NEW YORK, NY and TRONDHEIM, NORWAY / ACCESSWIRE / June 13, 2018 / Zedge, Inc. (NYSE American: ZDGE) today announced results for the third quarter of its fiscal year 2018, the three months ended April 30, 2018.
Third Quarter FY 2018 Operational and Financial Highlights
(Results are for the 3rd quarter FY 2018 and are compared to the 3rd quarter FY 2017 except where otherwise noted.)
- MAU (Monthly Active Users) for the last 30 days of the quarter increased 7.9% to 34.2 million from 31.7 million in the comparable period of 2017 driven primarily by strong growth in the emerging markets but down 3.7% from January 2018 with the majority of the decline attributable to the well-developed markets;
- Total installs at April 30, 2018 increased 23.5% to 321.5 million from 260.4 million;
- Quarterly revenue increased 0.8% to $2.55 million from $2.53 million;
- Average revenue per MAU derived from our apps (ARPMAU) declined 10.8% for the quarter to $0.0222 from $0.0249 in Q2, the first sequential decline in seven quarters;
- Selling, General, and Administration (SG&A) expense increased 2.0% to $2.20 million from $2.15 million, primarily attributable to the costs associated with the continuing development of Zedge Premium partially offset by the costs savings from the workforce reduction initiative implemented at the end of Q1 of fiscal 2018;
- Loss from operations during the quarter was $339 thousand, compared to a loss of $193 thousand, after accounting for depreciation and amortization of $317 thousand and $166 thousand, respectively;
- Zedge Premium, our marketplace offering, has been live for both iOS and Android users since April 2018. The overall KPIs are encouraging and we are highly focused on scaling this offering;
- Zedge is seeking to open a development center in Lithuania in order to accelerate development of Zedge Premium;
- For the nine months ended April 30, 2018, cash flow from operating activities was a positive $784 thousand an improvement of $597 thousand compared to the same period last year;
- Net loss per share of $0.03 compared to net loss per share of $0.02;
- Zedge has made the necessary changes to comply with the EU's General Data Protection Regulation (the "GDPR").
Management Remarks
"Q3 2018 was a mixed bag for us. On the upside, Zedge Premium, our marketplace for digital content, shows early promising potential. Even without aggressive promotion or deep product integration, usage and conversion rates are outpacing our expectations," said Tom Arnoy, CEO. "We are heavily focused on scaling Zedge Premium, initially by building a robust self-serve platform which will enable far broader artist participation, expanding the number of content verticals that we support, and increasing the number of ways in which artists can market and monetize their content. Separately, we are happy to announce that Nicki Minaj, a multi-platinum artist, is now using Zedge Premium to promote her new music and upcoming world tour."
"At the same time, MAU was negatively impacted by both seasonal factors and the overall lack of growth in new smartphones sales. Although MAU grew by 2.5 million, or 7.9%, when compared to the same period last year, it fell by 3.7% sequentially, with the decline in well-developed markets reaching 6.2% sequentially. On a year over year basis, MAU in well-developed countries fell by 7.6% while growing by 24.5% in emerging markets, which now constitute 55.8% of our user base. This geographic shift coupled with lower advertising rates in emerging markets when compared to well-developed markets resulted in a decline in revenue."
Jonathan Reich, CFO and COO of Zedge, said, "Although not a stellar quarter when viewed from a financial perspective, there were some positives, including cashflow from operating activities of $784 thousand for the nine months ended April 30, 2018, an improvement of $597 thousand compared to the same period last year as well as better timing related to prepaid expenses. Additionally, cash plus receivables minus payables was basically flat quarter-over-quarter. With GDPR compliance behind us we will continue working on lowering our infrastructure costs by migrating more functionality to higher quality, lower cost, cloud-based services. Additionally, we are in the midst of opening a development center in Lithuania, to help accelerate the ongoing delivery of Zedge Premium, at a lower cost, when compared to Norway or the US. We are excited by the possibilities of Zedge Premium and aspire to serve as the premier marketplace for personalized digital goods in the mobile ecosystem."
