Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Oct. 31, 2022 | Dec. 12, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | ZEDGE, INC. | |
Trading Symbol | ZDGE | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --07-31 | |
Amendment Flag | false | |
Entity Central Index Key | 0001667313 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Oct. 31, 2022 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 1-37782 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-3199071 | |
Entity Address, Address Line One | 1178 Broadway | |
Entity Address, Address Line Two | 3rd Floor #1450 | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10001 | |
City Area Code | (330) | |
Local Phone Number | 577-3424 | |
Title of 12(b) Security | Class B common stock, par value $.01 per share | |
Security Exchange Name | NYSE | |
Entity Interactive Data Current | Yes | |
Class A Common Stock | ||
Document Information Line Items | ||
Entity Common Stock, Shares Outstanding | 524,775 | |
Class B Common Stock | ||
Document Information Line Items | ||
Entity Common Stock, Shares Outstanding | 14,250,011 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 31, 2022 | Jul. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 18,419 | $ 17,085 |
Trade accounts receivable | 2,481 | 2,411 |
Prepaid expenses and other receivables | 601 | 396 |
Total current assets | 21,501 | 19,892 |
Property and equipment, net | 1,789 | 1,660 |
Intangible assets, net | 20,446 | 21,025 |
Goodwill | 10,646 | 10,788 |
Deferred tax assets, net | 861 | 861 |
Other assets | 353 | 400 |
Total assets | 55,596 | 54,626 |
Current liabilities: | ||
Trade accounts payable | 1,377 | 1,180 |
Deferred acquisition payment payable | 962 | |
Contingent consideration-current portion | 17 | 215 |
Accrued expenses and other current liabilities | 3,300 | 2,898 |
Deferred revenues | 3,084 | 3,402 |
Total current liabilities | 7,778 | 8,657 |
Term Loan, net of deferred financing costs | 1,982 | |
Contingent consideration-long term portion | 1,776 | 1,728 |
Other liabilities | 20 | 53 |
Total liabilities | 11,556 | 10,438 |
Commitments and contingencies (Note 10) | ||
Stockholders’ equity: | ||
Preferred stock, $.01 par value; authorized shares—2,400; no shares issued and outstanding | ||
Class A common stock, $.01 par value; authorized shares—2,600; 525 shares issued and outstanding at October 31, 2022 and July 31, 2022 | 5 | 5 |
Class B common stock, $.01 par value; authorized shares—40,000; 13,981 shares issued and 13,777 shares outstanding at October 31, 2022, and 13,951 shares issued and 13,877 outstanding at July 31, 2022 | 140 | 139 |
Additional paid-in capital | 44,198 | 43,609 |
Accumulated other comprehensive loss | (1,650) | (1,391) |
Retained earnings | 1,991 | 2,160 |
Treasury stock, 204 shares at October 31, 2022 and 74 shares at July 31, 2022, at cost | (644) | (334) |
Total stockholders’ equity | 44,040 | 44,188 |
Total liabilities and stockholders’ equity | $ 55,596 | $ 54,626 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares shares in Thousands | Oct. 31, 2022 | Jul. 31, 2022 |
Preferred stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,400 | 2,400 |
Preferred stock, shares issued | ||
Preferred stock, and outstanding | ||
Treasury stock, shares | 204 | 74 |
Class A Common Stock | ||
Common stock, par value (in Dollars per share) | $ 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 (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 13,981 | 13,951 |
Common stock, shares outstanding | 13,777 | 13,877 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues, net | $ 6,900 | $ 6,028 |
Costs and expenses: | ||
Direct cost of revenues (excluding amortization of capitalized software and technology development costs which is included below) | 632 | 310 |
Selling, general and administrative | 5,826 | 2,732 |
Depreciation and amortization | 793 | 398 |
Change in fair value of contingent consideration | (150) | |
(Loss) income from operations | (201) | 2,588 |
Interest and other income, net | 35 | 13 |
Net loss resulting from foreign exchange transactions | (76) | (10) |
(Loss) income before income taxes | (242) | 2,591 |
(Benefit from) provision for income taxes | (73) | 536 |
Net (Loss) Income | (169) | 2,055 |
Other comprehensive (loss) income: | ||
Changes in foreign currency translation adjustment | (259) | 142 |
Total other comprehensive (loss) income | (259) | 142 |
Total comprehensive (loss) income | $ (428) | $ 2,197 |
(Loss) income per share attributable to Zedge, Inc. common stockholders: | ||
Basic (in Dollars per share) | $ (0.01) | $ 0.14 |
Diluted (in Dollars per share) | $ (0.01) | $ 0.14 |
Weighted-average number of shares used in calculation of (loss) income per share: | ||
Basic (in Shares) | 14,330 | 14,281 |
Diluted (in Shares) | 14,330 | 15,031 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total |
Balance at Jul. 31, 2021 | $ 5 | $ 139 | $ 41,664 | $ (997) | $ (7,554) | $ (102) | $ 33,155 |
Balance (in Shares) at Jul. 31, 2021 | 525 | 13,923 | 58 | ||||
Stock-based compensation | 319 | 319 | |||||
Stock-based compensation (in Shares) | 12 | ||||||
Purchase of treasury stock | $ (232) | (232) | |||||
Purchase of treasury stock (in Shares) | 16 | ||||||
Foreign currency translation adjustment | 142 | 142 | |||||
Net income (loss) | 2,055 | 2,055 | |||||
Balance at Oct. 31, 2021 | $ 5 | $ 139 | 41,983 | (855) | (5,499) | $ (334) | 35,439 |
Balance (in Shares) at Oct. 31, 2021 | 525 | 13,935 | 74 | ||||
Balance at Jul. 31, 2022 | $ 5 | $ 139 | 43,609 | (1,391) | 2,160 | $ (334) | 44,188 |
Balance (in Shares) at Jul. 31, 2022 | 525 | 13,951 | 74 | ||||
Stock-based compensation | $ 1 | 589 | 590 | ||||
Stock-based compensation (in Shares) | 30 | ||||||
Purchase of treasury stock | $ (310) | (310) | |||||
Purchase of treasury stock (in Shares) | 130 | ||||||
Foreign currency translation adjustment | (259) | (259) | |||||
Net income (loss) | (169) | (169) | |||||
Balance at Oct. 31, 2022 | $ 5 | $ 140 | $ 44,198 | $ (1,650) | $ 1,991 | $ (644) | $ 44,040 |
Balance (in Shares) at Oct. 31, 2022 | 525 | 13,981 | 204 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Operating activities | ||
Net (loss) income | $ (169) | $ 2,055 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation | 14 | 12 |
Amortization of intangible assets | 579 | 115 |
Amortization of capitalized software and technology development costs | 200 | 271 |
Change in fair value of contingent consideration | (150) | |
Stock-based compensation | 589 | 319 |
Change in assets and liabilities: | ||
Trade accounts receivable | (70) | (295) |
Prepaid expenses and other current assets | (205) | (279) |
