Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2019 | Oct. 25, 2019 | Jan. 31, 2019 | |
Entity Registrant Name | Zedge, Inc. | ||
Entity Central Index Key | 0001667313 | ||
Entity File Number | 1-37782 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --07-31 | ||
Document Type | 10-K | ||
Document Period End Date | Jul. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Interactive Data Current | Yes | ||
Entity Public Float | $ 12,800 | ||
Entity Incorporation State Country Code | DE | ||
Class A common stock | |||
Entity Common Stock, Shares Outstanding | 524,775 | ||
Class B common stock | |||
Entity Common Stock, Shares Outstanding | 9,876,189 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,609 | $ 3,408 |
Trade accounts receivable, net of allowance for doubtful accounts of $0 at July 31, 2019 and 2018 | 1,133 | 1,777 |
Prepaid expenses | 380 | 316 |
Other current assets | 103 | 316 |
Total current assets | 3,225 | 5,817 |
Property and equipment, net | 3,396 | 3,344 |
Goodwill | 2,266 | 2,447 |
Other assets | 120 | 125 |
Total assets | 9,007 | 11,733 |
Current liabilities: | ||
Trade accounts payable | 217 | 280 |
Insurance premium loan payable | 141 | |
Accrued expenses | 1,172 | 1,432 |
Deferred revenues | 517 | 11 |
Total current liabilities | 2,047 | 1,723 |
Total liabilities | 2,047 | 1,723 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value; authorized shares-2,400; no shares issued | ||
Additional paid-in capital | 23,131 | 22,508 |
Accumulated other comprehensive loss | (985) | (702) |
Accumulated deficit | (15,243) | (11,899) |
Treasury stock, 22 shares at July 31, 2019 and 0 shares at July 31, 2018, at cost | (47) | |
Total stockholders' equity | 6,960 | 10,010 |
Total liabilities and stockholders' equity | 9,007 | 11,733 |
Class A common stock | ||
Stockholders' equity: | ||
Common stock value | 5 | 5 |
Total stockholders' equity | 5 | 5 |
Class B common stock | ||
Stockholders' equity: | ||
Common stock value | 99 | 98 |
Total stockholders' equity | $ 99 | $ 98 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
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 | ||
Treasury stock, shares | 22 | 0 |
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 | 9,876 | 9,786 |
Common stock, shares outstanding | 9,876 | 9,786 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 8,816 | $ 10,833 |
Costs and expenses: | ||
Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below) | 1,379 | 1,518 |
Selling, general and administrative | 8,897 | 9,581 |
Depreciation and amortization | 1,427 | 1,033 |
Loss from operations | (2,887) | (1,299) |
Interest and other income (expense), net | (199) | 29 |
Net loss resulting from foreign exchange transactions | (242) | (63) |
Loss before income taxes | (3,328) | (1,333) |
Provision for income taxes | 16 | 230 |
Net loss | (3,344) | (1,563) |
Other comprehensive loss: | ||
Changes in foreign currency translation adjustment | (283) | (118) |
Total other comprehensive loss | (283) | (118) |
Total comprehensive loss | $ (3,627) | $ (1,681) |
Loss per share attributable to Zedge, Inc. common stockholders: | ||
Basic and diluted | $ (0.33) | $ (0.16) |
Weighted-average number of shares used in calculation of loss per share: | ||
Basic and diluted | 10,083 | 9,803 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Class A Common Stock | Class B Common Stock | Additional Paid- in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock | Total |
Balance at Jul. 31, 2017 | $ 5 | $ 91 | $ 21,446 | $ (584) | $ (10,336) | $ 10,622 | |
Balance, shares at Jul. 31, 2017 | 525 | 9,123 | |||||
Exercise of stock options | $ 2 | 230 | 232 | ||||
Exercise of stock options, shares | 172 | ||||||
Stock-based compensation | $ 4 | 558 | 562 | ||||
Stock-based compensation, shares | 353 | ||||||
Stock issued for matching contributions to the 401(k) Plan | 33 | 33 | |||||
Stock issued for matching contributions to the 401(k) Plan, shares | 11 | ||||||
Stock issued to FreeForm noteholders | $ 1 | 241 | 242 | ||||
Stock issued to FreeForm noteholders, shares | 127 | ||||||
Foreign currency translation adjustment | (118) | (118) | |||||
Net loss | (1,563) | (1,563) | |||||
Balance at Jul. 31, 2018 | $ 5 | $ 98 | 22,508 | (702) | (11,899) | 10,010 | |
Balance, shares at Jul. 31, 2018 | 525 | 9,786 | |||||
Exercise of stock options | 5 | 5 | |||||
Exercise of stock options, shares | 41 | ||||||
Stock-based compensation | $ 1 | 570 | 571 | ||||
Stock-based compensation, shares | 30 | ||||||
Stock issued for matching contributions to the 401(k) Plan | 48 | 48 | |||||
Stock issued for matching contributions to the 401(k) Plan, shares | 19 | ||||||
Purchase of treasury stock | $ (47) | (47) | |||||
Foreign currency translation adjustment | (283) | (283) | |||||
Net loss | (3,344) | (3,344) | |||||
Balance at Jul. 31, 2019 | $ 5 | $ 99 | $ 23,131 | $ (985) | $ (15,243) | $ (47) | $ 6,960 |
Balance, shares at Jul. 31, 2019 | 525 | 9,876 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Operating activities | ||
Net loss | $ (3,344) | $ (1,563) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,427 | 1,033 |
Impairment of investment in privately-held company | 250 | |
Loss on disposal of furniture and fixtures | 3 | |
Deferred income taxes | 172 | |
Stock-based compensation | 619 | 595 |
Stock issued to FreeForm noteholders | 242 | |
Change in assets and liabilities: | ||
Trade accounts receivable | 644 | (65) |
Prepaid expenses and other current assets | 277 | 108 |
Other assets | 5 | 5 |
Trade accounts payable and accrued expenses | (311) | (171) |
Due to IDT Corporation | (35) | |
Deferred revenue | 506 | 11 |
Net cash provided by operating activities | 76 | 332 |
Investing activities | ||
Capitalized software and technology development costs and purchase of equipment | (1,490) | (1,702) |
Investment in privately-held company | (250) | |
Net cash used in investing activities | (1,740) | (1,702) |
Financing activities | ||
Proceeds from exercise of stock options | 5 | 232 |
Purchase of treasury stock in connection with restricted stock vesting | (47) | |
Net cash provided by (used in) financing activities | (42) | 232 |
Effect of exchange rate changes on cash and cash equivalents | (93) | (34) |
Net decrease in cash and cash equivalents | (1,799) | (1,172) |
Cash and cash equivalents at beginning of year | 3,408 | 4,580 |
Cash and cash equivalents at end of year | 1,609 | 3,408 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash payments made for income taxes | 1 | 31 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Note payable issued for insurance premium financing | $ 141 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Jul. 31, 2019 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Note 1—Description of Business and Summary of Significant Accounting Policies Description of Business Zedge, Inc. (the “Company”) offers a state-of-the-art digital publishing platform. The Company use this platform to power its consumer-facing mobile personalization app, called Zedge, available in the Google Play store and iTunes, which offers an easy, entertaining and immersive way for end-users to engage with its rich and diverse catalogue of wallpapers, stickers, ringtones, notification sounds and video wallpapers. The Company is evolving by developing new, entertainment-focused apps, that will run on its publishing platform. The Company secures its content from artists, both amateurs and professionals as well as emerging and major brands. Artists have the ability to easily launch a virtual storefront in the Zedge app where they can market and sell their content to the Company’s user base. Zedge app has been installed more than 396 million times, boasts more than 33 million monthly active users, or MAU, and has consistently averaged in the ‘Top 60’ most popular free apps in the Google Play store in the United States. The Company conducts business as a single operating segment. 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 2019 refers to the fiscal year ended July 31, 2019). The Spin-Off 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”). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications Certain items in the prior years’ Consolidated Financial Statements have been reclassified to conform to the current year presentation reflected in the Consolidated Financial Statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Revenue Recognition The following accounting policy relates to revenue transactions for fiscal 2018, which were accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” See Note 2 for a description of the policy for fiscal 2019. The Company generates approximately 90% of its revenues from selling its advertising inventory to advertising networks, advertising exchanges, and direct arrangements with advertisers. Advertising networks and advertising exchanges are third party technology platforms that facilitate the buying and selling of media advertising inventory from multiple ad networks. The price of advertising inventory is fixed on an advertising network whereas the price for inventory is determined through bidding on an advertising exchange. The Company recognizes advertising revenue as advertisements are delivered to users through impressions, ad views or app installs (depending on the terms agreed upon with the advertiser), as long as evidence of the arrangement with the payer exists (generally through an executed contract), the price is fixed and determinable, and the Company has assessed collectability as reasonably assured. The advertiser may compensate the Company on a cost-per-impression, cost-per-click, cost-per-action or cost-per-install basis. The Company also generated revenue from managing and optimizing the advertising inventory of a third-party mobile application publisher, as well as overseeing the billing, collections and reporting related to advertising for this publisher. The agreement with the publisher was terminated effective May 31, 2019. In March 2018, the Company launched Zedge Premium, a marketplace where professional creators and brands can market, distribute and sell their digital content to our consumers. In January 2019, we started offering a subscription model by which users can remove unsolicited advertisements from our Zedge app by paying a fee on a monthly or yearly basis. We recognize subscription revenue on a daily ratable basis over the subscription period. The Company generally reports its advertising revenue net of amounts due to agencies and brokers because the Company is not the primary obligor in the relevant arrangements, it does not finalize the pricing, and it does not establish or maintain a direct relationship with the advertiser. Certain advertising arrangements that are directly between the Company and advertisers are recognized gross equal to the price paid to the Company by the customer since the Company is the primary obligor and the Company determines the price. Any third-party costs related to such direct relationships are recognized as direct cost of revenues. In Zedge Premium, the Company generally report revenue net of the 70% share that is paid to the artists who own the licensed content. The Company reports subscription revenue gross of the fee retained by Google Play, as the subscriber is Zedge’s customer in the contract and Zedge controls the service prior to the transfer to the subscriber. The Company recognizes revenue based on reports that it receives from the ad networks and ad exchanges who respectively track and report the installs and impressions and pay the Company based on these reports. Independently the Company compares and reconciles these reports with data from each of the client sites and dispute any differences. Depending on the nature of the advertising agreement the Company records revenue either when it serves an end-user with a paid advertising impression or when a user installs an app from an advertiser who pays for the install. Being that the advertiser simultaneously receives and consumes the benefits provided by Zedge’s performance it views this as its output measure. Payment from the Company’s customers are typically received anywhere between 30-60 days from the end-of-month billing cycle, and any revenue adjustments are already factored into the payment. Concentration of Credit Risk and Significant Customers Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Company holds cash and cash equivalents at several major financial institutions, which may exceed FDIC insured limits. Historically, the Company has not experienced any losses due to such concentration of credit risk. The Company’s temporary cash investments policy is to limit the dollar amount of investments with any one financial institution and monitor the credit ratings of those institutions. While the Company may be exposed to credit losses due to the nonperformance of the holders of its deposits, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition. The Company routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced significant write-downs in its accounts receivable balances. In the year ended July 31, 2019, three customers represented 28%, 28% and 10% of the Company’s revenue, and in the year ended July 31,2018, three customers represented 35%, 22% and 14% of the Company’s revenue. At July 31, 2019, three customers represented 32%, 17% and 17% of the Company’s accounts receivable balance and at July 31, 2018, three customers represented 46%, 28% and 14% of the Company’s accounts receivable balance. All of these significant customers are advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers. Direct Cost of Revenues Direct cost of revenues for the Company consists of fees paid to third parties that provide the Company with internet hosting, content serving and filtering, and marketing automation services. Such costs are charged to expense as incurred. Long-Lived Assets Property and equipment is recorded at cost and depreciated on a straight-line basis over its estimated useful lives, which range as follows: capitalized software and technology development costs—3 years; and other—3, 5, 7, 10 or 20 years. Other is comprised of furniture and fixtures, office equipment, video conference equipment, computer hardware and computer software. The Company tests the recoverability of its long-lived assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such asset. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such asset using an appropriate discount rate. