Strong Free Cash Flow Generation and Balance Sheet, and Confidence in the Company's Prospects Support 25% Increase to $0.02 Per Share NEW YORK, NY / ACCESS Newswire / March 25, 2026 / Zedge, Inc. (NYSE AMERICAN:ZDGE), $ZDGE, a leader in digital marketplaces and interactive games that provide content, enable creativity, empower self-expression and facilitate community, today announced that its Board of Directors has approved a 25% increase to its quarterly cash dividend, from $0.016 to $0.02 per share, refle ...

User Engagement and Growth - Zedge reported 20.4 million monthly active users (MAU) as of January 31, 2026, a key performance indicator for the Zedge App [111]. - The Zedge Marketplace generated revenue through advertising, in-app sales of Zedge Credits, and a subscription offering, with approximately 1.2 million active subscribers as of January 31, 2026 [114]. - Zedge introduced pAInt, a generative AI wallpaper maker, in fiscal 2023, enhancing user engagement through text-to-image and other creative functionalities [112]. - The Creator Economy, which Zedge is part of, is estimated to be worth between $191 billion and $250 billion globally in 2025, presenting significant growth opportunities [110]. Financial Performance - Total revenues for the company increased by 18.3% to $8.254 million for the three months ended January 31, 2026, compared to $6.979 million in the same period last year [143]. - Subscription revenue for the Zedge App increased by 32.5% to $1.634 million for the three months ended January 31, 2026, compared to $1.233 million in the same period last year [144]. - Average Revenue Per Monthly Active User (ARPMAU) for the Zedge App increased by 47.5% to $0.1146 for the three months ended January 31, 2026, driven by higher advertising prices and strong subscription revenue growth [130]. - Advertising revenue for the three months ended January 31, 2026, increased by 18.3%, primarily due to higher average prices per advertising impression [150]. Operational Challenges - The company recorded a non-cash impairment charge of approximately $3.7 million to reduce the carrying amount of the Emojipedia assets group due to competitive pressures from AI developments [108]. - GuruShots, acquired by Zedge, has faced revenue decline and is undergoing a restructuring plan to improve user acquisition and retention [121]. - Zedge's operations are significantly impacted by geopolitical tensions, particularly in Israel, which may affect business performance and workforce availability [106]. Cost Management - Selling, general and administrative expenses decreased by 6.2% to $6.683 million for the three months ended January 31, 2026, compared to $7.126 million in the same period last year [143]. - Stock-based compensation expense decreased by 54.4% to $275,000 for the three months ended January 31, 2026, compared to $603,000 in the same period of 2025 [169]. - Direct cost of revenues increased by 25.5% to $561,000 for the three months ended January 31, 2026, compared to $447,000 in the same period last year [143]. Subscription Metrics - Active subscriptions at the end of the period reached 1,175,000, reflecting a 48.5% increase from 791,000 in the prior year [147]. - For the six months ended January 31, 2026, subscription revenue increased by 30.6% to $2,415,000 compared to $1,850,000 in the same period of 2025 [157]. - Subscription billings, a non-GAAP measure, increased by 2.0% to $1,908,000 for the three months ended January 31, 2026, compared to $1,871,000 in the same period of 2025 [148]. Loss and Impairment - Net loss for the company increased by 36.3% to $2.289 million for the three months ended January 31, 2026, compared to a net loss of $1.679 million in the same period last year [143]. - The company recorded an impairment charge of $3.7 million for the quarterly results ended January 31, 2026, due to anticipated reduced traffic and revenue from changes in search engine results [124]. - For the three months ended January 31, 2026, the Zedge Marketplace segment reported a loss from operations of $2.1 million, compared to income of $41,000 in the prior year, primarily due to impairment charges of $3.7 million [188][189]. Cash Flow and Capital Management - Cash and cash equivalents stood at $19.1 million as of January 31, 2026, with working capital of $15.3 million, compared to $18.6 million and $14.7 million, respectively, at July 31, 2025 [193]. - Net cash provided by operating activities was $1.7 million for the six months ended January 31, 2026, reflecting a net loss of $1.5 million adjusted for non-cash items of $4.4 million [196]. - The company maintains a revolving credit facility of $4 million, including a foreign exchange contract facility of up to $7.5 million [193]. Customer Concentration - One large customer represented 34% of total revenue for the six months ended January 31, 2026, compared to 31% in the same period of 2025 [205]. - At January 31, 2026, two customers represented 33% and 19% of the accounts receivable balance, respectively, compared to 48% and 13% at July 31, 2025 [205]. Workforce and Restructuring - Global headcount as of January 31, 2026, totaled 85, down from 106 as of January 31, 2025, indicating a reduction in workforce [169]. - The GuruShots segment's loss from operations decreased by 65.6% to $777,000 for the three months ended January 31, 2026, compared to $2.3 million in the prior year, attributed to lower SG&A expenses [190].

