Zedge(ZDGE) - 2025 Q1 - Quarterly Results

Management Commentary & Business Overview Zedge reported mixed Q1 FY2025 results, with strong Marketplace and Emojipedia growth offset by advertising challenges and GuruShots' transitional phase - Zedge Marketplace subscription revenue grew 21% YoY, and overall subscribers increased by 8%, driven by lifetime subscriptions[2][4] - Zedge Premium's Gross Transaction Value (GTV) surged by 62%, fueled by parallax wallpapers and the pAInt AI image generator[2][4] - Emojipedia delivered a record quarter with revenue up 33% year-over-year, validating its acquisition and value to the ecosystem[5] - GuruShots is in a transitional phase, focusing on new features like 'Duels' to attract new paying users, despite limiting marketing spend and seeing a short-term impact on revenue[6] - The company faced advertising challenges, including a resolved coding error and complexities with a new mediation platform, leading to a conservative short-term user acquisition strategy[4] Fiscal 2025 Outlook Zedge focuses on Q2 improvements, generative AI integration, creator-focused Marketplace, Emojipedia redesign, and GuruShots growth - The company anticipates significant improvements in Q2, driven by holiday seasonal strength and the resolution of Q1 challenges[7] - A top priority for the Zedge Marketplace is to transform users from content consumers into creators, supported by the rollout of pAInt 2.0 and planned AI audio capabilities[8] - The primary focus for GuruShots is returning to growth by introducing features like 'Duels' to attract and engage new users, moving away from reliance on legacy players[11] - Emojipedia's 'Emoji Playground' was expanded to include an AI-driven emoji creator, with a website redesign planned to improve engagement[10] - Zedge will continue its $5 million share repurchase program[13] Financial & Operational Highlights (Q1 FY2025) Q1 FY2025 revenue slightly increased to $7.2 million, with a GAAP operating loss of $0.5 million and Adjusted EBITDA of $0.3 million Q1 FY2025 Key Financial Results vs. Q1 FY2024 (in millions, except EPS) | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.2 | $7.1 | +1.6% | | GAAP Operating Income (Loss) | ($0.5) | $0.3 | -242.7% | | GAAP Net Loss | ($0.3) | ($0.0) | nm | | GAAP Diluted Loss Per Share | ($0.02) | ($0.00) | nm | | Adjusted EBITDA | $0.3 | $1.5 | -81.2% | | Cash Flow from Operations | $1.2 | $1.3 | -7.1% | Q1 FY2025 Zedge Marketplace Metrics vs. Q1 FY2024 (in millions, except where noted) | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | MAU | 25.0 | 28.5 | -12.3% | | Active Subscriptions (in 000s) | 698 | 648 | +7.7% | | ARPMAU | $0.077 | $0.063 | +22.1% | | Zedge Premium GTV | $0.7 | $0.4 | +61.6% | Q1 FY2025 Revenue Breakdown vs. Q1 FY2024 (in millions) | Revenue Source | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Advertising Revenue | $4.9 | $4.9 | -1.3% | | Digital goods and services | $0.6 | $0.9 | -31.8% | | Subscription Revenue | $1.2 | $1.0 | +21.1% | Consolidated Financial Statements This section presents unaudited condensed consolidated financial statements for October 31, 2024, detailing financial position and performance Condensed Consolidated Balance Sheets As of Oct 31, 2024, total assets were $38.2 million, cash $20.2 million, total liabilities $8.1 million, and equity $30.1 million Balance Sheet Summary (in thousands) | Account | Oct 31, 2024 | Jul 31, 2024 | | :--- | :--- | :--- | | Total Assets | $38,198 | $38,195 | | Cash and cash equivalents | $20,196 | $19,998 | | Total Liabilities | $8,095 | $7,299 | | Total Stockholders' Equity | $30,103 | $30,896 | Condensed Consolidated Statements of Operations Q1 FY2025 revenues were $7.19 million, but increased expenses led to a $0.46 million operating loss and $0.34 million net loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Oct 31, 2024 | Three Months Ended Oct 31, 2023 | | :--- | :--- | :--- | | Revenues | $7,194 | $7,081 | | Selling, general and administrative | $6,809 | $5,499 | | (Loss) income from operations | ($457) | $321 | | Net loss | ($339) | ($15) | | Diluted loss per share | ($0.02) | $0.00 | Condensed Consolidated Statements of Cash Flows Q1 FY2025 operating cash flow was $1.17 million, with $0.80 million used in financing, ending with $20.2 million cash Cash Flow Summary (in thousands) | Activity | Three Months Ended Oct 31, 2024 | Three Months Ended Oct 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,170 | $1,260 | | Net cash used in investing activities | ($157) | ($445) | | Net cash used in financing activities | ($804) | ($10) | | Net increase in cash | $198 | $620 | | Cash at end of period | $20,196 | $18,745 | Non-GAAP Financial Measures & Reconciliations Zedge uses non-GAAP measures like Adjusted EBITDA ($0.3 million) and Non-GAAP Net Loss (approx. zero) to assess core performance - The company defines Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock compensation, and other non-recurring expenses[37] Reconciliation of Net Loss to Adjusted EBITDA (in millions) | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net (Loss) Income | ($0.3) | ($0.0) | | Adjustments (Interest, Taxes, D&A, etc.) | $0.2 | $0.9 | | EBITDA | ($0.1) | $0.9 | | Stock-based compensation | $0.4 | $0.5 | | Adjusted EBITDA | $0.3 | $1.5 | Reconciliation of GAAP Net Loss to Non-GAAP Net Income (in millions) | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | GAAP Net (Loss) Income | ($0.3) | ($0.0) | | Stock-based compensation | $0.4 | $0.5 | | Other Adjustments & Tax Effects | ($0.1) | ($0.0) | | Non-GAAP Net Income (Loss) | ($0.0) | $0.5 |