Zedge (ZDGE) 10-Q 17 Mar 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jan. 31, 2017	Mar. 10, 2017
Entity Registrant Name	Zedge, Inc.
Entity Central Index Key	1,667,313
Amendment Flag	false
Current Fiscal Year End Date	--07-31
Document Type	10-Q
Document Period End Date	Jan. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
Entity Filer Category	Smaller Reporting Company
Class A common stock
Entity Common Stock, Shares Outstanding		524,775
Class B common stock
Entity Common Stock, Shares Outstanding		9,119,363

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Current assets:
Cash and cash equivalents	$ 5,604	$ 5,978
Trade accounts receivable, net of allowance for doubtful accounts of $0 at January 31, 2017 and July 31, 2016	1,617	1,668
Prepaid expenses	192	210
Other current assets	326	107
Total current assets	7,739	7,963
Property and equipment, net	2,271	1,843
Goodwill	2,403	2,361
Other assets	262	266
Total assets	12,675	12,433
Current liabilities:
Trade accounts payable	30	36
Accrued expenses	1,824	1,487
Deferred revenue	1	15
Due to IDT Corporation	77	299
Total current liabilities	1,932	1,837
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; authorized shares-2,400; no shares issued
Additional paid-in capital	21,294	21,045
Accumulated other comprehensive loss	(758)	(817)
Accumulated deficit	(9,889)	(9,725)
Total stockholders' equity	10,743	10,596
Total liabilities and stockholders' equity	12,675	12,433
Class A common stock
Stockholders' Equity:
Common stock value	5	5
Class B common stock
Stockholders' Equity:
Common stock value	$ 91	$ 88

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Allowance for doubtful accounts	$ 0	$ 0
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,400	2,400
Preferred stock, shares issued
Class A common stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	2,600	2,600
Common stock, shares issued	525	525
Common stock, shares outstanding	525	525
Class B common stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	40,000	40,000
Common stock, shares issued	9,114	8,819
Common stock, shares outstanding	9,114	8,819

Consolidated Statements of Comp

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Consolidated Statements of Comprehensive Income [Abstract]
Revenues	$ 2,572	$ 3,530	$ 4,955	$ 6,089
Costs and expenses:
Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below)	412	310	780	605
Selling, general and administrative	2,314	1,781	4,070	3,466
Depreciation and amortization	184	156	322	317
Write-off of capitalized software and technology development costs			9
(Loss) income from operations	(338)	1,283	(226)	1,701
Interest and other income	7	1	8	2
Net (loss) gain resulting from foreign exchange transactions	(17)	(106)	33	(161)
(Loss) income before income taxes	(348)	1,178	(185)	1,542
Benefit from (provision for) income taxes	22	(67)	21	(106)
Net (loss) income	(326)	1,111	(164)	1,436
Other comprehensive (loss) income:
Changes in foreign currency translation adjustment	(14)	(68)	59	(159)
Total other comprehensive (loss) income	(14)	(68)	59	(159)
Total comprehensive (loss) income	$ (340)	$ 1,043	$ (105)	$ 1,277
(Loss) earnings per share attributable to Zedge, Inc. common stockholders:
Basic	$ (0.03)	$ 0.14	$ (0.02)	$ 0.18
Diluted	$ (0.03)	$ 0.12	$ (0.02)	$ 0.16
Weighted-average number of shares used in calculation of (loss) earnings per share:
Basic	9,413	8,161	9,337	8,161
Diluted	9,413	8,962	9,337	8,948

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016
Operating activities
Net (loss) income	$ (164)	$ 1,436
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	322	317
Deferred income taxes	5
Stock-based compensation	143	9
Write-off of capitalized software and technology development costs	9
Change in assets and liabilities:
Trade accounts receivable	51	(728)
Prepaid expenses and other current assets	(258)	60
Other assets	(2)	6
Trade accounts payable and accrued expenses	335	333
Due to IDT Corporation	(222)	(5)
Deferred revenue	(14)
Net cash provided by operating activities	205	1,428
Investing activities
Capitalized software and technology development costs and purchase of equipment	(757)	(344)
Net cash used in investing activities	(757)	(344)
Financing activities
Proceeds from exercise of stock options	166
Net cash provided by financing activities	166
Effect of exchange rate changes on cash and cash equivalents	12	(61)
Net (decrease) increase in cash and cash equivalents	(374)	1,023
Cash and cash equivalents at beginning of period	5,978	2,170
Cash and cash equivalents at end of period	$ 5,604	$ 3,193