Management View - Zedge, Inc. achieved record levels of revenue and average revenue per monthly user, indicating an improvement in monetization quality [2] - CEO Jonathan Reich highlighted that the company's disciplined innovation and monetization strategy are key drivers of these record results [2] AI Data Offerings - Zedge is expanding its AI data offerings as part of its growth strategy, which aligns with its focus on innovation [2] - The company is committed to enhancing its product offerings through disciplined innovation, which is expected to further boost revenue [2]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $8.3 million, up 18.3% year-over-year, marking the seasonally strongest quarter due to holidays [15] - Advertising revenue increased by 18.3% for the quarter, driven by strong growth in the Zedge Marketplace, despite lower ad revenue at Emojipedia [16] - GAAP loss from operations was $2.9 million, compared to a loss of $2.2 million last year, with a non-cash impairment charge of $3.7 million related to Emojipedia [21] - Non-GAAP net income was $0.8 million, with EPS of $0.06, compared to a loss of $0.2 million and a loss per share of $0.01 last year [21] - Cash flow from operations was $0.9 million, and free cash flow was $0.8 million for the quarter [21] - Cash strengthened to $19.1 million with zero debt, and the company generated solid free cash flow even after investments in innovation [13][22] Business Line Data and Key Metrics Changes - Zedge Marketplace revenue was up over 21% year-over-year, driven by strong advertising and subscription revenue [15] - Zedge Plus subscription revenue increased by 33% year-over-year, with the net active subscriber base growing by 49%, reaching nearly 1.2 million subscribers [17] - Deferred revenue reached $6 million, up 5% sequentially and 39% year-over-year, reflecting future revenue with a 100% gross margin [17] - Zedge Premium GTV was up 15.7% from the year-ago quarter, and ARPM increased by 47.6%, indicating improved monetization efficiency [18] Market Data and Key Metrics Changes - The company is experiencing MAU contraction but is focused on acquiring higher-value users and monetizing the audience more effectively [5] - The digital goods and services revenue includes contributions from both GuruShots and DataSeeds.AI, with the majority generated by GuruShots at this stage [19] Company Strategy and Development Direction - The company aims to strengthen monetization in the marketplace, build DataSeeds deliberately, and expand the innovation pipeline in a disciplined manner [14] - The operational focus is on building a high-quality outbound pipeline and better qualifying inbound requests to ensure long-term credibility in the enterprise market [9] - The company is exploring multimodal data, including images, audio, and video, to enhance its offerings [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the quality of monetization improving, leading to record results, and highlighted the importance of investments in ad inventory and subscription offerings [5] - The appetite for AI training data is described as insatiable, with the company focusing on productizing offerings to meet the needs of model builders [7] - Management acknowledged structural headwinds tied to the evolving field of search, particularly affecting Emojipedia, but noted that the business remains profitable [12] Other Important Information - The company launched two more alpha products, bringing the total to four out of six planned for the fiscal year, with a focus on modular development to accelerate product delivery [11][32] - The company is paying a quarterly dividend while continuing to invest in innovation and share repurchases when market conditions are favorable [22] Q&A Session Summary Question: Can you walk us through the DataSeeds pipeline and margin perspective? - Management indicated that the progression of a deal depends on the success of proof of concept, with margins being attractive but variable based on deal type [26][28] Question: How are you thinking about multimodal data? - The company is focusing on multimodal data, including images, audio, and video, with completed proof of concept on the video side and discussions on audio work [30] Question: Can you comment on the new alpha products? - The new products are being built on an evolving foundation to allow for modular development and faster market entry, with ongoing refinement in selecting what to produce next [31][32] Question: What is driving the momentum in subscription revenues? - The ongoing investment in optimizing subscription offerings and targeting prospective subscribers is driving the momentum [34] Question: What is driving the success of