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairments in future periods and such impairments could be material. Capitalized Software and Technology Development Costs The Company accounts for capitalized software and technology development costs in accordance with FASB ASC 350-40. These costs consist of internal development costs on various projects that the Company invested in specific to the various platforms on which the Company operates its service that are capitalized during the application development stage. Capitalized software and technology development costs are included in property and equipment, net and are amortized over the estimated useful life of the software, generally three years. All ordinary maintenance costs are expensed as incurred. Goodwill Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of the business acquired. Under ASC 350, Intangibles-Goodwill and Other The Company performs its annual, or interim, goodwill impairment test by comparing the fair value of its reporting unit with its carrying amount. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the Company considers income tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss, if applicable. The Company’s estimated fair value substantially exceeded its carrying value in Step 1 of the Company’s annual impairment tests as of May 1st for the years ended July 31, 2019 and 2018. The Company concluded that no goodwill impairment existed in the years ended July 31, 2019 and 2018. The Company uses the market approach (guideline company method) for its Step 1 analysis. Investment in Privately Held Company The Company’s investments in privately held company is a non-marketable equity security without readily determinable fair value. On August 1, 2018, the Company adopted a new accounting standard (see Recently Adopted Accounting Standards below) and adjusts the carrying value of its non-marketable equity securities to fair value upon observable transactions for identical or similar investments of the same issuer or upon impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in interest and other income (expense), net in the consolidated statements of comprehensive loss. The Company periodically evaluates the carrying value of the investment in a privately held company, when events and circumstances indicate that the carrying amount of the investment may not be recovered. The Company estimates the fair value of the investments to assess whether impairment losses shall be recorded using Level 3 inputs. These investments include the Company’s holdings in privately held company that are not exchange traded and therefore not supported with observable market prices; hence, the Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the private companies, the amount of cash that the privately held company have on-hand, the ability to obtain additional financing and overall market conditions in which the private companies operate or based on the price observed from the most recent completed financing. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Income Taxes The accompanying financial statements include provisions for federal, state and foreign income taxes. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in its assessment of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change. The Company uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. The Company classifies interest and penalties on income taxes as a component of income tax expense. Contingencies The Company accrues for loss contingencies when both (a) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements and (b) the amount of loss can reasonably be estimated. When the Company accrues for loss contingencies and the reasonable estimate of the loss is within a range, the Company records its best estimate within the range. When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company discloses an estimated possible loss or a range of loss when it is at least reasonably possible that a loss may have been incurred. 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: Year ended July 31, 2019 2018 Basic weighted-average number of shares 10,083 9,803 Effect of dilutive securities: Stock options — — Non-vested restricted Class B common stock — — Diluted weighted-average number of shares 10,083 9,803 The following shares were excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive: Year ended July 31, 2019 2018 Stock options 1,231 1,314 Non-vested restricted Class B common stock 195 302 Shares excluded from the calculation of diluted earnings per share 1,426 1,616 For both fiscal 2019 and fiscal 2018, 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. Stock-Based Compensation The Company recognizes compensation expense for all of its grants of stock-based awards based on the estimated fair value on the grant date. Compensation cost for awards is recognized using the straight-line method over the vesting period. Stock-based compensation is included in selling, general and administrative expense. Fair Value Measurements Fair value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 – unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. Derivative Instruments – Foreign Exchange Forward Contracts The Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, primarily the U.S. Dollar Functional Currency The U.S. Dollar is the Company’s functional currency. The functional currencies for the Company’s subsidiaries that operate outside of the United States are NOK for Zedge Europe AS, EURO for Zedge Lithuania UAB which is a wholly-owned subsidiary of Zedge Europe AS, and the Canadian Dollar for Zedge Canada, Inc., which are the currencies of the primary economic environments in which they primarily expend cash. The Company translates assets and liabilities denominated in foreign currencies to U.S. Dollars at the exchange rate in effect as of the financial statement date, and translates accounts from the statements of comprehensive using the weighted average exchange rate for the period. Gains or losses resulting from foreign currency translations are recorded in “Accumulated other comprehensive loss” in the accompanying consolidated balance sheets. Foreign currency transaction gains and losses including gains and losses from currency exchange rate changes related to intercompany receivables and payables are reported in “Net loss resulting from foreign exchange transactions” in the accompanying Allowance for Doubtful Accounts The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The allowance is determined based on known troubled accounts, historical experience and other currently available evidence. Doubtful accounts are written-off upon final determination that the trade accounts will not be collected. Comprehensive Income (Loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that are recorded as an element of stockholders’ equity and are excluded from net income (loss). The Company’s other comprehensive income (loss) and accumulated other comprehensive loss are comprised principally of foreign currency translation adjustments. Leases The Company leases office spaces and equipment in multiple locations under non-cancelable lease agreements. The leases are reviewed for classification as operating and capital leases. For operating leases, rent is recognized on a straight-line basis over the lease period. For capital leases, the Company records the leased asset with a corresponding liability. Payments are recorded as reductions to the liability with an appropriate interest charge recorded based on the then-outstanding remaining liability. Upon adoption of ASU 2016-02 —Leases, the Company will recognize additional operating liabilities and corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. See “Recently Issued Accounting Standard Not Yet Adopted” below for additional information on the impact of ASU 2016-02 —Leases. Recently Adopted Accounting Standards In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities Recently Issued Accounting Standards Not Yet Adopted In August 2018, the FASB issued a new ASU which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted. The Company does not expect that the new standard will have a significant impact on its consolidated financial statements. In August 2018, the FASB issued an ASU which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The update eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and introduces a requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and early adoption is permitted. The Company does not expect that the new standard will have a significant impact on its consolidated financial statements. In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for the Company on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. The Company does not expect that the new standard will have a significant impact on its consolidated financial statements. In June 2016, the FASB issued an 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 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. In July 2018, the FASB issued updated guidance which allows an additional transition method to adopt the new lease standard at the adoption date, as compared to the beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption. The Company will adopt the new standard on August 1, 2019 using a modified retrospective transition method effective from the adoption date rather than the beginning of the earliest comparative period presented in the financial statements. The Company will elect the short-term lease recognition exemption for all leases that qualify. Accordingly, the Company will not recognize right-of-use assets or lease liabilities for leases that qualify, including leases for existing short-term leases in effect at transition and will recognize those payments on the consolidated statements of comprehensive loss on a straight-line basis over the lease term. The Company will elect the practical expedient to not separate lease and non-lease components for all its leases. The standard will have a material impact on the Company’s consolidated balance sheets, but it will not have a material impact on its consolidated statements of comprehensive loss, its consolidated statements of stockholders’ equity, or its consolidated statements of cash flows. The most significant impact will be the recognition of ROU assets and lease liabilities for operating leases. The accounting for capital leases remains substantially unchanged. The adoption of the new lease standard on August 1, 2019 is anticipated to result in the recognition of ROU assets and lease liabilities of approximately $522,000. |
Revenue
Revenue | 12 Months Ended |
Jul. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 2—Revenue Adoption of Topic 606, “Revenue from Contracts with Customers” On August 1, 2018, the Company adopted Topic 606, applying the modified retrospective method to those contracts not yet substantially completed as of August 1, 2018. Results for reporting periods beginning after August 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting practices under Topic 605. The impact of adopting the new revenue standard was not material to our consolidated financial statements and there was no adjustment to beginning retained earnings on August 1, 2018. Pursuant to Topic 606, revenue is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for promised goods or services. An entity applies the following five steps to achieve the core principle of Topic 606: 1. Identify the contract with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) the entity satisfies a performance obligation Revenue Recognition The Company generates revenue from three sources: (1) Advertising; (2) Service; and (3) Other. Approximately 90% of the Company’s revenue is generated from selling its advertising inventory (“Advertising Revenue”) to advertising networks, advertising exchanges, and direct arrangements with advertisers. Approximately 7% of the Company’s annual revenue for fiscal 2019 related to its managing and optimizing the advertising inventory of a third-party mobile application publisher, as well as overseeing the billing, collections and reporting related to advertising for this publisher (“Service Revenue”). The contract with this publisher was terminated effective May 31, 2019. The remaining revenue is a combination of subscriptions and from sales under Zedge Premium (“Other Revenue”) which were introduced in January 2019 and March 2018, respectively. Currently, subscription revenue allows users to prepay a monthly or annual fee to remove unsolicited advertisements from the Zedge app although the Company is working on adding additional capabilities to subscriptions including offering subscriptions to iOS customers. The Company retains 30% as fee when users purchase licensed content using Zedge Credits or unlock licensed content by watching a video or taking a survey on Zedge Premium. The following table summarizes revenue by type of service for the periods presented: Years Ended July 31, 2019 2018 (in thousands) Advertising revenue $ 7,940 $ 9,850 Service revenue 592 757 Other revenue 284 226 Total Revenue $ 8,816 $ 10,833 Advertising Revenue ● Advertising Networks. An advertising network is a third-party relationship where buyers of advertising inventory go to purchase either specific targeted inventory or a large scale of inventory at a set price. Advertising Networks serve as an indirect source of advertising fill to a variety of branded ad campaigns and performance-based ad campaigns. ● Advertising Exchanges. An advertising exchange is similar to an advertising network, except that the exchange typically bids in real-time for inventory. Advertisers may utilize an exchange when looking for scale or specific audiences, and accept that the price will vary based on when and how much volume of inventory they wish to buy. ● Direct Sales to Advertisers. The Company sells advertising directly to advertisers through a contractual relationship. These relationships typically offer higher than average pricing than realized from sales via advertising networks or advertising exchanges. ● App Installs. The Company earns revenue when a Zedge user installs an app offered by a publisher in the Game Channel that pays the Company a pre-negotiated fee for the installation (referred to as Cost Per Install or CPI). In October 2018, the Company replaced the Game Channel with a game wall which offers Zedge users with a mix of interactive playable ads which, if installed by the user, generate revenue for Zedge. The Company is expected to discontinue game wall in fiscal 2020. The Company recognizes advertising revenue as advertisements are delivered to users through impressions, ad views or app installs (depending on the terms agreed upon with the advertiser). For in-app display ads, in-app offers, engagement advertisements and other advertisements, the Company’s performance obligation is satisfied over the life of the relevant contract (i.e., over time), with revenue being recognized as advertising units are delivered. The advertiser may compensate the Company on a cost-per-impression, cost-per-click, cost-per-action or cost-per-install basis. Service Revenue Other Revenues: Zedge Premium Subscription Revenue For fiscal 2019, other revenue represented revenues derived solely from Zedge Premium and subscription. In prior year periods presented, other revenue represented revenue from assorted monetization trials that the Company tested. Gross Versus Net Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis unless the Company is unable to determine the amount on a gross basis, in which case the Company reports revenue on a net basis. