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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 12, 2025
Zedge, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 1-37782 | 26-3199071 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
1178 Broadway, Ste. 1450 (3rd Floor) New York, NY |
10001 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (330) 577-3424
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol |
Name of each exchange on which registered |
||
| Class B common stock, par value $0.01 per share | ZDGE | NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On March 12, 2025, Zedge, Inc. (the “Registrant”) issued a press release announcing its results of operations for its fiscal quarter ended January 31, 2025. A copy of the press release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The Registrant is furnishing the information contained in this Report, including Exhibit 99.1, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”). This information shall not be deemed to be “filed” with the SEC or incorporated by reference into any other filing with the SEC unless otherwise expressly stated in such filing. In addition, this Report and the press release contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in the press release.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
|
Exhibit No. |
Document | |
| 99.1 | Earnings Release, dated March 12, 2025, reporting the results of operations for Zedge, Inc.’s fiscal quarter ended January 31, 2025. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ZEDGE, INC. | ||
| By: |
/s/ Jonathan Reich |
|
| Name: | Jonathan Reich | |
| Title: | Chief Executive Officer | |
Dated: March 12, 2025
EXHIBIT INDEX
| Exhibit No. | Document | |
| 99.1 | Earnings Release, dated March 12, 2025, reporting the results of operations for Zedge, Inc.’s fiscal quarter ended January 31, 2025. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
3
Exhibit 99.1
Zedge Announces Second Quarter Fiscal 2025 Results
Zedge Marketplace active subscribers and subscription revenue increased 22% and 13%, respectively
Zedge Marketplace ARPMAU1 increased 9%
Zedge Premium GTV1 increased 27%
Free cash flow2 of $0.6 million
10% year-over-year revenue decline was mainly related to uncertainty in TikTok’s U.S
pre-ban status and its temporary removal from app stores
Announced restructuring activities, including 22% global workforce reduction, which along with other items are anticipated to save approximately
$4 million in annualized costs and increase profits and free cash flow
New York, NY – March 12, 2025: Zedge, Inc. (NYSE AMERICAN: ZDGE), $ZDGE, a leader in digital marketplaces and interactive games that provides content, enables creativity, empowers self-expression and facilitates community, today announced results for its second quarter fiscal 2025, ended January 31, 2025.
Jonathan Reich, Zedge’s CEO, commented:
“This quarter’s 10% year-over-year revenue decline was primarily driven by: the material pullback in TikTok’s U.S. ad spend resulting from its potential ban in the U.S., lower MAU and the ongoing drag from GuruShots on our overall revenue growth and profitability, all of which we are actively addressing.
“Despite these headwinds, we remained focused on areas within our control, especially continuing to optimize our ad inventory and engagement-driven monetization strategies. For example, with Zedge Premium, we saw material growth in revenue from rewarded video, mainly driven by premium offerings such as our pAInt AI image generator and Parallax 3-D wallpapers, which typically has higher CPMs when compared to display advertising. As a result, year-over-year, we achieved 13% growth in subscription revenue, a 9% increase in ARPMAU and a 27% rise in Zedge Premium’s GTV, while generating nearly $600 thousand in free cash flow and buying back 245,000 shares of our stock. Additionally, at the end of the quarter, we announced the first phase of a two-stage strategic restructuring, followed by announcing the second phase in early Q3, which we expect to streamline operations, reduce costs and enhance profitability and free cash flow. Taken together with the final payment of the GuruShots acquisition-related retention bonuses in April, these efforts will start to be reflected in the second half of our fiscal 2025 and total approximately $4 million in savings on an annualized basis.
“Regarding the impact of TikTok’s reduced ad spend, our advertising revenue declined over 14% year-over-year, primarily due to the disruption it caused in the programmatic ad market. Last year, TikTok was a top bidder across our mediation partners’ platforms, driving strong competition and higher CPMs. However, as TikTok started to scale back its digital ad spend, it left a void, diminishing demand and leading to reduced competition and lower CPMs across the industry. This broad shift in market dynamics impacted ad rates beyond our platform, contributing to the overall softness in digital advertising revenue.”
