NEW YORK, NY and TRONDHEIM, NORWAY / ACCESSWIRE / October 24, 2018 / Zedge, Inc. (NYSE American: ZDGE) today
announced results for the fourth quarter and full fiscal year 2018, the three and twelve months ended July 31, 2018.
Fourth Quarter and Full FY 2018 Operational and Financial Highlights
(Results are for the 4th quarter and full FY 2018 compared to the 4th quarter and full FY 2017 respectively, unless
otherwise noted)
- MAU (Monthly Active Users) for the last 30 days of the quarter increased 9.8% to 34.8 million from 31.7 million in the
comparable period of 2017; MAU in the well-developed markets declined 8.1% and increased 27.2% in the emerging markets during the
last 30 days of the quarter when compared to the same period a year earlier;
- Total installs at July 31, 2018, increased 22.9% to 336.3 million from 273.7 million at July 31, 2017;
- Quarterly revenue increased 1.3% to $2.58 million from $2.55 million;
- Average revenue per MAU derived from our apps (ARPMAU) was $0.0231 for Q4 '18, a decrease of 9.4% when compared to the same
period last year and an increase of 4.1% sequentially;
- Full year revenue increased 8.0% to $10.8 million compared to $10.0 million;
- SG&A in the 4th quarter of FY 2018 declined 18.6% to $1.8 million due in part to a one-time benefit gained from reversing
accrued vacation and audit fees totaling approximately $360 thousand;
- Income from operations during the 4th quarter of FY 2018 was $5 thousand compared to loss from operations of $264
thousand;
- Full year loss from operations was $1.30 million compared to $0.68 million;
- Net loss per diluted share of $0.03 in the 4th quarter of FY 2018 compared to net loss per diluted share of $0.02;
- Full year diluted loss per share of $0.16 compared to diluted EPS of $0.06;
- Zedge Premium, our marketplace for personalized digital goods, shows promise with early post-launch participation rates (the
number of core app users that entered Zedge Premium) increasing 211% between April and September;
- We have completed the soft launch of our artist portal, a self-serve platform that enables artists to market in Zedge
Premium. This is a needed tool for scaling the business;
- Over the past three months we introduced new content types including video wallpapers and stickers;
- Our development center in Lithuania is operational and is focusing on accelerating the development of Zedge Premium;
- The combination of cost-cutting initiatives announced at the end of Q1 '18 and voluntary resignations have resulted in $0.8
million (or $1.3 million on an annualized basis) in SG&A savings to date, which has been reinvested in Zedge Premium.
Management Remarks
''Zedge is committed to becoming the ''everything you'' destination that people turn to when seeking digital content that
expresses their essence, individuality and taste building on its leadership and success in mobile phone personalization content,''
said Tom Arnoy, co-Founder and CEO. ''I am encouraged by the potential that both our core offering and Zedge Premium have to offer.
We experienced lackluster growth in revenue and MAU during the fourth quarter and we are implementing steps to address the root
cause. We have acted on user feedback, and are poised to reap the benefits from our investments in improving search and discovery,
content recommendations and the overall user experience. We have independent semi-autonomous teams operating in Norway, the US, and
now Lithuania that are focused on executing Zedge Premium's product vision in order to drive user growth, artist participation and
revenue expansion. In the past quarter we had a soft launch of our artist portal, a self-serve platform that empowers creators to
open their own virtual store; introduced video wallpapers, an exciting new content type for our users; enabled co-creation by
allowing users to enhance their content with digital stickers; and elevated sharing and posting functionality as a core part of the
user journey. Our belief is that co-creation and sharing will increase the frequency of use of our app and positively impact
revenue. In addition, we continue witnessing consistent, incremental month-over-month improvements in the marketplace's
participation rates (users that are visiting Zedge Premium) and conversion rates (users that take some action that generates
revenue for our artists and for Zedge). Although it will take time to mature, we are encouraged by the progress we've made and
optimistic about the potential, and will continue investing in what we believe is an untapped opportunity that can scale our
business, drive revenues, attract new users and ultimately increase our value.''
Jonathan Reich, CFO and COO of Zedge, said, ''In Fiscal 2018, we committed to Zedge Premium as a key investment area and driver
of future growth. Since completing the Freeform transaction we have done a better job in containing our expenses, which, coupled
with savings we have recognized from staff layoffs and voluntary resignations, has given us the ability to provide Zedge Premium
with necessary resources. Although our net loss for FY 2018 was $1.6 million, much of this is attributable to the investment we are
making in building the premier marketplace for digital content.''
