Zedge (ZDGE) Q3 2024 earnings summary

Executive summary

• Q3 revenue grew 14% year-over-year to $7.7M, driven by strong ad and subscription growth, despite a decline in monthly active users and GuruShots revenue.

• Zedge Marketplace and Zedge+ subscriptions were key growth drivers, with Zedge+ revenue up 35% and ad revenue up 20% year-over-year.

• Net income was $0.1M, a turnaround from a $7.7M net loss last year, which included a large non-cash write-down.

• Strategic investments in marketing, product development, and AI initiatives are expected to support future growth.

• Significant impairment charges impacted nine-month results, mainly related to GuruShots intangible assets.

Financial highlights

• Total Q3 revenue was $7.7M, up 14% year-over-year; YTD revenue reached $22.5M.

• Subscription revenue rose 35% year-over-year; ad revenue up 19.4%; digital goods/services revenue was $0.9M, down 20% year-over-year.

• Zedge Premium's GTV reached a record $590,000, up 45% year-over-year.

• GAAP net income was $0.1M, or $0.01 per share; non-GAAP net income was $0.5M, or $0.03 per share.

• Adjusted EBITDA was $0.9M, down from $1.7M last year; operating margin was –1.7%.

Outlook and guidance

• Focus on building marketing capabilities, expanding influencer and product marketing, and leveraging AI for innovation and cost efficiency.

• New features and a multicurrency game economy are expected to drive 10%-30% revenue growth for GuruShots.

• Continued investment in premium content, user acquisition, and product features across platforms is planned.

• Management expects strong momentum to finish FY24 and enter FY25.

• No dividend payments anticipated until sustainable profitability and cash reserves are achieved.