Third Quarter Fiscal 2025 Outlook
“Looking ahead to the remainder of fiscal Q3, we are cautiously optimistic that the challenges of the second quarter were temporary. While there is still risk that TikTok could be banned in the U.S., we are currently seeing a rebound in advertising due to TikTok’s reentry into the market driving competition and higher CPMs, as well as solid performance from a new ad unit that we introduced during the second quarter.
“Of equal importance, the impact of our recent restructuring will begin to be reflected in our results with reduced expenses, improved adjusted EBITDA1 and stronger free cash flow. In parallel, the GuruShots team is optimizing the existing game for revenue growth while also developing a comprehensive plan for GuruShots 2.0.
“As an innovation-driven company, we are continuously developing and testing new features and content for all of our products. During the second half of the year, we expect to continue to introduce new AI creation features in the Zedge Marketplace and Emojipedia. We’ve seen a significant increase in engagement with the features we have already rolled out, and we are focusing our efforts to better retain and engage users, which, when taken together, are expected to drive growth in fiscal 2026 and beyond.
“While we are continually looking to drive long-term growth as a company, we believe our current valuations make us an attractive value stock, with trailing twelve-month free cash flow yield2 above 41%. Given this, we will continue to aggressively repurchase shares, reinforcing our confidence in the long-term value of our business,” concluded Reich.
Second Quarter Highlights (fiscal 2025 versus fiscal 2024)
| ● | Revenue decreased 10.2% to $7.0 million; |
| ● | GAAP operating loss of ($2.2) million, compared to ($11.9) million; |
| o | 2025 operating loss included non-cash restructuring and asset impairment charges of ($1.3) million; |
| o | 2024 operating loss included non-cash asset write-offs related to GuruShots of ($12.0) million; |
| ● | GAAP net loss and loss per share (EPS) were ($1.7) million and ($0.12) compared to ($9.2) million and ($0.66), respectively; |
| ● | Non-GAAP net loss and EPS were ($0.2) million and ($0.01) compared to Non-GAAP net income and EPS of $0.5 million and $0.04, respectively; |
| ● | Free Cash Flow of $0.6 million; |
| ● | Adjusted EBITDA of ($0.1) million; |
| ● | Zedge Premium’s GTV, increased 26.5% to $0.7 million |
| ● | Repurchased 244,826 shares of Class B Common Stock. |
| Second Quarter Select Financial Metrics: FY25 versus FY24* |
| (in $M except for EPS) | Q2 ‘25 | Q2 ‘24 | Change | 1H’25 | 1H’24 | Change | ||||||||||||||||||
| Total Revenue | $ | 7.0 | $ | 7.8 | -10.2 | % | $ | 14.2 | $ | 14.9 | -4.6 | % | ||||||||||||
| Advertising Revenue | $ | 4.7 | $ | 5.5 | -14.3 | % | $ | 9.6 | $ | 10.4 | -8.2 | % | ||||||||||||
| Digital Goods and Services Revenue | $ | 0.6 | $ | 0.9 | -33.0 | % | $ | 1.3 | $ | 1.9 | -32.4 | % | ||||||||||||
| Subscription Revenue | $ | 1.2 | $ | 1.1 | 13.3 | % | $ | 2.4 | $ | 2.1 | 17.0 | % | ||||||||||||
| Other Revenue | $ | 0.4 | $ | 0.3 | 53.3 | % | $ | 0.9 | $ | 0.5 | 83.8 | % | ||||||||||||
| GAAP Operating Income (Loss) | $ | (2.2 | ) | $ | (11.9 | ) | -81.4 | % | $ | (2.7 | ) | $ | (11.6 | ) | -76.9 | % | ||||||||
