Zedge (ZDGE) Q1 2025 earnings summary

Executive summary

• Revenue grew 1.6% year-over-year to $7.2 million for Q1 FY2025, driven by strong subscription and Zedge Premium growth, but offset by a 32% decline in GuruShots revenue and advertising headwinds.

• Net loss widened to $339,000 from $15,000 in the prior year, primarily due to higher SG&A expenses and lower GuruShots performance.

• Zedge App MAU declined 12.3% year-over-year to 25.0 million, while ARPMAU increased 22.1% to $0.077.

• Emojipedia delivered record revenue, up 33% year-over-year, and launched an AI Emoji Generator.

• GuruShots is undergoing a strategic transformation, with MAP down 25.9% and ARPMAP down 15.4%, but new features and onboarding improvements are showing early positive engagement.

Financial highlights

• Subscription revenue rose 21.1% year-over-year to $1.2 million, with active subscriptions up 7.7% to 698,000.

• Zedge Premium GTV surged 62% year-over-year to $700,000, with gross margin improving to 72% from 48%.

• SG&A expenses increased 24% to $6.8 million, mainly from higher marketing and user acquisition costs.

• Adjusted EBITDA was $0.3 million, down from $1.5 million last year; margin declined to 4.0% from 21.7%.

• Ended quarter with $20.2 million in cash and cash equivalents; cash flow from operations was $1.2 million.

Outlook and guidance

• Management expects Q2 to be seasonally strong, with improvements in advertising, subscriptions, and Zedge Premium.

• Continued investment in user acquisition for Zedge App is planned, provided return on ad spend remains strong.

• Focus remains on maintaining EBITDA positivity, leveraging synergies between Zedge App and GuruShots, and expanding AI-driven features.

• No formal projections provided, but management is comfortable with current growth trends and cash sufficiency for the next twelve months.