Company Delivers Record Cash Flow from Operations during Fiscal 2020;
NEW YORK, NY / ACCESSWIRE / October 22, 2020 / Zedge, Inc. (NYSE American:ZDGE), a worldwide mobile publishing and content platform provider, today announced results for the fiscal fourth quarter and full fiscal-year 2020 ended July 31, 2020.
"Zedge had a strong fourth quarter and finished the year on a high note with encouraging momentum heading into our new fiscal year," said Jonathan Reich, chief executive officer. "The investments we've made in product development, combined with improved ad optimization, strong paid subscription growth and the cost reductions we implemented this past year helped us generate positive earnings per share in the fourth quarter. Additionally, at the outset of fiscal 2020, we announced that one of our key goals was being cash flow positive in the fiscal fourth quarter, and we surpassed this by generating positive cash flow every quarter during the year."
"Our fourth quarter paid subscriber count continued to grow at an impressive pace and contributed to a 50% year-over-year increase in average revenue per monthly active user, or ARPMAU. We were also encouraged to see the gross transaction value, or GTV, for our Zedge Premium marketplace return to double-digit growth after a temporary pandemic-related slowdown last quarter."
4th Fiscal Quarter Highlights
- Revenue increased 39.2% to $2.7 million versus $2.0 million last year;
- Paid subscription revenue increased 378% to $0.6 million versus $0.1 million last year;
- Paid subscribers increased 277% versus last year and 26.3% from the third quarter;
- More than 40% of annual subscribers renewed their subscriptions;
- Operating income was $0.4 million versus an operating loss of ($0.9) million last year;
- Net income was $0.5 million versus a net loss of ($1.2) million last year;
- Diluted Earnings per share was $0.04 versus a loss per share of ($0.12);
- Monthly active users (MAU) decreased by 5.6% versus last year, but increased by 10.8% from the third quarter;
- Zedge Premium Gross Transaction Value (GTV) increased 13.1% versus last year.
Select Financial Metrics: Fiscal 4th Quarter and Fulll Year 2020 Comparisons
| (in $M except for EPS) | Q420 | Q419 | Change | FY20 | FY19 | Change |
| Total Revenue | $2.7 | $2.0 | 39.2% | $9.5 | $8.8 | 7.4% |
| Advertising Revenue | $2.0 | $1.7 | 16.9% | $7.4 | $7.9 | -6.7% |
| Subscription Revenue | $0.6 | $0.1 | 377.7% | $1.6 | $0.2 | 931.6% |
| Other Revenue | $0.1 | $0.1 | -6.4% | $0.5 | $0.7 | -36.1% |
| Operating Income (loss) | $0.4 | ($0.9) | - | ($0.4) | ($2.9) | 86.0% |
| Net Income (loss) | $0.5 | ($1.2) | - | ($0.6) | ($3.3) | 83.3% |
| Diluted Earnings (loss) Per Share | $0.04 | ($0.12) | $0.16 | ($0.05) | ($0.33) | $0.28 |
| Cash Flow from Operations | $0.5 | ($0.4) | - | $2.1 | $0.1 | - |
| Zedge Premium - Gross Transaction Value (GTV) | $0.19 | $0.17 | 13.1% | $0.73 | $0.49 | 50.0% |
| NM = not measurable/meaningful |
Select Business Metrics: Fiscal 4th Quarter 2020 versus Fiscal 2019 | |||
| (in MM except for ARPMAU and where noted) | Q420 | Q419 | Change |
| Total Installs - Cumulative | 449.8 | 395.9 | 13.6% |
| MAU | 31.9 | 33.8 | -5.6% |
| Well-developed Markets | 9.6 | 11.8 | -18.6% |
| Emerging Markets | 22.3 | 22.0 | 1.4% |
| ARPMAU | $0.028 | $0.019 | 50.2% |
| Paid Subscriptions (in 000s) | 504 | 134 | 277.0% |
Full-year 2020 Highlights
- Revenue increased 7.4% to $9.5 million versus $8.8 million last year;
- Revenue from paid subscriptions, which we launched in January 2019, increased 932% to $1.6 million versus $0.2 million last year;
- Operating loss was ($0.4) million versus ($2.9) million last year;
- Net loss was ($0.6) million versus ($3.3) million last year;
- Loss per share was ($0.05) versus ($0.33) last year;
- Cash flow from operations was positive in all four quarters and for the full year;
- At fiscal year-end, cash and cash equivalents were $5.1 million and long-term debt was $0.2 million;
- Zedge Premium Gross Transaction Value (GTV) increased 50% versus last year.
