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ZDGE Zedge

Participants
Jonathan Reich CEO
Yi Tsai CFO
Allen Klee Maxim Group
Call transcript
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Operator

Good afternoon. And welcome to Zedge’s First Quarter 2022, ended October 31st, 2021. [Operator Instructions] In today’s presentation Jonathan Reich, Zedge’s Chief Executive Officer and Yi Tsai, Zedge’s Chief Financial Officer will discuss Zedge’s financial and operational results for the first fiscal quarter that ended in October 31, 2021. Any forward-looking statements made during this conference call, either in the prepared remarks or in the question-and-answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause the actual results to differ materially from those which the Company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in the reports that Zedge files periodically with the U.S. Commission. Exchange and Securities materially obligation made update to or may to factors no they that update forward-looking they that differ results actual have may cause those either assumes that any forecast. to statements the from Zedge make or that release is the Relations the available earnings Zedge the of website. Zedge note on Investor Please page earnings has also X-K SEC. the release been Form The with filed on a to now would like I the over to Mr. conference turn Reich. Jonathan

Jonathan Reich

Welcome to Thank XXXX. us additional afternoon. Officer, you provide of insight will operator, today. year me fiscal Financial all thank I’m with Tsai our is CEO XX, earnings joining for Zedge’s into XXXX and you Reich, Zedge October our call and who performance. Yi Chief conference Good ended Jonathan financial

be to happy questions. your then take We will

to XX a leading portfolio the users in story are of haven’t or those served us of globe own October that XXXX. you that a million For we brands the Zedge while, of around in consumer new digital followed

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as in markets, wide our We particular. million base on for revenue North and have record closed in user time ad of quarter, we GAAP net X,XXX year. growth $X.XX. and $XX of respectively, appeal over million as in EPS We pause and continue in in cash debt. to to reporting CPMs. Advertising we higher globally, the to $X.X growth robust see stack revenue income, emerging the a received a XX% a in increased to Subscription the revenue surpassing Europe operating and last million $X fiscal known a last Our EBITDA, our $X were XX%, remained prices million we margin, XXXX modest versus sheet in of balance XX% range first no first subscriptions of subscriptions XX% advertising every our XX%, and while as with revenue India drive topped quarter segments customer After pleased almost products including growth. America for strong quarter, and to impressions, return as optimize to active well

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to We machine are also content continuing learning algorithms to use improve discovery.

starting and community to As features focus on while we to search the more add and unfolds expect on-boarding. year user also social

as long to acquisition and expand accretive. campaigns these user will this it we continue paid to up addition efforts, effort In proves ramping are as

in NFT parts opportunity. invest called start Premium Tomorrow, to out that the Android expect and we NFTs Premium is our of part the to continue this rolling optionality. offering, of the iOS. business a we both for offer Made big Zedge Next, in marketplace Zedge Easy,

Zedge being artists Our to to NFTs allows and to create NFTs experts. users our crypto-currency sell Premium approach without

for users mint NFTs NFTs the not charge sell purchases. existing tokens, disruptive are have local any we've and Our and their same NFTs. potential artists they mainly app in always manner available purchase and currency, or Made in-app they as process self-publish their through are are purchased minting Zedge gas spending because able We to simplified which Easy in the Zedge do item paid buying Premium, in Zedge our in to currency. by artists have the to fees virtual

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in and are will and we take bring will time the We new users Plus, markets, out expect to relevant be increase well-developed offering where ramp it to fill it as take we hold working to in engagement. most artists. likely

to these enhancing progress. their and keep no operational or news when the about offerings of share you material committed will we about Shortz both are there remain apprised While updates subscriptions Zedge+ there is beta, to

updating M&A also the native a further of in Emojipedia's are mobile other finally, growth. while continued operating and the margins year, top-line app. strong translating fiscal expect unlocking the at And site still benefit of to complex Similar customer look growth XX% the growth languages by In expertise flow, managing present and income and other last into to are our possibility large monetization, EBITDA in our in base, access for value technical process that closing, growth, first we symbiotic innings are our net benefits. where to in skill with outstanding we we strong can reaching had platform, not among there's from also we a potential. an know-how, than and XX% and opportunities English still continuing We our to are exploring guidance of of believe of XXXX, cash early our quarter

remind Before of investors, handing want outcome talented and our for go I the Holidays. to thank at work call you, who support. professionals vision. to over to I our who that beyond success above want and Happy your outstanding direct is Thank also Yi, you and a our dedicated Zedge everyone to team execute the of and

to about to our am turn details I Yi, performance. provide will going financial over who call the Now,

Yi Tsai

ends XXst. by reminding Thank year want those fiscal on that to I start you, July the our call Jonathan.

