Zedge (ZDGE) Q3 2025 earnings summary

Executive summary

• Revenue grew 1.3% year-over-year to $7.8M in Q3 FY2025, with net income up 63.7% to $0.2M and adjusted EBITDA up 46% year-over-year.

• Returned to revenue growth despite macroeconomic volatility, TikTok's absence, and tariff-related headwinds.

• Achieved $4M in annualized gross cost savings from restructuring, including a 22% global headcount reduction and Norway operations closure.

• Launched DataSeeds.ai, a B2B content marketplace for AI training datasets, signing its first agreement with a global AI tech company.

• Free cash flow reached $0.8M after $1M in restructuring and retention payments; ended quarter with $20.4M in cash and no debt.

Financial highlights

• Q3 revenue was $7.8M, up 1.3% year-over-year; nine-month revenue was $21.9M, down 2.6% year-over-year.

• Subscription revenue rose 13.4% year-over-year; net active subscribers up 37% to nearly 900,000.

• Deferred revenue reached nearly $5M, up 83% year-over-year and 13% sequentially, with 100% gross margin.

• Zedge Premium revenue more than doubled year-over-year, driven by web expansion and AI image generator usage.

• GuruShots revenue declined 45% year-over-year due to reduced user acquisition spend.

• Cost of revenue was 5.8% of sales, flat year-over-year; SG&A down 6% to $6.3M in Q3.

• GAAP net income was $0.2M (EPS $0.01); non-GAAP net income $0.9M (EPS $0.06).

• Free cash flow was $0.8M, impacted by $1M in restructuring and retention payments.

• Cash and cash equivalents at quarter-end were $20.4M, with no debt.

Outlook and guidance

• Restructuring-related cash payments expected to decline to $600K in Q4 and become immaterial in FY2026.

• Full impact of $4M annualized cost reductions to be visible in FY2026.

• Q4 typically lighter due to seasonality, but focus remains on top-line growth and product innovation.

• GuruShots expected to remain soft, but restructuring and new initiatives provide a stronger foundation.

• DataSeeds.ai launch and new AI features expected to drive B2B revenue and user engagement.