| Trended Financial Information: Fiscal 2019 and Fiscal 2020 | ||||||||||
| (in $M except for EPS, ARPMAU, Paid Subscriptions) | Q119 | Q219 | Q319 | Q419 | FY19 | Q120 | Q220 | Q320 | Q420 | FY20 |
| Total Revenue | $2.4 | $2.6 | $1.9 | $2.0 | $8.8 | $2.0 | $2.6 | $2.1 | $2.7 | $9.5 |
| Advertising Revenue | $2.2 | $2.4 | $1.7 | $1.7 | $7.9 | $1.7 | $2.3 | $1.5 | $2.0 | $7.4 |
| Subscription Revenue | $0.0 | $0.0 | $0.0 | $0.1 | $0.2 | $0.2 | $0.3 | $0.5 | $0.6 | $1.6 |
| Other Revenue | $0.2 | $0.2 | $0.2 | $0.1 | $0.7 | $0.2 | $0.1 | $0.1 | $0.1 | $0.5 |
| Operating Income (loss) | ($0.6) | ($0.2) | ($1.1) | ($0.9) | ($2.9) | ($0.7) | $0.1 | ($0.1) | $0.4 | ($0.4) |
| Net Income (loss) | ($0.7) | ($0.2) | ($1.2) | ($1.2) | ($3.3) | ($0.8) | $0.1 | ($0.3) | $0.5 | ($0.6) |
| Diluted Earnings (loss) Per Share | ($0.07) | ($0.02) | ($0.12) | ($0.12) | ($0.33) | ($0.08) | $0.01 | ($0.03) | $0.04 | ($0.05) |
| Cash Flow from Operations | $0.9 | ($0.4) | ($0.1) | ($0.4) | $0.1 | $0.4 | $0.6 | $0.7 | $0.5 | $2.1 |
| Zedge Premium - GTV | $0.04 | $0.12 | $0.16 | $0.17 | $0.49 | $0.19 | $0.20 | $0.15 | $0.19 | $0.73 |
| MAU | 34.6 | 36.7 | 34.0 | 33.8 | NM | 29.7 | 34.3 | 28.8 | 31.9 | NM |
| Well-developed Markets | 14.0 | 14.2 | 12.6 | 11.8 | NM | 10.0 | 11.3 | 9.0 | 9.6 | NM |
| Emerging Markets | 20.6 | 22.5 | 21.4 | 22.0 | NM | 19.7 | 23.0 | 19.8 | 22.3 | NM |
| ARPMAU | $0.021 | $0.022 | $0.017 | $0.019 | NM | $0.021 | $0.026 | $0.022 | $0.028 | NM |
| Paid Subscriptions (in 000s) | 0 | 1 | 64 | 134 | NM | 200 | 298 | 399 | 504 | NM |
| NM = not measurable/meaningful | ||||||||||
| Year-over-year Change: Fiscal 2020 versus Fiscal 2019 | |||||
| Q120 | Q220 | Q320 | Q420 | FY20 | |
| Total Revenue | -14.6% | 2.8% | 8.7% | 39.2% | 7.4% |
| Advertising Revenue | -24.2% | -4.8% | -10.2% | 16.9% | -6.7% |
| Subscription Revenue | NM | NM | 1650% | 377.7% | 931.6% |
| Other Revenue | -13.1% | -68.7% | -43.1% | -6.4% | -36.1% |
| Zedge Premium - GTV | 368.3% | 66.9% | -5.7% | 13.1% | 50.0% |
| MAU | -14.2% | -6.5% | -15.3% | -5.7% | NM |
| Well-developed Markets | -28.6% | -20.4% | -28.6% | -18.6% | NM |
| Emerging Markets | -4.4% | 2.2% | -7.5% | 1.4% | NM |
| ARPMAU | 0.0% | 18.2% | 29.4% | 50.2% | NM |
| Paid Subscriptions (in 000s) | - | - | 523.4% | 277.0% | NM |
| NM = not measurable/meaningful | |||||
Fiscal 2021 Commentary
"Our momentum has continued into the first quarter, and we are excited by the opportunity of further diversifying our existing revenue streams in the future," continued Reich, "We expect to introduce new features, products and monetization models to drive continued growth beyond the strength we are seeing in our flagship Zedge app, as well as our Zedge Premium marketplace. As we look to the full-year, we are targeting revenue growth of greater than 20%, continued positive cash flow and profitability on a quarterly and full-year basis."