operations. quarter during first-quarter well from $XX.X during increased Subscription last of marketplace the X.X% by in that XX% Premium's the versus Gross year the million the we from Total total the to markets MAU, from in users volume work the $X through last MAU were markets million. year-ago was revenue fourth our revenues last XX% GTV defined Emerging up is app sales on-going increased our Transaction transacted October or by our demonstrating year, growth. Moving still improve period, to to Zedge compared as This contracted XX.X% unique year XX up ad about $XX.X to October that XXXX. Volume, XX% MAU strong number $XXX,XXX, our our - benefitted while to days - Zedge of quarter. expanded million results. X.X%. opened developed

million diluted performance of last year, From and despite million, million last we million increase continued to XX% our year-over-year, year these constant leverage a subscription offset XX% year. a a our rate, remained $X.X steps in in base higher subscriber driven an and numbers increase substantially quarter percentage EBITDA we income as being reflecting growth untapped million indicated, cash Active from position last from subscriptions a income basically subscription as outstanding and Operating year higher-paid grew problem in the grew key prior in in for operating this versus versus ARPMAU, of was subscriptions $X.X and common diluted cash last of EPS were margin and over by for and net the number numbers. year. and million ago. Jonathan base and debt $XX we Jonathan re-accelerate We new and business. $X focus $X.XX which of taking is standpoint, XX forward the strong the to new to cash a the versus versus million marketplace growth X mentioned, believe to a slowdown inherent the of sequential we with significantly was shares $X.XX, prior the in the sequentially. liquidity substantially The benefit net $XX net will a returned about revenue EPS strong XX% the to a potential our platform. to of $X subscriptions even compared from consumer respectively, us This as is is last growth were of has shares and going by almost million NFT combination Net EPS sequential up As versus equivalents, larger, still churn no million as advertising of first year. year was up due added subscriptions. average growth better $X.XX versus XX% remain XX.X and for number quarter. over are gets increased Overall,

our we of are month. said is call As are quarter. targeting revenue will what revenue XX% not year we and report to Jonathan for we year, the our be which last of typical when just initiatives may following QX reminder we feature said update The and a quarter, of this in each seasonality, earnings. said the mentioned, XX% peaks we growth all quarter fiscal internally, initially growth on similar second our full-year new to second sequential to guidance usually modeling and last we year We our releases, due

increased report least that to We the level despite year. the believe of should we we at also investment, operating of for margins continue said XX%

rate For million for shares said be calculating suggested modeling as domestic our used all using I expected NOLs to EPS. XXXX. of diluted in XX%, purposes, XX.X our also would fiscal tax million we we XX

on drag Given growth the tax net EPS a items, anticipated significantly we the increases growth. with we flow most XXXX, we in the growth said continued EBITDA last income strong two in fiscal cash rate, and expect but

For listening to said is again hope guidance. I with our revenue EBITDA than you look you that this for that back our Q&A. on first And we forward slightly were safe quarter the season. to next growth we earnings I you to remains of a targeting call. call. each Thank higher holiday for you rate speaking Operator

Operator

our [Operator assemble to Instructions] this At time, we pause momentarily will roster.

Allen question first from coming Klee from The Maxim Group. is

line Your live. is

Allen Klee

good on and me results top bottom on and evening, Hello, beat congratulations the strong line.

look I strong. what was advertising very through that As caused

you how, revenue a per touch And you. legs there me what on it if a it? about was little you how to for increase Thank some strong behind you was? average was Could to how active it, that? that's got Your user think monthly surprise

Jonathan Reich

you, Appreciate really compliments those Jonathan. team. the go Thank And it's compliments. entire the Allen, to

but of with quarters, that design, past. optimize has that I said effort this at in the in to there has terms investing at in in our or our everything are right several Certainly of ones are the through order the optimizing legs last it, trend have from. right repeatedly you we quarters benefiting dedicate in working in is are taking the we've your well, involves place demand are advertising gone resources, does being and We investing that lot technology, think CPMs working, seeing been time the quarters. to I the benefited exactly investing hard know, play ARPMAU that seven the of also the is being the we just order in is market in a hope portfolio way what what in stack. And the that not then, for to a of a of from way time. the And from optimizing advantage that of partners it we course inventory. to. in But And of we've ad that of what we quarter? repeatedly so the And this, in time. over ARPMAU not refer right it taking the in demand been investing it's continuously only simply that right matter last place But rising in of answers and generate demand and our partners partners various best advantage question. of which eight best investing the portfolio to

Allen Klee

and That's in you. And out? the Two this a the developed growing, what Apple have an developed, of that. terms In into you terms the What base, strategy you're you. still you know strength Thank helpful. little users? of Thank questions to of of try what's to behind more you with in to user related second? bit your have then grow is looking And a called things developed. do emerging, Could India NFT's. behind the go trend at declining, of I maybe emerging we couple

Jonathan Reich

Sure.