| Operating Margin | -31.8 | % | -153.5 | % | -18.9 | % | -78.2 | % | ||||||||||||||||
| GAAP Net Loss | $ | (1.7 | ) | $ | (9.2 | ) | -81.8 | % | $ | (2.0 | ) | $ | (9.2 | ) | -78.2 | % | ||||||||
| GAAP Diluted Loss Per Share | $ | (0.12 | ) | $ | (0.66 | ) | -81.8 | % | $ | (0.14 | ) | $ | (0.66 | ) | -78.8 | % | ||||||||
| Non-GAAP Net Income (Loss) | $ | (0.2 | ) | $ | 0.5 | nm | $ | (0.3 | ) | $ | 1.0 | nm | ||||||||||||
| Non- GAAP Diluted Earnings (Loss) Per Share | $ | (0.01 | ) | $ | 0.04 | nm | $ | (0.02 | ) | $ | 0.07 | nm | ||||||||||||
| Cash Flow from Operations | $ | 0.7 | $ | 1.6 | -54.4 | % | $ | 1.9 | $ | 2.8 | -33.2 | % | ||||||||||||
| Free Cash Flow | $ | 0.6 | $ | 1.2 | -50.0 | % | $ | 1.6 | $ | 2.0 | -19.9 | % | ||||||||||||
| Adjusted EBITDA | $ | (0.1 | ) | $ | 1.5 | nm | $ | 0.2 | $ | 3.1 | -93.2 | % | ||||||||||||
nm = not measurable/meaningful
| * | numbers/percentages are based off of actuals versus the rounded numbers in the table |
| Select Zedge Marketplace Metrics: FY25 versus FY24* |
| (in MM except for ARPMAU and where noted) | Q2 '25 | Q2 '24 | Change | |||||||||
| Total Installs - Cumulative | 696.3 | 647.7 | 7.5 | % | ||||||||
| MAU | 24.7 | 28.7 | -14.0 | % | ||||||||
| Well-Developed Markets | 5.6 | 6.2 | -9.4 | % | ||||||||
| Emerging Markets | 19.1 | 22.5 | -15.3 | % | ||||||||
| Active Subscriptions (in 000s) | 791 | 648 | 22.0 | % | ||||||||
| ARPMAU | $ | 0.078 | $ | 0.072 | 8.6 | % | ||||||
| Zedge Premium - Gross Transaction Value (GTV) | $ | 0.68 | $ | 0.54 | 26.5 | % | ||||||
| * | numbers/percentages are based off of actuals versus the rounded numbers in the table |
| 1 | We use the following supplemental business metrics in this release because we believe they are useful in evaluating Zedge’s operational performance. |
| ● | Monthly active users, or MAU, captures the number of unique users that used our Zedge App during the previous 30 days of the relevant period, is useful for evaluating consumer engagement with our App, which correlates to advertising revenue as more users drive more ad impressions for sale. It also allows readers and potential advertisers to evaluate the size of our user base. |
| ● | Zedge Premium Gross Transaction Value, or GTV, is the total dollar amount of transactions conducted through Zedge Premium. As Zedge Premium is an internal focus for growth, we believe this metric will help investors evaluate our progress in growing this part of our business. |
| ● | Average Revenue Per Monthly Active User for our Zedge App, or ARPMAU, is useful in evaluating how well we monetize our user base. |
| ● | An Active Subscription is a subscription that has commenced and not been canceled, including paused subscriptions and subscriptions in free trials, grace periods, or account hold. This is important because it is a source of recurring revenue. |
| ● | Total Installs – Cumulative measures the number of times the Zedge App has been downloaded since inception. |
| 2 | Throughout this release, Non-GAAP Net Income, Non-GAAP EPS, Free Cash Flow (FCF), FCF Yield and Adjusted EBITDA/Margin are non-GAAP financial measures intended to provide useful information that supplement Zedge’s results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial measures at the end of this release for an explanation of Zedge’s formulations of Non-GAAP Net Income, Non-GAAP EPS, Free Cash Flow and Adjusted EBITDA and reconciliations to the most directly comparable GAAP measures. |
