Zedge Announces Third Quarter Fiscal 2024 Results
Zedge (NYSE American: ZDGE) announced its third-quarter fiscal 2024 results with a 14% total revenue growth and a 35% increase in subscription revenue compared to the previous year. The company reported a revenue of $7.7 million, a GAAP net income of $0.1 million, and a non-GAAP net income of $0.5 million. Key metrics included a 44.4% increase in Zedge Premium Gross Transaction Value (GTV) to $0.59 million and a 39.7% rise in average revenue per monthly active user (ARPMAU). The quarter also saw a GAAP operating loss of $0.1 million, an improved figure compared to a loss of $8.4 million in the same period last year. However, the company faced challenges with a 20.3% decline in digital goods and services revenue and a 13.4% drop in monthly active users (MAU).
CEO Jonathan Reich highlighted ongoing efforts to optimize advertising and subscription revenue, especially on iOS platforms, and emphasized future plans for user acquisition and product innovation. Despite some setbacks, the company remains optimistic about its growth trajectory heading into fiscal 2025.
- 14% total revenue growth year-over-year.
- 35% increase in subscription revenue compared to the previous year.
- Revenue of $7.7 million, up from $6.7 million.
- GAAP net income of $0.1 million, compared to a loss of $7.7 million in 2023.
- Non-GAAP net income of $0.5 million, an increase from $0.3 million.
- 44.4% rise in Zedge Premium Gross Transaction Value (GTV) to $0.59 million.
- 39.7% increase in average revenue per monthly active user (ARPMAU).
- Adjusted EBITDA of $0.9 million.
- Cash flow from operations increased by 44.5% to $2.3 million.
- 20.3% decline in digital goods and services revenue.
- 13.4% drop in monthly active users (MAU).
- GAAP operating loss of $0.1 million.
- Operating margin decreased to -1.7%.
- Adjusted EBITDA decreased by 50% from $1.7 million to $0.9 million.
- Well-developed markets MAU decreased by 16.7% to 6.0 million.
- Emerging markets MAU decreased by 12.5% to 21.7 million.
- GAAP diluted EPS decreased from $0.11 to $0.01.
Zedge's third-quarter results show solid top-line growth with a
Short-term, the revenue uplift is promising and suggests effective strategies in user acquisition and revenue optimization. However, the decline in digital goods and services points to challenges in that segment, potentially affecting future growth unless addressed. Long-term, the emphasis on subscription revenue and new product features could provide recurring revenue streams, vital for stable earnings. Overall, investors should keep an eye on how well Zedge can maintain and expand its subscription base while tackling the underperformance in digital goods.
Zedge's substantial growth in subscription revenue, particularly on the iOS platform, underscores the effectiveness of their app's monetization strategy. It's notable that iOS subscription revenue surged
The mention of a coin-based economy for GuruShots is intriguing. A shift to such an economy could significantly enhance user engagement and in-app purchases by offering more customized reward mechanisms. This model, seen in popular games, can drive higher user retention and spending. Investors should watch for early performance metrics from this initiative to gauge its impact on overall revenue growth.
Zedge's performance metrics reveal an important trend: despite significant growth in revenue and subscriptions, the Monthly Active Users (MAU) are declining, down
The growth in Average Revenue Per Monthly Active User (ARPMAU) is a positive sign, showing the company's ability to monetize its existing user base more effectively. However, focusing solely on extracting more revenue from fewer users can have limits. Sustainable growth will likely require a combination of expanding the user base and improving ARPMAU.
NEW YORK, NY / ACCESSWIRE / June 10, 2024 / Zedge, Inc. (NYSE American:ZDGE), a leader in building digital marketplaces and friendly competitive games around content that people use to express themselves, today announced results for its third quarter of fiscal 2024, ended April 30, 2024.
"Revenue growth accelerated from last quarter as advertising and subscription revenue showed strong growth across Zedge Marketplace's Android and iOS offerings," said Jonathan Reich, Zedge's chief executive officer. "I'm especially encouraged that we followed up record quarterly revenue in Q2 with record Q3 revenue and that we did not see the customary post-holiday hangover. Our work to optimize our advertising stack continues to pay off, and iOS subscription revenue was up more than
Third Quarter Highlights (fiscal 2024 versus fiscal 2023)
- Revenue increased
13.8% to$7.7 million ; - GAAP operating loss of (
$0.1) million , compared to ($8.4) million ;- GAAP operating loss for the third quarter of 2023 included an
$8.7 million non-cash write-down of goodwill;
- GAAP operating loss for the third quarter of 2023 included an
- GAAP net income (loss) and earnings (loss) per share were
$0.1 million and$0.01 compared to ($7.7) million and ($0.55) , respectively, including the impact of the writedown in 2023: - Non-GAAP net income2 and EPS2 were
$0.5 million and$0.03 compared to$0.3 million and$0.02 , respectively; - Adjusted EBITDA2 of
$0.9 million ; - Zedge Premium Gross Transaction Value1, or GTV, increased
44.4% to$0.59 million .