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. The Company generally reports its advertising revenue net of amounts due to agencies and brokers because the Company is not the primary obligor in the relevant arrangements, it does not finalize the pricing, and it does not establish or maintain a direct relationship with the advertiser. Certain advertising arrangements that are directly between the Company and advertisers are recognized on a gross basis equal to the price paid to the Company by the customer since the Company is the primary obligor and the Company determines the price. Any third-party costs related to such direct relationships are recognized as direct cost of revenues. The Company reports subscription revenue gross of the fee retained by Google Play, as the subscriber is Zedge’s customer in the contract and Zedge controls the service prior to the transfer to the subscriber. Payment terms The majority of Zedge’s Advertising Revenue is derived from large credit-worthy entities, including Twitter, Google, Facebook, Apple and Amazon or affiliates of those entities. The Company invoices its customers monthly. Payment terms are stipulated as a specific number of days subsequent to the end of the month, generally ranging from 30 to 60 days. The Company endeavors to terminate relationships with smaller advertisers promptly if balances become past due. Since these smaller advertisers rely on the Company to derive their own revenue, they generally pay their outstanding balances on a timely basis. Historically, write-offs of revenue have been de minimis. Accordingly, the Company does not maintain a bad debt allowance. The Company makes Royalty Payments to the artists and brands within sixty (60) days after the end of each calendar quarter. If the quarterly royalty amount is less than two hundred dollars ($200), the Company may defer payment to a later period in which the artist or brand surpasses the $200 threshold. The artist or brand forfeits any accrued royalty amounts below the $200 threshold upon expiration or termination of the artist’s license agreement with the Company. This provision will become effective on the first anniversary for all existing license agreements and for all new license agreements entered into on or after November 1, 2018. Additionally, the Company has established a minimum threshold of twenty-five dollars ($25) in accrued Royalty Payments in order for an artist or brand to maintain its license agreement. Accordingly, if an artist hasn’t generated a minimum of $25 in accrued Royalty Payments amount in a year, the Company may deduct up to $25 from the artist’s accrued Royalty Payment account. As of July 31, 2019, and 2018, the aggregate amount owed by the Company to artists were approximately $56,000 and $9,000, respectively. Contract Balances Deferred revenues The Company records deferred revenues when users purchase or earn Zedge Credits. Unused Zedge Credits represent the value of the Company’s unsatisfied performance obligation to its users. Revenue is recognized when Zedge App users use Zedge Credits to acquire Zedge Premium content. As of July 31, 2019, and 2018, the Company’s deferred revenue balance related to Zedge Premium was approximately $155,000 and $11,000, respectively. The Company also records deferred revenues related to the unsatisfied performance obligations with respect to the subscription revenue. As of July 31, 2019, the Company’s deferred revenue balance related to subscriptions was approximately $362,000, representing approximately 129,000 active subscribers. Total deferred revenues increased $506,000 from $11,000 at July 31, 2018 to $517,000 at July 31, 2019, primarily due to the Company’s new revenue streams from subscriptions and Zedge Premium as discussed above. Practical Expedients The Company expenses the fees retained by Google Play related to the subscriptions revenue when incurred because the duration of the contracts for which the Company pay commissions are less than one year. These costs are included in the selling, general and administrative expenses of the Consolidated Statements of Comprehensive Loss. Significant Judgments The advertising networks and advertising exchanges track and report the impressions and installs to Zedge and Zedge recognizes revenues based on these reports. The networks and exchanges base their payments off of those reports and Zedge independently compares the data to each of the client sites to validate the imported data and identify any differences. The number of impressions and installs delivered by the advertising networks and advertising exchanges is determined at the end of each month, which resolves any uncertainty in the transaction price during the reporting period. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jul. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 3—Fair Value Measurements The following table presents 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) July 31, 2019 Assets: Foreign exchange forward contracts $ - $ - $ - $ - Liabilities: Foreign exchange forward contracts $ - $ 38 $ - $ 38 July 31, 2018 Assets: Foreign exchange forward contracts $ - $ - $ - $ - Liabilities: Foreign exchange forward contracts $ - $ 41 $ - $ 41 Fair Value of Other Financial Instruments The Company’s other financial instruments at July 31, 2019 and 2018 included trade accounts receivable, trade accounts payable and insurance premium loan payable. The carrying amounts of the trade accounts receivable, trade accounts payable and insurance premium loan payable approximated fair value due to their short-term nature. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Jul. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Note 4—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. The Company is party to 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 14). 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 July 31, 2019 were as follows: Settlement Date U.S. Dollar Amount NOK Amount Aug-19 500,000 4,091,590 Total $ 500,000 4,091,590 The fair value of outstanding derivative instruments recorded in the accompanying consolidated balance sheets were as follows: July 31, 2019 2018 Liabilities Derivatives: Balance Sheet Location Derivatives not designated or not qualifying as hedging instruments Foreign exchange forward contracts Accrued expenses $ 38 $ 41 The effects of derivative instruments on the consolidated statements of comprehensive loss were as follows: Amount of Loss Recognized on Derivatives Year ended July 31, 2019 2018 Derivatives not designated or not qualifying as hedging instruments Location of Loss Recognized on Derivatives Foreign exchange forward contracts Net loss resulting from foreign exchange transactions $ (278 ) $ (52) On August 2, 2019, the Company entered into a series of forward contracts pursuant to the Foreign Exchange Agreement with Western Alliance Bank as follows: Settlement Date U.S. Dollar Amount NOK Amount Sep-19 $ 400,000 3,562,280 Oct-19 400,000 3,559,960 Nov-19 400,000 3,489,200 Dec-19 400,000 3,556,640 Jan-20 400,000 3,554,680 Feb-20 400,000 3,553,560 Total $ 2,400,000 21,276,320 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jul. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5—Property and Equipment Property and equipment consisted of the following: July 31, (in thousands) 2019 2018 Capitalized software and technology development costs $ 9,555 $ 8,103 Other 310 308 9,865 8,411 Less accumulated depreciation and amortization (6,469 ) (5,067 ) Total $ 3,396 $ 3,344 Depreciation and amortization expense pertaining to property and equipment was $1.4 million and $1.0 million for the years ended July 31, 2019 and 2018, respectively. |
Goodwill
Goodwill | 12 Months Ended |
Jul. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 6—Goodwill The Company's goodwill related to an acquisition made in a prior period and is carried on the balance sheet of Zedge Europe AS. The table below reconciles the change in the carrying amount of goodwill for the period from July 31, 2017 to July 31, 2019: (in thousands) Balance at July 31, 2017 $ 2,518 Foreign currency translation adjustments (71 ) Balance at July 31, 2018 2,447 Foreign currency translation adjustments (181 ) Balance at July 31, 2019 $ 2,266 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Jul. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Note 7—Accrued Expenses Accrued expenses consist of the following: July 31, (in thousands) 2019 2018 Accrued vacation $ 503 $ 559 Accrued payroll taxes 183 184 Accrued payroll and bonuses 235 393 Accrued severance - 83 Hedge payable 38 41 Accrued professional fees 57 96 Due to artists 56 9 Other 100 67 Total accrued expenses $ 1,172 $ 1,432 |
Equity
Equity | 12 Months Ended |
Jul. 31, 2019 | |
Equity [Abstract] | |
Equity | Note 8—Equity Class A Common Stock and Class B Common Stock The rights of holders of Class A common stock and Class B common stock are identical except for certain voting and conversion rights and restrictions on transferability. The holders of Class A common stock and Class B common stock have the right to receive identical dividends per share if and when declared by the Company's Board of Directors. In addition, the holders of Class A common stock and Class B common stock have identical and equal priority rights per share in liquidation. The Class A common stock and Class B common stock do not have any other contractual participation rights. The holders of Class A common stock are entitled to three votes per share and the holders of Class B common stock are entitled to one-tenth of a vote per share. Each share of Class A common stock may be converted into one share of Class B common stock, at any time, at the option of the holder. Shares of Class A common stock are subject to certain limitations on transferability that do not apply to shares of Class B common stock. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jul. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9—Commitments and Contingencies Legal Proceedings In March 2014, Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1.6 million as damages and an injunction for copyright infringement. Saregama India alleged that the Company made available Saregama India’s sound recordings through the Company’s platform with full knowledge that the sound recordings had been uploaded and were being communicated to the public without obtaining any license from Saregama India. On August 20, 2019, the Court lifted the injunction and, subsequently, Saregama India executed a consent pursuant to which the case against the Company was dismissed. 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. Lease Commitments The Company’s future contractual obligations and other commercial commitments at July 31, 2019 were as follows: Year ended July 31, (in thousands) 2020 2021 2022 Total Real estate leases $ 297 $ 293 $ 107 $ 697 Software as a Service (“SaaS”) license 200 - - 200 Total contractual obligations $ 497 $ 293 $ 107 $ 897 Rental expense under operating leases was $354,000 and $328,000 in the years ended July 31, 2019 and 2018, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10—Income Taxes The components of loss before income taxes are as follows: Year ended July 31, (in thousands) 2019 2018 Domestic $ (3,199 ) $ (1,245 ) Foreign (129 ) (88 ) Loss before income taxes $ (3,328 ) $ (1,333 ) Provision for income taxes consisted of the following: Year ended July 31, 2019 2018 Current: Foreign $ 15 $ 59 Federal - - State 1 (1 ) Total current expense 16 58 Deferred: Foreign - 172 Federal - - State - - Total deferred expense - 172 Provision for income taxes $ 16 $ 230 The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes reported were as follows: Year ended July 31, 2019 2018 U.S federal income tax (benefit) at statutory rate $ (699 ) $ (352 ) State tax (net of federal benefit) (449 ) 136 Change in valuation allowance 1,147 (182 ) Foreign tax rate differential 7 10 Stock based compensation and employement credits (3 ) (10 ) Impact of Tax Cuts and Jobs Act - 393 Transition Tax - 161 Other 13 74 Provision for income taxes $ 16 $ 230 On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and significant changes to the U.S. tax code that affects the year ended December 31, 2017, including, but not limited to, a change in the federal rate from 35% to 21% effective January 1, 2018, as well as the requirement to pay a one-time transition tax (“deemed repatriation tax”) on all undistributed earnings of foreign subsidiaries. As a result, Zedge has a blended rate for the fiscal year ended July 31, 2018 of 26.42%. The Company reduced their deferred tax assets by $393,000 with a corresponding decrease to its valuation allowance. The deemed repatriation tax is a tax on previously untaxed earnings and profits of certain foreign subsidiaries. To determine the amount of the tax, the Company must determine, in addition to other factors, the amount of earnings and profits subject to U.S. tax for the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company continues to gather additional information to more precisely compute the amount of deemed repatriation tax, which may be impacted by further legislative technical corrections, amendments and/or revised earnings and profits computations. As of July 31, 2018, the company computed a transition tax of $161,000 which is offset by the net operating loss generated in this fiscal period. Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows: July 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 1,616 $ 698 Reserves and accruals 370 215 Stock-based compensation 211 137 Net deferred tax assets 2,197 1,050 Less valuation allowance (2,197 ) (1,050 ) Total deferred tax assets $ - $ - At July 31, 2019, the Company had available U.S. federal and state net operating loss (“NOL”) carryforwards from domestic operations of approximately $4.6 million and $6.0 million, respectively, to offset future taxable income. Approximately $2.3 million federal NOLs can be carried forward indefinitely but it is limited to 80% of future taxable income. The federal and state NOL carryforwards will begin to expire in 2036. The Company generated a net operating loss from foreign operations for the period ended July 31, 2019 of $143,000. Due to its history of losses, the Company believes that it is more-likely-than-not that substantially all of the deferred tax assets will not be realized. Therefore, the Company has a full valuation allowance on all U.S. and foreign deferred tax assets. The change in the valuation allowance is as follows: Year ended July 31, (in thousands) Balance at beginning of year Additions charged to costs and expenses Deductions Balance at end of year 2019 Reserves deducted from deferred income taxes, net: Valuation allowance $ 1,050 $ 1147 $ - $ 2,197 2018 Reserves deducted from deferred income taxes, net: Valuation allowance $ 1,232 $ — $ (182 ) $ 1,050 At July 31, 2019 and 2018, the Company did not have any unrecognized tax benefits and did not anticipate any significant changes to the unrecognized tax benefits within twelve months of this reporting date. In the year ended July 31, 2019, the Company recorded no interest and penalties on income taxes. In fiscal 2018, the Company recorded $3,800 interest and penalties on income taxes. At July 31, 2019 and 2018, there was no accrued interest included in income taxes payable. The Company currently remains subject to examinations of its U.S. tax returns as follows: U.S. federal tax return for pre and post spin periods for fiscal 2016 to fiscal 2018, state and local tax returns generally for fiscal 2016 to fiscal 2018 and foreign tax returns generally for fiscal 2017 to fiscal 2018. 