• Fourth Quarter Revenue: $7.6 million, up 14% year-over-year.
• Full Year Revenue: $30.1 million, up 11% year-over-year.
• Subscription Revenue Growth: 31% for the quarter, 25% for the year.
• Zedge Premium Gross Transaction Value (GTV): $600,000 for the quarter, $2.1 million for the year, up 56% and 39% respectively.
• Average Revenue Per Monthly Active User (ARPMAU): $0.079, up 43% year-over-year.
• Cash and Cash Equivalents: $20 million, up by more than 10%.
• SG&A Expenses: $6.9 million for the fourth quarter, $25.6 million for the full year, up 33% and 17% respectively.
• GAAP Loss from Operations: $0.1 million for the quarter, $11.8 million for the full year.
• Non-GAAP Net Income: $0.3 million for the quarter, $1.8 million for the full year.
• Adjusted EBITDA: $0.8 million for the quarter, $4.7 million for the full year.
• Stock Repurchase: $600,000 in stock repurchased.

• Warning! GuruFocus has detected 3 Warning Sign with ZDGE.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zedge Inc (ZDGE) reported a 14% year-over-year revenue growth in the fourth quarter, driven by a 31% increase in subscription revenue and a 43% rise in Average Revenue Per Monthly Active User (ARPMAU).
• The company achieved a record Gross Transaction Value (GTV) for Zedge Premium, increasing by 56%, showcasing successful content and monetization enhancements.
• Zedge Inc (ZDGE) strengthened its balance sheet, increasing cash and cash equivalents by over 10% to $20 million, even after stock repurchases and loan repayments.
• The company's stock appreciated by 71% over the fiscal year, leading to its inclusion in the Russell Microcap Index.
• Zedge Inc (ZDGE) is committed to driving growth in fiscal year 2025 by embedding generative AI capabilities across its product portfolio and focusing on converting users into content creators.

Negative Points

• GuruShots, a part of Zedge Inc (ZDGE), experienced a 24% decline in revenue for the quarter and 25% for the year, impacting overall growth.
• The company reported a GAAP loss from operations of $0.1 million for the quarter and $11.8 million for the full year, partly due to non-cash accounting write-downs.
• SG&A expenses increased by 33% in the fourth quarter and 17% for the full year, driven by higher marketing expenses related to user acquisition.
• Despite revenue growth, the company faced challenges with high operating leverage, affecting profitability.
• The redesign of Emojipedia in Q3 did not perform as anticipated, although it has since been remedied.

Q & A Highlights

Q: Can you provide metrics on GuruShots, such as user numbers, retention, and engagement rates? A: Jonathan Reich, CEO: The KPIs included in the release are the ones to focus on. Our strategy is geared towards attracting new users, converting them into players, and driving revenue through in-game purchases. Engagement from new users has increased, and they are converting and consuming coins, which should drive revenue growth.

Q: How is Zedge driving growth in Marketplace gross transactional value and subscription numbers? A: Jonathan Reich, CEO: We promote content and make Zedge relevant to the Creator Economy. Growth in premium art is driven by AI. We've optimized subscriptions through various strategies, including animated messaging, price testing, and localization. Our relentless A/B testing and ad stack optimization have improved average revenue per monthly active user.

Q: How is advertising revenue trending, and how are you responding to industry changes in data access? A: Jonathan Reich, CEO: We use third-party mediation for programmatic offerings and focus on collecting zero-party and first-party data while complying with regulations. Our marketing efforts aim to understand user triggers and attract prospective users through effective ad campaigns.

Q: Can you provide commentary on the AI audio offering and the WishCraft beta app? A: Jonathan Reich, CEO: Paint 2.0 has expanded from text-to-image to include image-to-image capabilities. We plan to introduce AI audio features, starting with ringtones and notifications. WishCraft aims to simplify AI use with an intuitive interface, targeting users unfamiliar with AI, and is in beta with specific KPI thresholds for success.

Q: What is the outlook for Emojipedia in 2025, and has the redesign issue from Q3 been resolved? A: Jonathan Reich, CEO: The redesign issue has been remedied, and Emojipedia is performing well. For 2025, we focus on ad optimization, new content verticals like bespoke emojis, and a comprehensive redesign to enhance engagement and retention.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.