| Trended Financial Information* |
| (in $M except for EPS, ARPMAU, Paid Subscriptions) | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | FY23 | FY24 | 1H FY25 | |||||||||||||||||||||||||||
| Total Revenue | $ | 7.1 | $ | 7.8 | $ | 7.7 | $ | 7.6 | $ | 7.2 | $ | 7.0 | $ | 27.2 | $ | 30.1 | $ | 14.2 | ||||||||||||||||||
| Advertising Revenue | $ | 4.9 | $ | 5.5 | $ | 5.5 | $ | 5.2 | $ | 4.9 | $ | 4.7 | $ | 18.3 | $ | 21.0 | $ | 9.6 | ||||||||||||||||||
| Digital Goods and Services Revenue | $ | 0.9 | $ | 0.9 | $ | 0.9 | $ | 0.7 | $ | 0.6 | $ | 0.6 | $ | 4.6 | $ | 3.5 | $ | 1.3 | ||||||||||||||||||
| Subscription Revenue | $ | 1.0 | $ | 1.1 | $ | 1.1 | $ | 1.2 | $ | 1.2 | $ | 1.2 | $ | 3.5 | $ | 4.3 | $ | 2.4 | ||||||||||||||||||
| Other Revenue | $ | 0.2 | $ | 0.3 | $ | 0.2 | $ | 0.5 | $ | 0.5 | $ | 0.4 | $ | 0.8 | $ | 1.2 | $ | 0.9 | ||||||||||||||||||
| GAAP Operating Income (Loss) | $ | 0.3 | $ | (11.9 | ) | $ | (0.1 | ) | $ | (0.1 | ) | $ | (0.5 | ) | $ | (2.2 | ) | $ | (6.9 | ) | $ | (11.8 | ) | $ | (2.7 | ) | ||||||||||
| GAAP Net Income (Loss) | $ | (0.0 | ) | $ | (9.2 | ) | $ | 0.1 | $ | (0.0 | ) | $ | (0.3 | ) | $ | (1.7 | ) | $ | (6.1 | ) | $ | (9.2 | ) | $ | (2.0 | ) | ||||||||||
| GAAP Diluted Earnings (Loss) Per Share | $ | 0.00 | $ | (0.66 | ) | $ | 0.01 | $ | 0.00 | $ | (0.02 | ) | $ | (0.12 | ) | $ | (0.44 | ) | $ | (0.65 | ) | $ | (0.14 | ) | ||||||||||||
| Non GAAP Net Income (Loss) | $ | 0.5 | $ | 0.5 | $ | 0.5 | $ | 0.3 | $ | (0.0 | ) | $ | (0.2 | ) | $ | 1.9 | $ | 1.8 | $ | (0.3 | ) | |||||||||||||||
| Non-GAAP Diluted EPS | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.02 | $ | (0.00 | ) | $ | (0.01 | ) | $ | 0.13 | $ | 0.13 | $ | (0.02 | ) | |||||||||||||||
| Cash Flow from Operations | $ | 1.3 | $ | 1.6 | $ | 2.3 | $ | 0.7 | $ | 1.2 | $ | 0.7 | $ | 3.2 | $ | 5.9 | $ | 1.9 | ||||||||||||||||||
| Free Cash Flow | $ | 0.8 | $ | 1.2 | $ | 2.1 | $ | 0.5 | $ | 1.0 | $ | 0.6 | $ | 1.7 | $ | 4.7 | $ | 1.6 | ||||||||||||||||||
| Adjusted EBITDA | $ | 1.5 | $ | 1.5 | $ | 0.9 | $ | 0.8 | $ | 0.3 | $ | (0.1 | ) | $ | 5.7 | $ | 4.7 | $ | 0.2 | |||||||||||||||||
| MAU | 28.5 | 28.7 | 27.7 | 26.1 | 25.0 | 24.7 | nm | nm | nm | |||||||||||||||||||||||||||
| Well-developed Markets | 6.2 | 6.2 | 6.0 | 5.5 | 5.5 | 5.6 | nm | nm | nm | |||||||||||||||||||||||||||
| Emerging Markets | 22.3 | 22.5 | 21.7 | 20.6 | 19.5 | 19.1 | nm | nm | nm | |||||||||||||||||||||||||||
| Active Subscriptions (in 000s) | 648 | 648 | 654 | 669 | 698 | 791 | nm | nm | nm | |||||||||||||||||||||||||||
| ARPMAU | $ | 0.063 | $ | 0.072 | $ | 0.074 | $ | 0.079 | $ | 0.077 | $ | 0.078 | nm | nm | nm | |||||||||||||||||||||
| Zedge Premium – GTV | $ | 0.42 | $ | 0.54 | $ | 0.59 | $ | 0.60 | $ | 0.68 | $ | 0.68 | $ | 1.54 | $ | 2.15 | $ | 1.36 | ||||||||||||||||||
nm = not measurable/meaningful
| * | numbers may not add due to rounding |
Earnings Announcement and Supplemental Information
Management will host an earnings conference call today beginning at 4:30 PM Eastern to discuss its earnings results, outlook, and strategy, which will be followed by Q&A with investors.
