Zedge Increases Cost Reduction Efforts to a Targeted $4 Million Annually
Zedge (ZDGE) announced extensive restructuring initiatives aimed at reducing annual costs by $3.9-$4.1 million. The plan includes closing Norwegian operations and previous workforce reductions at GuruShots, resulting in a 22% total workforce reduction. The company expects annualized compensation-related savings of $2.6 million, plus $0.1-$0.3 million in non-employee cost reductions.
Additional savings of $1.2 million will come from completing scheduled GuruShots acquisition-related retention bonus payments. The company reported generating $30 million in revenue and $4.7 million in free cash flow in FY24. The restructuring charges will be reflected in Q2 and Q3 fiscal results ending January and April 2025. Operations will be consolidated in Lithuania and Israel, with implementation of cost-saving measures beginning in Q3 and Q4.
Zedge (ZDGE) ha annunciato ampie iniziative di ristrutturazione volte a ridurre i costi annuali di $3,9-$4,1 milioni. Il piano prevede la chiusura delle operazioni in Norvegia e precedenti riduzioni della forza lavoro in GuruShots, con una riduzione totale della forza lavoro del 22%. L'azienda prevede risparmi annualizzati legati alla retribuzione di $2,6 milioni, oltre a $0,1-$0,3 milioni in riduzioni di costi non legati ai dipendenti.
Ulteriori risparmi di $1,2 milioni derivano dal completamento dei pagamenti dei bonus di retention relativi all'acquisizione di GuruShots, programmati. L'azienda ha riportato di aver generato $30 milioni di entrate e $4,7 milioni di flusso di cassa libero per l'anno fiscale 24. I costi di ristrutturazione saranno riflessi nei risultati fiscali del secondo e terzo trimestre che termineranno a gennaio e aprile 2025. Le operazioni saranno consolidate in Lituania e Israele, con l'implementazione delle misure di risparmio sui costi che inizierà nel terzo e quarto trimestre.
Zedge (ZDGE) anunció iniciativas de reestructuración amplias con el objetivo de reducir los costos anuales entre $3,9 y $4,1 millones. El plan incluye el cierre de operaciones en Noruega y reducciones anteriores en la fuerza laboral de GuruShots, resultando en una reducción total del 22% de la fuerza laboral. La empresa espera ahorros anualizados relacionados con la compensación de $2,6 millones, además de $0,1-$0,3 millones en reducciones de costos no relacionados con empleados.
Ahorros adicionales de $1,2 millones provendrán del cumplimiento de los pagos de bonos de retención programados relacionados con la adquisición de GuruShots. La compañía reportó haber generado $30 millones en ingresos y $4,7 millones en flujo de caja libre en el ejercicio fiscal 24. Los cargos por reestructuración se reflejarán en los resultados fiscales del segundo y tercer trimestre que terminan en enero y abril de 2025. Las operaciones se consolidarán en Lituania e Israel, con la implementación de las medidas de ahorro de costos comenzando en el tercer y cuarto trimestre.
Zedge (ZDGE)는 연간 비용을 $3.9-$4.1백만 줄이기 위한 광범위한 구조 조정 계획을 발표했습니다. 이 계획에는 노르웨이 운영 중단 및 GuruShots의 이전 인력 감축이 포함되어 있으며, 총 인력의 22%가 감소합니다. 회사는 연간 보상 관련 $2.6백만 절감과 함께 $0.1-$0.3백만의 비고용자 비용 절감을 예상하고 있습니다.
추가적으로 $1.2백만은 GuruShots 인수 관련으로 예정된 유지 보너스 지급 완료에서 발생할 것입니다. 이 회사는 FY24에서 $30백만의 수익과 $4.7백만의 자유 현금 흐름을 창출했다고 보고했습니다. 구조 조정 비용은 2025년 1월과 4월에 종료되는 2분기 및 3분기 재무 결과에 반영될 것입니다. 운영은 리투아니아와 이스라엘로 통합되며, 비용 절감 조치는 3분기와 4분기부터 시작됩니다.
