Zedge Inc. Q3 2024 Financial Report

Date of Report: June 23, 2024

Ticker: ZDGE

Exchange: AMEX

Company Name: Zedge Inc.

Industry: Software Application

Financial Highlights

During the third fiscal quarter of 2024, Zedge Inc. reported revenue of $7.7M, marking a 14% increase from the same quarter last year. This was driven largely by the Zedge Marketplace, which saw advertising revenue increase by 20% and subscription revenue increase by 35%. The average revenue per monthly active user (ARPMAU) reached a record-high of $0.074, reflecting a 39% increase year-over-year.

Gross transaction value (GTV) for Zedge Premium rose by 44%, predominantly due to enhancements in content and monetization efforts.

Operational Strategies and Innovations

Zedge is committed to long-term growth through continuous innovation and optimization. In this quarter, the company focused on:

• Full-stack marketing team development with dedicated SEO, ASO, user acquisition, and creative resources.
• Expanding marketing strategies, including influencer and product marketing initiatives anticipated in fiscal year 2025.
• Enhancing product development capabilities, including Generative AI applications like pAInt and WishCraft, a standalone Gen AI creation app currently in beta testing.
• Integrating AI into various operational aspects, including marketing, coding, and analysis.
• Introducing innovative features for GuruShots, with a focus on improving the onboarding experience and overhauling the game's economy.
• Addressing performance issues for Emojipedia, particularly around the website redesign, with remedies applied and new features set for release.

Financial Performance

Income Statement

Total revenue for Q3 was $7.7M. Despite a decrease in monthly active users (MAU), which stood at 27.7M, the company reported significant gains in other areas. The digital goods and services sector, represented primarily by GuruShots, saw a decline, generating $0.9M, down 20% from the previous year. Subscription revenue grew by 35% year-over-year, highlighting the success of Zedge+'s revamped offerings.

The company managed to achieve a GAAP net income of $113K, or $0.01 per share, reversing the loss of $7.7M, or $0.55 per share, from the previous year. Non-GAAP net income improved to $0.5M, an increase of 60% compared to the previous year.

Balance Sheet

As of the end of Q3, Zedge Inc. held $19.93M in cash and equivalents, up from $18.06M at the beginning of the period. Total current assets stood at $23.62M, whereas total non-current assets were $14.52M, resulting in total assets of $38.14M. Current liabilities were $6.43M, and total liabilities were $7.24M. The company’s total stockholders' equity was $30.90M.

Cash Flow Statement

Net cash provided by operating activities was $2.34M, with major contributions from adjustments in non-cash items and working capital changes. Capital expenditures stood at $228K, resulting in a free cash flow of $2.12M. Cash used in financing activities, mainly stock repurchases, amounted to $152K. The net change in cash during the quarter was $1.86M.

Market Data & Financial Ratios

Zedge's current market cap stands at $40.58M. The company’s Altman Z-Score is 4.25, and the Piotroski Score is 5, signaling strong financial health.

Key Ratios:

• Gross Profit Margin: 86.45%
• EBITDA Ratio: 5.89%
• Operating Income Ratio: -1.72%
• Net Income Ratio: 1.48%
• Current Ratio: 367.69%
• Quick Ratio: 361.87%
• Free Cash Flow per Share: $0.15
• Operating Cash Flow per Share: $0.17
• Cash Flow to Debt Ratio: 2,415.46%

Outlook

Looking ahead, Zedge is optimistic about the future, focusing on expanding both user base and revenue streams. The planned enhancements to GuruShots and expansion of Zedge's AI capabilities are expected to drive growth. With a strong cash position and ongoing investments in product and marketing innovation, the company is well-positioned for continued success.

For detailed financial statements and further analysis, please visit the SEC filing.