Live Call-in Info:
Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 257316
Webcast: https://www.webcaster4.com/Webcast/Page/2205/52035
Replay:
Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 52035
About Zedge
Zedge empowers tens of millions of consumers and creators each month with its suite of interconnected platforms that enable creativity, self-expression and e-commerce and foster community through fun competitions. Zedge’s ecosystem of product offerings includes the Zedge Marketplace, a freemium marketplace offering mobile phone wallpapers, video wallpapers, ringtones, notification sounds, and pAInt, a generative AI image maker; GuruShots, “The World’s Greatest Photography Game,” a skill-based photo challenge game; and Emojipedia, the #1 trusted source for ‘all things emoji.’ For more information, visit: investor.zedge.net
Follow us on X: @Zedge
Follow us on LinkedIn
Forward-Looking Statements
All statements above that are not purely about historical facts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate,” “target” and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Our filings with the SEC provide detailed information on such statements and risks and should be consulted along with this release. To the extent permitted under applicable law, we assume no obligation to update any forward-looking statements.
Contact:
Brian Siegel, IRC, MBA
Senior Managing Director
Hayden IR
(346) 396-8696
ir@zedge.net
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
| January 31, | July 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 20,054 | $ | 19,998 | ||||
| Trade accounts receivable | 2,990 | 3,406 | ||||||
| Prepaid expenses and other receivables | 953 | 593 | ||||||
| Total Current assets | 23,997 | 23,997 | ||||||
| Property and equipment, net | 1,271 | 2,306 | ||||||
| Intangible assets, net | 5,145 | 5,369 | ||||||
| Goodwill | 1,760 | 1,824 | ||||||
| Deferred tax assets, net | 4,528 | 4,344 | ||||||
| Other assets | 391 | 355 | ||||||
| Total assets | $ | 37,092 | $ | 38,195 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 1,444 | $ | 1,113 | ||||
| Accrued expenses and other current liabilities | 2,994 | 2,969 | ||||||
| Deferred revenues | 2,727 | 2,168 | ||||||
| Total Current liabilities | 7,165 | 6,250 | ||||||
| Deferred revenues--non-current | 1,606 | 931 | ||||||
| Other liabilities | 116 | 118 | ||||||
| Total liabilities | 8,887 | 7,299 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value; authorized shares—2,400; no shares issued and outstanding | - | - | ||||||
| Class A common stock, $.01 par value; authorized shares—2,600; 525 shares issued and outstanding at January 31, 2025 and July 31, 2024 | 5 | 5 | ||||||
| Class B common stock, $.01 par value; authorized shares—40,000; 14,969 shares issued and 13,447 shares outstanding at January 31, 2025, and 14,866 shares issued and 13,815 outstanding at July 31, 2024 | 150 | 149 | ||||||
| Additional paid-in capital | 49,244 | 48,263 | ||||||
| Accumulated other comprehensive loss | (1,993 | ) | (1,832 | ) | ||||
| Accumulated deficit | (15,131 | ) | (13,113 | ) | ||||
| Treasury stock, 1,522 shares at January 31, 2025 and 1,051 shares at July 31, 2024, at cost | (4,070 | ) | (2,576 | ) | ||||