Financial Results by Quarter (in thousands of USD)
|
|
Q4 |
|
|
Q4 |
|
|
|
|
|
%
|
|
|
Q4 |
|
|
Q3 |
|
|
|
|
|
%
|
|
|
Years Ended
|
|
|
|
|
|
%
|
|
|
|
FY '18
|
|
|
FY '17
|
|
|
DELTA
|
|
|
Change
|
|
|
FY '18
|
|
|
FY '18
|
|
|
DELTA
|
|
|
Change
|
|
|
7/31/18
|
|
|
7/31/17
|
|
|
DELTA
|
|
|
Change
|
|
|
Revenue
|
|
$ |
2,579 |
|
|
$ |
2,547 |
|
|
$ |
32 |
|
|
|
1.3 |
% |
|
$ |
2,579 |
|
|
$ |
2,551 |
|
|
$ |
28 |
|
|
|
1.1 |
% |
|
$ |
10,833 |
|
|
$ |
10,031 |
|
|
$ |
802 |
|
|
|
8.0 |
% |
|
Direct Cost of Revenue
|
|
$ |
412 |
|
|
$ |
381 |
|
|
$ |
31 |
|
|
|
8.1 |
% |
|
$ |
412 |
|
|
$ |
378 |
|
|
$ |
34 |
|
|
|
9.0 |
% |
|
$ |
1,518 |
|
|
$ |
1,567 |
|
|
$ |
(49 |
) |
|
|
-3.1 |
% |
|
Total SG&A
|
|
$ |
1,828 |
|
|
$ |
2,247 |
|
|
$ |
(419 |
) |
|
|
-18.6 |
% |
|
$ |
1,828 |
|
|
$ |
2,195 |
|
|
$ |
(367 |
) |
|
|
-16.7 |
% |
|
$ |
9,581 |
|
|
$ |
8,468 |
|
|
$ |
1,113 |
|
|
|
13.1 |
% |
|
Depreciation & Amortization
|
|
$ |
334 |
|
|
$ |
156 |
|
|
$ |
178 |
|
|
|
114.1 |
% |
|
$ |
334 |
|
|
$ |
317 |
|
|
$ |
17 |
|
|
|
5.4 |
% |
|
$ |
1,033 |
|
|
$ |
643 |
|
|
$ |
390 |
|
|
|
60.7 |
% |
|
Write Off of Software / Tech Development
|
|
$ |
0 |
|
|
$ |
27 |
|
|
$ |
(27 |
) |
|
|
-100.0 |
% |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
nm
|
|
|
$ |
0 |
|
|
$ |
36 |
|
|
$ |
(36 |
) |
|
|
-100.0 |
% |
|
Income (loss) from Operations
|
|
$ |
5 |
|
|
$ |
(264 |
) |
|
$ |
269 |
|
|
|
-101.9 |
% |
|
$ |
5 |
|
|
$ |
(339 |
) |
|
$ |
344 |
|
|
|
-101.5 |
% |
|
$ |
(1,299 |
) |
|
$ |
(683 |
) |
|
$ |
(616 |
) |
|
|
90.2 |
% |
|
Net Gain/(Loss) from FX & Other
|
|
$ |
(37 |
) |
|
$ |
60 |
|
|
$ |
(97 |
) |
|
|
-161.7 |
% |
|
$ |
(37 |
) |
|
$ |
33 |
|
|
$ |
(70 |
) |
|
|
-212.1 |
% |
|
$ |
(34 |
) |
|
$ |
56 |
|
|
$ |
(90 |
) |
|
|
-160.7 |
% |
|
Provision for (benefit from) income taxes
|
|
$ |
229 |
|
|
$ |
4 |
|
|
$ |
225 |
|
|
nm
|
|
|
$ |
229 |
|
|
$ |
3 |
|
|
$ |
226 |
|
|
nm
|
|
|
$ |
230 |
|
|
$ |
(16 |
) |
|
$ |
246 |
|
|
nm
|
|
|
Net Loss
|
|
$ |
(261 |
) |
|
$ |
(208 |
) |
|
$ |
(53 |
) |
|
|
25.5 |
% |
|
$ |
(261 |
) |
|
$ |
(309 |
) |
|
$ |
48 |
|
|
|
-15.5 |
% |
|
$ |
(1,563 |
) |
|
$ |
(611 |
) |
|
$ |
(952 |
) |
|
|
155.8 |
% |
|
Loss Per Share
|
|
$ |
(0.03 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
|
|
50.0 |
% |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
|
0.0 |
% |
|
$ |
(0.16 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.10 |
) |
|
|
165.7 |
% |
|
Total Current Assets Less Total Current Liabilities
|
|
$ |
4,094 |
|
|
$ |
5,125 |
|
|
$ |
(1,031 |
) |
|
|
-20.1 |
% |
|
$ |
4,094 |
|
|
$ |
4,101 |
|
|
$ |
(7 |
) |
|
|
-0.2 |
% |
|
$ |
4,094 |
|
|
$ |
5,125 |
|
|
$ |
(1,031 |
) |
|
|
-20.1 |
% |
|
MAU (Million)
|
|
|
34.8 |
|
|
|
31.7 |
|
|
|
3.1 |
|
|
|
9.8 |
% |
|
|
34.8 |
|
|
|
34.2 |
|
|
|
0.6 |
|
|
|
1.8 |
% |
|
|
34.8 |
|
|
|
31.7 |
|
|
|
3.1 |
|
|
|
9.8 |
% |
|
Total Installs (Million)
|
|
|
336.3 |
|
|
|
273.7 |
|
|
|
62.6 |
|
|
|
22.9 |
% |
|
|
336.3 |
|
|
|
321.5 |
|
|
|
14.8 |
|
|
|
4.6 |
% |
|
|
336.3 |
|
|
|
273.7 |
|
|
|
62.6 |
|
|
|
22.9 |
% |
|
ARPMAU
|
|
$ |
0.0231 |
|
|
$ |
0.0255 |
|
|
$ |
(0.0024 |
) |
|
|
-9.4 |
% |
|
$ |
0.0231 |
|
|
$ |
0.0222 |
|
|
$ |
0.0009 |
|
|
|
4.1 |
% |
|
$ |
