Zedge (ZDGE) Q2 2025 earnings summary

Executive summary

• Revenue declined 10.2% year-over-year to $7.0 million, mainly due to industry-wide ad headwinds and TikTok's temporary removal from app stores, but TikTok's return is showing positive early results.

• Subscription revenue grew 13.3% year-over-year, with active subscriptions up 22% to 791,000 and Zedge Premium GTV up 27%.

• A major restructuring was announced, reducing the global workforce by 22%, closing the Norway office, and targeting $4 million in annualized cost savings.

• Product innovation continued with the launch of Paint 2.0 and plans to introduce AI audio features, expanding GenAI capabilities.

• Cash and cash equivalents stood at $20.1 million at quarter-end, with working capital of $16.8 million.

Financial highlights

• Total revenue for Q2 was $7.0 million, down 10.2% year-over-year.

• Subscription revenue increased 13.3% year-over-year; active subscribers rose 22%.

• Zedge Premium GTV reached $700,000, up 27% year-over-year.

• GuruShots revenue declined 33% year-over-year but only 4% sequentially.

• GAAP net loss was $1.7 million ($0.12 per share), improved from $9.2 million ($0.66 per share) last year.

• Non-GAAP net loss was $0.2 million ($0.01 per share), compared to non-GAAP net income of $0.5 million ($0.04 per share) last year.

• Adjusted EBITDA was negative $0.1 million, down from positive $1.5 million last year.

• Cash flow from operations was $0.7 million; free cash flow was $0.6 million.

Outlook and guidance

• Restructuring savings of $1 million per quarter are expected to begin in Q3, fully realized in Q3.

• Management expects restructuring benefits and TikTok's ad market rebound to improve results in the second half of fiscal 2025.

• Plans to expand GenAI offerings, including AI audio, in the next couple of quarters.

• GuruShots 2.0 is in ideation, with future investment contingent on board approval and milestone achievement.

• Cash and cash equivalents, plus cash flow from operations, are expected to meet anticipated needs through March 2026.