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. In a report dated December 20, 2018, the Norwegian Tax Authorities informed the Company that they have concluded their audit with no changes. However, they recommended that the Company adopt a profit split method with Zedge Europe AS instead of the cost-plus method that the Company has used to set transfer pricing. The Company is evaluating this recommendation. In connection with the Spin-Off, the Company and IDT entered into various agreements prior to the Spin-Off including a Separation and Distribution Agreement to effect the separation and provide a framework for the Company’s relationship with IDT after the Spin-Off, and a Tax Separation Agreement, which sets forth the responsibilities of the Company and IDT with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the Spin-Off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to Separation and Distribution Agreement, among other things, the Company indemnifies IDT and IDT indemnifies the Company for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, among other things, IDT indemnifies the Company from all liability for taxes of the Company and any of its subsidiaries or relating to its business with respect to taxable periods ending on or before the Spin-Off, and the Company indemnifies IDT from all liability for taxes of the Company and any of its subsidiaries or relating to its business accruing after the Spin-Off. Notwithstanding the foregoing, the Company is responsible for, and IDT has no obligation to indemnify the Company for, any tax liability of the Company resulting from an audit, examination or other proceeding related to any tax returns that relate solely to it and its subsidiaries regardless of whether such tax return relates to a period prior to or following the Spin-Off. Research and Development Credits As of July 31, 2019 and 2018, the balance of the Company’s receivable from Norway’s SkatteFUNN government program designed to stimulate research and development in Norwegian trade and industry was $35,000 and $208,000, respectively, which was included in “Other current assets” in the consolidated balance sheet and $0 and $39,000 was recorded as a reduction of selling, general and administrative expense for the years ended July 31, 2019 and 2018, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Jul. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 11—Stock-Based Compensation 2016 Stock Option and Incentive Plan The Company adopted the Zedge, Inc. 2016 Stock Option and Incentive Plan (as amended to date, the “2016 Incentive Plan”), which became effective upon the consummation of the Spin-Off. The 2016 Incentive Plan is intended to provide incentives to executive officers, employees, directors and consultants of the Company. Incentives available under the 2016 Incentive Plan include restricted stock, deferred stock unit, stock options and stock appreciation rights. The 2016 Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors. On October 18, 2017, the Company’s Board of Directors amended the 2016 Incentive Plan to increase the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional 350,000 shares to an aggregate of 1,041,000 shares. This amendment was ratified by the Company’s stockholders during Annual Meeting held on January 17, 2018. At July 31, 2019, there were 374,000 shares of the Company’s Class B common stock available for awards under the 2016 Incentive Plan. Pursuant to the 2016 Incentive Plan, the option exercise price for all stock option awards must not be less than the Fair Market Value of the shares of Class B Common Stock covered by the option award on the date of grant. In general, Fair Market Value means the closing sale price per share of Class B Common Stock on the exchange on which the Class B Common Stock is principally traded for the last preceding date on which there was a sale of Class B Common Stock on such exchange. In the years ended July 31, 2019 and 2018 there was no income tax benefit resulting from tax deductions in excess of the compensation cost recognized for the Company’s stock-based compensation. Stock Options The Company’s option awards generally have a maximum term of 10 years from grant date, are exercisable upon vesting unless otherwise designated for early exercise by the Board of Directors at the time of grant and are pursuant to individual written agreements. Grants generally vest over a three-year period. Certain option agreements provide for accelerated vesting of options upon the effective date of an initial public offering or a change in control of the Company. In September 2016, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved an equity grant of options to purchase 231,327 shares of our Class B common stock to our 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 being recognized on a straight-line basis over the vesting period. In November 2017, the Company cancelled 53,026 shares of this option grant because they exceeded the annual limit of 60,000 shares per grantee as set forth in Article 5(c) of the 2016 Stock Incentive Plan. Simultaneously, the Compensation Committee approved an option grant of 53,026 with similar terms. Unrecognized compensation expense related to this option grant was an aggregate of $85,000 based on the estimated fair value of the options on the grant date. In October 2017, the Compensation Committee approved an equity grant of options to purchase an aggregate of 124,435 shares of our Class B common stock to 55 non-executive employees. The options vest over a three-year period. Unrecognized compensation expense related to this grant was an aggregate of $159,000 based on the estimated fair value of the options on the grant date. In fiscal 2019, the Compensation Committee approved two equity grants of options to purchase an aggregate of 27,493 shares of our Class B common stock to 6 non-executive employees. The options vest over a three-year period. Unrecognized compensation expense related to this grant was an aggregate of $33,000 based on the estimated fair value of the options on the grant dates. In fiscal 2019, the Company received proceeds of $5,291 from the exercise of stock options for which the Company issued 40,700 shares of its Class B common stock. In fiscal 2018, the Company received proceeds of $231,810 from the exercise of stock options for which the Company issued 172,239 shares of its Class B common stock. The Company cancelled options grants of 69,000 shares and 132,000 shares in fiscal 2019 and fiscal 2018 respectively primarily due to employee resignations or layoffs. The fair value of stock options was estimated on the date of the grant using a Black-Scholes valuation model (“BSM”) and the assumptions in the following table. Expected volatility is based on historical volatility of the Company’s Class B common stock and other factors. The Company uses historical data on exercise of stock options, post vesting forfeitures and other factors to estimate the expected term of the stock-based payments granted. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company used the following weighted average assumptions in its BSM pricing model: Year ended July 31, 2019 2018 Expected term 6.0 years 6.0 years Volatility 74 % 71 % Risk free interest rate 2.7 % 2.1 % Dividends — — The following represents option activity for the fiscal years ended July 31, 2019 and 2018, including options granted prior to the spin-off on June 1, 2016 and options granted under the 2016 Incentive Plan adopted on June 2, 2016: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at July 31, 2017 1,438 $ 1.59 Granted 180 2.57 Exercised (172 ) 1.35 Cancelled / forfeited (132 ) 3.29 Outstanding at July 31, 2018 1,314 $ 1.58 7.4 $ 2,055 Granted 27 1.80 Exercised (41 ) 0.13 Cancelled / forfeited (69 ) 1.99 Outstanding at July 31, 2019 1,231 $ 1.60 6.32 $ 642 Exercisable at July 31, 2019 1,107 $ 1.43 6.15 $ 642 The following table summarizes the weighted average grant date fair value of options granted, intrinsic value of options exercised and fair value of awards vested in the periods indicated: July 31, 2019 2018 Weighted average grant date fair value of options granted $ 1.19 $ 1.38 Intrinsic value of options exercised 66 312 Fair value of awards vested 252 235 At July 31, 2019, there was $63,000 of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 0.4 years. Restricted Stock As part of the Spin-Off, holders of IDT restricted Class B common stock and Deferred Stock Units (“DSUs”) received, in respect of those restricted shares and DSUs, one restricted share of the Company’s Class B common stock for every three restricted shares of IDT and one DSU of the Company for every three DSUs of IDT that they owned as of the record date for the Spin-Off (the same ratio as used for shares of our Class B common stock distributed by IDT in connection with the Spin-Off). As such, 111,842 shares of restricted stock and 7,767 DSUs were issued (adjusted for forfeitures) pursuant to the terms of the 2016 Incentive Plan. Such restricted shares of the Company’s Class B common stock are restricted under the same terms as the IDT restricted stock in respect of which they were issued. The restricted shares of the Company’s Class B common stock received in the Spin-Off are subject to forfeiture on the same terms, and their restrictions will lapse at the same time, as the corresponding IDT shares. The fair value of restricted shares of the Company’s Class B common stock is determined based on the closing price of the Company’s Class B common stock on the grant date. Share awards generally vest on a graded basis over three years of service. On July 16, 2018, the remaining 43,107 such restricted shares and the remaining such 3,713 DSUs were vested. In September 2017, the Company entered into an Agreement and Release with Freeform and certain of its former employees, pursuant to which the Company obtained releases for certain employees from their Freeform employment agreements in exchange for the repayment of certain of Freeform’s liabilities. The Company paid Freeform $125,000 in cash to pay its operating liabilities (with any excess to be refunded to the Company), and the Company paid the holders of Freeform’s convertible promissory notes cash of $97,567 and issued the noteholders a total of 126,679 shares of Zedge Class B common stock with a fair value of $242,000 on issuance, which are subject to a two-year lock-up agreement. The Company believes this transaction did not qualify as a business combination under ASU 2017-01, which the Company adopted early on August 1, 2017, and as such accounted for the payment of the Freeform liabilities that aggregated $465,000, as selling, general and administrative expense in the three months ended October 31, 2017. In July 2018, the Company received a $25,000 refund from Freeform. Accordingly, the Company reduced the Freeform acquihire costs from $465,000 to $440,000. In addition to the above payments, the Company granted a total of 192,953 restricted shares of the Company’s Class B common stock to former Freeform employees, which shall vest over a four-year period subject to continued employment. Notwithstanding the above, these restricted shares shall become vested upon (i) a Change in Control (as defined in the 2016 Incentive Plan) or (ii) the termination of their employment without Cause. These shares had an aggregate grant date fair value of $369,000 which is being amortized on a straight-line basis over the vesting period. On February 7, 2018, the Compensation Committee and the Corporate Governance Committees of our Board of Directors approved a grant of 108,553 restricted shares of the Company’s Class B Common Stock to our Executive Chairman Michael Jonas. Mr. Jonas has agreed to accept all of his compensation for his service as Executive Chairman during fiscal 2018 in the form of equity in the Company and to make receipt of such equity compensation contingent on the Company achieving certain milestones relative to its fiscal 2018 budget. The grant was made at that time because the milestones previously set were achieved. These shares shall vest in equal amounts on February 7, 2019, 2020 and 2021.These shares had an aggregate grant date fair value of $330,000 which is being amortized on a straight-line basis over the vesting period. In fiscal 2019, the Company granted 30,558 restricted shares of its Class B common stock, which vested immediately, to its non-employee Board of Directors at an average grant date fair value of $2.33 per share. In fiscal 2018, the Company granted 49,533 restricted shares of its Class B common stock, which vested immediately, to its non-employee Board of Directors at an average grant date fair value of $3.00 per share. These shares were awarded pursuant to the non-employee Board of Director’s semi-annual grant. At July 31, 2019, there were 195,375 non-vested restricted shares of the Company’s Class B common stock. At July 31, 2019, there was $335,000 of total unrecognized compensation cost related to these non-vested restricted shares, which is expected to be recognized over a weighted-average period of 1.8 years. The following represents restricted shares activity for the fiscal years ended July 31, 2019 and 2018: Number of Shares Weighted Average Grant Date Fair Value Non-vested stock award award as of July 31, 2017 49,474 NA Granted 301,506 2.32 Vested (47,263 ) NA Forfeited (2,211 ) NA Non-vested stock award award as of July 31, 2018 301,506 $ 2.32 Granted - - Vested (106,131 ) 2.30 Forfeited - - Non-vested stock award award as of July 31, 2019 195,375 $ 2.33 NA: Restricted shares awarded to the holders of IDT restricted Class B common stock as of part of Spin-Off in June, 2016, grant date fair value is not available |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jul. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12—Related Party Transactions 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. As of October 31, 2017, most of these services were discontinued and are being performed directly by Zedge or vendors retained by Zedge. Amounts charged by IDT to the Company are included in "Selling, general and administrative expense" in the consolidated statements of comprehensive loss. The change in the Company's liability to IDT was as follows: Years ended July 31, (in thousands) 2019 2018 Balance at beginning of year $ 1 $ 36 Payments by IDT on behalf of the Company 21 303 Cash repayments, net of advances (22 ) (338 ) Balance at end of year $ - $ 1 In the years ended July 31, 2019 and 2018, the Company paid $171,000 and $174,000, respectively, to Braze Inc. (formerly "Appboy, Inc.") for use of its customer relationship management and lifecycle marketing platform. The former Chief Executive Officer and Co-Founder of Braze, Inc. is a member of the Company's Board of Directors. |