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jan. 31, 2017
Basis of Presentation [Abstract]
Basis of Presentation	Note 1—Basis of Presentation The accompanying unaudited consolidated financial statements of Zedge, Inc. and its subsidiaries, Zedge Europe AS and Zedge Canada, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2017. The balance sheet at July 31, 2016 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2016, as filed with the U.S. Securities and Exchange Commission (“SEC”). The Company was formerly a majority-owned subsidiary of IDT Corporation (“IDT”). On June 1, 2016, IDT’s interest in the Company was spun-off by IDT to IDT’s stockholders and the Company became an independent public company through a pro rata distribution of the Company’s common stock held by IDT to IDT’s stockholders (the “Spin-Off”). The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal 2017 refers to the fiscal year ending July 31, 2017).

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jan. 31, 2017
Fair Value Measurements [Abstract]
Fair Value Measurements	Note 2—Fair Value Measurements The following tables present the balance of assets and liabilities measured at fair value on a recurring basis: Level 1 (1) Level 2 (2) Level 3 (3) Total (in thousands) January 31, 2017 Assets: Foreign exchange forward contracts $ — $ 44 $ — $ 44 Liabilities: Foreign exchange forward contracts $ — $ — $ — $ — July 31, 2016 Assets: Foreign exchange forward contracts $ — $ 21 $ — $ 21 Liabilities: Foreign exchange forward contracts $ — $ 15 $ — $ 15 (1) – quoted prices in active markets for identical assets or liabilities (2) – observable inputs other than quoted prices in active markets for identical assets and liabilities (3) – no observable pricing inputs in the market Fair Value of Other Financial Instruments The Company’s other financial instruments at January 31, 2017 and July 31, 2016 included trade accounts receivable, trade accounts payable and due to IDT Corporation. The carrying amounts of the trade accounts receivable, trade accounts payable and due to IDT Corporation balances approximated fair value due to their short-term nature. This fair value estimate was classified as Level 2 of the fair value hierarchy.

Derivative Instruments

Derivative Instruments	6 Months Ended
	Jan. 31, 2017
Derivative Instruments [Abstract]
Derivative Instruments	Note 3—Derivative Instruments The primary risk managed by the Company using derivative instruments is foreign exchange risk. Foreign exchange forward contracts are entered into as hedges against unfavorable fluctuations in the U.S. Dollar - NOK exchange rate. Subsequent to the Spin-Off and until November 2016, IDT provided hedging services to the Company pursuant to the Transition Services Agreement (see Note 7). As of November 16, 2016, the Company entered into a Foreign Exchange Agreement with Western Alliance Bank allowing the Company to enter into foreign exchange contracts under its revolving credit facility with the bank (see Note 8). The Company does not apply hedge accounting to these contracts; therefore the changes in fair value are recorded in earnings. By using derivative instruments to mitigate exposures to changes in foreign exchange rates, the Company is exposed to credit risk from the failure of the counterparty to perform under the terms of the contract. The credit or repayment risk is minimized by entering into transactions with high-quality counterparties. The outstanding contracts at January 31, 2017 were as follows: Settlement Date U.S. Dollar Amount NOK Amount February 2017 500,000 4,235,537 March 2017 500,000 4,234,454 April 2017 250,000 2,067,554 May 2017 500,000 4,132,484 June 2017* 500,000 4,179,494 July 2017* 500,000 4,179,038 * Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank. The fair value of outstanding derivative instruments recorded as assets in the accompanying consolidated balance sheets were as follows: Asset Derivatives Balance Sheet Location January 31, 2017 July 31, (in thousands) Derivatives not designated or not qualifying as hedging instruments: Foreign exchange forward contracts Other current assets $ 44 $ 21 The fair value of outstanding derivative instruments recorded as liabilities in the accompanying consolidated balance sheets were as follows: Liability Derivatives Balance Sheet Location January 31, 2017 July 31, 2016 (in thousands) Derivatives not designated or not qualifying as hedging instruments: Foreign exchange forward contracts Accrued expenses $ — $ 15 The effects of derivative instruments on the consolidated statements of comprehensive (loss) income were as follows: Amount of Loss Recognized on Derivatives Three Months Ended January 31, Six Months Ended January 31, Derivatives not designated or not qualifying as hedging instruments Location of Loss Recognized on Derivatives 2017 2016 2017 2016 (in thousands) Foreign exchange forward contracts Net loss (gain) resulting from foreign exchange transactions $ (110 ) $ (123 ) $ (43 ) $ (225 )

