Zedge(ZDGE) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Zedge reported a record revenue increase of 85% year-over-year, reaching $3.8 million in Q1 2021 [6][24] - Operating margin improved to 29% compared to negative 37% in the previous year and positive 14% in Q4 [28] - Net income was $1 million with diluted EPS of $0.08, a significant turnaround from a net loss of $800,000 and a loss per share of $0.08 in the prior year [28] - EBITDA for Q1 was $1.4 million, up $1.7 million from the previous year [28] Business Line Data and Key Metrics Changes - Paid subscribers exceeded 600,000, marking a 205% increase year-over-year and 21% sequentially [26] - Average Revenue Per Monthly Active User (ARPMAU) reached a record $0.036, an increase of 73% year-over-year and 28% sequentially [27] - Zedge Premium's Gross Transaction Volume (GTV) was $208,000, up 8% year-over-year and 10% sequentially [25] Market Data and Key Metrics Changes - Monthly Active Users (MAU) increased by 9.1% to 32.4 million from 29.7 million in October 2019 [23] - Emerging markets showed strong double-digit growth, while well-developed markets continued to contract [24] Company Strategy and Development Direction - The company is focusing on enhancing user growth in well-developed markets due to higher advertising rates and discretionary income [40] - Investments are being made in a new content management system to improve user engagement and retention through social features [12][36] - Zedge aims to evolve its Premium platform to attract a broader range of creators beyond mobile personalization content [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued revenue growth, targeting at least 20% for the full year, with profitability and positive cash flow expected in each quarter [19][31] - The company anticipates benefiting from year-end advertising spend in Q2, which is expected to be the strongest quarter of the year [42] Other Important Information - Zedge has $6.3 million in cash and cash equivalents, a $1.2 million increase sequentially and a $4.6 million increase year-over-year [29] - The company filed a shelf-registration to raise up to $20 million for potential investment opportunities [30] Q&A Session Summary Question: Timing and rollout of the new content management system - Management expects the new content management system to be available to the entire user base before the end of fiscal Q2, allowing for the introduction of community features [36] Question: Expected benefits of the new features - The expectation is that enhanced community features will drive user engagement, retention, and potentially increase advertising revenues [38][39] Question: Strategies for growing developed country MAUs - The focus is on well-developed economies due to higher advertising rates, with customized experiences being developed for emerging markets [40][41] Question: Seasonality of CPM and advertising budgets - Q2 is typically the strongest quarter due to holiday advertising, while Q3 tends to be weaker, with a recovery expected in Q4 [42]