0.0246 |
|
|
$ |
0.0244 |
|
|
$ |
0.0002 |
|
|
|
0.8 |
% |
nm- not meaningful
Earnings Announcement and Supplemental Information
Zedge will host a conference call at 4:30 PM Eastern, October 24, 2018 beginning with management's discussion of results,
outlook and strategy followed by Q&A with investors.
To participate in the call, please dial 877-407-8133 (U.S. toll free) or 201-689-8040 (International) at least five minutes
before the 4:30 PM Eastern start and ask for the Zedge earnings conference call.
The call will also be webcast through this URL: http://www.investorcalendar.com/event/37465 thru 1/24/2019.
Starting approximately two hours after the call and continuing through November 7, 2018, a recording of the call will be
available by dialing 877-481-4010 (U.S. toll free) or 919-882-2331 (International) and entering the replay access code: #37465
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.
About Zedge
Zedge is a content discovery and creation platform with a global audience of close to 35 million monthly active users. We aspire
to be the ''everything you'' destination that people turn to when seeking digital content that expresses their essence,
individuality, and taste. Professional artists, individual creators, and brands use Zedge to market, distribute and sell their
content. We have a rich and diverse library with more than a million images and audio clips.
Contact:
Jonathan Reich
ir@zedge.net
ZEDGE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
|
July 31,
|
|
2018 |
|
|
2017 |
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
3,408 |
|
|
$ |
4,580 |
|
|
Trade accounts receivable, net of allowance for doubtful accounts of $0 at July 31, 2018 and 2017
|
|
|
1,777 |
|
|
|
1,712 |
|
|
Prepaid expenses
|
|
|
316 |
|
|
|
315 |
|
|
Other current assets
|
|
|
302 |
|
|
|
427 |
|
|
Total current assets
|
|
|
5,803 |
|
|
|
7,034 |
|
|
Property and equipment, net
|
|
|
3,344 |
|
|
|
2,678 |
|
|
Goodwill
|
|
|
2,447 |
|
|
|
2,518 |
|
|
Other assets
|
|
|
125 |
|
|
|
301 |
|
|
Total assets
|
|
$ |
11,719 |
|
|
$ |
12,531 |
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$ |
280 |
|
|
$ |
33 |
|
|
Accrued expenses
|
|
|
1,428 |
|
|
|
1,840 |
|
|
Due to IDT Corporation
|
|
|
1 |
|
|
|
36 |
|
|
Total current liabilities
|
|
|
1,709 |
|
|
|
1,909 |
|
|
Total liabilities
|
|
|
1,709 |
|
|
|
1,909 |
|
|
Commitments and contingencies (Note 8)
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; authorized shares-2,400; no shares issued
|
|
|
- |
|
|
|
- |
|
|
Class A common stock, $.01 par value; authorized shares-2,600; 525 shares issued and outstanding at July 31, 2018 and
2017
|
|
|
5 |
|
|
|
5 |
|
|
Class B common stock, $.01 par value; authorized shares-40,000; 9,786 and 9,123 shares issued and outstanding at July 31,
2018 and 2017, respectively
|
|
|
98 |
|
|
|
91 |
|
|
Additional paid-in capital
|
|
|
22,508 |
|
|
|
21,446 |
|
|
Accumulated other comprehensive loss
|
|
|
(702 |
) |
|
|
(584 |
) |
|
Accumulated deficit
|
|
|
(11,899 |
) |
|
|
(10,336 |
) |
|
Total stockholders' equity
|
|
|
10,010 |
|
|
|
10,622 |
|
|
Total liabilities and stockholders' equity
|
|
$ |
11,719 |
|
|
$ |
12,531 |
|
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)INCOME