Other assets | 14 | (8) |
Trade accounts payable and accrued expenses | 598 | 522 |
Deferred revenue | (318) | (18) |
Net cash provided by operating activities | 1,082 | 2,694 |
Investing activities | ||
Final payments for asset acquisitions | (962) | |
Capitalized software and technology development costs and purchase of equipment | (349) | (188) |
Net cash used in investing activities | (1,311) | (188) |
Financing activities | ||
Proceed from term loan payable | 2,000 | |
Payment of deferred financing costs | (18) | |
Purchase of treasury stock in connection with share buyback program and restricted stock vesting | (310) | (232) |
Net cash provided by (used in) financing activities | 1,672 | (232) |
Effect of exchange rate changes on cash and cash equivalents | (109) | 67 |
Net increase in cash and cash equivalents | 1,334 | 2,341 |
Cash and cash equivalents at beginning of period | 17,085 | 24,908 |
Cash and cash equivalents at end of period | 18,419 | 27,249 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Acquisition of Emojipedia through release of escrow funds of $4,776, plus additional amounts due to seller of $1,923 and legal fee of $12 | 6,711 | |
Accounts receivable from certain Emojipedia websites collected by Seller | $ 24 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parentheticals) $ in Thousands | 3 Months Ended |
Oct. 31, 2021 USD ($) | |
Statement of Cash Flows [Abstract] | |
Escrow funds | $ 4,776 |
Due to seller | 1,923 |
Legal fee | $ 12 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1—Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Zedge, Inc. and its subsidiaries, GuruShots Ltd. (“GuruShots”), Zedge Europe AS and Zedge Lithuania UAB (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended October 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2023 or any other period. The balance sheet at July 31, 2022 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”). 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 2022 refers to the fiscal year ending July 31, 2022). Reportable Segments Effective August 1, 2022, the Company revised the presentation of segment information to reflect the addition, following the acquisition of GuruShots, of the GuruShots App to the Company’s portfolio of mobile apps resulting from the GuruShots acquisition (see Note 5). As such, the Company now reports operating results through two reportable segments: Zedge App and GuruShots App, as further discussed in Note 12. Use of Estimates The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ materially from the Company’s estimates due to risks and uncertainties, including uncertainty in the current economic environment due to various global events. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers Revenue from Contracts with Customers With the exception of the standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended October 31, 2022, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2022, that are of significance or potential significance to the Company. Significant Accounting Policies Other than intangible assets described below, there have been no material changes to the Company’s significant accounting policies from its Annual Report on Form 10-K for the fiscal year ended July 31, 2022. Related Party Transactions The Company has no material related party transactions that have impacted the consolidated balance sheets for the years ended October 31, 2022 or July 31, 2022, or the consolidated statements of operations and comprehensive (loss) income for the three months ended October 31, 2022 or 2021. |
Revenue
Revenue | 3 Months Ended |
Oct. 31, 2022 | |
Revenue [Abstract] | |
Revenue | Note 2—Revenue Disaggregation of Revenue The following table presents revenue disaggregated by segment and type (in thousands): Three Months Ended 2022 2021 %Changes Zedge App Advertising revenue $ 3,957 $ 4,569 -13 % Paid subscription revenue 391 960 -7 % Zedge Premium revenue 187 186 1 % Emojipedia revenue 260 310 -16 % Applovin integration bonus 250 - nm Other revenues 26 3 767 % Total Zedge App revenue 5,571 6,028 -8 % GuruShots App Virtual items used for online game 1,329 - nm Total revenue $ 6,900 $ 6,028 14 % nm-not meaningful Contract Balances The Company enters into contracts with its customers, which may give rise to contract liabilities (deferred revenue) and contract assets (unbilled revenue). The payment terms and conditions within the Company’s contracts vary by products or services purchased, the substantial all of which are due in less than one year. When the timing of revenue recognition differs from the timing of payments made by customers, the Company recognizes only deferred revenue (customer payment is received in advance of performance). The Company does not have unbilled revenue (its performance precedes the billing date). Deferred revenues On April 1, 2022, the Company received from AppLovin Corporation a one-time integration bonus of $2 million for migrating to their mediation platform. This amount is being amortized over initial estimated service period of 24 months. As of October 31, 2022, the Company’s deferred revenue balance related to this bonus was approximately $1.4 million. As of July 31, 2022, the Company’s deferred revenue balance related to this bonus was approximately $1.7 million. The Company records deferred revenues related to the unsatisfied performance obligations with respect to subscription revenue. As of October 31, 2022, the Company’s deferred revenue balance related to paid subscriptions was approximately $1.4 million related to approximately 674,000 active subscribers. As of July 31, 2022, the Company’s deferred revenue balance related to paid subscribers was approximately $1.5 million, related to approximately 692,000 active subscribers. The amount of revenue related to subscribers recognized in the three months ended October 31, 2022 that was included in the deferred balance at July 31, 2022 was $0.7 million. The Company also 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 or upon expiration of the Zedge Credits upon 180 days of account inactivity. As of October 31, 2022, and July 31, 2022, the Company’s deferred revenue balance related to Zedge Premium was approximately $252,000 and $259,000, respectively. Total deferred revenues decreased by $0.3 million from $3.4 million at July 32, 2022 to $3.1 million at October 31, 2022, primarily attributed to the amortization of the integration bonus mentioned above. Significant Judgments The advertising networks and advertising exchanges to which the Company sell its inventory 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. Practical Expedients The Company expenses the fees retained by Google Play related to subscription revenue when incurred as marketing expense because the duration of the contracts for which the Company pays commissions are less than one year. These costs are included in the selling, general and administrative expenses of the condensed consolidated statements of operations and comprehensive (loss) income. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Oct. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 3—Fair Value Measurements The following tables present the balance of assets and liabilities measured at fair value on a recurring basis (in thousands): Level 1 Level 2 Level 3 Total October 31, 2022 Liabilities: Contingent consideration-short term $ - $ - $ 17 $ 17 Contingent consideration-long term $ - $ - $ 1,776 $ 1,776 Foreign exchange forward contracts $ - $ 101 $ - $ 101 July 31, 2022 Liabilities: Contingent consideration-short term $ - $ - $ 215 $ 215 Contingent consideration-long term $ - $ - $ 1,728 $ 1,728 Foreign exchange forward contracts $ - $ 141 $ - $ 141 (1) – quoted prices in active markets for identical assets or liabilities (2) – observable inputs other than quoted prices in active markets for identical assets and liabilities (3) – no observable pricing inputs in the market Contingent Consideration Contingent consideration related to the business combinations discussed below in Note 5 are classified within Level 3 of the fair value hierarchy as the determination of fair value uses considerable judgement and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The following table provides a rollforward of the contingent consideration related to the GuruShots acquisition (in thousands): Balance at July 31, 2022 $ 1,943 Change in fair value (150 ) Balance at October 31, 2022 $ 1,793 The overall fair value of the contingent consideration decreased by $150 thousand during the three months ended October 31, 2022, due primarily to the decrease in the likelihood that certain contingent milestones would be achieved. Fair Value of Other Financial Instruments Fair value of the outstanding foreign exchange forward contracts are marked to market price at the end of each measurement period. The Company’s other financial instruments at October 31, 2022 and July 31, 2022 included trade accounts receivable and trade accounts payable. The carrying amounts of the trade accounts receivable and trade accounts payable approximated fair value due to their short-term nature. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Oct. 31, 2022 | |
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 (USD) to Norwegian Kroner (NOK) and USD to Euro (EUR) exchange rates. 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 11). The Company does not apply hedge accounting to these contracts, and therefore the changes in fair value are recorded in unaudited condensed consolidated statements of operations and comprehensive income. 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 October 31, 2022, were as follows: Settlement Date U.S. Dollar NOK Nov-22 225,000 2,000,925 Dec-22 225,000 2,297,948 Jan-23 225,000 2,296,103 Feb-23 225,000 2,294,685 Mar-23 225,000 2,293,065 Apr-23 225,000 2,291,355 May-23 225,000 2,317,545 Total $ 1,575,000 15,791,626 Settlement Date U.S. Dollar EUR Nov-22 225,000 201,848 Dec-22 225,000 222,332 Jan-23 225,000 221,653 Feb-23 225,000 221,195 Mar-23 225,000 220,826 Apr-23 225,000 220,459 May-23 225,000 220,070 Total $ 1,575,000 1,528,383 The fair value of outstanding derivative instruments recorded in the accompanying unaudited condensed consolidated balance sheets were as follows: Assets and Liabilities Derivatives: Balance Sheet Location October 31, July 31, Derivatives not designated or not qualifying as hedging instruments (in thousands) Foreign exchange forward contracts Accrued expenses and other current liabilities $ 101 $ 141 The effects of derivative instruments on the condensed consolidated statements of operations and comprehensive (loss) income were as follows: Three Months Ended Amount of (Loss) Gain Recognized on Derivatives 2022 2021 Derivatives not designated or not qualifying as hedging instruments Location of Loss Recognized on Derivatives (in thousands) Foreign exchange forward contracts Net loss resulting from foreign exchange transactions $ (121 ) $ 10 |
Business Combination and Assets
Business Combination and Assets Acquisition | 3 Months Ended |
Oct. 31, 2022 | |
Business Combinations [Abstract] | |
Business Combination and Assets Acquisition | Note 5—Business Combination and Assets Acquisition GuruShots Acquisition On April 12, 2022, the Company consummated the acquisition of 100% of the outstanding equity securities of GuruShots, Ltd., an Israeli company that operates a platform used for its competitive photography game available across iOS, Android and the web. The acquisition was effected pursuant to a Share Purchase Agreement (the “SPA”) between the Company, GuruShots and the holders of the GuruShots equity interests. This acquisition was accounted for as a business combination under the acquisition method of accounting and the results of operations of GuruShots have been included in the Company’s results of operations as of the acquisition date. The purchase price for the equity securities of GuruShots consists of approximately $18 million in cash paid at closing and contingent payments (the “Earnout”) of up to a maximum of $8.4 million due on each of the first and second anniversaries from the closing, payable either in cash or Class B common stock of the Company or a combination thereof, at the Company’s discretion, and subject to GuruShots achieving certain financial targets set forth in the SPA. The fair value of the earnout amount at the acquisition date was estimated at $5.9 million based on a Monte Carlo simulation model in an option pricing framework, whereby a range of possible scenarios were simulated. This fair value was reduced from $5.9 million to $1.9 million as of July 31, 2022 and further reduced to $1.8 million as of October 31, 2022. See Note 3, Fair Value Measurements Under the SPA, the Company has agreed to make certain minimum investments in user acquisition for GuruShots in the period covered by the Earnout, subject to GuruShots maintaining agreed upon levels of Return On Ad Spend (“ROAS”). In addition, the Company has committed to a retention pool of $4 million in cash and 626,242 shares of the Company Class B common stock (the number of shares was determined based on a value of $4 million or $6.39 per share which was