Business Segment and Geographic
Business Segment and Geographic Information | 12 Months Ended |
Jul. 31, 2019 | |
Segment Reporting [Abstract] | |
Business Segment and Geographic Information | Note 13—Business Segment and Geographic Information The Company provides a content 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 mostly free, high-quality ringtones, wallpapers, home screen app icons, widgets and notification sounds. In March 2018, the Company completed its rollout of 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: July 31, 2019 $ 3,304 $ 212 $ 3,516 July 31, 2018 $ 3,234 $ 235 $ 3,469 Total assets: July 31, 2019 $ 5,508 $ 3,499 $ 9,007 July 31, 2018 $ 7,661 $ 4,072 $ 11,733 |
Revolving Credit Facility
Revolving Credit Facility | 12 Months Ended |
Jul. 31, 2019 | |
Revolving Credit Facility [Abstract] | |
Revolving Credit Facility | Note 14—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 for an initial two years term which was extended for another two years term expiring September 26, 2020. 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 5.0% 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 26, 2020. 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 July 31, 2019, 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. This limit was raised to approximately $6.5 million pursuant to the Loan and Security Modification Agreement dated May 30, 2018. The available borrowing under the revolving credit facility is 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% of the nominal amount of the foreign exchange contracts in effect at the relevant time. In December 2016, the applicable foreign exchange reserve percentage was changed so that the reduction of available borrowing for major currency forward contracts of less than six months tenor is set at 10% of the nominal amount of the foreign exchange contracts, and for contracts over six months tenor, 12.5% of the nominal amount of the foreign exchange contracts. At July 31, 2019, there were $0.5 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility, which reduced the available borrowing under the revolving credit facility by $50,000 see Note 4 above. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Jul. 31, 2019 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plan | Note 15—Defined Contribution Plan In September 2016, the Company adopted a 401(k) Plan, effective August 1, 2016, available to all employees meeting certain eligibility criteria. The Plan permits participants to elect pre-tax or after-tax salary deferrals that will be contributed to the Plan, not to exceed the limits established by the Internal Revenue Code. The Plan provides for enhanced safe harbor employer matching contributions. All contributions made by participants and safe harbor matching contributions by the Company will be fully vested. The Company's Class A common stock and Class B common stock are not investment options for elective deferrals by the Plan's participants. However, matching contributions may be made in shares of the Company. The Company's cost for matching contributions to the Plan were $48,000 and $33,000 for the years ended July 31, 2019 and 2018, respectively. In lieu of making cash contribution, the Company opted to contribute 19,479 shares and 11,130 shares of the Company's Class B common stock to the Plan for fiscal 2019 and fiscal 2018, respectively. |
Investment in Privately-Held Co
Investment in Privately-Held Company | 12 Months Ended |
Jul. 31, 2019 | |
Investments in Privately-Held Company [Abstract] | |
Investment in Privately-Held Company | Note 16— Investment in Privately Held Company In August 2018, the Company made a $250,000 investment in TreSensa, Inc. ("TreSensa"), representing a less than 1% equity ownership interest on a fully-diluted basis, and concurrently entered into a playable ad distribution agreement with TreSensa under which the Company shall be paid a higher percentage (when compared to industry norms) of revenue derived from all playable ads provided by TreSensa, from its available catalogue for distribution through the Zedge App. This distribution agreement was terminated in April 2019. The Company's ownership interest in TreSensa, a privately held company, is comprised of non-marketable equity securities without a readily determinable fair value. On August 1, 2018, the Company adopted ASU 2016-01, a new standard on the classification and measurement for non-marketable securities. The Company adjusts the carrying value of its non-marketable equity securities to fair value upon observable transactions for identical or similar investments of the same issuer or upon impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in interest and other income (expense), net. The Company periodically evaluates the carrying value of the investments in privately held company when events and circumstances indicate that the carrying amount of the investment may not be recovered. The Company estimates the fair value of the investments to assess whether impairment losses shall be recorded using Level 3 inputs. These investments include the Company's holdings in privately held company that are not exchange traded and therefore not supported with observable market prices; hence, the Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the privately held company, the amount of cash that the privately held company have on-hand, the ability to obtain additional financing and overall market conditions in which the privately held company operate or based on the price observed from the most recent completed financing round. Management performed its qualitative assessment using the above factors, which indicated the investment's fair value is below its carrying value, and therefore recorded an impairment charges of $250,000 in July 2019 which was included in interest and other income (expense), net in the consolidated statements of comprehensive loss, and reduced the carrying value of the Company's non-marketable equity securities to $0 as of July 31, 2019. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jul. 31, 2019 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Zedge, Inc. (the “Company”) offers a state-of-the-art digital publishing platform. The Company use this platform to power its consumer-facing mobile personalization app, called Zedge, available in the Google Play store and iTunes, which offers an easy, entertaining and immersive way for end-users to engage with its rich and diverse catalogue of wallpapers, stickers, ringtones, notification sounds and video wallpapers. The Company is evolving by developing new, entertainment-focused apps, that will run on its publishing platform. The Company secures its content from artists, both amateurs and professionals as well as emerging and major brands. Artists have the ability to easily launch a virtual storefront in the Zedge app where they can market and sell their content to the Company’s user base. Zedge app has been installed more than 396 million times, boasts more than 33 million monthly active users, or MAU, and has consistently averaged in the ‘Top 60’ most popular free apps in the Google Play store in the United States. The Company conducts business as a single operating segment. 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 2019 refers to the fiscal year ended July 31, 2019). |
The Spin-Off | The Spin-Off 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"). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications Certain items in the prior years’ Consolidated Financial Statements have been reclassified to conform to the current year presentation reflected in the Consolidated Financial Statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. |
Revenue Recognition | Revenue Recognition The following accounting policy relates to revenue transactions for fiscal 2018, which were accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” See Note 2 for a description of the policy for fiscal 2019. The Company generates approximately 90% of its revenues from selling its advertising inventory to advertising networks, advertising exchanges, and direct arrangements with advertisers. Advertising networks and advertising exchanges are third party technology platforms that facilitate the buying and selling of media advertising inventory from multiple ad networks. The price of advertising inventory is fixed on an advertising network whereas the price for inventory is determined through bidding on an advertising exchange. The Company recognizes advertising revenue as advertisements are delivered to users through impressions, ad views or app installs (depending on the terms agreed upon with the advertiser), as long as evidence of the arrangement with the payer exists (generally through an executed contract), the price is fixed and determinable, and the Company has assessed collectability as reasonably assured. The advertiser may compensate the Company on a cost-per-impression, cost-per-click, cost-per-action or cost-per-install basis. The Company also generated revenue from managing and optimizing the advertising inventory of a third-party mobile application publisher, as well as overseeing the billing, collections and reporting related to advertising for this publisher. The agreement with the publisher was terminated effective May 31, 2019. In March 2018, the Company launched Zedge Premium, a marketplace where professional creators and brands can market, distribute and sell their digital content to our consumers. In January 2019, we started offering a subscription model by which users can remove unsolicited advertisements from our Zedge app by paying a fee on a monthly or yearly basis. We recognize subscription revenue on a daily ratable basis over the subscription period. The Company generally reports its advertising revenue net of amounts due to agencies and brokers because the Company is not the primary obligor in the relevant arrangements, it does not finalize the pricing, and it does not establish or maintain a direct relationship with the advertiser. Certain advertising arrangements that are directly between the Company and advertisers are recognized gross equal to the price paid to the Company by the customer since the Company is the primary obligor and the Company determines the price. Any third-party costs related to such direct relationships are recognized as direct cost of revenues. In Zedge Premium, the Company generally report revenue net of the 70% share that is paid to the artists who own the licensed content. The Company reports subscription revenue gross of the fee retained by Google Play, as the subscriber is Zedge’s customer in the contract and Zedge controls the service prior to the transfer to the subscriber. The Company recognizes revenue based on reports that it receives from the ad networks and ad exchanges who respectively track and report the installs and impressions and pay the Company based on these reports. Independently the Company compares and reconciles these reports with data from each of the client sites and dispute any differences. Depending on the nature of the advertising agreement the Company records revenue either when it serves an end-user with a paid advertising impression or when a user installs an app from an advertiser who pays for the install. Being that the advertiser simultaneously receives and consumes the benefits provided by Zedge’s performance it views this as its output measure. Payment from the Company’s customers are typically received anywhere between 30-60 days from the end-of-month billing cycle, and any revenue adjustments are already factored into the payment. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Company holds cash and cash equivalents at several major financial institutions, which may exceed FDIC insured limits. Historically, the Company has not experienced any losses due to such concentration of credit risk. The Company's temporary cash investments policy is to limit the dollar amount of investments with any one financial institution and monitor the credit ratings of those institutions. While the Company may be exposed to credit losses due to the nonperformance of the holders of its deposits, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition. The Company routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced significant write-downs in its accounts receivable balances. In the year ended July 31, 2019, three customers represented 28%, 28% and 10% of the Company's revenue, and in the year ended July 31,2018, three customers represented 35%, 22% and 14% of the Company's revenue. At July 31, 2019, three customers represented 32%, 17% and 17% of the Company's accounts receivable balance and at July 31, 2018, three customers represented 46%, 28% and 14% of the Company's accounts receivable balance. All of these significant customers are advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers. |
Direct Cost of Revenues | Direct Cost of Revenues Direct cost of revenues for the Company consists of fees paid to third parties that provide the Company with internet hosting, content serving and filtering, and marketing automation services. Such costs are charged to expense as incurred. |
Long-Lived Assets | Long-Lived Assets Property and equipment is recorded at cost and depreciated on a straight-line basis over its estimated useful lives, which range as follows: capitalized software and technology development costs—3 years; and other—3, 5, 7, 10 or 20 years. Other is comprised of furniture and fixtures, office equipment, video conference equipment, computer hardware and computer software. The Company tests the recoverability of its long-lived assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such asset. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such asset using an appropriate discount rate. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairments in future periods and such impairments could be material. |