Accrued Expenses

Accrued Expenses	6 Months Ended
	Jan. 31, 2017
Accrued Expenses [Abstract]
Accrued Expenses	Note 4—Accrued Expenses Accrued expenses consist of the following: January 31, 2017 July 31, 2016 (in thousands) Accrued vacation $ 601 $ 494 Accrued payroll taxes 274 210 Accrued payroll and bonuses 76 72 Accrued direct cost of revenues 5 111 Accrued advertising 294 242 Accrued income taxes 69 119 Other 505 239 Total accrued expenses $ 1,824 $ 1,487

Equity

Equity	6 Months Ended
	Jan. 31, 2017
Equity [Abstract]
Equity	Note 5—Equity Changes in the components of equity were as follows: Six Months Ended January 31, (in thousands) Balance, July 31, 2016 $ 10,596 Exercise of stock options 109 Stock-based compensation 143 Comprehensive loss: Net loss (164 ) Foreign currency translation adjustments 59 Total comprehensive loss (105 ) Balance, January 31, 2017 $ 10,743 Stock Options In the six months ended January 31, 2017, the Company received proceeds of $109,335 from the exercise of stock options for which the Company issued 277,200 shares of its Class B common stock. In addition, in the six months ended January 31, 2017, the Company received proceeds of $56,840 from the exercise of stock options in fiscal 2016 which was recorded as a receivable as of July 31, 2016. In September 2016, the Compensation Committee of the Company’s Board of Directors approved an equity grant of options to purchase 231,327 shares of the Company’s Class B common stock to its executive officers, a consultant and a non-executive employee. The options vest over a three-year period. Unrecognized compensation expense related to this grant was an aggregate of $681,000 based on the estimated fair value of the options on the grant date. The unrecognized compensation expense is recognized on a straight-line basis over the vesting period.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jan. 31, 2017
Earnings Per Share [Abstract]
Earnings Per Share	Note 6—Earnings Per Share Basic earnings per share is computed by dividing net income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive. The weighted-average number of shares used in the calculation of basic and diluted earnings per share attributable to the Company’s common stockholders consists of the following: Three Months Ended January 31, Six Months Ended January 31, 2017 2016 2017 2016 (in thousands) Basic weighted-average number of shares 9,413 8,161 9,337 8,161 Effect of dilutive securities: Stock options — 801 — 787 Non-vested restricted Class B common stock — — — — Diluted weighted-average number of shares 9,413 8,962 9,337 8,948 The following shares were excluded from the dilutive earnings per share computations because their inclusion would have been anti-dilutive: Three Months Ended January 31, Six Months Ended January 31, 2017 2016 2017 2016 (in thousands) Stock options 1,434 707 1,434 707 Non-vested restricted Class B common stock 53 — 53 — Shares excluded from the calculation of diluted earnings per share 1,487 707 1,487 707 For the three and six months ended January 31, 2017, the diluted earnings per share equals basic earnings per share because the Company had a net loss and the impact of the assumed exercise of stock options and vesting of restricted stock would have been anti-dilutive. For the three and six months ended January 31, 2016, outstanding stock options were excluded from the calculation of diluted earnings per share because the exercise price of the stock option was greater than the average market price of the Company’s stock during the periods.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jan. 31, 2017
Related Party Transactions [Abstract]
Related Party Transactions	Note 7—Related Party Transactions Prior to the Spin-Off, IDT charged the Company for certain transactions and allocated routine expenses based on company specific items covered under a Master Services Agreement. This agreement provided for, among other things: (1) the allocation between the Company and IDT of costs of employee benefits, taxes and other liabilities and obligations; (2) services provided by IDT relating to human resources and employee benefits administration; and (3) finance, accounting, tax, facilities and legal services provided by IDT to the Company. Following the Spin-Off, IDT charges the Company for services it provides pursuant to the Transition Services Agreement. The services provided pursuant to the Transition Services Agreement include human resources, payroll, investor relations, legal, accounting, tax, financial systems, management consulting and foreign exchange risk management. The Transition Services Agreement has a twelve-month term (expiring May 31, 2017) with automatic renewals for additional six month terms unless terminated by either party upon 90 days’ notice prior to the end of the then-current term. IDT’s charges are included in “Selling, general and administrative expense” in the consolidated statements of comprehensive (loss) income. Three Months Ended January 31, Six Months Ended January 31, 2017 2016 2017 2016 (in thousands) Payments by IDT on behalf of the Company $ 161 $ 552 $ 638 $ 865 Cash repayments, net of advances $ (157 ) $ (464 ) $ (860 ) $ (870 )

