User Engagement and Growth - As of April 30, 2024, the Zedge App had been installed nearly 661 million times and had 27.7 million monthly active users (MAU)[106] - Emojipedia received approximately 36 million monthly page views and had about 10.4 million MAU as of April 30, 2024, with 55.5% of users in developed markets[113] - MAU for the Zedge App decreased by 13.4% to 27.7 million for the three months ended April 30, 2024, compared to 32.0 million in the same period last year[121] - Emerging markets represented 78.3% of total MAU for the Zedge App, up from 77.5% a year ago[121] Product Development and Features - In fiscal 2023, Zedge introduced pAInt, a generative AI wallpaper maker, and upgraded Zedge+ to enhance user experience[107] - The company is exploring new features for Emojipedia, including a revamped onboarding process to enhance user acquisition[114] - Zedge plans to enable GuruShots players to sell their photos as Zedge Premium content, leveraging synergies between the two platforms[112] Revenue and Monetization - Zedge's marketplace monetization includes advertising revenue, in-app sales of Zedge Credits, and a subscription model for an ad-free experience[109] - The average revenue per monthly active user (ARPMAU) is a key performance indicator that helps assess monetization effectiveness[118] - ARPMAU for the Zedge App increased by 39.7% to $0.0742, driven by higher advertising prices and strong subscription revenue growth[121] - Total revenues increased by 13.9% to $7,658,000 for the three months ended April 30, 2024, compared to $6,726,000 in the same period last year[127] - Subscription revenue rose by 34.9% to $1,122,000, attributed to new iOS and Android subscription offerings[133] - Advertising revenue increased by 19.4% to $5,461,000, driven by higher prices per advertising impression[132] - Zedge Premium gross revenue increased by 44.4% to $592,000, while net revenue decreased by 12.6% to $202,000 due to write-downs of advanced royalties[130] - Subscription billings (Non-GAAP) increased by 80.3% to $1,495,000 for the three months ended April 30, 2024[130] Operational Challenges and Costs - Monthly Active Payers (MAPs) for GuruShots decreased by 20.7% to 5,408, primarily due to challenges from Apple's App Tracking Transparency framework[126] - Average Revenue Per Monthly Active Payer (ARPMAP) decreased slightly by 0.4% to $53.0[126] - For the three months ended April 30, 2024, digital goods and services revenue declined 20.3% compared to the same period in the prior year, primarily due to a 20.7% decrease in GuruShots' MAP[135] - SG&A expense increased 34.6% in the three months ended April 30, 2024, with SG&A as a percentage of revenue rising to 88.2% from 74.6% in the prior year[144] - Stock-based compensation expenses decreased 16.6% in the three months ended April 30, 2024, compared to the same period in the prior year[146] - Depreciation and amortization expenses decreased 35.0% in the three months ended April 30, 2024, primarily due to an $11.9 million impairment charge recorded in January 2024[149] Financial Performance and Position - Gross margin for the nine months ended April 30, 2024, was 44%, down from 56% in the prior year, attributed to advanced royalty write-downs[138] - Direct cost of revenues decreased 20.6% for the nine months ended April 30, 2024, as a percentage of revenue, it declined to 6.2% from 8.5% in the prior year[142] - Interest and other income, net increased by 123.8% in the three months ended April 30, 2024, primarily due to higher interest income from cash and cash equivalents[155] - Cash and cash equivalents as of April 30, 2024, were $19.9 million, with working capital of $17.1 million, compared to $18.1 million and $15.8 million, respectively, at July 31, 2023[167] - Cash provided by operating activities increased by $2.4 million to $5.1 million for the nine months ended April 30, 2024, compared to $2.7 million in the prior year[169] Tax and Impairment - Income tax benefit for the three months ended April 30, 2024, decreased by $0.6 million, primarily due to an $0.8 million increase in deferred tax assets related to an $8.7 million impairment of goodwill in the prior period[161] - For the nine months ended April 30, 2024, income tax benefit increased by $1.7 million, mainly from a $2.5 million increase in deferred tax assets related to an $11.9 million impairment loss on intangible assets[162] Segment Performance - Zedge Marketplace segment income decreased to $1.2 million for the three months ended April 30, 2024, down 35.3% from $1.9 million in the prior year, attributed to higher SG&A expenses[163] - GuruShots segment loss from operations was $1.3 million for the three months ended April 30, 2024, compared to a loss of $10.3 million in the prior year, which included an $8.7 million impairment loss of goodwill[164] - Total loss from operations for the three months ended April 30, 2024, was $132,000, a decrease of 98.4% from a loss of $8.4 million in the prior year[163] Share Repurchase and Dividends - In the nine months ended April 30, 2024, the company repurchased 60,206 shares of Class B common stock for $152,000, compared to 680,594 shares for $1.4 million in the prior year[175] - The company does not anticipate paying dividends until achieving sustainable profitability and retaining certain minimum cash reserves[176] External Factors - The ongoing geopolitical tensions, including the Israel-Hamas conflict, are being monitored for potential impacts on business operations[102]
Zedge(ZDGE) - 2024 Q3 - Quarterly Report