Zedge(US:ZDGE)2021-03-16 02:30Financial Data and Key Metrics Changes - Zedge reported a record revenue of over $5 million for Q2 2021, representing an increase of more than 100% compared to the same quarter last year [4] - Operating margin increased to 47% from 3% last year and 29% in Q1 [22] - Net income was $2.3 million with diluted EPS of $0.17, compared to $100,000 and $0.01 in the prior year [22] - Average revenue per monthly user (ARPMAU) reached a record $0.049, an increase of 88% year-over-year and 35% sequentially [21] Business Line Data and Key Metrics Changes - Active subscriptions exceeded 700,000, marking a 139% increase year-over-year and 17% sequentially [20] - Zedge Premium gross transaction value (GTV) was $211,000 in Q2, up 7.1% compared to the year-ago quarter [19] - Monthly active users (MAU) increased by 3.2% to 35.4 million from 34.3 million in January 2020, and up 9.3% sequentially [18] Market Data and Key Metrics Changes - Emerging markets showed strong double-digit growth, while well-developed markets continued to contract, albeit at lower rates than in previous quarters [18] - Approximately 90% of Zedge's users are on Android, while around 10% are on iOS [33] Company Strategy and Development Direction - Zedge aims to enhance user engagement and retention through new features and enhancements following the completion of its content management system (CMS) migration [8][30] - The company is focusing on improving its offerings in well-developed markets to reverse declining user growth [31] - Zedge is exploring potential acquisition targets in mobile gaming, social video, and mindfulness to leverage its user base and expertise [12] Management's Comments on Operating Environment and Future Outlook - Management expects continued strong year-over-year growth in the second half of the fiscal year, projecting top-line growth for fiscal 2021 to increase between 75% to 80% compared to the previous year [13] - The company anticipates Q3 to be seasonally slow but relatively favorable compared to the previous year due to COVID-19 impacts [24] - Management is optimistic about the potential of new features and the ad-supported model to drive user engagement and revenue [10][34] Other Important Information - Zedge completed a $5 million at-the-market offering and plans to initiate a new $10 million program to strengthen its balance sheet [11] - The company is testing new designs to better display premium content and is focused on increasing the number of professional artists using its platform [9] Q&A Session Summary Question: Advertising rates and monetization - Management noted that changes made have resulted in generating more revenue per monthly active user, benefiting from both pre- and post-CMS migration [29] Question: Content Management System (CMS) details - The CMS manages all content in the app and allows for new features and enhancements that are expected to improve engagement and retention [30] Question: Focus on well-developed markets and Apple traction - Zedge is investing in features to reverse the trend of declining user growth in well-developed countries and has rolled out app icons on iOS to generate incremental revenue [31][33] Question: Metrics on ad-supported model - Preliminary data indicates improved engagement and day two retention, but more time is needed to assess the overall impact [34] Question: Monetization of Shortcastz - Management has not yet decided on monetization strategies for Shortcastz and will analyze user engagement first [35] Question: Impact of Google privacy changes - Management stated that the company is not expected to see a material impact from Google's privacy changes due to its relatively small number of Apple users [36] Question: Seasonality in Q3 and Q4 - Historically, there has been a 10% to 20% fall-off in Q3, but management could not confirm if this trend would continue [37] Question: Monthly active users growth attribution - Growth is attributed to app improvements and significant growth in emerging markets, particularly India [40]