Zedge, Inc. (NYSE MKT:ZDGE) today announced results for the
third quarter of its fiscal year 2017, the three months ended April
30, 2017.
Third Quarter FY 2017 Operational and
Financial Highlights(Results are for the 3rd quarter FY
2017 and are compared to the 3rd quarter FY 2016 except where
otherwise noted.)
- MAU (Monthly Active Users) for the last
30 days of the quarter increased 0.3% to 31.7 million, and
decreased 5.1% compared to Q2 FY2017;
- Total installs were 260.4 million at
April 30, 2017, an increase of 28.5% compared to April 30,
2016;
- Revenue decreased 1.7% to 2.5
million;
- Average revenue per MAU derived from
our apps (ARPMAU) increased year-over-year for the second
consecutive quarter, rising 0.8% to $0.0249 and increasing 5.1%
sequentially;
- Loss from operations was $193 thousand
compared to income from operations of $243 thousand;
- Net loss per diluted share of $0.02
compared to diluted EPS of $0.04;
- Working capital – current assets less
current liabilities - increased to $5.3 million at April 30, 2017
from $3.9 million at April 30, 2016.
Management Remarks
“Zedge is focused on expanding MAU and revenue, especially
across well developed markets where we can command more attractive
advertising rates. In particular, we are committed to ensuring that
our users find fresh, high quality content that matches their needs
and expectations,” said Tom Arnoy, Zedge’s Co-founder and CEO.
“We have streamlined operations in order to shorten the time it
takes to complete projects that will impact user growth while
deprioritizing projects that do not immediately align with this
goal. Specifically, we have been reworking ‘Search’ which currently
generates close to 100 million queries monthly and expect that the
makeover will provide a more powerful content discovery tool. In
addition, we are changing the way we display content in order to
drive inspiration and promote engagement.
“We are excited to announce that earlier today we launched a
public beta of an entirely new content publishing platform that
makes it easy and rewarding for creators to contribute their art
directly from their mobile devices as well as from their desktops.
This new platform should significantly improve the variety,
timeliness and relevancy of the content available to our users.
“In the iOS universe, we continue to make progress after being
removed from the iTunes store in early 2016. We recently launched a
‘Premium Ringtones & Marimba Remixes’ iTunes app, and we are
building out our content catalogue and scaling our user base.
Furthermore ‘Zedge Wallpapers’ on iOS is now benefitting from
content focused updates that have significantly improved the app’s
ratings.
“In summarizing the quarter I would highlight our doubling down
on projects that we expect to put us back on a growth trajectory
especially across higher value geographies, and executing with
excellence on a highly focused set of user and content-centric
initiatives.”
Jonathan Reich, CFO and COO of Zedge, added, “If we are
successful in executing on our growth initiatives, we expect to
realize a disproportionate benefit from improving ARPMAU. The third
quarter’s 5.1% sequential increase in app ARPMAU, which we achieved
despite it being a seasonally slow period, reflects how attractive
our user base is to advertisers. We continue mining ways to unlock
value including the introduction of new ad units and offering the
ability to purchase premium ringtones. We will also test several
new monetization layers in the months to come which will likely add
incremental revenue to our existing monetization stack. Our
strategic focus on content will drive long term, sustainable user
growth and increased customer value.”
Financial Results
by Quarter (in thousands of USD)
Change
Q3 FY2017
Q2 FY2017 Q3 FY2016
3Q16 to 3Q17
Revenues $2,530 $2,572
$2,573 (1.7%) Direct cost
of revenue $406 $412
$327 +24.2 % SG&A
$2,151 $2,314
$1,781 +16.3% Depreciation &
amortization $166 $184
$153 +8.2% (Loss) income
from operations $(193)
$(338) $243 $(436) Net
(loss) gain from FX and other $(46)
$(10) $128
$(175) Provision for (benefit from) income taxes
- $(22) $45
$(45) Net (loss) income $(239)
$(327) $326
$(565) Diluted (loss) earnings per share
$(0.02) $(0.03)
$0.04 $(0.06) Total current assets less total
current liabilities $5,298
$5,808 $3,895
+36.0%
Earnings Conference Call
Zedge’s management will host an earnings conference call today
beginning at 5:00 PM Eastern. 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 5:00 PM Eastern start, ask for the Zedge
earnings conference call, and enter the conference ID: 4571853.
Following the call and continuing through June 20, 2017, a
replay will be available through the Zedge investor relations
website and by calling 1-877-344-7529 (US toll free) or
1-412-317-0088 (international) and entering the Replay Access Code:
10108387.