Earnings Announcement and Supplemental Information
Zedge's earnings release will be filed on Form 8-K and posted on the Zedge investor relations website (https://investor.zedge.net) at approximately 4:10PM Eastern on October 22, 2020.
Zedge's management will host an earnings conference call beginning at 4:30PM Eastern. Management's presentation of the results, outlook and strategy will be followed by Q&A with investors.
To participate in the call, please dial Toll Free: 844-602-0380 or International: 862-298-0970 at least five minutes before the 4:30PM Eastern start and ask for the Zedge earnings conference call.
The call will also be webcast through the following link and will be live through Tuesday, December 22, 2020: https://www.webcaster4.com/Webcast/Page/2205/37697
Following the call and continuing through Thursday, November 05, 2020 a call replay will be available by dialing Toll Free: 877-481-4010 or International: 919-882-2331 and entering the replay access code: 37697
About Zedge
Zedge offers a state-of-the-art digital publishing platform that powers our consumer-facing app availing users with a host of digital content - wallpapers, video wallpapers, ringtones, and stickers. We are evolving by developing new apps run on top of our publishing platform and generally focus on the entertainment vertical. Our creators are amateur and professional artists as well as new and major brands who can easily launch a virtual storefront in Zedge where they can market and sell their content to our user base. Our app has been downloaded 450 million times, has approximately 32 million monthly active users and has consistently been ranked as one of the most popular free apps in Google Play in the US. For more information, visit https://www.zedge.net.
Forward Looking Statements
All statements above that are not purely about historical facts, including, but not limited to, those in which we use the words "believe," "anticipate," "expect," "plan," "intend," "estimate," "target" and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Our filings with the SEC provide detailed information on such statements and risks and should be consulted along with this release. To the extent permitted under applicable law, we assume no obligation to update any forward-looking statements.
Contact:
Hayden IR
Brian Siegel
zdge@haydenir.com
ZEDGE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
| July 31, | 2020 | 2019 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,111 | $ | 1,609 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $0 at July 31, 2020 and 2019 | 1,407 | 1,133 | ||||||
| Prepaid expenses | 123 | 380 | ||||||
| Other current assets | 113 | 103 | ||||||
| Total current assets | 6,754 | 3,225 | ||||||
| Property and equipment, net | 2,584 | 3,396 | ||||||
| Goodwill | 2,196 | 2,266 | ||||||
| Other assets | 471 | 120 | ||||||
| Total assets | $ | 12,005 | $ | 9,007 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 290 | $ | 217 | ||||
| Insurance premium loan payable | - | 141 | ||||||
| Accrued expenses and other current liabilities | 1,210 | 1,172 | ||||||
| Deferred revenues | 1,338 | 517 | ||||||
| Total current liabilities | 2,838 | 2,047 | ||||||
| Loans Payable | 218 | - | ||||||
| Other liabilities | 64 | - | ||||||
| Total liabilities | 3,120 | 2,047 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.01 par value; authorized shares-2,400; no shares issued | - | - | ||||||
| Class A common stock, $.01 par value; authorized shares-2,600; 525 shares issued and outstanding at July 31, 2020 and 2019 | 5 | 5 | ||||||
| Class B common stock, $.01 par value; authorized shares-40,000; 11,789 shares issued and 11,749 shares outstanding at July 31, 2020, and 9,876 shares issued and 9,854 ouststanding at July 31, 2019 | 118 | 99 | ||||||
| Additional paid-in capital | 25,725 | 23,131 | ||||||