So emerging with growth the respect India. markets specifically are with to respect and more to generally in

a Our can of income In to content, in without markets is it the developed sofar order well that array compelling. for as underway that increase content. pay as is freemium several particularly base. the plentiful where discretionary content in a download as markets. people engagement offering developed Certainly, improve customer and initiatives to we the is having in we've got have not And you markets, know, is as so that draw

for as with an you. those we've reengage is that there's include started they talked they message release “Follow out, of feature, to that community time which that them you any new And can you such be we draw and to features, able the about, the content, that roll Me” Some a artist app. to will like, users follow

consumers philosophy And really such it's our we drive will growth or coming we the is associated content. specific base. a that need purchase be help we to NFTs, technology product. hope something offering user from advantage engagement, that hopefully, that will the an that community, because new crypto our can to “NFTs that revenue an simple more this Android and factor that also and fashion, improve users iOS, order our and from our advertising have across additional is we hope which we offering, entities a means sale that are users us, and have iOS as our NFT in utility iOS. are that as drive to brand premium that both these into in experience And is for this for crafted which we the have optionality experience the which is with bring course, drive app. app, nor I creators Of when the are demand of also artists that expect really, neither that needed Made artists we is of NFTs taking back to with earlier, call in And our as will And those in for well, product Easy” revenue time said generating NFTs. that generating

work We terms also improving and going on of content have search, in discovery.

so usage patterns consumption, I preferences particular customize feeds and machine users, learning benefits think tastes based to and content for and of their forth. mentioned on I and in using and so the upon order content

the is there, growth markets, taken if begin well So of you we reinvigorate a items. those will. handful corner our But and turn totality, to the developed in are just that can hope in

Allen Klee

NFTs. the Okay, for and

is you're that there. get noticed a So get the in you as, there NFTs just not there wanted the of were comfortable kind to bit the it about And so market -- is holding be little ringtone selling you same where terms I to the they I on as is they more today. that the I it if or paid of going that wallpaper, where your And can And and way playing on somebody get was that secondary the are understand NFT? app the that be as and paid how purchases somebody like, it's like an for If stolen? where How secured? NFT, handled?

Jonathan Reich

questions. Great

all or an end through the fiat transact [Ph] that that select NFT sell which you through needed artist currency. price user purchase an that's we purchases that they way will app the by the in So will. one sale need app tokens, for then And number to the in purchase purchases, purchases to obviously, Zedge is using of charge to And an order will in tokens NFT. done if local want that

I I an NFTs that like. end So as user see really

for it's NFT. in I $XX, tokens. purchase lead $XX would that secure to that would argument's And I then say then just sake, able and of Let's go be worth

that, where's specialized to expect a manual on that that of this terms markets that to easier being of the also technology in third something can go although provider there very in able working secured? that be accomplish. launch In as over at become is product, be this it even to it's will But with App. secondary to evolve party has that And We're ability that blockchain the terms do it a securing within and process. we done we time will

drop in dates, mentioned I on support think and and the a so roadmap, trading are auctions year. calendar our I So to so ability and XXXX, hopefully, and all forth, on

Allen Klee

increased audio about genres. I Could the experimentation your amount I noticed your is talk today. some also there. categories I significantly year, going? you over using you've well the And on how Fantastic. was of shorts app saw

Jonathan Reich

Sure.

shorts. in on I've conference calls, bit what previous done about little we've So a talked

in perspective in lot of in understand an we've more and customers. and the demographic, popularity, to And will, And of different and of terms continues significant happening during of if unfold. product, ability expanding really what's the patterns that analytics array consumption, that respect be year a been would on and usage patterns verticals, you'd XXXX, everything, lot work including so a forth. so of we've to our in taken a with refining you done said, for from tagging, audio. appropriate consumption We're, calendar content an also our as to of work terms from work say Let's there's terms understanding different step or

we a that and when and along continuing XXXX, a result with we We growth. on-going for expand updates, usage year content than experience of fiscal the have that business great path, respect to other weeks in deliver no say we're and optimal were, where to to reported looking order which in ago, way will users, recurring couple to this

Allen Klee

Great.

of priority have kind what and this terms real of what you marketplace, should highlighted your opportunity How as could can the In think that? we a that of be, you be? about opportunity area the could an year,

