Zedge(US:ZDGE)2024-03-15 18:51Financial Data and Key Metrics Changes - Q2 revenue increased by 11% year-over-year, totaling $7.8 million [5][24] - GAAP loss from operations was $11.9 million, compared to income from operations of $1.5 million in the previous year [27] - Non-GAAP net income for the quarter was $0.5 million, down from $0.8 million year-over-year [27] - Monthly active users (MAU) for the Zedge marketplace decreased by 10.7% year-over-year to 28.8 million [24] Business Line Data and Key Metrics Changes - Ad revenue increased by 18% year-over-year [6] - Zedge+ subscription revenue grew by 24% year-over-year, with a sequential increase for the third consecutive quarter [25] - Zedge Premium Gross Transaction Value (GTV) grew by 23% year-over-year to a record $540,000 [26] - Digital goods and services revenue, including GuruShots, decreased by 26% year-over-year to $0.9 million [24] Market Data and Key Metrics Changes - iOS revenue for the Zedge marketplace increased by 46% sequentially, indicating strong growth potential in the iOS ecosystem [7][17] - MAU in developed markets decreased by 15.6%, while emerging markets saw a decline of 9.2% [24] Company Strategy and Development Direction - The company is focusing on building a full-stack marketing team to enhance growth, similar to previous initiatives in data and analytics [8] - Product development is being prioritized to drive innovation and resource consolidation for long-term success [8] - The company is investing in a coin-based economy for GuruShots to enhance user engagement and retention [13][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in unlocking growth from GuruShots despite a noncash write-down of $11.9 million on intangible assets [20][21] - The company believes it is well-positioned for sustainable long-term growth due to market opportunities and its product portfolio [19] - Management highlighted the importance of AI integration across the business to drive future growth [19] Other Important Information - The company has over $18.1 million in cash and cash equivalents, indicating a strong liquidity position [27] - The company plans to report non-GAAP net income and diluted EPS as new metrics going forward [21] Q&A Session Summary Question: What effect is seasonal versus other factors on advertising rates? - Management noted that numbers are holding up due to a combination of factors, making it difficult to parse out seasonal effects [30] Question: What are the key drivers of growth in the marketplace? - Management indicated that continuous optimization and feature improvements are driving growth in both Zedge Premium and the overall marketplace [31][32] Question: Can you clarify the Zedge+ subscription offerings? - Zedge+ is a bundled subscription offering that includes ad-free options and additional value adds [34] Question: How did Emojipedia perform this quarter? - Emojipedia grew 27% over six months, although growth was slower than expected in the last quarter [39] Question: What are the plans to increase monthly active users? - Management is focusing on feature enhancements, user acquisition investments, and reimagining the Zedge app to drive growth [40] Question: What changes are being made to the GuruShots onboarding process? - The onboarding process is being simplified to make it more accessible for new users, allowing for quicker engagement [42][43] Question: What is the status of AI Art Master and the hybrid casual game? - AI Art Master remains in soft launch while the company focuses on optimizing GuruShots [48][49] Question: What contributed to the increase in SG&A expenses? - The increase in SG&A is attributed to marketing spend and platform fees associated with new subscription models [50][52]