the volume weighted average closing prices of the Class B common stock on the NYSE American Exchange for the thirty trading days ended April 12, 2022) for GuruShots’ founders and employees that will be payable or vest, as applicable, over three years from closing based on the beneficiaries thereof remaining employed by the Company or a subsidiary. The parties to the SPA have made customary representations, warranties and covenants therein. The assertions embodied in those representations and warranties were made for purposes of the SPA and are subject to qualifications and limitations agreed by the respective parties in connection with negotiating the terms of the SPA. The cash purchase price and the earnout have been allocated to GuruShots’ tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values. The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as the Company obtains additional information for those estimates during the measurement period (up to one year from the acquisition date). The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities was recorded as goodwill. The Company will record measurement period adjustments based on its ongoing valuation and purchase price allocation procedures. The Company is still finalizing the valuation and purchase price allocation as it relates to the net working capital amount in the table below. The allocation of the preliminary purchase price is as follows (in thousands): (Dollar Amounts in Thousands) Purchase price consideration: Cash consideration paid at close $ 15,242 Cash contributed to escrow accounts at close 2,700 Cash deducted from purchase price and contributed to GuruShots’ working capital 58 Fair value of contingent consideration to be achieved at year 1 3,396 Fair value of contingent consideration to be achieved at year 2 2,508 Fair value of total consideration transferred 23,904 Total purchase price, net of cash acquired $ 23,384 Fair value allocation of purchase price: Cash and cash equivalents $ 520 Trade accounts receivable 282 Prepaid expenses 145 Property and equipment, net 17 Other assets (including ROU) 151 Accounts payable and accrued expenses (1,351 ) Operating lease liabilities, current (53 ) Operating lease liabilities, noncurrent (34 ) Acquired intangible assets 15,320 Goodwill 8,907 Total purchase price $ 23,904 The cash consideration paid includes $2.7 million deposited with the escrow agent that is available to satisfy for post-closing indemnification claims made within 18 months of the acquisition date. There have been no claims made as of October 31, 2022. The earnout amount to be paid (up to the maximum of $16.8 million) will be determined based upon the satisfaction of certain defined operational milestones and will be remeasured at fair value at each reporting period through earnings. As the fair value is based on unobservable inputs, the liabilities are included in Level 3 of the fair value measurement hierarchy. The unobservable inputs used in the determination of the fair value of the earnout which is assumed to be paid in cash include managements assumptions about the likelihood of payment based on the satisfaction of certain defined operational milestones and discount rates based on cost of debt. The Company has issued 616,848 (net of forfeiture of 9,394 shares) shares of the Company’s Class B common in respect of the retention pool to the GuruShots founders and employees, which will be held by a trustee based in Israel. These shares will vest, in equal tranches, over three years assuming that the recipients remain employed by the Company or a subsidiary through the vesting dates. The $4 million fair value of these unvested restricted stock is not included as purchase consideration above, as it has a post-combination service requirement and will be accounted for separately from the business combination as stock compensation expense. Additionally, the founders and employees are also entitled to receive an aggregate of up to $4 million retention cash bonus over three years subject to the same continued service requirement, which was not included in the purchase price above. As of October 31, 2022, the Company has accrued $766 thousand in retention bonus which is included in the accrued expense and other current liabilities. Identified intangible assets consist of trade names, technology and customer relationships. The fair value of intangible assets and the determination of their respective useful lives were made in accordance with ASC 805 and are outlined in the table below: (Dollar Amounts in Thousands) Asset Value Useful Life Identified intangible assets: Trade names $ 3,570 12 years Acquired developed technology 3,950 5 years Customer relationships 7,800 10 years Total identified intangible assets $ 15,320 The Company’s initial fair value estimates related to the various identified intangible assets were determined under various valuation approaches including the Relief-from-Royalty Method and Multi-period excess earnings. These valuation methods require management to project revenues, operating expenses, working capital investment, capital spending and cash flows for GuruShots over a multiyear period, as well as determine the weighted average cost of capital to be used as a discount rate. The Company amortizes its intangible assets assuming no residual value over periods in which the economic benefit of these assets is consumed. The Company recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. The Company believes that the investment value of the future enhancement of the Company’s products and offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $8.9 million of goodwill, which has been reduced by $180,000 subsequently related to accounts payable balance as of the closing date. The goodwill is deductible for tax purposes. Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) are not included as a component of consideration transferred but are required to be expensed as incurred. During fiscal 2022, we incurred $860,000 of acquisition-related costs, which are included in Selling, General and Administrative expenses on the Company’s condensed consolidated statements of operations and comprehensive (loss) income. Emojipedia Acquisition Pursuant to an Asset Purchase Agreement, on August 1, 2021 (“Closing”), the Company consummated the acquisition of substantially all of the assets of Emojipedia Pty Ltd, a proprietary company organized under the laws of Australia. The total purchase price of the assets was $6.7 million of which $4.8 million was paid on August 2, 2021, $917,000 was paid on February 1, 2022, and the remaining $962,000 paid on August 2, 2022. The $4.8 million was funded into an escrow account and classified as other assets on our consolidated balance sheet as of July 31, 2021. The assets purchased include emojipeida.org, a set of smaller websites, a bank of emoji related URLs related to the seller’s business, including World Emoji Day, the annual World Emoji Awards, and Emojitracker. The asset purchase does not qualify as a business combination under FASB ASC 805, Business Combinations |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended |
Oct. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Note 6—Intangible Assets and Goodwill The following table presents the detail of intangible assets, net as of October 31, 2022 and July 31, 2022 (in thousands): October 31, 2022 July 31, 2022 Gross Accumulated Net Gross Accumulated Net Emojipedia.org and other internet domains acquired 6,711 559 6,152 6,711 447 6,264 Acquired developed technology 3,950 436 3,515 3,950 238 3,713 Customer relationships 7,800 428 7,372 7,800 233 7,567 Trade names 3,570 163 3,407 3,570 89 3,481 Total intangible assets $ 22,031 $ 1,586 $ 20,446 $ 22,031 $ 1,007 $ 21,025 Estimated future amortization expense as of October 31, 2022 is as follows (in thousands): Fiscal 2023 1,737 Fiscal 2024 2,315 Fiscal 2025 2,315 Fiscal 2026 2,315 Fiscal 2027 2,315 Thereafter 9,449 Total $ 20,446 The Company’s amortization expense for intangible assets were $579 thousand and $115 thousand for the three months ended October 31, 2022 and 2021, respectively. Goodwill Changes in the carrying amount of goodwill in the three months ended October 31, 2022 are as follows (in thousands): Carrying Balance at July 31, 2022 $ 10,788 Foreign currency translation adjustments (142 ) Balance at October 31, 2022 $ 10,646 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Oct. 31, 2022 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | Note 7—Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): October 31, July 31, 2022 2022 Accrued vacation $ 596 $ 585 Accrued income taxes payable 77 169 Accrued payroll taxes 277 214 Accrued payroll and bonuses 1,504 1,084 Accrued expenses 328 262 Operating lease liability-current portion 133 142 Derivative liability for foreign exchange contracts 101 141 Due to artists 282 301 Other 2 - Total accrued expenses and other current liabilities $ 3,300 $ 2,898 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Oct. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 8—Stock-Based Compensation On November 10, 2021, the Company’s Board of Directors amended the Company’s 2016 Stock Option and Incentive Plan (as amended to date, 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 325,000 shares to an aggregate of 1,846,000 shares. This amendment was ratified by the Company’s stockholders at the Annual Meeting of Stockholders held on January 12, 2022. On March 23, 2022, 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 685,000 shares to an aggregate of 2,531,000 shares, including 685,000 shares for the GuruShots retention pool. The Company expects to submit the amendment, as well as other changes to certain terms of the 2016 Incentive Plan for ratification by the Company’s stockholders at the Annual Meeting of Stockholders to be held in January 2023. At October 31, 2022, there were 501,000 shares of Class B common stock available for awards under the 2016 Incentive Plan before accounting for the 204,000 contingently issuable shares related to the deferred stock units (“DSUs”) with both service and market conditions. In addition to stock options and restricted stock awards, the Company occasionally issues DSU’s. On September 7, 2021, the Company granted a total of 291,320 DSUs to 64 of its employees and consultants. Each DSU represents the right to receive one share of the Company’s Class B common stock. 30% of the DSU’s (or 87,396) have service vesting conditions only, with a vesting schedule of 25% on September 7, 2022, 33% on September 7, 2023, and as to all remaining DSUs on September 7, 2024. Vesting of the remaining 70% of the DSUs (or 203,924) is subject to continued service as well as a market condition. These DSUs will vest if the grantee remains in service to the Company and only if the aggregate market capitalization of the Company’s equity securities has reached or exceeded $451 million for five consecutive trading days between the grant date and the vest date. Subject to satisfaction of both of those conditions, these DSU’s with both service and market conditions have a vesting schedule of 25% September 7, 2022, up to 58% (the 25% eligible to vest in 2022 and an additional 33%) on September 7, 2023, and up to 100% on September 7, 2024. In the event the market capitalization condition has not been met prior to a vesting date, but is met by a subsequent vesting date, all DSUs with a market condition eligible for vesting prior to that date shall vest. In the event that the market capitalization condition has not been met by September 7, 2024, the DSUs with a market condition shall expire. The Company recognizes stock-based compensation for stock-based awards, including stock options, restricted stock and DSUs based on the estimated fair value of the awards and recognized over the relevant service period. The Company estimates the fair value of stock options on the measurement date using the Black-Scholes option valuation model. The Company estimates the fair value of the restricted stock and DSU’s with service conditions only using the current market price of the stock. The Company estimates the fair value of the DSU’s with both service and market conditions using the Monte Carlo Simulation valuation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. We recognize stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally 4 years for options and 3 years for restricted stock units. In our accompanying unaudited condensed consolidated statements of operations and comprehensive (loss) income, the Company recognized stock-based compensation for our employees and non-employees as follows: Three Months Ended October 31, 2022 2021 % Change (in thousands) Stock-based compensation expense $ 589 $ 319 84.6 % The DSUs with both service and market conditions were valued using a Monte Carlo simulation model, with a valuation of $7.19 per DSU. Total grant date fair value for these DSUs was approximately $1.5 million. The unrecognized compensation expense is being recognized on a graded vesting method over the vesting period. The DSUs with a service condition only had a grant date fair value of $1.3 million. Total grant date fair value for the remaining 30% DSUs without market-based condition was approximately $1.0 million. The unrecognized compensation expense is being recognized on a straight-line basis over the vesting period. As of October 31, 2022, the Company’s unrecognized stock-based compensation expense was $0.5 million for unvested stock options, $1.2 million for DSUs and $3.3million for unvested restricted stock including the $4 million portion of retention bonus to be paid in the Company’s Class B common stock in connection with the GuruShots acquisition. In the three months ended October 31, 2022 and 2021, the Company purchased 6,310 shares and 16,155 shares respectively of Class B Stock from certain employees for $17,000 and $232,000 respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock and DSUs. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Oct. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 9—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, issuances to be made on the vesting of unvested DSUs and the exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive. 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. As such, the Company is not required to break out EPS by class. 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 (in thousands): Three Months Ended October 31, 2022 2021 Basic weighted-average number of shares 14,330 14,281 Effect of dilutive securities: Stock options - 653 Non-vested restricted Class B common stock - 75 Deferred stock units - 22 Diluted weighted-average number of shares 14,330 15,031 The following shares were excluded from the dilutive earnings per share computations because their inclusion would have been anti-dilutive (in thousands): Three Months Ended October 31, 2022 2021 Stock options 858 65 Non-vested restricted Class B common stock 679 - Deferred stock units 239 171 Shares excluded from the calculation of diluted earnings per share 1,776 236 For the three months ended October 31, 2022, the diluted earnings per share equals basic earnings per share because the Company incurred a net loss during that period and the impact of the assumed exercise of stock options and vesting of restricted stock and DSUs would have been anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Oct. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10—Commitments and Contingencies Commitments In connection with the acquisition of GuruShots, the Company has (i) committed to a retention pool of $4 million in cash to be paid to the founders and employees of GuruShots that will be payable over three years from closing of the acquisition based on the beneficiaries thereof remaining employed by the Company or a subsidiary; and (ii) agreed to make certain minimum investments in user acquisition for GuruShots in the period covered by the earnout to be contingently paid to the prior owners of GuruShots subject to GuruShots maintaining agreed upon levels of return on ad spend (ROAS). Legal Proceedings 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. |
Term Loan and Revolving Credit
Term Loan and Revolving Credit Facilities | 3 Months Ended |
Oct. 31, 2022 | |
Debt Disclosure [Abstract] | |
Term Loan and Revolving Credit Facilities | Note 11—Term Loan and Revolving Credit Facilities 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-year term which was extended twice for another two-year term which expired September 26, 2022 and was amended on October 28, 2022 as discussed below. At the Company’s request in September 2020, advances under this facility were reduced to the lesser of $2.0 million or 80% of the Company’s eligible accounts receivable, subject to certain concentration limits. The revolving credit facility was secured by a lien on substantially all of the Company’s assets. Effective with the September 2020 extension, the outstanding principal amount bore interest per annum at the greater of 3.5% or the prime rate plus 1.25%. Previously the interest rate was capped at 5.0%. Interest was payable monthly and all outstanding principal and any accrued and unpaid interest was due on the maturity date of September 26, 2022. The Company was required to pay an annual facility fee of $10,000 to Western Alliance Bank. The Company was 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 included a prohibition on the Company paying any dividend on its capital stock. At October 27, 2022 and July 31, 2022, there were no amounts outstanding under the revolving credit facility and the Company was in compliance with all of the covenants. On October 28, 2022, the Company entered into an Amended and Restated Loan and Security Agreement (“Amended Loan Agreement”) with Western Alliance Bank. Pursuant to the Amended Loan Agreement, Western Alliance Bank agreed to provide the Company with a new term loan facility in the maximum principal amount of $7,000,000 for a four-year term and a $4,000,000 revolving credit facility for a two-year term. Amounts outstanding under the term loan and credit facility of the Amended Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 0.5%, with a Prime “floor” rate of 4.00%. Pursuant to the Amended Loan Agreement, the Company discontinued the existing $2,000,000 revolving credit facility under the existing Loan and Security Agreement, dated as of September 26, 2016 (discussed above), as amended, restated, supplemented and otherwise modified from time to time prior to the date of the Amended Loan Agreement. At the time of the discontinuance, there was no outstanding balance on the revolving credit facility. Pursuant to the Amended Loan Agreement, $2,000,000 was advanced in a single-cash advance on October 28, 2022, with the remaining $5,000,000 available for drawdown during twenty-four (24) months after closing. Each drawdown must be in an amount of not less than One Million Dollars ($1,000,000). Interest accrued under the Amended Loan Agreement is due monthly, and the Company shall make monthly interest-only payments related to the term loan through the eighteen (18) month anniversary of the closing date. From the nineteen (19) month anniversary of the Closing Date through the maturity date, the Company shall repay each outstanding term loan by paying the Applicable Term Advance Amortization Payment equal to 1/12 th The Amended Loan Agreement may also require early repayments if certain conditions are met. The Amended Loan Agreement is secured by substantially all of the assets of the Company, its subsidiaries, and certain of its affiliates. The Amended Loan Agreement includes the following financial covenants: a) Debt Service Coverage Ratio b) Maximum Debt to EBITDA Maximum Debt to Quarter Ending EBITDA Ratio October 31, 2022 1.75 to 1.00 January 31, 2023 1.75 to 1.00 April 30, 2023 1.75 to 1.00 July 31, 2023 1.75 to 1.00 October 31, 2023 1.25 to 1.00 January 31, 2024 1.25 to 1.00 April 30, 2024 1.25 to 1.00 July 31, 2024 1.25 to 1.00 Thereafter To be agreed upon The Amended Loan Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and a change of control default. 