the Zedge Marketplace? - The fiscal Q2 coincides with year-end advertising spend, and efforts in data science to better segment users have contributed to the marketplace's success [36][38] Question: How is the Tapedeck product progressing? - The KPIs for Tapedeck are trending positively, with a focus on expanding the music catalog to attract users [42]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $8.3 million, up 18.3% year-over-year, marking the seasonally strongest quarter due to holidays [15] - Advertising revenue increased by 18.3% for the quarter, driven by strong growth in the Zedge Marketplace, despite lower ad revenue at Emojipedia [16] - GAAP loss from operations was $2.9 million, compared to a loss of $2.2 million last year, with a non-cash impairment charge of $3.7 million related to Emojipedia [21] - Non-GAAP net income was $0.8 million, with an EPS of $0.06, compared to a loss of $0.2 million and a loss per share of $0.01 last year [21] - Cash strengthened to $19.1 million with zero debt, and free cash flow yield remains in the double digits [13][22] Business Line Data and Key Metrics Changes - Zedge Marketplace revenue was up over 21% year-over-year, driven by strong advertising CPMs and subscription revenue [15] - Zedge Plus subscription revenue increased by 33% year-over-year, with the net active subscriber base growing by 49% to nearly 1.2 million subscribers [17] - Deferred revenue reached $6 million, up 5% sequentially and 39% year-over-year, reflecting future revenue with a 100% gross margin [17] - Zedge Premium GTV was up 15.7% from the year-ago quarter, and ARPM increased by 47.6%, indicating improved monetization efficiency [18] Market Data and Key Metrics Changes - The company is experiencing MAU contraction but is focused on acquiring higher-value users and monetizing the audience more effectively [5] - The operational focus includes building a high-quality outbound pipeline and better qualifying inbound requests [9] Company Strategy and Development Direction - The company aims to strengthen monetization in the marketplace, build DataSeeds deliberately, and expand the innovation pipeline in a disciplined manner [14] - Investments in optimizing ad inventory and subscription offerings are yielding positive results, with a focus on innovation in AI training data through DataSeeds.AI [5][7] - The company is exploring multimodal data, including images, audio, and video, to enhance its offerings [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential of DataSeeds.AI and the ongoing interest from enterprise customers [8] - The company is cautious about scaling operations to avoid impacting profitability while building infrastructure and operational rigor [10] - Management acknowledged structural headwinds affecting Emojipedia and the need to adapt to changes in the search landscape [12] Other Important Information - The company has launched two more alpha products, bringing the total to four out of six planned for the fiscal year [11] - The cost of revenue was 6.8% of revenue, up from 6.4% last year due to increased production costs [19] - SG&A expenses decreased by about 6% to $6.7 million for the quarter, reflecting net savings from restructuring [20] Q&A Session Summary Question: Insights on DataSeeds and pipeline delivery - Management indicated that the progression of deals in DataSeeds.AI depends on successful proof of concepts and customer needs, with attractive margins thus far [26][28] Question: Updates on alpha product launches - Management shared that the new products are built on an evolving foundation for modular development, allowing for faster market entry [31][32] Question: Subscription revenue trends - The ongoing investment in optimizing subscription offerings is driving growth, with a focus on attracting prospective subscribers [34] Question: Zedge Marketplace performance - The strong performance is attributed to the overlap with year-end advertising spend and enhanced data science efforts for user segmentation [36][38] Question: Strategy for increasing active users - The company is employing new marketing strategies, testing product features, and utilizing data science to attract new users [40] Question: Progress on Tapedeck and music catalog - Management emphasized the importance of building a substantial and diverse music catalog to attract users, with ongoing efforts to promote the app [42][44]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $8.3 million, up 18.3% from last year, marking the seasonally strongest quarter due to holidays [9] - Advertising revenue increased by 18.3% for the quarter, driven by strong growth in the Zedge Marketplace [10] - GAAP loss from operations was $2.9 million, compared