Zedge, Inc. (NYSE AMERICAN:ZDGE) today announced results for the
first quarter of its fiscal year 2018, the three months ended
October 31, 2017.
First Quarter FY 2018 Operational and
Financial Highlights(Results are for the 1st quarter FY
2018 and are compared to the 1st quarter FY 2017 except where
otherwise noted.)
- MAU (Monthly Active Users) for the last
30 days of the quarter increased 5.7% to 33.4 million from 31.6
million in the comparable period of 2017 with growth across all
regions, globally;
- Total installs at October 31, 2017
increased 25.3% to 288.8 million from 230.5 million;
- Quarterly revenue increased 11.6% to
$2.66 million from $2.38 million;
- Average revenue per MAU derived from
our apps (ARPMAU) increased 9.9% for the quarter to $0.0256 from
$0.0233, the fourth consecutive quarter of improvement;
- Selling, General and Administration
(SG&A) expense increased 69.3% to $2.97 million from $1.76
million, primarily attributable to the one-time costs of $465
thousand incurred in connection with the Freeform acquihire and the
severance of $191 thousand associated with the reduction in
workforce, as well as a $200 thousand SkatteFUNN credit recorded in
Q1 FY 2017 that related to prior periods. Excluding the one-time
costs and adjustments, SG&A increased 18.4% to $2.32 million
from $1.96 million, mainly due to increase in headcount from 59 at
October 31, 2016 to 69 at October 31, 2017;
- Loss from operations during the 1st
quarter of FY 2018 was $833 thousand, compared to income from
operations of $113 thousand. Excluding one-time costs and
adjustments discussed above, loss from operations would have been
$177 thousand compared to an operating loss of $87 thousand;
- Net loss per diluted share of $0.08 in
the 1st quarter of FY 2018 compared to net income per diluted share
of $0.02;
- Beta launch of Zedge Premium, a
marketplace for professional artists that want to promote and
monetize their art within Zedge, on iOS earlier today.
Management Remarks
“Q1 2018 was a strong quarter for Zedge with improvement in key
fundamentals including revenue, user growth and ARPMAU. Earlier
today, we announced the beta launch of Zedge Premium, a marketplace
for professional artists that want to promote and monetize their
creations to our customer base. This beta, currently available on
iOS, opens the door for recruiting artists accustomed to selling
their art. After a successful beta, we will make Zedge Premium
available on Android as well, allowing artists to promote to our 33
million MAU, and assisting us in adding new users and introducing
new monetization layers into the app,” said Tom Arnoy, CEO.
“It is gratifying to return to growth and see that our focus on
the core user experience is working. With both MAU and revenue, two
of our key performance indicators, up on a year-over-year basis
5.7% and 11.6% respectively, we are going to continue investing in
initiatives that improve user experience and expand revenues.
“We are pleased that we were able to launch Zedge Premium on
schedule and our launch partners are excited by the potential of
where we can go with this. Over the coming months, we will iterate
to improve the overall experience, build out both our Android and
iOS offerings and focus on enlisting creators.”
Jonathan Reich, CFO and COO of Zedge, said, “We are encouraged
by the positive momentum of Q1 and will continue focusing on growth
while managing our cost structure with discipline. We are pleased
that loss from operations, after backing out the Freeform acquihire
and restructuring costs, was $177,000 compared to a loss of
$264,000 last quarter.”
Financial Results
by Quarter (in thousands of USD, other than ARPMAU)
Q1 FY '18 Q1 FY '17 Delta
% Change Q1 FY '18 Q4
FY '17 Delta % Change Revenues $
2,659 $ 2,383 $ 276 11.6 % $
2,659 $ 2,547 $ 112 4.4 % Direct Cost Of
Revenue $ 372 $ 367 $ 5 1.4 % $ 372 $ 381 ($9 ) (2.4 %) Total
SG&A $ 2,973 $ 1,756 $ 1,217 69.3 % $ 2,973 $ 2,247 $ 726 32.3
% Depreciation & Amortization $ 157 $ 138 $ 19 13.8 % $ 157 $
156 $ 1 0.6 % Other Operating (Income)/Expense ($9 ) $ 9 ($18 )
(200 %) ($9 ) $ 27 ($36 ) (133.3 %) (Loss) Income From Operations
($833 ) $ 113 ($946 ) (837.2 %) ($833 ) ($264 ) ($569 ) 215.5 % Net
(Loss) Gains From FX & Other ($1 ) $ 52 ($53 ) (101.9 %) ($1 )
$ 60 ($61 ) (101.7 %) (Benefit From) Provision For Income Taxes
($14 ) $ 1 ($15 ) (1,500 %) ($14 ) $ 4 ($18 ) (450 %) Net (Loss)
Income ($820 ) $ 163 ($983 ) (603.1 %) ($820 ) ($208 ) ($612 )
294.2 % Diluted (Loss) Earnings Per Share ($0.08 ) $ 0.02 ($0.1 )
(500 %) ($0.08 ) ($0.02 ) ($0.06 ) 300.0 % Total Current Assets
Less Total Current Liabilities $ 4,243 $ 6,196 ($1,953 ) (31.5 %) $
4,243 $ 5,125 ($882 ) (17.2 %) MAU (Million) 33.4 31.6 1.8 5.7 %
33.4 31.7 1.7 5.4 % Total Installs (Million) 288.8 230.5 58.3 25.3
% 288.8 273.7 15.1 5.5 % ARPMAU $ 0.0256 $
0.0233 $ 0.0024 9.9 % $ 0.0256
$ 0.0255 $ 0.0001 0.4 %
Earnings Announcement and Supplemental
Information
Zedge will host a conference call at 5:00 PM ET today, December
12, beginning with management’s discussion of results, outlook and
strategy 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 5:00 PM Eastern start, ask for the Zedge
earnings conference call, and enter the conference ID: 9414063.