(in thousands, except per share data)
|
Year ended July 31,
|
|
2018 |
|
|
2017 |
|
|
Revenues
|
|
$ |
10,833 |
|
|
$ |
10,031 |
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included
below)
|
|
|
1,518 |
|
|
|
1,567 |
|
|
Selling, general and administrative
|
|
|
9,581 |
|
|
|
8,468 |
|
|
Depreciation and amortization
|
|
|
1,033 |
|
|
|
643 |
|
|
Write-off of capitalized software and technology development costs
|
|
|
- |
|
|
|
36 |
|
|
Loss from operations
|
|
|
(1,299 |
) |
|
|
(683 |
) |
|
Interest and other income
|
|
|
29 |
|
|
|
19 |
|
|
Net (loss) gain resulting from foreign exchange transactions
|
|
|
(63 |
) |
|
|
37 |
|
|
Loss before income taxes
|
|
|
(1,333 |
) |
|
|
(627 |
) |
|
Provision for (benefit from) income taxes
|
|
|
230 |
|
|
|
(16 |
) |
|
Net loss
|
|
|
(1,563 |
) |
|
|
(611 |
) |
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
Changes in foreign currency translation adjustment
|
|
|
(118 |
) |
|
|
233 |
|
|
Total other comprehensive (loss) income
|
|
|
(118 |
) |
|
|
233 |
|
|
Total comprehensive loss
|
|
$ |
(1,681 |
) |
|
$ |
(378 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to Zedge, Inc. common stockholders:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$ |
(0.16 |
) |
|
$ |
(0.06 |
) |
|
Weighted-average number of shares used in calculation of loss per share:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
9,803 |
|
|
|
9,467 |
|
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
Year ended July 31,
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(1,563 |
) |
|
$ |
(611 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,033 |
|
|
|
643 |
|
|
Deferred income taxes
|
|
|
172 |
|
|
|
(28 |
) |
|
Stock-based compensation
|
|
|
595 |
|
|
|
275 |
|
|
Write-off of capitalized software and technology development costs
|
|
|
- |
|
|
|
36 |
|
|
Stock issued to FreeForm noteholders
|
|
|
242 |
|
|
|
- |
|
|
Change in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
(65 |
) |
|
|
(45 |
) |
|
Prepaid expenses and other current assets
|
|
|
122 |
|
|
|
(481 |
) |
|
Other assets
|
|
|
5 |
|
|
|
(8 |
) |
|
Trade accounts payable and accrued expenses
|
|
|
(174 |
) |
|
|
400 |
|
|
Due to IDT Corporation
|
|
|
(35 |
) |
|
|
(263 |
) |
|
Deferred revenue
|
|
|
- |
|
|
|
(15 |
) |
|
Net cash provided by (used in) operating activities
|
|
|
332 |
|
|
|
(97 |
) |
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Capitalized software and technology development costs and purchase of equipment
|
|
|
(1,702 |
) |
|
|
(1,506 |
) |
|
Net cash used in investing activities
|
|
|
(1,702 |
) |
|
|
(1,506 |
) |
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
232 |
|
|
|
166 |
|
|
Net cash provided by financing activities
|
|
|
232 |
|
|
|
166 |
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(34 |
) |
|
|
39 |
|
|
Net decrease in cash and cash equivalents
|
|
|
(1,172 |
) |
|
|
(1,398 |
) |
|
Cash and cash equivalents at beginning of year
|
|
|
4,580 |
|
|
|
5,978 |
|
|
Cash and cash equivalents at end of year
|
|
$ |
3,408 |
|
|
$ |
4,580 |
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
Cash payments made for income taxes
|
|
$ |
31 |
|
|
$ |
- |
|
SOURCE: Zedge, Inc.