| Accumulated other comprehensive loss | (1,085 | ) | (985 | ) | ||||
| Accumulated deficit | (15,802 | ) | (15,243 | ) | ||||
| Treasury stock, 40 shares at July 31, 2020 and 22 shares at July 31, 2019, at cost | (76 | ) | (47 | ) | ||||
| Total stockholders' equity | 8,885 | 6,960 | ||||||
| Total liabilities and stockholders' equity | $ | 12,005 | $ | 9,007 | ||||
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share data)
| Year ended July 31, | 2020 | 2019 | ||||||
| Revenues | $ | 9,470 | $ | 8,816 | ||||
| Costs and expenses: | ||||||||
| Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below) | 1,195 | 1,379 | ||||||
| Selling, general and administrative | 7,110 | 8,897 | ||||||
| Depreciation and amortization | 1,568 | 1,427 | ||||||
| Loss from operations | (403 | ) | (2,887 | ) | ||||
| Interest and other income (expense), net | 11 | (199 | ) | |||||
| Net loss resulting from foreign exchange transactions | (152 | ) | (242 | ) | ||||
| Loss before income taxes | (544 | ) | (3,328 | ) | ||||
| Provision for income taxes | 15 | 16 | ||||||
| Net loss | (559 | ) | (3,344 | ) | ||||
| Other comprehensive loss: | ||||||||
| Changes in foreign currency translation adjustment | (100 | ) | (283 | ) | ||||
| Total other comprehensive loss | (100 | ) | (283 | ) | ||||
| Total comprehensive loss | $ | (659 | ) | $ | (3,627 | ) | ||
| Loss per share attributable to Zedge, Inc. common stockholders: | ||||||||
| Basic and diluted | $ | (0.05 | ) | $ | (0.33 | ) | ||
| Weighted-average number of shares used in calculation of loss per share: | ||||||||
| Basic and diluted | 11,086 | 10,083 | ||||||
ZEDGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year ended July 31, | 2020 | 2019 | ||||||
| Operating activities | ||||||||
| Net loss | $ | (559 | ) | $ | (3,344 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 1,568 | 1,427 | ||||||
| Impairment of investment in privately-held company | - | 250 | ||||||
| Loss on disposal of furniture and fixtures | - | 3 | ||||||
| Stock-based compensation | 492 | 619 | ||||||
| Change in assets and liabilities: | ||||||||
| Trade accounts receivable | (274 | ) | 644 | |||||
| Prepaid expenses and other current assets | 247 | 277 | ||||||
| Other assets | (55 | ) | 5 | |||||
| Trade accounts payable and accrued expenses | (118 | ) | (311 | ) | ||||
| Deferred revenue | 821 | 506 | ||||||
| Net cash provided by operating activities | 2,122 | 76 | ||||||
| Investing activities | ||||||||
| Capitalized software and technology development costs and purchase of equipment | (759 | ) | (1,490 | ) | ||||
| Investment in privately-held company | - | (250 | ) | |||||
| Net cash used in investing activities | (759 | ) | (1,740 | ) | ||||
| Financing activities | ||||||||
| Proceeds from sales of Class B Common Stock | 2,250 | - | ||||||
| Payment of issuance costs | (141 | ) | - | |||||
| Proceeds from PPP loan payable | 218 | - | ||||||
| Repayment of insurance premium loan payable | (141 | ) | - | |||||
| Proceeds from exercise of stock options | 12 | 5 | ||||||
| Purchase of treasury stock in connection with restricted stock vesting | (29 | ) | (47 | ) | ||||
| Net cash provided by (used in) financing activities | 2,169 | (42 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | (30 | ) | (93 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 3,502 | (1,799 | ) | |||||
| Cash and cash equivalents at beginning of year | 1,609 | 3,408 | ||||||
| Cash and cash equivalents at end of year | $ | 5,111 | $ | 1,609 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash payments made for income taxes | $ | 1 | $ | 1 | ||||
| Cash payments made for interest expenses | $ | 3 | $ | - | ||||
| SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Note payable issued for insurance premium financing | $ | - | $ | 141 | ||||
SOURCE: Zedge, Inc.
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