| Total stockholders’ equity | 28,205 | 30,896 | ||||||
| Total liabilities and stockholders’ equity | $ | 37,092 | $ | 38,195 | ||||
ZEDGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | $ | 6,979 | $ | 7,771 | $ | 14,173 | $ | 14,852 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Direct cost of revenues (excluding amortization of capitalized software and technology development costs which is included below) | 447 | 458 | 908 | 944 | ||||||||||||
| Selling, general and administrative | 7,126 | 6,523 | 13,935 | 12,022 | ||||||||||||
| Depreciation and amortization | 317 | 762 | 698 | 1,537 | ||||||||||||
| Impairment of intangible assets | - | 11,958 | - | 11,958 | ||||||||||||
| Restructuring charges | 481 | - | 481 | - | ||||||||||||
| Impairment of capitalized software and technology development costs | 827 | - | 827 | - | ||||||||||||
| Loss from operations | (2,219 | ) | (11,930 | ) | (2,676 | ) | (11,609 | ) | ||||||||
| Interest and other income, net | 171 | 165 | 352 | 246 | ||||||||||||
| Net (loss) gain resulting from foreign exchange transactions | (86 | ) | 76 | (100 | ) | (143 | ) | |||||||||
| Loss before income taxes | (2,134 | ) | (11,689 | ) | (2,424 | ) | (11,506 | ) | ||||||||
| Benefit from income taxes | (455 | ) | (2,459 | ) | (406 | ) | (2,260 | ) | ||||||||
| Net loss | $ | (1,679 | ) | $ | (9,230 | ) | $ | (2,018 | ) | $ | (9,246 | ) | ||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Changes in foreign currency translation adjustment | (132 | ) | 250 | (161 | ) | (117 | ) | |||||||||
| Total other comprehensive (loss) income | (132 | ) | 250 | (161 | ) | (117 | ) | |||||||||
| Total comprehensive loss | $ | (1,811 | ) | $ | (8,980 | ) | $ | (2,179 | ) | $ | (9,363 | ) | ||||
| Loss per share attributable to Zedge, Inc. common stockholders: | ||||||||||||||||
| Basic and diluted | $ | (0.12 | ) | $ | (0.66 | ) | $ | (0.15 | ) | $ | (0.66 | ) | ||||
| Weighted-average number of shares used in calculation of loss per share: | ||||||||||||||||
| Basic and diluted | 13,882 | 14,068 | 13,872 | 14,022 | ||||||||||||
ZEDGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six Months Ended | ||||||||
| January 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating activities | ||||||||
| Net loss | $ | (2,018 | ) | $ | (9,246 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation | 30 | 28 | ||||||
| Amortization of intangible assets | 224 | 1,158 | ||||||
| Amortization of capitalized software and technology development costs | 444 | 351 | ||||||
| Amortization of deferred financing costs | - | 15 | ||||||
| Stock-based compensation | 982 | 1,190 | ||||||
| Impairment charge of capitalized software and technology development costs | 827 | - | ||||||
| Impairment charge of intangible assets | - | 11,958 | ||||||
| Impairment of investment in privately-held company | - | 50 | ||||||
| Deferred income taxes | (184 | ) | (2,619 | ) | ||||
| Change in assets and liabilities: | ||||||||
| Trade accounts receivable | 416 | (480 | ) | |||||
| Prepaid expenses and other current assets | (360 | ) | (106 | ) | ||||
| Other assets | (39 | ) | 15 | |||||
| Trade accounts payable and accrued expenses | 322 | 445 | ||||||
| Deferred revenue | 1,234 | 53 | ||||||