Revolving Credit Facility

Revolving Credit Facility	6 Months Ended
	Jan. 31, 2017
Revolving Credit Facility [Abstract]
Revolving Credit Facility	Note 8—Revolving Credit Facility As of September 27, 2016, the Company entered into a loan and security agreement with Western Alliance Bank for a revolving credit facility of up to $2.5 million. Advances under this facility may not exceed the lesser of $2.5 million or 80% of the Company’s eligible accounts receivable subject to certain concentration limits. The revolving credit facility is secured by a lien on substantially all of the Company’s assets. The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%. Interest is payable monthly and all outstanding principal and any accrued and unpaid interest is due on the maturity date of September 27, 2018. The Company is required to pay an annual facility fee of $12,500 to Western Alliance Bank. The Company is also required to comply with various affirmative and negative covenants and to maintain certain financial ratios during the term of the revolving credit facility. The covenants include a prohibition on the Company paying any dividend on its capital stock. The Company may terminate this agreement at any time without penalty or premium provided that it pays down any outstanding principal, accrued interest and bank expenses. At January 31, 2017, there were no amounts outstanding under the revolving credit facility and the Company was in compliance with all of the covenants. As of November 16, 2016, the Company entered into a Foreign Exchange Agreement with Western Alliance Bank to allow the Company to enter into foreign exchange contracts not to exceed $5.0 million in the aggregate at any point in time under its revolving credit facility. The available borrowing under the revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%. In December 2016, the applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%. As of January 31, 2017, there was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

Business Segment and Geographic

Business Segment and Geographic Information	6 Months Ended
	Jan. 31, 2017
Business Segment and Geographic Information [Abstract]
Business Segment and Geographic Information	Note 9—Business Segment and Geographic Information The Company provides a content distribution platform, worldwide, centered on self-expression, attracting both creators looking to promote their content and consumers who utilize such content to express their identity, feelings, tastes and interests. The Company’s platform enables consumers to personalize their mobile devices with free, high quality ringtones, wallpapers, home screen app icons and notification sounds. The Company conducts business as one operating segment. There were no revenues from customers located outside of the United States in all periods presented. Net long-lived assets and total assets held outside of the United States, which are located primarily in Norway, were as follows: United States Foreign Total (in thousands) Long-lived assets, net: January 31, 2017 $ 2,146 $ 250 $ 2,396 July 31, 2016 1,719 247 1,966 Total assets: January 31, 2017 $ 7,780 $ 4,895 $ 12,675 July 31, 2016 8,576 3,857 12,433

Legal Proceeding and Tax Matter

Legal Proceeding and Tax Matters	6 Months Ended
	Jan. 31, 2017
Legal Proceeding and Tax Matters [Abstract]
Legal Proceeding and Tax Matters	Note 10—Legal Proceeding and Tax Matters Legal Proceedings In March 2014, Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement. The main ground for the lawsuit was an allegation that the Company avails the plaintiff’s sound recordings through the Company’s platform with full knowledge that the sound recordings have been uploaded and are being communicated to the public without obtaining any license from the plaintiff. The Company believes that the possibility of it bearing material liability on the matter is remote. The Company may from time to time be subject to other legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. Tax Audits In September 2016, the Company was notified that the Zedge Europe AS tax returns for 2012 through 2016 were going to be audited by the tax authorities in Norway. The initial audit meeting took place in October 2016 and the audit is progressing. No significant issues have been identified at this time. Amounts asserted by taxing authorities or the amount ultimately assessed against the Company could be greater than any accrued amount. Accordingly, provisions may be recorded in the future as estimates are revised or underlying matters are settled or resolved. Imposition of assessments as a result of tax audits could have an adverse effect on the Company’s results of operations, cash flows and financial condition. Research and Development Credits As of October 31, 2016, the Company recorded a $0.2 million receivable from Norway’s SkatteFUNN government program designed to stimulate research and development in Norwegian trade and industry, which related to previous periods. At January 31, 2017, the balance was $0.3 million, which was included in “Other current assets” in the consolidated balance sheet.

