Zedge(US:ZDGE)2025-12-12 21:16User Engagement and Active Users - Zedge reported 22.2 million monthly active users (MAU) as of October 31, 2025, a key performance indicator for the Zedge App[91] - As of October 31, 2025, Zedge had approximately 1.1 million active subscribers for its Zedge+ subscription service, which offers an ad-free experience[94] - Monthly Active Users (MAU) for the Zedge App decreased by 11.2% to 22.2 million for the three months ended October 31, 2025, compared to 25.0 million in the same period last year[107] - Emojipedia recorded 43.6 million monthly page views and approximately 7.2 million MAU as of October 31, 2025, with 42.1% of users in developed markets[101] Revenue and Financial Performance - Total revenue for the three months ended October 31, 2025, increased by 5.8% to $7,610,000 compared to $7,194,000 in the same period last year[120] - Subscription revenue increased by 28.6% to $1,520,000 for the three months ended October 31, 2025, compared to $1,182,000 in the same period last year[121] - Digital goods and services revenue declined by 27.3% to $468,000 for the three months ended October 31, 2025, primarily due to a 28.4% decrease in Monthly Active Payers (MAP) for GuruShots[127] - Average Revenue Per Monthly Active User (ARPMAU) for the Zedge App increased by 29.2% to $0.0991 for the three months ended October 31, 2025, driven by higher advertising prices and strong subscription revenue growth[108] Cost and Expenses - Direct cost of revenues increased by 20.4% to $555,000 for the three months ended October 31, 2025, compared to $461,000 in the same period last year, reflecting higher data center costs[130] - SG&A expenses decreased by 13.0% to $5.9 million for the three months ended October 31, 2025, compared to $6.8 million in the prior year, primarily due to lower personnel-related expenses and the expiration of an $8 million retention bonus program[132] - Stock-based compensation expense fell by 72.6% to $104,000 for the three months ended October 31, 2025, down from $379,000 in the same period last year, mainly due to the full amortization of $4 million related to the GuruShots acquisition[134] - Depreciation and amortization expenses decreased by 43.3% to $216,000 for the three months ended October 31, 2025, compared to $381,000 in the prior year, largely due to a $0.8 million impairment charge recognized in the second quarter of fiscal 2025[136] Strategic Initiatives - The company introduced pAInt, a generative AI wallpaper maker, in fiscal 2023, enhancing user engagement through text-to-image and image-to-image capabilities[92] - The company is developing DataSeeds.AI, which creates custom datasets for enterprise AI teams, leveraging its creator ecosystem[95] - Zedge's monetization strategy includes advertising revenue, in-app sales of Zedge Credits, and subscription offerings[94] - Zedge's strategy includes reducing paid user acquisition costs for GuruShots to improve return on ad spend[99] Market and Economic Conditions - The ongoing geopolitical tensions, particularly in Israel, pose risks to Zedge's operations and workforce stability[84] - The Creator Economy, which Zedge is part of, is estimated to be worth between $191 billion and $250 billion globally in 2025[88] Shareholder and Customer Concentration - The company repurchased 238,460 shares of Class B common stock for approximately $776,000 during the three months ended October 31, 2025, under its share repurchase program[158] - In the three months ended October 31, 2025, one large customer represented 34% of the company's revenue, compared to 30% in the same period of 2024[162] - As of October 31, 2025, two customers accounted for 42% and 14% of the accounts receivable balance, respectively[162] - At July 31, 2024, three customers represented 43%, 12%, and 11% of the accounts receivable balance, indicating a concentration of revenue sources[162] Income and Taxation - Income tax expense rose by 375.5% to $233,000 for the three months ended October 31, 2025, compared to $49,000 in the prior year, reflecting a higher effective tax rate of 22.8%[142] Segment Performance - Segment income from operations for the Zedge Marketplace increased by 66.4% to $1.6 million for the three months ended October 31, 2025, compared to $0.9 million in the prior year, attributed to higher revenue and lower SG&A[148] - Total segment income improved to $914,000 for the three months ended October 31, 2025, compared to a loss of $457,000 in the prior year, marking a 300.0% increase[147] Liquidity and Cash Position - Cash and cash equivalents stood at $18.5 million as of October 31, 2025, with working capital of $14.6 million, indicating stable liquidity compared to $18.6 million and $14.7 million at July 31, 2025[150]