Zedge (ZDGE) a annoncé des initiatives de restructuration étendues visant à réduire les coûts annuels de 3,9 à 4,1 millions de dollars. Le plan comprend la fermeture des opérations norvégiennes et des réductions de personnel antérieures chez GuruShots, entraînant une réduction totale de 22% de la main-d'œuvre. La société prévoit des économies annualisées liées à la rémunération de 2,6 millions de dollars, ainsi que de 0,1 à 0,3 million de dollars en réductions de coûts non liés aux employés.
Des économies supplémentaires de 1,2 million de dollars proviendront du règlement des paiements de primes de fidélité liés à l'acquisition de GuruShots. La société a rapporté avoir généré 30 millions de dollars de revenus et 4,7 millions de dollars de flux de trésorerie libre pour l'exercice 24. Les charges de restructuration seront reflétées dans les résultats fiscaux du 2ème et du 3ème trimestre se terminant en janvier et avril 2025. Les opérations seront consolidées en Lituanie et en Israël, avec la mise en œuvre des mesures d'économies de coûts débutant au 3ème et au 4ème trimestre.
Zedge (ZDGE) gab umfassende Umstrukturierungsmaßnahmen bekannt, die darauf abzielen, die jährlichen Kosten um $3,9-$4,1 Millionen zu senken. Der Plan umfasst die Schließung der norwegischen Betriebe und frühere Stellenabbauten bei GuruShots, was zu einer Gesamtreduzierung der Belegschaft um 22% führt. Das Unternehmen erwartet jährliche Einsparungen in Höhe von $2,6 Millionen im Zusammenhang mit Vergütungen, sowie $0,1-$0,3 Millionen an Einsparungen bei nicht angestellten Kosten.
Zusätzliche Einsparungen von $1,2 Millionen werden durch die Zahlung geplanter Prämien im Zusammenhang mit der Akquisition von GuruShots erzielt. Das Unternehmen berichtete, $30 Millionen Umsatz und $4,7 Millionen freien Cashflow im Geschäftsjahr 24 generiert zu haben. Die Umstrukturierungskosten werden in den Ergebnissen des 2. und 3. Quartals reflektiert, die im Januar und April 2025 enden. Die Betriebe werden in Litauen und Israel konsolidiert, und die Umsetzung von kostensparenden Maßnahmen beginnt im 3. und 4. Quartal.
- Generated $30M revenue and $4.7M free cash flow in FY24
- Expected annual cost savings of $3.9-$4.1M ($0.30 per share pre-tax)
- Operational consolidation in Lithuania and Israel to improve efficiency
- 22% workforce reduction across global operations
- Closure of Norwegian subsidiary
- Scaling back GuruShots paid player acquisition initiatives
- Restructuring charges impacting Q2 and Q3 fiscal results
Insights
The announced $4M cost reduction initiative represents a substantial transformation for Zedge, equating to approximately 13.3% of their annual revenue and nearly 11% of their market capitalization. This aggressive restructuring includes several strategic components:
The 22% workforce reduction and closure of Norwegian operations, consolidating into Lithuania and Israel, signals a decisive move to streamline operations. The expected $2.6M in compensation-related savings represents about 55% of FY24's free cash flow, highlighting the potential impact on profitability.
Particularly noteworthy is the timing structure: benefits will begin materializing in Q3 and Q4 of the fiscal year, with full realization of the $0.30 per share pre-tax benefit expected thereafter. The completion of GuruShots retention bonus payments in April 2025 will provide an additional $1.2M reduction in the expense run rate.
The restructuring appears well-balanced between immediate cost savings and maintaining operational capabilities. The consolidation in Lithuania and Israel, combined with the GuruShots 2.0 initiative, suggests a strategic pivot focused on efficiency while preserving core development capabilities. The strong FY24 free cash flow of $4.7M provides a solid foundation for executing these changes without compromising financial stability.