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 260 million app installs and 31
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
April 30,
July 31,
2017
2016
(Unaudited) (Note 1) (in thousands)
Assets Current assets: Cash and cash equivalents $ 5,082 $
5,978 Trade accounts receivable, net of allowance for doubtful
accounts of $0 at April 30, 2017 and July 31, 2016 1,790 1,668
Prepaid expenses 131 210 Other current assets 313
107 Total current assets 7,316 7,963 Property and
equipment, net 2,586 1,843 Goodwill 2,325 2,361 Other assets
260 266 Total assets $ 12,487 $ 12,433
Liabilities and stockholders’ equity Current
liabilities: Trade accounts payable $ 45 $ 36 Accrued expenses
1,916 1,487 Deferred revenue 1 15 Due to IDT Corporation 56
299 Total current liabilities 2,018
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 and outstanding
at April 30, 2017 and July 31, 2016 5 5 Class B common stock, $.01
par value; authorized shares—40,000; 9,123 and 8,819 shares issued
and outstanding at April 30, 2017 and July 31, 2016, respectively
91 88 Additional paid-in capital 21,380 21,045 Accumulated other
comprehensive loss (879 ) (817 ) Accumulated deficit (10,128
) (9,725 ) Total stockholders’ equity 10,469
10,596 Total liabilities and stockholders’ equity $
12,487 $ 12,433
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME
(Unaudited)
Three Months Ended
Nine Months Ended
April 30,
April 30,
2017 2016 2017 2016
(in thousands, except per share data) Revenues $ 2,530 $
2,573 $ 7,485 $ 8,661 Costs and expenses: Direct cost of revenues
(exclusive of amortization of capitalized software and technology
development costs included below) 406 327 1,186 932 Selling,
general and administrative 2,151 1,850 6,222 5,316 Depreciation and
amortization 166 153 487 470 Write-off of capitalized software and
technology development costs — —
9 — (Loss) income from operations (193 ) 243
(419 ) 1,943 Interest and other income (loss) 6 (1 ) 14 2 Net
(loss) gain resulting from foreign exchange transactions (52
) 130 (19 ) (31 ) (Loss) income before
income taxes (239 ) 372 (424 ) 1,914 (Provision for) benefit from
income taxes — (46 ) 21
(152 ) Net (loss) income (239 ) 326 (403 ) 1,762 Other
comprehensive (loss) income: Changes in foreign currency
translation adjustment (121 ) 266 (62 )
107 Total other comprehensive (loss) income
(121 ) 266 (62 ) 107 Total
comprehensive (loss) income $ (360 ) $ 592 $ (465 ) $ 1,869
(Loss) earnings per share attributable to Zedge, Inc.
common stockholders: Basic $ (0.02 ) $ 0.04 $ (0.04 ) $ 0.22
Diluted $ (0.02 ) $ 0.04 $ (0.04 ) $ 0.20
Weighted-average number of shares used in calculation of
(loss) earnings per share: Basic 9,595 8,199
9,423 8,174 Diluted 9,595
9,186 9,423 9,027
See accompanying notes to consolidated
financial statements.
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
Nine Months Ended
April 30,
2017 2016 (in thousands) Operating
activities Net (loss) income $ (403 ) $ 1,762 Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: Depreciation and amortization 487 470 Deferred income
taxes 4 — Stock-based compensation 209 10 Write-off of capitalized
software and technology development costs 9 — Change in assets and
liabilities: Trade accounts receivable (122 ) (158 ) Prepaid
expenses and other current assets (184 ) 6 Other assets 2 (13 )
Trade accounts payable and accrued expenses 442 305 Due to IDT
Corporation (243 ) 89 Deferred revenue (14 ) (1 ) Net
cash provided by operating activities 187 2,470
Investing
activities Capitalized software and technology development
costs and purchase of equipment (1,240 ) (680 ) Net
cash used in investing activities (1,240 ) (680 )
Financing
activities Proceeds from exercise of stock options 167
9 Net cash provided by financing activities
167 9 Effect of exchange rate changes on cash and cash equivalents
(10 ) 7 Net (decrease) increase in cash and
cash equivalents (896 ) 1,806 Cash and cash equivalents at
beginning of period 5,978 2,170 Cash
and cash equivalents at end of period $ 5,082 $ 3,976
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Zedge, Inc.Jonathan Reichir@zedge.net
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