Zedge (ZDGE) Q1 2026 earnings summary

Executive summary

• Revenue increased 5.8% year-over-year to $7.6 million, driven by strong Zedge Marketplace and record subscription growth, despite declines at Emojipedia and GuruShots.

• Achieved record 1.1 million active subscriptions, up over 50% year-over-year, with ARPMAU rising 29.2%.

• Net income was $0.8 million, a turnaround from a net loss last year, with operating income rising to $0.9 million due to improved cost management.

• DataSeeds enterprise business showed early traction, with a significant repeat order from an AI sector customer and a robust pipeline of six-figure opportunities.

• Paid first quarterly dividend and repurchased approximately 240,000 shares, with disciplined capital allocation supporting innovation and growth.

Financial highlights

• Total revenue for Q1 was $7.6 million, up 5.8% year-over-year; advertising revenue increased 6% to $5.2 million, and subscription revenue rose 28.6% to $1.5 million.

• Adjusted EBITDA was $1.2 million, up from $0.3 million last year; GAAP net income was $0.8 million, or $0.06 per share.

• Free cash flow was $0.6 million, impacted by restructuring-related tax payments and reinvestment in growth initiatives.

• Ended the quarter with $18.5 million in cash and no debt.

• SG&A expenses fell 13% to $5.9 million, reflecting restructuring savings and a 21% headcount reduction.

Outlook and guidance

• Expect strong cash generation for the remainder of fiscal 2026, supported by a leaner cost structure and multiple growth vectors.

• Management expects Q2 to be seasonally stronger and will invest prudently in high-potential opportunities.

• Ongoing evaluation of mitigation strategies for Emojipedia traffic declines due to Google and AI platform changes.