to a loss of $2.2 million last year, with a GAAP net loss of $2.3 million and loss per share of $0.18 [12] - Non-GAAP net income was $0.8 million with an EPS of $0.06, compared to a loss of $0.2 million and a loss per share of $0.01 last year [12][13] - Cash strengthened to $19.1 million with zero debt, and free cash flow remained in the double digits [8][14] Business Line Data and Key Metrics Changes - Zedge Marketplace revenue was up over 21% year-over-year, driven by strong advertising and subscription revenue [9] - Zedge Plus subscription revenue increased by 33% year-over-year, with the net active subscriber base growing by 49% to nearly 1.2 million subscribers [10] - Deferred revenue reached $6 million, up 5% sequentially and 39% year-over-year, reflecting future revenue with a 100% gross margin [10] - GuruShots appears to be stabilizing, while DataSeeds.AI is expected to increase its contribution in the second half of fiscal 2026 [11] Market Data and Key Metrics Changes - The appetite for AI training data is described as virtually insatiable, with ongoing interest and larger orders from enterprise customers [5] - The company is focusing on multimodal data, including images, audio, and video, to expand its offerings [20] Company Strategy and Development Direction - The company aims to strengthen monetization in the marketplace, build DataSeeds deliberately, and expand its innovation pipeline in a disciplined manner [8] - The operational focus includes building a high-quality outbound pipeline and better qualifying inbound requests to ensure long-term credibility in the enterprise market [6] - The company is adopting a framework for product innovation that emphasizes rapid development and objective measurement of success [7] Management's Comments on Operating Environment and Future Outlook - Management noted that MAU contraction remains, but the focus is on acquiring higher value users and improving monetization efficiency [4] - The company is optimistic about the growth potential of DataSeeds.AI and is committed to making the right investments in this area [5] - Management acknowledged structural headwinds tied to the evolving field of search affecting Emojipedia, leading to a non-cash impairment this quarter [7] Other Important Information - The company generated solid free cash flow even after investing in innovation priorities, and it is now paying a quarterly dividend while repurchasing shares when market conditions are favorable [8] - The cost of revenue was 6.8% of revenue, up from 6.4% last year due to various factors including partner discounts and new licensing fees [11] Q&A Session Summary Question: Can you walk us through the DataSeeds pipeline and margin perspective? - Management explained that the progression of a deal depends on the success of proof of concept, with margins being attractive but variable based on deal type [17][18] Question: How are you thinking about multimodal data? - The company is focusing on images, audio, and video, with completed proof of concept on the video side and discussions on audio work [20] Question: Can you comment on the new alpha products launched? - Management stated that the new products are built on an evolving foundation, allowing for modular development and faster market entry [21][22] Question: What is driving the momentum in subscription revenues? - The ongoing investment in optimizing subscription offerings is attracting prospective subscribers [23] Question: What is driving the success of the Zedge Marketplace? - The fiscal Q2 coincides with year-end advertising spend, and efforts in data science are enhancing user segmentation and monetization [25][27] Question: How is the Tapedeck product progressing? - The company is focusing on expanding the music catalog to attract users, with ongoing product development slowing down [29][30] Question: How important is discovery for the success of Tapedeck? - Discovery is crucial, and the app recommends alternative artists and genres to users, while also promoting the app through artists' fan bases [31]