Capitalized Software and Technology Development Costs | Capitalized Software and Technology Development Costs The Company accounts for capitalized software and technology development costs in accordance with FASB ASC 350-40. These costs consist of internal development costs on various projects that the Company invested in specific to the various platforms on which the Company operates its service that are capitalized during the application development stage. Capitalized software and technology development costs are included in property and equipment, net and are amortized over the estimated useful life of the software, generally three years. All ordinary maintenance costs are expensed as incurred. |
Goodwill | Goodwill Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of the business acquired. Under ASC 350, Intangibles-Goodwill and Other The Company performs its annual, or interim, goodwill impairment test by comparing the fair value of its reporting unit with its carrying amount. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the Company considers income tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss, if applicable. The Company's estimated fair value substantially exceeded its carrying value in Step 1 of the Company's annual impairment tests as of May 1st for the years ended July 31, 2019 and 2018. The Company concluded that no goodwill impairment existed in the years ended July 31, 2019 and 2018. The Company uses the market approach (guideline company method) for its Step 1 analysis. |
Investment in Privately Held Company | Investment in Privately Held Company The Company’s investments in privately held company is a non-marketable equity security without readily determinable fair value. On August 1, 2018, the Company adopted a new accounting standard (see Recently Adopted Accounting Standards below) and adjusts the carrying value of its non-marketable equity securities to fair value upon observable transactions for identical or similar investments of the same issuer or upon impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in interest and other income (expense), net in the consolidated statements of comprehensive loss. The Company periodically evaluates the carrying value of the investment in a privately held company, when events and circumstances indicate that the carrying amount of the investment may not be recovered. The Company estimates the fair value of the investments to assess whether impairment losses shall be recorded using Level 3 inputs. These investments include the Company’s holdings in privately held company that are not exchange traded and therefore not supported with observable market prices; hence, the Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the private companies, the amount of cash that the privately held company have on-hand, the ability to obtain additional financing and overall market conditions in which the private companies operate or based on the price observed from the most recent completed financing. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Income Taxes | Income Taxes The accompanying financial statements include provisions for federal, state and foreign income taxes. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in its assessment of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change. The Company uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. The Company classifies interest and penalties on income taxes as a component of income tax expense. |
Contingencies | Contingencies The Company accrues for loss contingencies when both (a) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements and (b) the amount of loss can reasonably be estimated. When the Company accrues for loss contingencies and the reasonable estimate of the loss is within a range, the Company records its best estimate within the range. When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company discloses an estimated possible loss or a range of loss when it is at least reasonably possible that a loss may have been incurred. |
Earnings Per Share | 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: Year ended July 31, (in thousands) 2019 2018 Basic weighted-average number of shares 10,083 9,803 Effect of dilutive securities: Stock options — — Non-vested restricted Class B common stock — — Diluted weighted-average number of shares 10,083 9,803 The following shares were excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive: Year ended July 31, (in thousands) 2019 2018 Stock options 1,231 1,314 Non-vested restricted Class B common stock 195 302 Shares excluded from the calculation of diluted earnings per share 1,426 1,616 For both fiscal 2019 and fiscal 2018, 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. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes compensation expense for all of its grants of stock-based awards based on the estimated fair value on the grant date. Compensation cost for awards is recognized using the straight-line method over the vesting period. Stock-based compensation is included in selling, general and administrative expense. |
Fair Value Measurements | Fair Value Measurements Fair value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 – unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. |
Derivative Instruments - Foreign Exchange Forward Contracts | Derivative Instruments – Foreign Exchange Forward Contracts The Company's earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, primarily the U.S. Dollar – Norwegian Krone ("NOK") exchange rate. The Company's risk management policy allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate exposure. Foreign currency derivative activities are subject to the management, direction and control of the executive management. Foreign exchange forward contracts are recognized on the consolidated balance sheet at their fair value in "Other current assets" or "Accrued expenses", and changes in fair value are recognized in "Net loss resulting from foreign exchange transactions" in the consolidated statements of comprehensive loss. |
Functional Currency | Functional Currency The U.S. Dollar is the Company's functional currency. The functional currencies for the Company's subsidiaries that operate outside of the United States are NOK for Zedge Europe AS, EURO for Zedge Lithuania UAB which is a wholly-owned subsidiary of Zedge Europe AS, and the Canadian Dollar for Zedge Canada, Inc., which are the currencies of the primary economic environments in which they primarily expend cash. The Company translates assets and liabilities denominated in foreign currencies to U.S. Dollars at the exchange rate in effect as of the financial statement date, and translates accounts from the statements of comprehensive loss using the weighted average exchange rate for the period. Gains or losses resulting from foreign currency translations are recorded in "Accumulated other comprehensive loss" in the accompanying consolidated balance sheets. Foreign currency transaction gains and losses including gains and losses from currency exchange rate changes related to intercompany receivables and payables are reported in "Net loss resulting from foreign exchange transactions" in the accompanying consolidated statements of comprehensive loss. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The allowance for doubtful accounts reflects the Company's best estimate of probable losses inherent in the accounts receivable balance. The allowance is determined based on known troubled accounts, historical experience and other currently available evidence. Doubtful accounts are written-off upon final determination that the trade accounts will not be collected. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that are recorded as an element of stockholders’ equity and are excluded from net income (loss). The Company’s other comprehensive income (loss) and accumulated other comprehensive loss are comprised principally of foreign currency translation adjustments. |
Leases | Leases The Company leases office spaces and equipment in multiple locations under non-cancelable lease agreements. The leases are reviewed for classification as operating and capital leases. For operating leases, rent is recognized on a straight-line basis over the lease period. For capital leases, the Company records the leased asset with a corresponding liability. Payments are recorded as reductions to the liability with an appropriate interest charge recorded based on the then-outstanding remaining liability. Upon adoption of ASU 2016-02 —Leases, the Company will recognize additional operating liabilities and corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. See "Recently Issued Accounting Standard Not Yet Adopted" below for additional information on the impact of ASU 2016-02 —Leases. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities |
Recently Issued Accounting Standards Not Yet Adopted | Recently Issued Accounting Standards Not Yet Adopted In August 2018, the FASB issued a new ASU which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted. The Company does not expect that the new standard will have a significant impact on its consolidated financial statements. In August 2018, the FASB issued an ASU which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The update eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and introduces a requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and early adoption is permitted. The Company does not expect that the new standard will have a significant impact on its consolidated financial statements. In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for the Company on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. The Company does not expect that the new standard will have a significant impact on its consolidated financial statements. In June 2016, the FASB issued an 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 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. In July 2018, the FASB issued updated guidance which allows an additional transition method to adopt the new lease standard at the adoption date, as compared to the beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption. The Company will adopt the new standard on August 1, 2019 using a modified retrospective transition method effective from the adoption date rather than the beginning of the earliest comparative period presented in the financial statements. The Company will elect the short-term lease recognition exemption for all leases that qualify. Accordingly, the Company will not recognize right-of-use assets or lease liabilities for leases that qualify, including leases for existing short-term leases in effect at transition and will recognize those payments on the consolidated statements of comprehensive loss on a straight-line basis over the lease term. The Company will elect the practical expedient to not separate lease and non-lease components for all its leases. The standard will have a material impact on the Company’s consolidated balance sheets, but it will not have a material impact on its consolidated statements of comprehensive loss, its consolidated statements of stockholders’ equity, or its consolidated statements of cash flows. The most significant impact will be the recognition of ROU assets and lease liabilities for operating leases. The accounting for capital leases remains substantially unchanged. The adoption of the new lease standard on August 1, 2019 is anticipated to result in the recognition of ROU assets and lease liabilities of approximately $522,000. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of weighted-average number of shares used in the calculation of basic and diluted earnings per share | Year ended July 31, (in thousands) 2019 2018 Basic weighted-average number of shares 10,083 9,803 Effect of dilutive securities: Stock options — — Non-vested restricted Class B common stock — — Diluted weighted-average number of shares 10,083 9,803 |
Schedule of shares were excluded from the diluted earnings per share | Year ended July 31, (in thousands) 2019 2018 Stock options 1,231 1,314 Non-vested restricted Class B common stock 195 302 Shares excluded from the calculation of diluted earnings per share 1,426 1,616 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by type of service | Years Ended July 31, 2019 2018 (in thousands) Advertising revenue $ 7,940 $ 9,850 Service revenue 592 757 Other revenue 284 226 Total Revenue $ 8,816 $ 10,833 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule 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) July 31, 2019 Assets: Foreign exchange forward contracts $ - $ - $ - $ - Liabilities: Foreign exchange forward contracts $ - $ 38 $ - $ 38 July 31, 2018 Assets: Foreign exchange forward contracts $ - $ - $ - $ - Liabilities: Foreign exchange forward contracts $ - $ 41 $ - $ 41 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Schedule of derivative instruments contracts | Settlement Date U.S. Dollar Amount NOK Amount Aug-19 500,000 4,091,590 Total $ 500,000 4,091,590 |
Schedule of fair value of derivative assets and liabilities | July 31, 2019 2018 Liabilities Derivatives: Balance Sheet Location Derivatives not designated or not qualifying as hedging instruments Foreign exchange forward contracts Accrued expenses $ 38 $ 41 |
Schedule of derivative instruments on consolidated statements of comprehensive loss | Year ended July 31, (in thousands) 2019 2018 Derivatives not designated or not qualifying as hedging instruments Location of Loss Recognized on Derivatives Foreign exchange forward contracts Net loss resulting from foreign exchange transactions $ (278 ) $ (52 ) |
Western Alliance Bank [Member] | |
Schedule of derivative instruments contracts | Settlement Date U.S. Dollar Amount NOK Amount Sep-19 $ 400,000 3,562,280 Oct-19 400,000 3,559,960 Nov-19 400,000 3,489,200 Dec-19 400,000 3,556,640 Jan-20 400,000 3,554,680 Feb-20 400,000 3,553,560 Total $ 2,400,000 21,276,320 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | July 31, (in thousands) 2019 2018 Capitalized software and technology development costs $ 9,555 $ 8,103 Other 310 308 9,865 8,411 Less accumulated depreciation and amortization (6,469 ) (5,067 ) Total $ 3,396 $ 3,344 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of change in carrying amount of goodwill | (in thousands) Balance at July 31, 2017 $ 2,518 Foreign currency translation adjustments (71 ) Balance at July 31, 2018 2,447 Foreign currency translation adjustments (181 ) Balance at July 31, 2019 $ 2,266 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | July 31, (in thousands) 2019 2018 Accrued vacation $ 503 $ 559 Accrued payroll taxes 183 184 Accrued payroll and bonuses 235 393 Accrued severance - 83 Hedge payable 38 41 Accrued professional fees 57 96 Due to artists 56 9 Other 100 67 Total accrued expenses $ 1,172 $ 1,432 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of future contractual obligations and other commercial commitments | Year ended July 31, (in thousands) 2020 2021 2022 Total Real estate leases $ 297 $ 293 $ 107 $ 697 Software as a Service ("SaaS") license 200 - - 200 Total contractual obligations $ 497 $ 293 $ 107 $ 897 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of loss before income taxes | Year ended July 31, (in thousands) 2019 2018 Domestic $ (3,199 ) $ (1,245 ) Foreign (129 ) (88 ) Loss before income taxes $ (3,328 ) $ (1,333 ) |