Recently Issued Accounting Stan

Recently Issued Accounting Standards Not Yet Adopted	6 Months Ended
	Jan. 31, 2017
Recently Issued Accounting Standards Not Yet Adopted [Abstract]
Recently Issued Accounting Standards Not Yet Adopted	Note 11—Recently Issued Accounting Standards Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, 2020. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company will adopt the new standard on August 1, 2017. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and IFRS. The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company is required to adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company is evaluating the impact that the standard will have on its consolidated financial statements and has not yet selected an adoption date or a transition method. The Company cannot reasonably estimate the impact that the adoption of the standard will have on its consolidated financial statements.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jan. 31, 2017
Fair Value Measurements [Abstract]
Summary of balance of assets and liabilities measured at fair value on a recurring basis	Level 1 (1) Level 2 (2) Level 3 (3) Total (in thousands) January 31, 2017 Assets: Foreign exchange forward contracts $ — $ 44 $ — $ 44 Liabilities: Foreign exchange forward contracts $ — $ — $ — $ — July 31, 2016 Assets: Foreign exchange forward contracts $ — $ 21 $ — $ 21 Liabilities: Foreign exchange forward contracts $ — $ 15 $ — $ 15 (1) – quoted prices in active markets for identical assets or liabilities (2) – observable inputs other than quoted prices in active markets for identical assets and liabilities (3) – no observable pricing inputs in the market

Derivative Instruments (Tables)

Derivative Instruments (Tables)	6 Months Ended
	Jan. 31, 2017
Derivative Instruments [Abstract]
Schedule of derivative instruments outstanding contracts	Settlement Date U.S. Dollar Amount NOK Amount February 2017 500,000 4,235,537 March 2017 500,000 4,234,454 April 2017 250,000 2,067,554 May 2017 500,000 4,132,484 June 2017* 500,000 4,179,494 July 2017* 500,000 4,179,038 * Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.
Schedule of derivative assets fair value	Asset Derivatives Balance Sheet Location January 31, 2017 July 31, (in thousands) Derivatives not designated or not qualifying as hedging instruments: Foreign exchange forward contracts Other current assets $ 44 $ 21
Schedule of derivative liability fair value	Liability Derivatives Balance Sheet Location January 31, 2017 July 31, 2016 (in thousands) Derivatives not designated or not qualifying as hedging instruments: Foreign exchange forward contracts Accrued expenses $ — $ 15
Schedule of derivative instruments on consolidated statements of comprehensive (loss) income	Amount of Loss Recognized on Derivatives Three Months Ended January 31, Six Months Ended January 31, Derivatives not designated or not qualifying as hedging instruments Location of Loss Recognized on Derivatives 2017 2016 2017 2016 (in thousands) Foreign exchange forward contracts Net loss (gain) resulting from foreign exchange transactions $ (110 ) $ (123 ) $ (43 ) $ (225 )

Accrued Expenses (Tables)

Accrued Expenses (Tables)	6 Months Ended
	Jan. 31, 2017
Accrued Expenses [Abstract]
Summary of accrued expenses	January 31, 2017 July 31, 2016 (in thousands) Accrued vacation $ 601 $ 494 Accrued payroll taxes 274 210 Accrued payroll and bonuses 76 72 Accrued direct cost of revenues 5 111 Accrued advertising 294 242 Accrued income taxes 69 119 Other 505 239 Total accrued expenses $ 1,824 $ 1,487

Equity (Tables)

Equity (Tables)	6 Months Ended
	Jan. 31, 2017
Equity [Abstract]
Summary of changes in the components of stockholders' equity	Six Months Ended January 31, (in thousands) Balance, July 31, 2016 $ 10,596 Exercise of stock options 109 Stock-based compensation 143 Comprehensive loss: Net loss (164 ) Foreign currency translation adjustments 59 Total comprehensive loss (105 ) Balance, January 31, 2017 $ 10,743