Financial Results by Quarter (in thousands of USD, other than Loss per Share and ARPMAU)
| Q | Q | % | Q | Q | % | |||||||||||||||||||||||||||
FY '18 | FY '17 | DELTA | Change | FY '18 | FY '18 | DELTA | Change | |||||||||||||||||||||||||
Revenue | $ | 2,551 | $ | 2,530 | $ | 21 | 0.8 | % | $ | 2,551 | $ | 3,045 | $ | (494 | ) | -16.2 | % | |||||||||||||||
Direct Cost of Revenue | $ | 378 | $ | 406 | $ | (28 | ) | -6.9 | % | $ | 378 | $ | 356 | $ | 22 | 6.2 | % | |||||||||||||||
Total SG&A | $ | 2,195 | $ | 2,151 | $ | 44 | 2.0 | % | $ | 2,195 | $ | 2,586 | $ | (391 | ) | -15.1 | % | |||||||||||||||
Depreciation & Amortization | $ | 317 | $ | 166 | $ | 151 | 91.0 | % | $ | 317 | $ | 225 | $ | 92 | 40.9 | % | ||||||||||||||||
Loss from Operations | $ | (339 | ) | $ | (193 | ) | $ | (146 | ) | 75.6 | % | $ | (339 | ) | $ | (122 | ) | $ | (217 | ) | 177.9 | % | ||||||||||
Net Gain/(Loss) from FX & Other | $ | 33 | $ | (46 | ) | $ | 79 | -171.7 | % | $ | 33 | $ | (39 | ) | $ | 72 | -184.6 | % | ||||||||||||||
Provision for income taxes | $ | 3 | $ | 0 | $ | 3 | nm | $ | 3 | $ | 12 | $ | (9 | ) | -75.0 | % | ||||||||||||||||
Net Loss | $ | (309 | ) | $ | (239 | ) | $ | (70 | ) | 29.3 | % | $ | (309 | ) | $ | (173 | ) | $ | (136 | ) | 78.6 | % | ||||||||||
Loss Per Share | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.01 | ) | 50.0 | % | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.01 | ) | 50.0 | % | ||||||||||
Total Current Assets Less Total Current Liabilities | $ | 4,101 | $ | 5,298 | $ | (1,197 | ) | -22.6 | % | $ | 4,101 | $ | 4,353 | $ | (252 | ) | -5.8 | % | ||||||||||||||
MAU (Million) | 34.2 | 31.7 | 2.5 | 7.9 | % | 34.2 | 35.5 | (1.3 | ) | -3.7 | % | |||||||||||||||||||||
Total Installs (Million) | 321.5 | 260.4 | 61.1 | 23.5 | % | 321.5 | 306.2 | 15.3 | 5.0 | % | ||||||||||||||||||||||
ARPMAU | $ | 0.0222 | $ | 0.0249 | $ | (0.0027 | ) | -10.8 | % | $ | 0.0222 | $ | 0.0273 | $ | (0.0051 | ) | -18.7 | % | ||||||||||||||
Earnings Announcement and Supplemental Information
Zedge will host a conference call at 5:00 PM Eastern, June 13, 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 5:00 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/33439 (through 9/13/18)
Starting approximately two hours after the call and continuing through June 27th, 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: 33439.
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 320 million app installs and over 34 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.