Schedule of Provision for income taxes | Year ended July 31, 2019 2018 Current: Foreign $ 15 $ 59 Federal - - State 1 (1 ) Total current expense 16 58 Deferred: Foreign - 172 Federal - - State - - Total deferred expense - 172 Provision for income taxes $ 16 $ 230 |
Schedule of income taxes expected at the U.S. federal statutory income tax rate and income taxes | Year ended July 31, 2019 2018 U.S federal income tax (benefit) at statutory rate $ (699 ) $ (352 ) State tax (net of federal benefit) (449 ) 136 Change in valuation allowance 1,147 (182 ) Foreign tax rate differential 7 10 Stock based compensation and employement credits (3 ) (10 ) Impact of Tax Cuts and Jobs Act - 393 Transition Tax - 161 Other 13 74 Provision for income taxes $ 16 $ 230 |
Schedule of Significant components of the Company’s deferred tax assets and deferred tax liabilities | July 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 1,616 $ 698 Reserves and accruals 370 215 Stock-based compensation 211 137 Net deferred tax assets 2,197 1,050 Less valuation allowance (2,197 ) (1,050 ) Total deferred tax assets $ - $ - |
Schedule of change in the valuation allowance | Year ended July 31, (in thousands) Balance at beginning of year Additions charged to costs and expenses Deductions Balance at end of year 2019 Reserves deducted from deferred income taxes, net: Valuation allowance $ 1,050 $ 1147 $ - $ 2,197 2018 Reserves deducted from deferred income taxes, net: Valuation allowance $ 1,232 $ — $ (182 ) $ 1,050 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of weighted average assumptions in its BSM pricing model | Year ended July 31, 2019 2018 Expected term 6.0 years 6.0 years Volatility 74 % 71 % Risk free interest rate 2.7 % 2.1 % Dividends — — |
Schedule of option activity | Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at July 31, 2017 1,438 $ 1.59 Granted 180 2.57 Exercised (172 ) 1.35 Cancelled / forfeited (132 ) 3.29 Outstanding at July 31, 2018 1,314 $ 1.58 7.4 $ 2,055 Granted 27 1.80 Exercised (41 ) 0.13 Cancelled / forfeited (69 ) 1.99 Outstanding at July 31, 2019 1,231 $ 1.60 6.32 $ 642 Exercisable at July 31, 2019 1,107 $ 1.43 6.15 $ 642 |
Schedule of weighted average grant date fair value of options granted | July 31, 2019 2018 Weighted average grant date fair value of options granted $ 1.19 $ 1.38 Intrinsic value of options exercised 66 312 Fair value of awards vested 252 235 |
Schedule of restricted shares activity | Number of Shares Weighted Average Grant Date Fair Value Non-vested stock award award as of July 31, 2017 49,474 NA Granted 301,506 2.32 Vested (47,263 ) NA Forfeited (2,211 ) NA Non-vested stock award award as of July 31, 2018 301,506 $ 2.32 Granted - - Vested (106,131 ) 2.30 Forfeited - - Non-vested stock award award as of July 31, 2019 195,375 $ 2.33 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of change in the Company's liability to IDT | Years ended July 31, (in thousands) 2019 2018 Balance at beginning of year $ 1 $ 36 Payments by IDT on behalf of the Company 21 303 Cash repayments, net of advances (22 ) (338 ) Balance at end of year $ - $ 1 |
Business Segment and Geograph_2
Business Segment and Geographic Information (Tables) | 12 Months Ended |
Jul. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of net long-lived assets and total assets held outside of the United States | United States Foreign Total (in thousands) Long-lived assets, net: July 31, 2019 $ 3,304 $ 212 $ 3,516 July 31, 2018 $ 3,234 $ 235 $ 3,469 Total assets: July 31, 2019 $ 5,508 $ 3,499 $ 9,007 July 31, 2018 $ 7,661 $ 4,072 $ 11,733 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details) - shares shares in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Accounting Policies [Abstract] | ||
Basic weighted-average number of shares | 10,083 | 9,803 |
Effect of dilutive securities: | ||
Stock options | ||
Non-vested restricted Class B common stock | ||
Diluted weighted-average number of shares | 10,083 | 9,803 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies (Details 1) - shares shares in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Shares excluded from the calculation of diluted earnings per share | 1,426 | 1,616 |
Stock options [Member] | ||
Shares excluded from the calculation of diluted earnings per share | 1,231 | 1,314 |
Non-vested restricted Class B common stock [Member] | ||
Shares excluded from the calculation of diluted earnings per share | 195 | 302 |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies (Details Textual) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2019SegmentsCustomer | Jul. 31, 2018Customer | Aug. 01, 2019USD ($) | |
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Number of segments | Segments | Segments | 1 | ||
Description pertaining to income tax | Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. | ||
Business description | Zedge app has been installed more than 396 million times, boasts more than 33 million monthly active users, or MAU, and has consistently averaged in the ‘Top 60’ most popular free apps in the Google Play store in the United States. The Company conducts business as a single operating segment. | ||
ROU Asset Member | Subsequent Event [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Lease liabilities | $ | $ 522 | ||
Accounts Receivable [Member] | Customer One [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 32.00% | 46.00% | |
Number of customers | 3 | 3 | |
Accounts Receivable [Member] | Customer Two [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 17.00% | 28.00% | |
Number of customers | 3 | 3 | |
Accounts Receivable [Member] | Customer Three [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 17.00% | 14.00% | |
Number of customers | 3 | 3 | |
Revenue [Member] | Zedge Premium [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 70.00% | ||
Revenue [Member] | Customer One [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 28.00% | 35.00% | |
Number of customers | 3 | 3 | |
Revenue [Member] | Customer Two [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 28.00% | 22.00% | |
Number of customers | 3 | 3 | |
Revenue [Member] | Customer Three [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 10.00% | 14.00% | |
Number of customers | 3 | 3 | |
Revenue [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 90.00% | ||
Capitalized Software and Technology Development Costs [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Estimated useful lives of long-lived assets | 3 years | ||
Furniture and Fixtures [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Estimated useful lives of long-lived assets | 3 years | ||
Office Equipment [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Estimated useful lives of long-lived assets | 5 years | ||
Video Conference Equipment [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Estimated useful lives of long-lived assets | 7 years | ||
Computer Hardware [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Estimated useful lives of long-lived assets | 10 years | ||
Computer Software [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Estimated useful lives of long-lived assets | 20 years |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 8,816 | $ 10,833 |
Advertising revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 7,940 | 9,850 |
Service revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 592 | 757 |
Other revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 284 | $ 226 |
Revenue (Details Textual)
Revenue (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Revenue (Textual) | ||
Credits, description | If a user purchases Zedge Credits (ranging from 500 credits for $0.99 to 14,000 credits for $19.99), Google Play or iTunes retains 30% of the purchase price as its fee. When a user purchases Zedge Premium content, the artist or brand receives 70% of the actual revenue (“Royalty Payment”) and the Company receives the remaining 30%, which is recognized as Other Revenue. Some of the Zedge Premium content is available for print on demand merchandise, including phone cases and tee shirts fulfilled through third party vendors. When a user purchases a print-on-demand item, the artist or brand is paid 70% of the net profit, after accounting for cost-of-goods sold, shipping and handling, credit card processing, and other direct expenses, and the Company recognizes Other Revenue in the amount of the remaining 30%. | |
Royalty payments, description | The Company makes Royalty Payments to the artists and brands within sixty (60) days after the end of each calendar quarter. If the quarterly royalty amount is less than two hundred dollars ($200), the Company may defer payment to a later period in which the artist or brand surpasses the $200 threshold. The artist or brand forfeits any accrued royalty amounts below the $200 threshold upon expiration or termination of the artist’s license agreement with the Company. This provision will become effective on the first anniversary for all existing license agreements and for all new license agreements entered into on or after November 1, 2018. Additionally, the Company has established a minimum threshold of twenty-five dollars ($25) in accrued Royalty Payments in order for an artist or brand to maintain its license agreement. Accordingly, if an artist hasn’t generated a minimum of $25 in accrued Royalty Payments amount in a year, the Company may deduct up to $25 from the artist’s accrued Royalty Payment account. | |
Royalty aggregate amount | $ 56,000 | $ 9,000 |
Deferred revenue | $ 362,000 | |
Subscription revenue, description | Payment terms are stipulated as a specific number of days subsequent to the end of the month, generally ranging from 30 to 60 days. The Company endeavors to terminate relationships with smaller advertisers promptly if balances become past due. Since these smaller advertisers rely on the Company to derive their own revenue, they generally pay their outstanding balances on a timely basis. Historically, write-offs of revenue have been de minimis. Accordingly, the Company does not maintain a bad debt allowance. | |
Service revenue percentage for advertising inventory | 7.00% | |
Process subscription payments fee percent | 30.00% | |
Unsatisfied performance obligations, description | The Company also records deferred revenues related to the unsatisfied performance obligations with respect to the subscription revenue. As of July 31, 2019, the Company’s deferred revenue balance related to subscription was approximately $362,000, representing approximately 129,000 active subscribers. | |
Zedge Premium [Member] | ||
Revenue (Textual) | ||
Deferred revenue | $ 155,000 | 11,000 |
Subscription Revenue [Member] | ||
Revenue (Textual) | ||
Deferred revenue | 129,000 | |
New revenue streams [Member] | ||
Revenue (Textual) | ||
Deferred revenue | $ 517,000 | 11,000 |
Minimum [Member] | ||
Revenue (Textual) | ||
Payment terms | 30 days | |
Maximum [Member] | ||
Revenue (Textual) | ||
Payment terms | 60 days | |
Maximum [Member] | New revenue streams [Member] | ||
Revenue (Textual) | ||
Deferred revenue | $ 506,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
Assets: | ||
Foreign exchange forward contracts | ||
Liabilities: | ||
Foreign exchange forward contracts | 38 | 41 |
Fair Value on a Recurring Basis [Member] | Level 1 [Member] | ||
Assets: | ||
Foreign exchange forward contracts | ||
Liabilities: | ||
Foreign exchange forward contracts | ||
Fair Value on a Recurring Basis [Member] | Level 2 [Member] | ||
Assets: | ||
Foreign exchange forward contracts | ||
Liabilities: | ||
Foreign exchange forward contracts | 38 | 41 |
Fair Value on a Recurring Basis [Member] | Level 3 [Member] | ||
Assets: | ||
Foreign exchange forward contracts | ||
Liabilities: | ||
Foreign exchange forward contracts |
Derivative Instruments (Details
Derivative Instruments (Details) kr in Thousands, $ in Thousands | 12 Months Ended | |
Jul. 31, 2019USD ($) | Jul. 31, 2019NOK (kr) | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount | $ | $ 500,000 | |
Norway, Krone [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount | kr | kr 4,091,590 | |
Aug-19 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Settlement Date | Aug. 31, 2019 | Aug. 31, 2019 |
Amount | $ | $ 500,000 | |
Aug-19 [Member] | Norway, Krone [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount | kr | kr 4,091,590 |
Derivative Instruments (Detai_2
Derivative Instruments (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Derivatives not designated or not qualifying as hedging instruments | ||
Foreign exchange forward contracts | $ 38 | $ 41 |
Balance Sheet Location | Accrued expenses | Accrued expenses |
Derivative Instruments (Detai_3
Derivative Instruments (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Derivatives not designated or not qualifying as hedging instruments | ||
Foreign exchange forward contracts | $ (278) | $ (52) |
Location of Loss Recognized on Derivatives | Net loss resulting from foreign exchange transactions | Net loss resulting from foreign exchange transactions |
Derivative Instruments (Detai_4
Derivative Instruments (Details 3) kr in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Aug. 02, 2019USD ($) | Aug. 02, 2019NOK (kr) | Jul. 31, 2019USD ($) | Jul. 31, 2019NOK (kr) | |
Amount | $ | $ 500,000 | |||
NOK [Member] | ||||
Amount | kr | kr 4,091,590 | |||
Western Alliance Bank [Member] | ||||
Amount | $ | $ 2,400,000 | |||
Western Alliance Bank [Member] | NOK [Member] | ||||
Amount | kr | kr 21,276,320 | |||
Western Alliance Bank [Member] | Sep-19 [Member] | ||||
Settlement Date | Sep. 30, 2019 | Sep. 30, 2019 | ||
Amount | $ | $ 400,000 | |||
Western Alliance Bank [Member] | Sep-19 [Member] | NOK [Member] | ||||
Amount | kr | kr 3,562,280 | |||
Western Alliance Bank [Member] | Oct-19 [Member] | ||||
Settlement Date | Oct. 31, 2019 | Oct. 31, 2019 | ||
Amount | $ | $ 400,000 | |||
Western Alliance Bank [Member] | Oct-19 [Member] | NOK [Member] | ||||
Amount | kr | kr 3,559,960 | |||
Western Alliance Bank [Member] | Nov-19 [Member] | ||||
Settlement Date | Nov. 30, 2019 | Nov. 30, 2019 | ||
Amount | $ | $ 400,000 | |||
Western Alliance Bank [Member] | Nov-19 [Member] | NOK [Member] | ||||
Amount | kr | kr 3,489,200 | |||
Western Alliance Bank [Member] | Dec-19 [Member] | ||||
Settlement Date | Dec. 31, 2019 | Dec. 31, 2019 | ||
Amount | $ | $ 400,000 | |||
Western Alliance Bank [Member] | Dec-19 [Member] | NOK [Member] | ||||
Amount | kr | kr 3,556,640 | |||
Western Alliance Bank [Member] | Jan-20 [Member] | ||||
Settlement Date | Jan. 31, 2020 | Jan. 31, 2020 | ||
Amount | $ | $ 400,000 | |||
Western Alliance Bank [Member] | Jan-20 [Member] | NOK [Member] | ||||
Amount | kr | kr 3,554,680 | |||
Western Alliance Bank [Member] | Feb-20 [Member] | ||||
