Zedge (ZDGE) Q3 2026 earnings summary

Executive summary

• Achieved GAAP profitability for the quarter, with net income rising to $0.9 million from $0.2 million, driven by strong subscription growth, improved operating margins, and record ARPMOU, despite a decline in overall monthly active users.

• Total revenue for the quarter increased 3% year-over-year to $8.0 million, supported by subscription growth and new DataSeeds.AI revenue, while advertising and GuruShots revenue declined.

• Subscription revenue grew 32% year-over-year, with active subscriptions up 41% to nearly 1.3 million, marking nine consecutive quarters of growth.

• DataSeeds.AI fulfilled its first six-figure order for a leading technology company, validating its ability to secure larger, complex deals and expanding its enterprise pipeline.

• Tapedeck expanded its music catalog with notable indie labels, enhancing its value proposition for independent artists.

Financial highlights

• GAAP operating income was $1.1 million (vs. $0.2 million last year); GAAP net income was $0.9 million (vs. $0.2 million); non-GAAP net income was $1.0 million; adjusted EBITDA was $1.3 million, up 1% year-over-year.

• Free cash flow increased 55% year-over-year to $1.2 million.

• Deferred revenue reached $6.2 million, up 26% year-over-year.

• Cash and cash equivalents at quarter-end were $19.7 million, with no debt.

• Quarterly dividend increased 25% to $0.02 per share; share repurchase authorization expanded by $2 million, with $2.2 million capacity remaining.

Outlook and guidance

• Priorities for the remainder of fiscal 2026 include strengthening Marketplace monetization, deliberate growth of DataSeeds.AI, disciplined execution on selected opportunities, and advancing the innovation pipeline, with six alpha product launches targeted.

• Management expects cash and cash equivalents and operating cash flow to be sufficient for at least the next twelve months.

• Continued investment in user acquisition for Zedge App is planned, subject to maintaining attractive ROAS.

• GuruShots 2.0 development is underway to revamp the offering and improve growth and monetization.