Contact:
Jonathan Reich
[email protected]
ZEDGE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| April 30, | July 31, | |||||||
| 2018 | 2017 | |||||||
(in thousands, except par value) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,272 | $ | 4,580 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $0 at April 30, 2018 and July 31, 2017 | 1,680 | 1,712 | ||||||
Prepaid expenses | 236 | 315 | ||||||
Other current assets | 314 | 427 | ||||||
Total current assets | 6,502 | 7,034 | ||||||
Property and equipment, net | 3,272 | 2,678 | ||||||
Goodwill | 2,491 | 2,518 | ||||||
Other assets | 293 | 301 | ||||||
Total assets | $ | 12,558 | $ | 12,531 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 285 | $ | 33 | ||||
Accrued expenses | 2,113 | 1,840 | ||||||
Due to IDT Corporation | 3 | 36 | ||||||
Total current liabilities | 2,401 | 1,909 | ||||||
Total liabilities | 2,401 | 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 April 30, 2018 and July 31, 2017 | 5 | 5 | ||||||
Class B common stock, $.01 par value; authorized shares - 40,000; 9,736 and 9,123 shares issued and outstanding at April 30, 2018 and July 31, 2017, respectively | 97 | 91 | ||||||
Additional paid-in capital | 22,327 | 21,446 | ||||||
Accumulated other comprehensive loss | (634 | ) | (584 | ) | ||||
Accumulated deficit | (11,638 | ) | (10,336 | ) | ||||
Total stockholders' equity | 10,157 | 10,622 | ||||||
Total liabilities and stockholders' equity | $ | 12,558 | $ | 12,531 | ||||
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per share data) | (in thousands, except per share data) | |||||||||||||||
Revenues | $ | 2,551 | $ | 2,530 | $ | 8,255 | $ | 7,485 | ||||||||
Costs and expenses: | ||||||||||||||||
Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below) | 378 | 406 | 1,106 | 1,186 | ||||||||||||
Selling, general and administrative | 2,195 | 2,151 | 7,753 | 6,222 | ||||||||||||
Depreciation and amortization | 317 | 166 | 699 | 487 | ||||||||||||
Write-off of capitalized software and technology development costs | - | - | - | 9 | ||||||||||||
Loss from operations | (339 | ) | (193 | ) | (1,303 | ) | (419 | ) | ||||||||
Interest and other income | 7 | 6 | 21 | 14 | ||||||||||||
Net gain (loss) resulting from foreign exchange transactions | 26 | (52 | ) | (19 | ) | (19 | ) | |||||||||
Loss before income taxes | (306 | ) | (239 | ) | (1,301 | ) | (424 | ) | ||||||||
Provision for (benefit from) income taxes | 3 | - | 1 | (21 | ) | |||||||||||
Net loss | (309 | ) | (239 | ) | (1,302 | ) | (403 | ) | ||||||||
Other comprehensive loss: | ||||||||||||||||
Changes in foreign currency translation adjustment | (152 | ) | (121 | ) | (50 | ) | (62 | ) | ||||||||
Total other comprehensive loss | (152 | ) | (121 | ) | (50 | ) | (62 | ) | ||||||||
Total comprehensive loss | $ | (461 | ) | $ | (360 | ) | $ | (1,352 | ) | $ | (465 | ) | ||||
Loss per share attributable to Zedge, Inc. common stockholders: | ||||||||||||||||
Basic and diluted | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.13 | ) | $ | (0.04 | ) | ||||
Weighted-average number of shares used in calculation of loss per share: | ||||||||||||||||
Basic and diluted | 9,867 | 9,595 | 9,757 | 9,423 | ||||||||||||
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended | ||||||||
April 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Operating activities | ||||||||
Net loss | $ | (1,302 | ) | $ | (403 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 699 | 487 | ||||||
Deferred income taxes | 7 | 4 | ||||||
Stock-based compensation | 429 | 209 | ||||||
Write-off of capitalized software and technology development costs | - | 9 | ||||||
Stock issued to FreeForm noteholders | 242 | - | ||||||
Change in assets and liabilities: | ||||||||
Trade accounts receivable | 33 | (122 | ) | |||||
Prepaid expenses and other current assets | 192 | (184 | ) | |||||
Other assets | 1 | 2 | ||||||
Trade accounts payable and accrued expenses | 516 | 442 | ||||||
Due to IDT Corporation | (33 | ) | (243 | ) | ||||
Deferred revenue | - | (14 | ) | |||||
Net cash provided by operating activities | 784 | 187 | ||||||
Investing activities | ||||||||
Capitalized software and technology development costs and purchase of equipment | (1,295 | ) | (1,240 | ) | ||||
Net cash used in investing activities | (1,295 | ) | (1,240 | ) | ||||
Financing activities | ||||||||
Proceeds from exercise of stock options | 216 | 167 | ||||||
Net cash provided by financing activities | 216 | 167 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (13 | ) | (10 | ) | ||||
Net decrease in cash and cash equivalents | (308 | ) | (896 | ) | ||||
Cash and cash equivalents at beginning of period | 4,580 | 5,978 | ||||||
Cash and cash equivalents at end of period | $ | 4,272 | $ | 5,082 | ||||
SOURCE: Zedge, Inc.