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. At October 31, 2022, there were $3.2 million of outstanding foreign exchange contracts, which reduced the available borrowing under the revolving credit facility by $315,000. |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Oct. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Note 12—Segment and Geographic Information Segment Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer as of October 31, 2022. Based on the criteria established by ASC 280, Segment Reportin Beginning in the first quarter of fiscal 2023, the Company revised the presentation of segment information to align with changes to how the Company’s CODM manages the business, allocates resources and assesses operating performance reports operating results based on two reportable segments which are Zedge App and GuruShots App. The CODM evaluates the performance of each operating segment using revenue and income (loss) from operations. The following table provides information about the Company’s two reportable segments: Three Months Ended October 31, Change 2022 2021 $ % Revenue: Zedge App $ 5,571 $ 6,028 $ (457 ) -7.6 % GuruShots App 1,329 - 1,329 nm Total Revenue $ 6,900 $ 6,028 872 14.5 % Segment income (loss) from operation Zedge App $ 1,371 $ 2,588 $ (1,217 ) -47.0 % GuruShots App (1,572 ) - (1,572 ) nm Segment income (loss) from operation $ (201 ) $ 2,588 (2,789 ) -107.8 % Nm-not meaningful The CODM does not evaluate operating segments using asset information and, accordingly, the Company does not report asset information by segment. Geographic Information Net long-lived assets and total assets held outside of the United States, which are located primarily in Israel and Norway, were as follows (in thousands): United Foreign Total Long-lived assets, net: October 31, 2022 $ 7,634 $ 14,904 $ 22,538 July 31, 2022 $ 7,818 $ 15,217 $ 23,035 Total assets: October 31, 2022 $ 27,342 $ 28,254 $ 55,596 July 31, 2022 $ 26,229 $ 28,397 $ 54,626 |
Operating Leases
Operating Leases | 3 Months Ended |
Oct. 31, 2022 | |
Operating Leases [Abstract] | |
Operating Leases | Note 13— Operating Leases The Company has operating leases primarily for office space. Operating lease right-of-use assets recorded and included in other assets were $163,000 and $204,000 at October 31, 2022 and July 31, 2022, respectively. Other than the above, there were no other material changes in the Company’s operating and finance leases in the three months ended October 31, 2022, as compared to the disclosure in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2022. |
Provision for Income Taxes
Provision for Income Taxes | 3 Months Ended |
Oct. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Note 14—Provision for Income Taxes The Company’s tax provision or benefit from income taxes for interim periods has generally been determined using an estimate of its annual effective tax rate applied to year-to-date income and records the discrete tax items in the period to which they relate. In each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the tax provision as necessary. The Company’s annual effective tax rate for the fiscal year ending July 31, 2023 differs from the United States federal statutory tax rate due to certain factors with temporary differences primarily related to equity compensation expenses. As of October 31, 2022, the Company had $2.8 million of deferred tax assets for which it has established a valuation allowance of $1.9 million, related to U.S. federal and state taxes and for a certain international subsidiary. The Company is subject to taxation in the United States and certain foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The material jurisdictions where the Company is subject to potential examination by tax authorities include the United States, Norway, Lithuania and Israel. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Oct. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15—Subsequent Events The Company performed a review for subsequent events through the date of these unaudited condensed consolidated financial statements and noted no material items for disclosure. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Oct. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Zedge, Inc. and its subsidiaries, GuruShots Ltd. (“GuruShots”), Zedge Europe AS and Zedge Lithuania UAB (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended October 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2023 or any other period. The balance sheet at July 31, 2022 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”). 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 2022 refers to the fiscal year ending July 31, 2022). |
Reportable Segments | Reportable Segments Effective August 1, 2022, the Company revised the presentation of segment information to reflect the addition, following the acquisition of GuruShots, of the GuruShots App to the Company’s portfolio of mobile apps resulting from the GuruShots acquisition (see Note 5). As such, the Company now reports operating results through two reportable segments: Zedge App and GuruShots App, as further discussed in Note 12. |
Use of Estimates | Use of Estimates The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ materially from the Company’s estimates due to risks and uncertainties, including uncertainty in the current economic environment due to various global events. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers Revenue from Contracts with Customers With the exception of the standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended October 31, 2022, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2022, that are of significance or potential significance to the Company. |
Significant Accounting Policies | Significant Accounting Policies Other than intangible assets described below, there have been no material changes to the Company’s significant accounting policies from its Annual Report on Form 10-K for the fiscal year ended July 31, 2022. |
Related Party Transactions | Related Party Transactions The Company has no material related party transactions that have impacted the consolidated balance sheets for the years ended October 31, 2022 or July 31, 2022, or the consolidated statements of operations and comprehensive (loss) income for the three months ended October 31, 2022 or 2021. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Revenue [Abstract] | |