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jan. 31, 2017
Earnings Per Share [Abstract]
Summary of weighted-average number of shares used in the calculation of basic and diluted earnings per share	Three Months Ended January 31, Six Months Ended January 31, 2017 2016 2017 2016 (in thousands) Basic weighted-average number of shares 9,413 8,161 9,337 8,161 Effect of dilutive securities: Stock options — 801 — 787 Non-vested restricted Class B common stock — — — — Diluted weighted-average number of shares 9,413 8,962 9,337 8,948
Shares excluded from the diluted earnings per share computations	Three Months Ended January 31, Six Months Ended January 31, 2017 2016 2017 2016 (in thousands) Stock options 1,434 707 1,434 707 Non-vested restricted Class B common stock 53 — 53 — Shares excluded from the calculation of diluted earnings per share 1,487 707 1,487 707

Related Party Transactions (Tab

Related Party Transactions (Tables)	6 Months Ended
	Jan. 31, 2017
Related Party Transactions [Abstract]
Schedule of related party transactions	Three Months Ended January 31, Six Months Ended January 31, 2017 2016 2017 2016 (in thousands) Payments by IDT on behalf of the Company $ 161 $ 552 $ 638 $ 865 Cash repayments, net of advances $ (157 ) $ (464 ) $ (860 ) $ (870 )

Business Segment and Geograph23

Business Segment and Geographic Information (Tables)	6 Months Ended
	Jan. 31, 2017
Business Segment and Geographic Information [Abstract]
Schedule of net long-lived assets and total assets by geographic areas	United States Foreign Total (in thousands) Long-lived assets, net: January 31, 2017 $ 2,146 $ 250 $ 2,396 July 31, 2016 1,719 247 1,966 Total assets: January 31, 2017 $ 7,780 $ 4,895 $ 12,675 July 31, 2016 8,576 3,857 12,433

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands		Jan. 31, 2017	Jul. 31, 2016
Assets:
Foreign exchange forward contracts		$ 44	$ 21
Liabilities:
Foreign exchange forward contracts			15
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Assets:
Foreign exchange forward contracts	[1]
Liabilities:
Foreign exchange forward contracts	[1]
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Assets:
Foreign exchange forward contracts	[2]	44	21
Liabilities:
Foreign exchange forward contracts	[2]		15
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Assets:
Foreign exchange forward contracts	[3]
Liabilities:
Foreign exchange forward contracts	[3]
[1]	quoted prices in active markets for identical assets or liabilities
[2]	observable inputs other than quoted prices in active markets for identical assets and liabilities
[3]	no observable pricing inputs in the market

Derivative Instruments (Details

Derivative Instruments (Details)	6 Months Ended
	Jan. 31, 2017USD ($)		Jan. 31, 2017NOK
February 2017 [Member]
Derivative [Line Items]
Settlement Date	Feb. 28, 2017		Feb. 28, 2017
Amount	$ 500,000		NOK 4,235,537
March 2017 [Member]
Derivative [Line Items]
Settlement Date	Mar. 31, 2017		Mar. 31, 2017
Amount	$ 500,000		NOK 4,234,454
April 2017 [Member]
Derivative [Line Items]
Settlement Date	Apr. 30, 2017		Apr. 30, 2017
Amount	$ 250,000		NOK 2,067,554
May 2017 [Member]
Derivative [Line Items]
Settlement Date	May 31, 2017		May 31, 2017
Amount	$ 500,000		NOK 4,132,484
June 2017 [Member]
Derivative [Line Items]
Settlement Date	Jun. 30, 2017		Jun. 30, 2017
Amount	$ 500,000	[1]	NOK 4,179,494	[1]
July 2017 [Member]
Derivative [Line Items]
Settlement Date	Jul. 31, 2017		Jul. 31, 2017
Amount	$ 500,000	[1]	NOK 4,179,038	[1]
[1]	Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

Derivative Instruments (Detai26

Derivative Instruments (Details 1) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	$ 44	$ 21

Derivative Instruments (Detai27

Derivative Instruments (Details 2) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts		$ 15

Derivative Instruments (Detai28

Derivative Instruments (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Derivatives not designated or not qualifying as hedging instruments
Foreign exchange forward contracts	$ (110)	$ (123)	$ (43)	$ (225)

