Zedge(US:ZDGE)2025-10-28 16:00Financial Data and Key Metrics Changes - Total revenue for Q4 was $7.5 million, down 1.5% year over year, with Zedge Marketplace revenue up mid-single digits but offset by an 11% decline at Emojipedia and a 39% drop at GuruShots [14][15] - Subscription revenue increased by 21% year over year, with nearly 1 million active subscribers, a 47% increase compared to Q4 of fiscal 2024 [5][15] - Deferred revenue reached $5.4 million, up 10% sequentially and 73% year over year, indicating future revenue potential with high gross margins [15][17] - GAAP loss from operations was $0.7 million, compared to a loss of $0.1 million last year, primarily due to restructuring costs [16][17] Business Line Data and Key Metrics Changes - Zedge Marketplace performed well, while GuruShots showed signs of plateauing, with a 39% year-over-year revenue decline [5][14] - Advertising revenue was slightly up for the quarter, but total ad revenue was softer than expected due to a decline at Emojipedia [5][14] - Zedge Premium's GTV grew by 7% year over year, and ARPMAU increased by 17%, reflecting a shift towards higher-value users [15] Market Data and Key Metrics Changes - The introduction of a new Google search feature allowing users to copy emojis directly from search results has diverted traffic away from Emojipedia, impacting its performance [6][32] - The competitive impact of AI search has also affected Emojipedia's traffic, as users can now obtain emojis without visiting the site [6][32] Company Strategy and Development Direction - The company aims to expand and diversify its revenue base, focusing on innovation and optimizing monetization strategies [9][12] - Plans include further integration of audio AI capabilities into products and evaluating the future direction of GuruShots [9][11] - The company is committed to improving operational efficiency and executing a balanced capital allocation strategy, including share repurchases and dividends [12][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's cash flow generation and balance sheet, initiating a quarterly dividend of $0.016 per share [8] - The completed restructuring is expected to provide greater operating flexibility and improved cash flow and profitability in fiscal 2026 [4][12] - Management is optimistic about the potential of early-stage products like Dataseeds.ai, TapeDeck, and SyncAt, which are evolving and positioned for growth [12][13] Other Important Information - The company repurchased approximately 640,000 shares in Q4 and a total of 1.3 million shares for the full year, reflecting a disciplined capital allocation strategy [7][8] - Cash and cash equivalents at year-end were approximately $19 million, with no debt [17] Q&A Session Summary Question: Actions regarding TapeDeck and Dataseeds.ai - Management highlighted that TapeDeck aims to support indie artists and will evaluate its future based on performance metrics, while Dataseeds.ai focuses on providing datasets for AI companies [21][23] Question: Sequential improvement in monthly active users - Management attributed the improvement to discerning marketing spend and seasonal dynamics, ensuring high-value customer acquisition [27][28] Question: Focus of restructuring savings - Management indicated that restructuring savings were reinvested in marketing and user acquisition, with plans to continue prioritizing these areas if growth opportunities arise [29][30] Question: Changes affecting Emojipedia - Management explained that Google's new search feature has impacted Emojipedia's traffic, and they are exploring strategies to mitigate this effect [31][32] Question: Deferred revenue recognition - Management clarified that deferred revenue is recognized over 30 months, and maintaining a steady subscriber pool will help level up revenue recognition [35] Question: SG&A expenses outlook - Management suggested that SG&A may decline slightly going forward as spending on user acquisition and consulting for new projects is expected to decrease [37]