Settlement Date | Feb. 28, 2020 | Feb. 28, 2020 | ||
Amount | $ | $ 400,000 | |||
Western Alliance Bank [Member] | Feb-20 [Member] | NOK [Member] | ||||
Amount | kr | kr 3,553,560 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Capitalized software and technology development costs | $ 9,555 | $ 8,103 |
Other | 310 | 308 |
Property and equipment, gross | 9,865 | 8,411 |
Less accumulated depreciation and amortization | (6,469) | (5,067) |
Total | $ 3,396 | $ 3,344 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Property and Equipment (Textual) | ||
Depreciation and amortization expense | $ 1,427 | $ 1,033 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning Balance | $ 2,447 | $ 2,518 |
Foreign currency translation adjustments | (181) | (71) |
Ending Balance | $ 2,266 | $ 2,447 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued vacation | $ 503 | $ 559 |
Accrued payroll taxes | 183 | 184 |
Accrued payroll and bonuses | 235 | 393 |
Accrued severance | 83 | |
Hedge payable | 38 | 41 |
Accrued professional fees | 57 | 96 |
Due to artists | 56 | 9 |
Other | 100 | 67 |
Total accrued expenses | $ 1,172 | $ 1,432 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Jul. 31, 2019USD ($) |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |
2020 | $ 497 |
2021 | 293 |
2022 | 107 |
Total | 897 |
Real estate leases [Member] | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |
2020 | 297 |
2021 | 293 |
2022 | 107 |
Total | 697 |
Software as a Service ("SaaS") license [Member] | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |
2020 | 200 |
2021 | |
2022 | |
Total | $ 200 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2014 | Jul. 31, 2019 | Jul. 31, 2018 |
Commitments and Contingencies (Textual) | |||
Lawsuit approximate amount | $ 1,600,000 | ||
Rental expense under operating leases | $ 354,000 | $ 328,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (3,199) | $ (1,245) |
Foreign | (129) | (88) |
Loss before income taxes | $ (3,328) | $ (1,333) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Current: | ||
Foreign | $ 15 | $ 59 |
Federal | ||
State | 1 | (1) |
Total current expense | 16 | 58 |
Deferred: | ||
Foreign | 172 | |
Federal | ||
State | ||
Total deferred expense | 172 | |
Provision for income taxes | $ 16 | $ 230 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
U.S federal income tax (benefit) at statutory rate | $ (699) | $ (352) |
State tax (net of federal benefit) | (449) | 136 |
Change in valuation allowance | 1,147,000 | (182,000) |
Foreign tax rate differential | 7 | 10 |
Stock based compensation and employement credits | (3) | (10) |
Impact of Tax Cuts and Jobs Act | 393 | |
Transition Tax | 161,000 | |
Other | 13 | 74 |
Provision for (benefit from) income taxes | $ 16 | $ 230 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 1,616 | $ 698 |
Reserves and accruals | 370 | 215 |
Stock-based compensation | 211 | 137 |
Net deferred tax assets | 2,197 | 1,050 |
Less valuation allowance | (2,197) | (1,050) |
Total deferred tax assets |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Change in the valuation allowance for deferred tax assets | ||
Balance at beginning of year | $ 1,050 | $ 1,232 |
Additions charged to costs and expenses | 1,147 | |
Deductions | (182) | |
Balance at end of year | $ 2,197 | $ 1,050 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Dec. 22, 2017 | Jul. 31, 2019 | Jul. 31, 2018 | |
Income Taxes (Textual) | |||
Future taxable income rate | 80.00% | ||
Federal and state net operating loss carryforwards expire date | Jul. 31, 2036 | ||
Net operating loss ("NOL") carryforwards, Foreign | $ 143,000 | ||
Deferred tax assets, decrease in valuation allowance | 1,147,000 | $ (182,000) | |
Transition tax | $ 161,000 | ||
Blended rate | 26.42% | ||
Other current assets | 103 | $ 316 | |
Selling, general and administrative expense | 8,897 | 9,581 | |
Interest and penalties on income taxes | 3,800 | ||
State Operating Loss Carryforward [Member] | |||
Income Taxes (Textual) | |||
Net operating loss ("NOL") carryforwards, Domestic | 6,000,000 | ||
Federal Operating Loss Carryforward [Member] | |||
Income Taxes (Textual) | |||
Net operating loss ("NOL") carryforwards | 2,300,000 | ||
Net operating loss ("NOL") carryforwards, Domestic | 4,600,000 | ||
Norway Skattefunn [Member] | |||
Income Taxes (Textual) | |||
Other current assets | 35,000 | 208,000 | |
Selling, general and administrative expense | $ 0 | 39,000 | |
Tax Cuts And Jobs Act [Member] | |||
Income Taxes (Textual) | |||
Deferred tax assets, decrease in valuation allowance | $ 393,000 | ||
Minimum [Member] | |||
Income Taxes (Textual) | |||
Change in the federal rate | 21.00% | ||
Maximum [Member] | |||
Income Taxes (Textual) | |||
Change in the federal rate | 35.00% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Stock Options [Member] | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Expected term | 6 years | 6 years |
Volatility | 74.00% | 71.00% |
Risk free interest rate | 2.70% | 2.10% |
Dividends |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Number of Options | ||
Outstanding at beginning | 1,314 | 1,438 |
Granted | 27,000 | 180,000 |
Exercised | (41) | (172) |
Cancelled / forfeited | (69) | (132) |
Outstanding at end | 1,231 | 1,314 |
Exercisable | 1,107 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning | $ 1.58 | $ 1.59 |
Granted | 1.80 | 2.57 |
Exercised | 0.13 | 1.35 |
Cancelled / forfeited | 1.99 | 3.29 |
Outstanding at end | 1.60 | $ 1.58 |
Exercisable | $ 1.43 | |
Weighted-Average Remaining Contractual Term (in years) | ||
Outstanding at end | 6 years 3 months 26 days | 7 years 4 months 24 days |
Exercisable | 6 years 1 month 24 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 642 | $ 2,055 |
Exercisable | $ 642 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Weighted average grant date fair value of options granted | $ 1.19 | $ 1.38 |
Intrinsic value of options exercised | $ 66 | $ 312 |
Fair value of awards vested | $ 252 | $ 235 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details 3) - $ / shares | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Weighted Average Grant Date Fair Value | ||
Granted | $ 1.19 | $ 1.38 |
Restricted Stock [Member] | ||
Number of Shares | ||
Balance at beginning | 301,506 | 49,474 |
Granted | 301,506,000 | |
Vested | (106,131) | (47,263) |
Forfeited | (2,211) | |
Balance at end | 195,375 | 301,506 |
Weighted Average Grant Date Fair Value | ||
Balance at beginning | $ 2.32 | |
Granted | 2.32 | |
Vested | 2.30 | |
Forfeited | ||
Balance at end | $ 2.33 | $ 2.32 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details Textual) $ in Thousands | Feb. 07, 2018USD ($)shares | Jul. 16, 2018 | Nov. 30, 2017USD ($)shares | Oct. 31, 2017USD ($)Customershares | Oct. 18, 2017shares | Sep. 30, 2017 | Sep. 30, 2016USD ($)shares | Jul. 31, 2019USD ($)shares | Jul. 31, 2018shares |
Stock-Based Compensation (Textual) | |||||||||
Unrecognized compensation expense | $ | $ 63,000 | ||||||||
Recognized over a weighted-average period | 4 months 24 days | ||||||||
Cancelled shares of these options grant | 69,000 | 132,000 | |||||||
Stock, description | The Company received proceeds of $5,291 from the exercise of stock options for which the Company issued 40,700 shares of its Class B common stock. In fiscal 2018, the Company received proceeds of $231,810 from the exercise of stock options for which the Company issued 172,239 shares of its Class B common stock. | ||||||||
Equity grant of options to purchase | 124,435,000 | ||||||||
Restricted Stock [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Options granted | 108,553,000 | ||||||||
Restricted Stock, description | The Company entered into an Agreement and Release with Freeform and certain of its former employees, pursuant to which the Company obtained releases for certain employees from their Freeform employment agreements in exchange for the repayment of certain of Freeform's liabilities. The Company paid Freeform $125,000 in cash to pay its operating liabilities (with any excess to be refunded to the Company), and the Company paid the holders of Freeform's convertible promissory notes cash of $97,567 and issued the noteholders a total of 126,679 shares of Zedge Class B common stock with a fair value of $242,000 on issuance, which are subject to a two-year lock-up agreement. The Company believes this transaction did not qualify as a business combination under ASU 2017-01, which the Company adopted early on August 1, 2017, and as such accounted for the payment of the Freeform liabilities that aggregated $465,000, as selling, general and administrative expense in the three months ended October 31, 2017. In July 2018, the Company received a $25,000 refund from Freeform. Accordingly, the Company reduced the Freeform acquihire costs from $465,000 to $440,000. | There were 195,375 non-vested restricted shares of the Company's Class B common stock. At July 31, 2019, there was $335,000 of total unrecognized compensation cost related to these non-vested restricted shares, which is expected to be recognized over a weighted-average period of 1.8 years. | |||||||
Aggregate grant date fair value | $ | $ 330,000 | ||||||||
Vested shares, description | These shares shall vest in equal amounts on February 7, 2019, 2020 and 2021. | ||||||||
Stock Options [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Options granted | 27,000 | 180,000 | |||||||
Vesting period | 3 years | 3 years | 10 years | ||||||
Options to purchase shares of the Company's Class B common stock | 231,327,000 | ||||||||
Unrecognized compensation expense | $ | $ 85,000 | $ 159,000 | $ 681,000 | ||||||
Cancelled shares of these options grant | 53,026,000 | ||||||||
Annual limit shares per grantee | 60,000 | ||||||||
Number of non-executive employees | Customer | 55 | ||||||||
Stock, description | The Compensation Committee approved two equity grants of options to purchase an aggregate of 27,493 shares of our Class B common stock to 6 non-executive employees. The options vest over a three-year period. Unrecognized compensation expense related to this grant was an aggregate of $33,000 based on the estimated fair value of the options on the grant dates. | ||||||||
Common Class B [Member] | Restricted Stock [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Restricted Stock, description | The Company granted 30,558 restricted shares of its Class B common stock, which vested immediately, to its non-employee Board of Directors at an average grant date fair value of $2.33 per share. In fiscal 2018, the Company granted 49,533 restricted shares of its Class B common stock, which vested immediately, to its non-employee Board of Directors at an average grant date fair value of $3.00 per share. | ||||||||
2016 Incentive Plan [Member] | Restricted Stock [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Options granted | 192,953,000 | ||||||||
Vesting period | 4 years | ||||||||
Aggregate grant date fair value | $ | $ 369,000 | ||||||||
2016 Incentive Plan [Member] | Stock Options [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Options granted | 53,026,000 | ||||||||
2016 Incentive Plan [Member] | Common Class B [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Options granted | 1,041,000 | 374,000 | |||||||
Inclusive of the additional | 350,000 | ||||||||
Restricted Stock, description | The remaining 43,107 such restricted shares and the remaining such 3,713 DSUs were vested. | As such, 111,842 shares of restricted stock and 7,767 DSUs were issued (adjusted for forfeitures) pursuant to the terms of the 2016 Incentive Plan. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Balance at beginning of year | $ 1 | $ 36 |
Payments by IDT on behalf of the Company | 21 | 303 |
Cash repayments, net of advances | (22) | (338) |
Balance at end of year | $ 1 |
Related Party Transactions (D_2
Related Party Transactions (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Appboy, Inc. [Member] | ||
Related Party Transactions (Textual) | ||
Related party payments | $ 171,000 | $ 174,000 |
Business Segment and Geograph_3
Business Segment and Geographic Information (Details) - USD ($) $ in Thousands | Jul. 31, 2019 | Jul. 31, 2018 |
Segment Reporting Information [Line Items] | ||
Long-lived assets, net | $ 3,516 | $ 3,469 |
Total assets | 9,007 | 11,733 |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets, net | 3,304 | 3,234 |
Total assets | 5,508 | 7,661 |
Foreign [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets, net | 212 | 235 |
Total assets | $ 3,499 | $ 4,072 |
Business Segment and Geograph_4
Business Segment and Geographic Information (Details Textual) | 12 Months Ended |
Jul. 31, 2018Segments | |
Business Segment and Geographic Information Details (Textual) | |
Number of operating segments | 1 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Nov. 16, 2016 | Sep. 27, 2016 | Jul. 31, 2019 | |
Revolving Credit Facility (Textual) | |||
Loan and security agreement with Western Alliance Bank for revolving credit facility | $ 2,500,000 | ||
Line of credit maturity date | Sep. 26, 2020 | ||
Line of credit facility annual fee | $ 12,500 | ||
Forward contracts, description | There were $0.5 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility, which reduced the available borrowing under the revolving credit facility by $50,000 | ||
Foreign Exchange Contract [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 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. This limit was raised to approximately $6.5 million pursuant to the Loan and Security Modification Agreement dated May 30, 2018. The available borrowing under the revolving credit facility is 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% of the nominal amount of the foreign exchange contracts in effect at the relevant time. | ||
Foreign exchange, description | In December 2016, the applicable foreign exchange reserve percentage was changed so that the reduction of available borrowing for major currency forward contracts of less than six months tenor is set at 10% of the nominal amount of the foreign exchange contracts, | ||
Outstanding foreign exchange contracts amount | $ 50,000 | ||
Revolving Credit Facility [Member] | |||
Revolving Credit Facility (Textual) | |||
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 5.0% or the prime rate plus 1.25%. | ||
Available borrowing reduction | $ 50,000 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Defined Contribution Plan (Textual) | ||
Contribution plan cost | $ 48,000 | $ 33,000 |
Common Class B [Member] | ||
Defined Contribution Plan (Textual) | ||
Contributed plan, shares issued | 19,479 | 11,130 |
Investment in Privately-Held _2
Investment in Privately-Held Company (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2019 | Aug. 31, 2018 | |
Investments in Privately-Held Company [Abstract] | ||
Investments | $ 250,000 | |
Equity ownership interest | 1.00% | |
Impairment charges | $ 250,000 | |
Non-marketable equity securities | $ 0 |