Zedge, Inc. (NYSE MKT:ZDGE) today announced results for the
first quarter of its fiscal year 2017, the three months ended
October 31, 2016.
First Quarter FY 2017 Operational and
Financial Highlights(Results are for the 1st quarter FY
2017 and are compared to the 1st quarter FY 2016 except where
otherwise noted.)
- MAU (Monthly Active Users) for the last
30 days of the quarter increased 2.6% to 31.6 million
- Total installs at October 31, 2016
increased 32.6% to 230.5 million
- Revenue decreased 6.9% to $2.4
million
- Average revenue per MAU decreased 10.7%
to $0.0233
- Income from operations decreased 73.0%
to $113 thousand
- Net income per diluted share of $0.02
compared to $0.04
- Working capital – current assets less
current liabilities - increased 150% to $6.2 million at October 31,
2016 from $2.5 million at October 31, 2015
Management Remarks“Zedge
remains focused on growing our user base and improving engagement
to facilitate future revenue growth. We are energized seeing the
early fruits of this commitment in the first quarter results,
particularly the uptick in our monthly active user base,” commented
Tom Arnoy, co-founder and CEO. “We are confident that there is
substantial untapped potential in this category and believe that
our continued investments in building the right team, optimizing
the user experience and expanding our product portfolio will help
us in realizing our goals.”
Jonathan Reich, CFO and COO of Zedge, said, “Our first quarter
results generate optimism, particularly with the return to user
growth. The increase in MAU, one of our key performance indicators,
is a good harbinger for revenue expansion and we remain focused on
improving this metric in coming quarters. Furthermore, we
re-introduced Zedge Ringtones on iTunes in November in the U.S. and
Canada before releasing it globally in December. We expect that
this will positively impact ARPMAU in the second quarter.”
Financial Results by Quarter (in
thousands of USD)
Q1 FY2017
Q4 FY2016 Q1 FY2016
Change1Q16 to 1Q17
Revenue $2,383 $2,452
$2,559 (6.9%) Direct cost of revenue
$367 $367 $295
+24.4% SG&A $1,756
$2,439 $1,685 +4.2% Depreciation &
amortization $138 $135
$160 (13.8%) Write-off of software and
technology development operating expense $9
$281 - +$9 Income (loss)
from operations $113 ($771)
$419 ($306) Net gain (loss) from FX and
other $51 ($17)
($54) +$105 (Provision for) benefit from income taxes
($1) $9 ($40)
+$39 Net income (loss) $163
($780) $325 ($162)
Diluted earnings (loss) per share $0.02
($0.08) $0.04 ($0.02) Total
current assets less total current liabilities
$6,196 $6,126 $2,476
+$3,720
Earnings Conference
CallZedge’s management will host an earnings conference
call beginning at 5:30 PM Eastern time today, December 8th.
Management’s presentation of the results, outlook and strategy will
be followed by Q&A with investors.
To participate in the call, please dial toll-free 1-888-317-6003
(from the U.S.) or 1-412-317-6061 (outside the U.S.) at least five
minutes before the 5:30 PM Eastern start, ask for the Zedge
earnings conference call, and enter the conference ID: 5453687.
The conference call will also be webcast, and can be accessed
both live and for three months following the call through this URL:
http://services.choruscall.com/links/zdge161205nbyzxpUE.html.
Forward Looking
StatementsAll 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 ZedgeZedge is a
content platform, and global leader in smartphone personalization,
with more than 230 million app installs and 32 million monthly
active users. People use Zedge to make their smartphones more
personal; to express their emotions, tastes and interests using
wallpapers, icons, widgets, ringtones and more. The Zedge platform
enables brands, artists and creators to share their smartphone
personalization content with their fans in order to extend their
reach, reinforce their message and gain valuable insight into how
customers interact with their content.
ZEDGE, INC. CONSOLIDATED BALANCE
SHEETS
October 31,2016 July 31,2016
(Unaudited) (in thousands, except par value)
Assets Current assets: Cash and cash equivalents $ 5,983 $
5,978 Trade accounts receivable, net of allowance for doubtful
accounts of $0 at October 31, 2016 and July 31, 2016 1,679 1,668
Prepaid expenses 192 210 Other current assets 332
107 Total current assets 8,186 7,963 Property and
equipment, net 2,058 1,843 Goodwill 2,411 2,361 Other assets
262 266 Total assets $ 12,917 $ 12,433
Liabilities and stockholders’
equity
Current liabilities: Trade accounts payable $ 74 $ 36 Accrued
expenses 1,835 1,487 Deferred revenue 8 15 Due to IDT Corporation
73 299 Total current liabilities
1,990 1,837 Commitments and contingencies
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 andoutstanding at
October 31, 2016 and July 31, 2016
5 5
Class B common stock, $.01 par value;
authorized shares—40,000; 8,865 and 8,819 shares issuedand
outstanding at October 31, 2016 and July 31, 2016, respectively
89 88 Additional paid-in capital 21,139 21,045 Accumulated other
comprehensive loss (744 ) (817 ) Accumulated deficit (9,562
) (9,725 ) Total stockholders’ equity 10,927
10,596 Total liabilities and stockholders’ equity $
12,917 $ 12,433
ZEDGE,
INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME(Unaudited)
Three Months EndedOctober
31,
2016 2015 (in
thousands, except per share data) Revenues $ 2,383 $
2,559 Costs and expenses:
Direct cost of revenues (exclusive of
amortization of capitalizedsoftware and technology development
costs included below)
367 295 Selling, general and administrative 1,756 1,685
Depreciation and amortization 138 160 Write-off of capitalized
software and technology development costs 9
— Income from operations 113 419 Interest and other
income 1 1 Net gain (loss) resulting from foreign exchange
transactions 50 (55 ) Income before
income taxes 164 365 Provision for income taxes (1 )
(40 ) Net income 163 325 Other comprehensive income (loss):
Changes in foreign currency translation adjustment 73
(92 ) Total other comprehensive income (loss)
73 (92 ) Total comprehensive income $ 236
$ 233 Earnings per share attributable to
Zedge, Inc. common stockholders: Basic $ 0.02 $ 0.04
Diluted $ 0.02 $ 0.04 Weighted-average
number of shares used in calculation of earnings per share: Basic
9,261 8,161 Diluted
10,458 8,934
ZEDGE, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited)
Three Months EndedOctober
31,
2016 2015
(in thousands) Operating activities Net income $ 163
$ 325 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 138 160
Deferred income taxes 5 — Stock-based compensation 27 6 Change in
assets and liabilities: Trade accounts receivable (11 ) (330 )
Prepaid expenses and other current assets (264 ) (106 ) Other
assets (2 ) 4 Trade accounts payable and accrued expenses 392 511
Due to IDT Corporation (226 ) (93 ) Deferred revenue (7 )
(4 ) Net cash provided by operating activities 215 473
Investing activities Capitalized software and technology
development costs and purchase of equipment (349 )
(183 ) Net cash used in investing activities (349 ) (183 )
Financing activities Proceeds from exercise of stock options
124 — Net cash provided by financing
activities 124 — Effect of exchange rates on cash and cash
equivalents 15 (27 ) Net increase in cash and
cash equivalents 5 263 Cash and cash equivalents at beginning of
period 5,978 2,170 Cash and cash
equivalents at end of period $ 5,983 $ 2,433
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Zedge, Inc.Jonathan Reichir@zedge.net
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