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Accrued Expenses [Abstract]
Accrued vacation	$ 601	$ 494
Accrued payroll taxes	274	210
Accrued payroll and bonuses	76	72
Accrued direct cost of revenues	5	111
Accrued advertising	294	242
Accrued income taxes	69	119
Other	505	239
Total accrued expenses	$ 1,824	$ 1,487

Equity (Details)

Equity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Equity [Abstract]
Balance, July 31, 2016			$ 10,596
Exercise of stock options			109
Stock-based compensation			143
Comprehensive loss:
Net loss	$ (326)	$ 1,111	(164)	$ 1,436
Foreign currency translation adjustments	(14)	$ (68)	59	$ (159)
Total comprehensive loss			(105)
Balance, January 31, 2017	$ 10,743		$ 10,743

Equity (Details Textual)

Equity (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	Sep. 30, 2016	Jan. 31, 2017
Equity (Textual)
Exercise of stock options		$ 109,000
Stock Option [Member]
Equity (Textual)
Options to purchase shares of the Company's Class B common stock	231,327
Unrecognized compensation expense	$ 681,000
Vesting period	3 years
Collection of receivable from stockholder for stock option exercise		$ 56,840
Stock Option [Member] | Class B common stock [Member]
Equity (Textual)
Options to purchase shares of the Company's Class B common stock		277,200
Exercise of stock options		$ 109,335

Earnings Per Share (Details)

Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Weighted-average number of shares used in the calculation of basic and diluted earnings per share
Basic weighted-average number of shares	9,413	8,161	9,337	8,161
Effect of dilutive securities:
Stock options		801		787
Non-vested restricted Class B common stock
Diluted weighted-average number of shares	9,413	8,962	9,337	8,948

Earnings Per Share (Details 1)

Earnings Per Share (Details 1) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculation of diluted earnings per share	1,487	707	1,487	707
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculation of diluted earnings per share	1,434	707	1,434	707
Non-vested restricted Class B common stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculation of diluted earnings per share	53		53

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Related Party Transactions [Abstract]
Payments by IDT on behalf of the Company	$ 161	$ 552	$ 638	$ 865
Cash repayments, net of advances	$ (157)	$ (464)	$ (860)	$ (870)

Revolving Credit Facility (Deta

Revolving Credit Facility (Details) - Revolving Credit Facility [Member] - USD ($)	1 Months Ended		6 Months Ended
	Dec. 31, 2016	Sep. 27, 2016	Jan. 31, 2017	Nov. 16, 2016
Revolving Credit Facility (Textual)
Loan and security agreement with Western Alliance Bank for revolving credit facility		$ 2,500,000
Line of credit facility, borrowing capacity, description			Advances under this facility may not exceed the lesser of $2.5 million or 80% of the Company's eligible accounts receivable subject to certain concentration limits.
Interest rate description			The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%.
Line of credit maturity date		Sep. 27, 2018
Line of credit facility annual fee		$ 12,500
Foreign Exchange Agreement [Member]
Revolving Credit Facility (Textual)
Loan and security agreement with Western Alliance Bank for revolving credit facility				$ 5,000,000
Line of credit facility, borrowing capacity, description			The revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%.
Foreign exchange, Description	The applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%.		There was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

Business Segment and Geograph36

Business Segment and Geographic Information (Details) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Business Segment Information [Line Items]
Long-lived assets, net	$ 2,396	$ 1,966
Total assets	12,675	12,433
United States [Member]
Business Segment Information [Line Items]
Long-lived assets, net	2,146	1,719
Total assets	7,780	8,576
Foreign [Member]
Business Segment Information [Line Items]
Long-lived assets, net	250	247
Total assets	$ 4,895	$ 3,857

Legal Proceeding and Tax Matt37

Legal Proceeding and Tax Matters (Details) - USD ($)	Mar. 31, 2014	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2016
Legal Proceeding and Tax Audits (Textual)
Lawsuit description		Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement.
Lawsuit approximate amount	$ 1,595,700
Amounts receivable from Norway's SkatteFUNN government			$ 200,000
Other current assets		326,000		$ 107,000
Norway SkatteFUNN [Member]
Legal Proceeding and Tax Audits (Textual)
Other current assets		$ 300,000