. The Q&A revealed management's lack of clarity on restructuring charges and revenue forecasts, adding uncertainty. Despite optimistic guidance on future initiatives, these issues, coupled with macroeconomic and regulatory risks, suggest a negative short-term outlook.
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