| Net cash provided by operating activities | 1,878 | 2,812 | ||||||
| Investing activities | ||||||||
| Capitalized software and technology development costs | (236 | ) | (777 | ) | ||||
| Purchase of property and equipment | (30 | ) | (23 | ) | ||||
| Net cash used in investing activities | (266 | ) | (800 | ) | ||||
| Financing activities | ||||||||
| Prepayment of term loan | - | (2,000 | ) | |||||
| Proceeds from exercise of stock options | - | 3 | ||||||
| Purchase of treasury stock in connection with share buyback program and stock awards vesting | (1,494 | ) | (13 | ) | ||||
| Net cash used in financing activities | (1,494 | ) | (2,010 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (62 | ) | (63 | ) | ||||
| Net increase (decrese) in cash and cash equivalents | 56 | (61 | ) | |||||
| Cash and cash equivalents at beginning of period | 19,998 | 18,125 | ||||||
| Cash and cash equivalents at end of period | $ | 20,054 | $ | 18,064 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash payments made for income taxes | $ | 130 | $ | 67 | ||||
| Cash payments made for interest expenses | $ | - | $ | 65 | ||||
Use of Non-GAAP Measures
Adjusted EBITDA, defined as earnings (loss) before interest, taxes, depreciation and amortization, stock compensation expense, transaction-related expenses and other non-recurring expenses, Free Cash Flow, FCF yield and non-GAAP net income and EPS (which adjust out stock compensation expense, transaction-related expenses and other non-recurring expenses from GAAP net income and EPS), represent measures that we believe are customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures we present. Our management also believes these measures are useful in evaluating our core operating results. However, these are not measures of financial performance under GAAP and should not be considered an alternative to net income or operating income/margin as an indicator of our operating performance or to net cash provided by operating activities as a measure of our liquidity. Free Cash Flow yield calculated as trailing twelve months (TTM) FCF/Enterprise Value.
Numbers in the following reconciliation tables may not add due to rounding
| Reconciliation of Adjusted EBITDA to Net (Loss) Income | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | FY23 | FY24 | 1H FY25 | |||||||||||||||||||||||||||
| Net Income (Loss) | $ | (0.0 | ) | $ | (9.2 | ) | $ | 0.1 | $ | (0.0 | ) | $ | (0.3 | ) | $ | (1.7 | ) | $ | (6.1 | ) | $ | (9.2 | ) | $ | (2.0 | ) | ||||||||||
| Excluding: | ||||||||||||||||||||||||||||||||||||
| Interest and other income (expense), net | $ | (0.1 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.3 | ) | $ | (0.6 | ) | $ | (0.4 | ) | |||||||||
| Provision for (benefit from) income taxes | $ | 0.2 | $ | (2.5 | ) | $ | (0.1 | ) | $ | 0.2 | $ | 0.0 | $ | (0.5 | ) | $ | (0.5 | ) | $ | (2.2 | ) | $ | (0.4 | ) | ||||||||||||
| Depreciation and amortization | $ | 0.8 | $ | 0.8 | $ | 0.6 | $ | 0.3 | $ | 0.4 | $ | 0.3 | $ | 3.3 | $ | 2.5 | $ | 0.7 | ||||||||||||||||||
| EBITDA | $ | 0.9 | $ | (11.1 | ) | $ | 0.4 | $ | 0.3 | $ | (0.1 | ) | $ | (2.0 | ) | $ | (3.6 | ) | $ | (9.5 | ) | $ | (2.1 | ) | ||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Asset impairments and restructuring charges | $ | 0.0 | $ | 12.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 1.3 | $ | 6.8 | $ | 12.0 | $ | 1.3 | ||||||||||||||||||