The call will also be webcast through this URL:
https://services.choruscall.com/links/zdge171212C8rjqToL.html
Following the call and continuing through Tuesday, December
19th, a call replay will be available through the Zedge investor
relations website and by dialing 1-877-344-7529 (US toll free), or
1-412-317-0088 (international) and entering the replay access code:
10114492.
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 platform, and global leader in smartphone
personalization, with more than 288 million app installs and 33
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
(Unaudited)
October 31, July 31, 2017
2017 (in thousands, except par value) Assets
Current assets: Cash and cash equivalents $ 4,163 $ 4,580 Trade
accounts receivable, net of allowance for doubtful accounts of $0
at October 31, 2017 and July 31, 2017 1,898 1,712 Prepaid expenses
300 315 Other current assets 272 427
Total current assets 6,633 7,034 Property and equipment, net 3,005
2,678 Goodwill 2,437 2,518 Other assets 296
301 Total assets $ 12,371 $ 12,531
Liabilities and stockholders’ equity Current liabilities:
Trade accounts payable $ 155 $ 33 Accrued expenses 2,173 1,840 Due
to IDT Corporation 63 36 Total current
liabilities 2,391 1,909 Total
liabilities 2,391 1,909 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
and outstanding at October 31, 2017 and July 31, 2017 5 5 Class B
common stock, $.01 par value; authorized shares—40,000; 9,442 and
9,123 shares issued and outstanding at October 31, 2017 and July
31, 2017, respectively 92 91 Additional paid-in capital 21,760
21,446 Accumulated other comprehensive loss (721 ) (584 )
Accumulated deficit (11,156 ) (10,336 ) Total
stockholders’ equity 9,980 10,622 Total
liabilities and stockholders’ equity $ 12,371 $ 12,531
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME
(Unaudited)
Three Months Ended October 31, 2017
2016 (in thousands, except per share data)
Revenues $ 2,659 $ 2,383 Costs and expenses: Direct cost of
revenues (exclusive of amortization of capitalized software and
technology development costs included below) 372 367 Selling,
general and administrative 2,973 1,756 Depreciation and
amortization 157 138 Write-off of capitalized software and
technology development costs - 9 (Loss)
income from operations (842 ) 113 Interest and other income 9 1 Net
(loss) gain resulting from foreign exchange transactions (1
) 50 (Loss) income before income taxes (834 ) 164
Benefit from (provision for) for income taxes 14
(1 ) Net (loss) income (820 ) 163 Other comprehensive (loss)
income: Changes in foreign currency translation adjustment
(137 ) 73 Total other comprehensive (loss) income
(137 ) 73 Total comprehensive (loss) income $
(957 ) $ 236 (Loss) earnings per share attributable to
Zedge, Inc. common stockholders: Basic $ (0.08 ) $ 0.02
Diluted $ (0.08 ) $ 0.02 Weighted-average number of shares
used in calculation of (loss) earnings per share: Basic
9,658 9,261 Diluted 9,658
10,458
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
Three Months Ended October 31, 2017
2016 (in thousands) Operating
activities Net (loss) income $ (820 ) $ 163 Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: Depreciation and amortization 157 138 Deferred income
taxes 1 5 Stock-based compensation 73 27 Stock issued to FreeForm
noteholders 242 - Change in assets and liabilities: Trade accounts
receivable (186 ) (11 ) Prepaid expenses and other current assets
170 (264 ) Other assets 4 (2 ) Trade accounts payable and accrued
expenses 438 392 Due to IDT Corporation 27 (226 ) Deferred revenue
- (7 ) Net cash provided by operating
activities 106 215
Investing activities Capitalized software
and technology development costs and purchase of equipment
(488 ) (349 ) Net cash used in investing activities (488 )
(349 )
Financing activities Proceeds from exercise of stock
options - 124 Net cash provided by
financing activities - 124 Effect of exchange rate changes on cash
and cash equivalents (35 ) 15 Net (decrease)
increase in cash and cash equivalents (417 ) 5 Cash and cash
equivalents at beginning of period 4,580 5,978
Cash and cash equivalents at end of period $ 4,163 $
5,983
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version on businesswire.com: http://www.businesswire.com/news/home/20171212006253/en/
Zedge, Inc.Jonathan Reichir@zedge.net
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