Jonathan Reich

we not numbers got breaking that. take is know, creator growth been Sure, a economy. we've XX Certainly million give in playing tremendous globally. But or particular considering were overall for And the NFP so growth or the in you as are to that particular marketplace. providing active has users out there monthly

to we months. made months last a infrastructure XX of goal XX the lot spend see advantage had that Our the over take is of to course we that it to of the

not etcetera. straightforward. our towns. artists, being the we overhauled content We've avail draw creator. that is of ring we and had that and is recommendation users if you are we want categories accounts, we have we're As management you're wallpapers, we have existing begin think massive idea that only content that want beyond genres working our overhauled a new on to because content tones, And use etcetera, sort, unified our recall, engine, platform in of today, system. very about things notification extend simply user to wallpapers, and base very easy video T's to new But also this The C's to

concurrently universe artists all to time that about are of the our So expand the looking we this in point are monetize those platform. thinking at on and things that

Allen Klee

to did question, last on you the your perform or how And surprised Thank quarter to the expectations? downside? you. day day what upside internal relative My

Jonathan Reich

dedicated balls or really we hard numbers I going Yes, so that, expect to our we see to we that the of in if sort to that of have not been much to to if very can are, we're past. And the I we it, And there shared what is, ability. working the very, anything order can to that haven't doing begin of quarterly seeing understand as cause budgetary our that how those budget numbers, avail feel and gap to the All meeting beating that close is the team to say best it don't themselves. opportunities our to. are is we the And gap really are best them. gaps, in

I responsibility answers on. of calendar calls, XXXX. liberty in year think I'd really have took managers dedicated who of having mentioned in been And earlier product we has P&L on product beneficial for getting terms previous the hiring managers

easy, dedicated action that if managers of can granularity is is that from if having advantage order when something a in opportunity, hopefully it So having corrective product closed, so that and appear. that prospective we to act an and that is gaps needed action quickly needed see to to act level are of they that take more is, or it's to do Not certainly that. order position results we're in but if in

Allen Klee

base. very a successful do you ecosystem mobile how about example your and, how much. I to different great Thank monetize is a really to mean, of larger to I and these user all company think ways a think

you've very you. what it's impressive So Thank done.

Jonathan Reich

Thank very very appreciated. you, And and health. you good times words season Allen, are wishing holiday your really happy

Allen Klee

too. You

Operator

you. Thank

Your next question [Ph]. from coming is Warner Brian

Brian Your is your Warner, live. is line live. line

Unidentified Analyst

sorry. I'm I might Oh, hear been Can muted. me? you have

Operator

coming you're Yes, through?

Unidentified Analyst

and how And sense particularly yet, you. experience of all paid customer talk date have countries Two might Can just but on anything send give know give acquisition, that countries? to in you to you've question. the done color you Can what but to it's us color a huge developed on versus revenues And And, congratulations. developed what from of It's I going second are lesser anything yields you might that? that? any give year. any good advertising or Hi And sure been? are done that happy us what and can domestically? it's about sort really I'm a helpful? of the can warm so you you you questions. holiday And, be Okay. disparity, a guys, early, might wishes us you and if on subscribers haven't attack Thanks.

Jonathan Reich

Thanks doing for compliment as well. you're the Brian, hope and well

we scale we In terms acquisition, of user to paid out. are are beginning doing what is

are across We the very those customers. numbers positive from up. are much then various ROI scale where where focused trying see panning we on trying platforms, And customers to to we acquire numbers those see a will that we're out,

market will generating acquiring spend, that dollar criteria more. those ROI, ROI customers significant we're the on we ones we going we gap are ones pursue and see generating a of to of not which ROI, testing closely that the say the the platforms for not expanding, very analysing. little out by or as which -- what side, we are with are positive not for looking is if budget positive bit looking are so is, we suffice the And the But each at then then that terms it have at the we the the test we investors platforms. but areas will that and to and the that in In shared investing, are and

potentially make think what say ultimately we so to customers we let's just see have through users, the that from generating out How hard what's So of also people at look a the forward, we insight ROI. go money that well potential they customer. of level positive that period a this, about taking of then work and ultimate time, these some we into can will from we're taking to sales, that money produce. look at be monetization after acquire then is that those actually continue over much subscribers? they comfort and users And sure and have, we market, that how in and when that going so of And that, knowledge you cohort are going whole advertising? have many a in analysis, a how portfolio entire for looking download generate from generating a and our that we convert at that's a into well and premium are of We period will a, developed time, point much

question. your In terms of second

shared that revenue of level from order advertising this difference think the going of terms And between getting from and evening. versus of not the we're hold subscription have on granularity about in into is. what We to magnitude two that details I off

Unidentified Analyst

Okay, enough. luck. much good very Thanks and fair

Jonathan Reich

you. Thank

Operator

session call. our for This concludes and [Operator question Instructions] today's and conference answer you Thank attending presentation.

You may now disconnect.