| Stock-based compensation | $ | 0.5 | $ | 0.7 | $ | 0.5 | $ | 0.5 | $ | 0.4 | $ | 0.6 | $ | 2.5 | $ | 2.1 | $ | 1.0 | ||||||||||||||||||
| Transaction costs related to business combination | $ | 0.2 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.2 | $ | 0.0 | ||||||||||||||||||
| Adjusted EBITDA | $ | 1.5 | $ | 1.5 | $ | 0.9 | $ | 0.8 | $ | 0.3 | $ | (0.1 | ) | $ | 5.7 | $ | 4.7 | $ | 0.2 | |||||||||||||||||
| * | numbers may not add due to rounding |
| Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | FY23 | FY24 | 1H FY25 | |||||||||||||||||||||||||||
| GAAP Net (Loss) Income | $ | (0.0 | ) | $ | (9.2 | ) | $ | 0.1 | $ | (0.0 | ) | $ | (0.3 | ) | $ | (1.7 | ) | $ | (6.1 | ) | $ | (9.2 | ) | $ | (2.0 | ) | ||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Asset impairments and restructuring charges | $ | 0.0 | $ | 12.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 1.3 | $ | 6.8 | $ | 12.0 | $ | 1.3 | ||||||||||||||||||
| Stock-based compensation | $ | 0.5 | $ | 0.7 | $ | 0.5 | $ | 0.5 | $ | 0.4 | $ | 0.6 | $ | 2.5 | $ | 2.1 | $ | 1.0 | ||||||||||||||||||
| Transaction costs related to business combination | $ | 0.2 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.2 | $ | 0.0 | ||||||||||||||||||
| Income tax effect on non-GAAP items | $ | (0.2 | ) | $ | (2.9 | ) | $ | (0.1 | ) | $ | (0.1 | ) | $ | (0.1 | ) | $ | (0.4 | ) | $ | (1.3 | ) | $ | (3.3 | ) | $ | (0.5 | ) | |||||||||
| Non-GAAP Net Income (Loss) | $ | 0.5 | $ | 0.5 | $ | 0.5 | $ | 0.3 | $ | (0.0 | ) | $ | (0.2 | ) | $ | 1.9 | $ | 1.8 | $ | (0.3 | ) | |||||||||||||||
| Non-GAAP basic earnings (loss) per share | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.02 | $ | (0.00 | ) | $ | (0.01 | ) | $ | 0.13 | $ | 0.13 | $ | (0.02 | ) | |||||||||||||||
| Non-GAAP diluted earnings (loss) per share | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.02 | $ | (0.00 | ) | $ | (0.01 | ) | $ | 0.13 | $ | 0.13 | $ | (0.02 | ) | |||||||||||||||
| Weighted average shares used to compute Non-GAAP basic earnings per share | 14.0 | 14.1 | 14.2 | 14.1 | 14.1 | 13.9 | 14.1 | 14.1 | 14.3 | |||||||||||||||||||||||||||
| Weighted average shares used to compute Non-GAAP diluted earnings per share | 14.0 | 14.1 | 14.5 | 14.5 | 14.1 | 13.9 | 14.1 | 14.1 | 14.3 | |||||||||||||||||||||||||||
| * | numbers may not add due to rounding |
| Free Cash Flow Calculation | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | FY23 | FY24 | 1H FY25 | |||||||||||||||||||||||||||
| Cash Flow from Operations | $ | 1.3 | $ | 1.6 | $ | 2.3 | $ | 0.7 | $ | 1.2 | $ | 0.7 | $ | 3.2 | $ | 5.9 | $ | 1.9 | ||||||||||||||||||
| Capital Expenditures | $ | 0.4 | $ | 0.4 | $ | 0.2 | $ | 0.2 | $ | 0.2 | $ | 0.1 | $ | 1.5 | $ | 1.2 | $ | 0.3 | ||||||||||||||||||
| Free Cash Flow | $ | 0.8 | $ | 1.2 | $ | 2.1 | $ | 0.5 | $ | 1.0 | $ | 0.6 | $ | 1.7 | $ | 4.7 | $ | 1.6 | ||||||||||||||||||
| TTM FCF Yield Calculation (in $M except for FCF yield) | ||||
| Market Cap - 3/7/25 | $ | 30.3 | ||
| Cash as of 1/31/25 | $ | 20.1 | ||
| Enterprise Value | $ | 10.2 | ||
| TTM FCF | $ | 4.3 | ||
| FCF Yield | 41.7 | % | ||
10