Revenue Growth - Revenue increased 18% year over year to $8.3 million, driven by strong advertising and subscription optimization [2] - Subscription revenue rose 33%, with active subscriptions growing 49% to nearly 1.2 million [2] - ARPMAU increased 48% to a quarterly record of $0.115, indicating improved monetization of the user base [2] - Revenues for the three months ended January 31, 2026, increased to $8,254,000, up 18.3% from $6,979,000 in the same period of 2025 [24] Financial Performance - GAAP net loss was $2.3 million, with diluted loss per share at $0.18, compared to a net loss of $1.7 million and $0.12 per share in the prior year [10] - Non-GAAP net income reached $0.8 million, a significant improvement from a non-GAAP net loss of $0.2 million in the previous year [10] - Net loss for the six months ended January 31, 2026, was $1,501,000, compared to a net loss of $2,018,000 for the same period in 2025, representing a 25.6% improvement [26] - Basic and diluted loss per share for the three months ended January 31, 2026, was $(0.18), compared to $(0.12) for the same period in 2025 [24] Cash Flow and Assets - Free cash flow increased 31% year over year to $0.8 million, with cash and cash equivalents rising to $19.1 million [6] - Total current assets increased to $23,933,000 as of January 31, 2026, compared to $22,444,000 as of July 31, 2025, reflecting a growth of 6.6% [23] - Cash and cash equivalents at the end of the period were $19,106,000, a slight increase from $18,609,000 at the beginning of the period [26] - Net cash provided by operating activities for the six months ended January 31, 2026, was $1,683,000, down from $1,878,000 in the same period of 2025 [26] Expenses and Impairments - The company reported an impairment charge of intangible assets amounting to $3,570,000 for the three months ended January 31, 2026 [24] - The company incurred asset impairments and restructuring charges of $1.3 million in Q2 2025, contributing to a total of $12.0 million for FY24 [30] Dividends and Investments - Zedge has initiated a quarterly dividend of $0.016 per share, reflecting confidence in cash generation while investing in innovation [6] - The company is focusing on expanding its music catalog and has launched two new alpha products, aiming to introduce up to six alphas this fiscal year [5] - The demand for high-quality AI training data through DataSeeds is growing, with an expanding pipeline of interest from customers [4] Adjusted Metrics - Adjusted EBITDA for the six months ended January 31, 2026, was $2,300,000, compared to $1,800,000 for the same period in 2025, showing a 27.8% increase [28] - Non-GAAP Net Income for Q3 2025 reached $0.9 million, with a Non-GAAP diluted EPS of $0.06 for the same quarter [30] - The company projects a Non-GAAP Net Income of $1.8 million for FY24, with expectations of $0.7 million for FY25 and $1.7 million for FY26 [30]

Core Insights - Zedge, Inc. reported record quarterly results for total revenue, advertising and subscription revenue, and active subscriptions in its second quarter fiscal 2026 [1] Financial Performance - Total revenue increased by 18% year over year to $8.3 million [1] - Subscription revenue saw a significant increase of 33% [1] - Active subscriptions grew by 49% to nearly 1.2 million [1] - Average Revenue Per Monthly Active User (ARPMAU) increased by 48% to a quarterly record of $0.115 [1] - Zedge Premium Gross Transaction Value (GTV) increased by 16% [1] Management Commentary - Jonathan Reich, CEO of Zedge, highlighted the strong second quarter performance, emphasizing record monetization in the Zedge Marketplace [1]

Core Viewpoint - Zedge, Inc. is set to report its financial and operational results for the Second Fiscal Quarter of 2026, which ended on January 31, 2026 [1] Financial Reporting - The earnings release will be filed on Form 8-K [1] - The report will be available on the Zedge investor relations website at approximately 4:10 PM Eastern on March 12, 2026 [1]

Core Viewpoint - Zedge, Inc. has initiated a quarterly cash dividend, reflecting a commitment to enhancing shareholder value while maintaining growth initiatives [2][3]. Group 1: Dividend Announcement - The Board of Directors approved a quarterly cash dividend, marking a new phase in the company's capital return strategy [2]. - The dividend is set at $0.016 per share, resulting in a dividend yield of 2.01% as of January 29 [3]. Group 2: Shareholder Returns and Growth - The introduction of dividends indicates management's confidence in Zedge's long-term growth, consistent free cash flow, and strong balance sheet [3]. - Zedge has previously returned capital through share repurchases, having bought back approximately $4 million of Class B shares from a $5 million authorization [3]. Group 3: Investment in Innovation - Management emphasized that shareholder returns will not hinder growth, as the company continues to invest in product development and innovation [4]. - Recent product launches, such as Tapedeck and SynCat, demonstrate Zedge's focus on innovation [4]. - A Product Innovation Team has been established to enhance the speed of bringing new products to market, focusing on AI, vibe coding, and automation [5]. Group 4: Financial Flexibility - Zedge's financial flexibility allows it to reward shareholders while simultaneously funding initiatives that support future growth [5].