However, investors should note that restructuring charges in Q2 and Q3 FY25 will temporarily impact financial results. The success of this initiative will largely depend on:
- Successful integration of consolidated operations
- Execution of the GuruShots 2.0 strategy
- Maintaining service quality despite workforce reductions
- Effective realization of targeted non-employee cost reductions
Estimated total global restructuring and other cost reductions to save
Total global restructuring efforts to date include a
Other annual cost reductions of
NEW YORK, NY / ACCESS Newswire / February 5, 2025 / Zedge, Inc. (NYSE AMERICAN:ZDGE), $ZDGE, a leader in digital marketplaces and interactive games that foster creativity, self-expression and community engagement, today announced additional restructuring initiatives, mainly the closure of its Norway operations. Combined with the previously announced headcount and compensation expense reductions at GuruShots and other initiatives, these actions mark a key milestone in the Company's strategy to streamline operations and enhance profitability while positioning for growth and revamped focus.
Jonathan Reich, CEO of Zedge, commented:
"Today's announcement, including the closure of our Norwegian subsidiary, marks an end to our aggressive restructuring efforts. Combined with the actions announced on January 21, 2025, and some additional reductions, we expect to lower our annualized expense run rate by roughly
"Beyond cost savings, these measures will consolidate our workforce in Lithuania and Israel, streamlining operations, driving efficiency and reducing expenses beyond compensation. These changes are designed to position us for sustainable growth and support our strategic objectives."
Estimated Change in Expense (vs Q1 FY25) | ||
in $M |
| Annualized Reductions |
Restructuring: |
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Compensation-Related Expense |
| ( |
Non-employee |
| ( |
Other: |
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Expiration of GS Retention Bonus |
| ( |
Total |
| ( |
Cost-saving benefits in the above table are expected to begin taking effect in Zedge's third and fourth fiscal quarters.
Highlights of Zedge's Restructuring Initiatives
Announced February 5, 2025:
Closure of Norwegian Subsidiary -
Zedge is ceasing operations in Norway while consolidating its activities in Lithuania and Israel. The Company expects this move to enhance operational efficiency and reduce expenses.
Announced January 21, 2025:
Rightsizing the GuruShots Workforce -
As part of the restructuring, the GuruShots team underwent a significant reorganization. These changes aim to bring GuruShots closer to breakeven while supporting the development of the GuruShots 2.0 product strategy.
Non-employee expense reduction targets -
Zedge is also targeting non-employee expense reductions related to its restructuring initiatives, including scaling back GuruShots paid player acquisition initiatives for the remainder of fiscal 2025.
Reimagining GuruShots Gameplay and Monetization
The GuruShots team is conducting a comprehensive review of the game via the GuruShots 2.0 initiative, reimagining gameplay, progression dynamics, monetization strategies, and technology infrastructure. Once the GuruShots 2.0 strategy and roadmap are finalized, Zedge plans to re-invest strategically based on achieving key milestones.
Additional Cost Savings
Zedge also expects to benefit from the completion (in April 2025) of GuruShots employee retention bonuses (that were committed to as part of the 2022 acquisition), which will further reduce GuruShots (and Zedge's) annualized expense run-rate by approximately
Restructuring Charges
Zedge anticipates accounting charges related to its restructuring efforts will primarily be reflected in the Company's second and third fiscal quarter results, covering periods ending January 31 and April 30, 2025, respectively.
By completing these restructuring efforts, Zedge is positioning itself for sustainable growth while improving operational focus and cost efficiency.
*Free cash flow is a non-GAAP metric defined as cash flow from operations (
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
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Contact:
Brian Siegel, IRC, MBA
Senior Managing Director
Hayden IR
(346) 396-8696
ir@zedge.net
SOURCE: Zedge, Inc.
View the original press release on ACCESS Newswire
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