| Third Quarter Select Financial Metrics: FY24 versus FY23* | |||||||||||||||||||||||||
(in $M except for EPS) | Q3 '24 | Q3 '23 | Change | FY24 YTD | FY23 YTD | Change | |||||||||||||||||||
Total Revenue | $ | 7.7 | $ | 6.7 | 13.8 | % | $ | 22.5 | $ | 20.6 | 9.2 | % | |||||||||||||
Advertising Revenue | $ | 5.5 | $ | 4.6 | 19.4 | % | $ | 15.9 | $ | 13.7 | 16.0 | % | |||||||||||||
Digital goods and services | $ | 0.9 | $ | 1.1 | -20.3 | % | $ | 2.7 | $ | 3.7 | -25.5 | % | |||||||||||||
Subscription Revenue | $ | 1.1 | $ | 0.8 | 34.9 | % | $ | 3.2 | $ | 2.6 | 22.6 | % | |||||||||||||
Other Revenue | $ | 0.2 | $ | 0.2 | -11.2 | % | $ | 0.7 | $ | 0.7 | 9.0 | % | |||||||||||||
GAAP Operating Loss | $ | (0.1 | ) | $ | (8.4 | ) | nm | $ | (11.7 | ) | $ | (7.2 | ) | nm | |||||||||||
Operating Margin | -1.7 | % | -125.1 | % | -52.2 | % | -34.7 | % | |||||||||||||||||
GAAP Net Income (Loss) | $ | 0.1 | $ | (7.7 | ) | nm | $ | (9.1 | ) | $ | (6.3 | ) | nm | ||||||||||||
GAAP Diluted Earnings (Loss) Per Share | $ | 0.01 | $ | (0.55 | ) | nm | $ | (0.65 | ) | $ | (0.45 | ) | nm | ||||||||||||
Non-GAAP Net Income | $ | 0.5 | $ | 0.3 | 59.7 | % | $ | 1.5 | $ | 1.3 | 13.3 | % | |||||||||||||
Non- GAAP Diluted EPS | $ | 0.03 | $ | 0.02 | 54.0 | % | $ | 0.11 | $ | 0.09 | 14.9 | % | |||||||||||||
Adjusted EBITDA | $ | 0.9 | $ | 1.7 | -50.0 | % | $ | 3.9 | $ | 4.1 | -3.8 | % | |||||||||||||
Cash Flow from Operations | $ | 2.3 | $ | 1.6 | 44.5 | % | $ | 5.2 | $ | 2.7 | 87.9 | % | |||||||||||||
nm = not measurable/meaningful | |||||||||||||||||||||||||
*numbers may not add due to rounding | |||||||||||||||||||||||||
| Select Zedge Marketplace Metrics: FY24 versus FY23* | |||||||||||||
(in MM except for ARPMAU and where noted) | Q3 '24 | Q3 '23 | Change | ||||||||||
Total Installs - Cumulative | 660.9 | 609.0 | 8.5 | % | |||||||||
MAU | 27.7 | 32.0 | -13.4 | % | |||||||||
Well-developed Markets | 6.0 | 7.2 | -16.7 | % | |||||||||
Emerging Markets | 21.7 | 24.8 | -12.5 | % | |||||||||
Active Subscriptions (in 000s) | 654 | 631 | 3.6 | % | |||||||||
ARPMAU | $ | 0.074 | $ | 0.053 | 39.7 | % | |||||||
Zedge Premium - Gross Transaction Value (GTV) | $ | 0.59 | $ | 0.41 | 44.4 | % | |||||||
*numbers may not add due to rounding | |||||||||||||
Fiscal 2024 Commentary
Reich continued, "We believe we are still in the early stages of benefiting from the organizational and product changes we made in recent quarters in order to drive sustainable, profitable, long-term revenue growth. As we move forward, we expect to continue to test and optimize our paid and organic user acquisition strategies, in conjunction with introducing new features and content for existing products while innovating to bring new products to market.
"For the Zedge Marketplace, we are continuing to optimize our paid user acquisition investments for accelerating growth in both advertising and subscriptions. iOS remains a key focus here, and despite the hockey stick growth we are seeing, we remain diligent in finding ways to tap the significant potential of this market. For Emojipedia, we have a roadmap of new features and services that we plan to roll out over the next 12 months, including emoji mashups, emoji-based mini-games and other user enhancements that we believe will drive new users, increase engagement and enable monetization growth.
"GuruShots remains in transition, but I'm feeling optimistic about our initial progress and current roadmap for returning the game to growth. We recently began beta testing a fully redesigned onboarding flow in the Android app with the goal of both improving engagement and retention, as well as expanding our target market to attract a wider set of potential players. Additionally, we are introducing a new, coin-based economy in June. By transitioning to a coin-based economy with multiple virtual currencies, we can better reward all players in a controlled, bespoke manner to encourage higher engagement and in-app purchases. We believe the cumulative impact of these changes will play a key role in returning GuruShots to growth in the quarters to come.
"Overall, I'm optimistic that we are headed in the right direction across our product portfolio and believe that we will finish 2024 with strong momentum heading into fiscal 2025."
1 We use the following 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 and Adjusted EBITDA 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 and Adjusted EBITDA and reconciliations to the most directly comparable GAAP measures.
Trended Financial Information*
(in $M except for EPS, ARPMAU, Paid Subscriptions) | Q123 | Q223 | Q323 | Q423 | Q124 | Q224 | Q324 | FY22 | FY23 | YTD FY24 | ||||||||||||||||||||||||||||||
Total Revenue | $ | 6.9 | $ | 7.0 | $ | 6.7 | $ | 6.6 | $ | 7.1 | $ | 7.8 | $ | 7.7 | $ | 26.5 | $ | 27.2 | $ | 22.5 | ||||||||||||||||||||
Advertising Revenue | $ | 4.5 | $ | 4.6 | $ | 4.6 | $ | 4.6 | $ | 4.9 | $ | 5.5 | $ | 5.5 | $ | 20.3 | $ | 18.3 | $ | 15.9 | ||||||||||||||||||||
Digital goods and services | $ | 1.3 | $ | 1.2 | $ | 1.1 | ||||||||||||||||||||||||||||||||||