Schedule of revenue disaggregated by segment and type | Three Months Ended 2022 2021 %Changes Zedge App Advertising revenue $ 3,957 $ 4,569 -13 % Paid subscription revenue 391 960 -7 % Zedge Premium revenue 187 186 1 % Emojipedia revenue 260 310 -16 % Applovin integration bonus 250 - nm Other revenues 26 3 767 % Total Zedge App revenue 5,571 6,028 -8 % GuruShots App Virtual items used for online game 1,329 - nm Total revenue $ 6,900 $ 6,028 14 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Schedule of balance of assets and liabilities measured at fair value on a recurring basis | Level 1 Level 2 Level 3 Total October 31, 2022 Liabilities: Contingent consideration-short term $ - $ - $ 17 $ 17 Contingent consideration-long term $ - $ - $ 1,776 $ 1,776 Foreign exchange forward contracts $ - $ 101 $ - $ 101 July 31, 2022 Liabilities: Contingent consideration-short term $ - $ - $ 215 $ 215 Contingent consideration-long term $ - $ - $ 1,728 $ 1,728 Foreign exchange forward contracts $ - $ 141 $ - $ 141 (1) – quoted prices in active markets for identical assets or liabilities (2) – observable inputs other than quoted prices in active markets for identical assets and liabilities (3) – no observable pricing inputs in the market |
Schedule of contingent consideration related to gurushots acquisition | Balance at July 31, 2022 $ 1,943 Change in fair value (150 ) Balance at October 31, 2022 $ 1,793 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of outstanding contracts | Settlement Date U.S. Dollar NOK Nov-22 225,000 2,000,925 Dec-22 225,000 2,297,948 Jan-23 225,000 2,296,103 Feb-23 225,000 2,294,685 Mar-23 225,000 2,293,065 Apr-23 225,000 2,291,355 May-23 225,000 2,317,545 Total $ 1,575,000 15,791,626 Settlement Date U.S. Dollar EUR Nov-22 225,000 201,848 Dec-22 225,000 222,332 Jan-23 225,000 221,653 Feb-23 225,000 221,195 Mar-23 225,000 220,826 Apr-23 225,000 220,459 May-23 225,000 220,070 Total $ 1,575,000 1,528,383 |
Schedule of fair value of outstanding derivative instruments | Assets and Liabilities Derivatives: Balance Sheet Location October 31, July 31, Derivatives not designated or not qualifying as hedging instruments (in thousands) Foreign exchange forward contracts Accrued expenses and other current liabilities $ 101 $ 141 |
Schedule of derivative instruments on the condensed consolidated statements of operations and comprehensive (loss) income | Three Months Ended Amount of (Loss) Gain Recognized on Derivatives 2022 2021 Derivatives not designated or not qualifying as hedging instruments Location of Loss Recognized on Derivatives (in thousands) Foreign exchange forward contracts Net loss resulting from foreign exchange transactions $ (121 ) $ 10 |
Business Combination and Asse_2
Business Combination and Assets Acquisition (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Business Combinations [Abstract] | |
Schedule of allocation of the preliminary purchase price | (Dollar Amounts in Thousands) Purchase price consideration: Cash consideration paid at close $ 15,242 Cash contributed to escrow accounts at close 2,700 Cash deducted from purchase price and contributed to GuruShots’ working capital 58 Fair value of contingent consideration to be achieved at year 1 3,396 Fair value of contingent consideration to be achieved at year 2 2,508 Fair value of total consideration transferred 23,904 Total purchase price, net of cash acquired $ 23,384 Fair value allocation of purchase price: Cash and cash equivalents $ 520 Trade accounts receivable 282 Prepaid expenses 145 Property and equipment, net 17 Other assets (including ROU) 151 Accounts payable and accrued expenses (1,351 ) Operating lease liabilities, current (53 ) Operating lease liabilities, noncurrent (34 ) Acquired intangible assets 15,320 Goodwill 8,907 Total purchase price $ 23,904 |
Schedule of intangible assets | (Dollar Amounts in Thousands) Asset Value Useful Life Identified intangible assets: Trade names $ 3,570 12 years Acquired developed technology 3,950 5 years Customer relationships 7,800 10 years Total identified intangible assets $ 15,320 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | October 31, 2022 July 31, 2022 Gross Accumulated Net Gross Accumulated Net Emojipedia.org and other internet domains acquired 6,711 559 6,152 6,711 447 6,264 Acquired developed technology 3,950 436 3,515 3,950 238 3,713 Customer relationships 7,800 428 7,372 7,800 233 7,567 Trade names 3,570 163 3,407 3,570 89 3,481 Total intangible assets $ 22,031 $ 1,586 $ 20,446 $ 22,031 $ 1,007 $ 21,025 |
Schedule of estimated future amortization expense | Fiscal 2023 1,737 Fiscal 2024 2,315 Fiscal 2025 2,315 Fiscal 2026 2,315 Fiscal 2027 2,315 Thereafter 9,449 Total $ 20,446 |
Schedule of carrying amount of goodwill | Carrying Balance at July 31, 2022 $ 10,788 Foreign currency translation adjustments (142 ) Balance at October 31, 2022 $ 10,646 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | October 31, July 31, 2022 2022 Accrued vacation $ 596 $ 585 Accrued income taxes payable 77 169 Accrued payroll taxes 277 214 Accrued payroll and bonuses 1,504 1,084 Accrued expenses 328 262 Operating lease liability-current portion 133 142 Derivative liability for foreign exchange contracts 101 141 Due to artists 282 301 Other 2 - Total accrued expenses and other current liabilities $ 3,300 $ 2,898 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of operations and comprehensive (loss) income | Three Months Ended October 31, 2022 2021 % Change (in thousands) Stock-based compensation expense $ 589 $ 319 84.6 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of weighted-average number of shares basic and diluted | Three Months Ended October 31, 2022 2021 Basic weighted-average number of shares 14,330 14,281 Effect of dilutive securities: Stock options - 653 Non-vested restricted Class B common stock - 75 Deferred stock units - 22 Diluted weighted-average number of shares 14,330 15,031 |
Schedule of the dilutive earnings per share | Three Months Ended October 31, 2022 2021 Stock options 858 65 Non-vested restricted Class B common stock 679 - Deferred stock units 239 171 Shares excluded from the calculation of diluted earnings per share 1,776 236 |
Term Loan and Revolving Credi_2
Term Loan and Revolving Credit Facilities (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of maximum debt to EBITDA ratio | Maximum Debt to Quarter Ending EBITDA Ratio October 31, 2022 1.75 to 1.00 January 31, 2023 1.75 to 1.00 April 30, 2023 1.75 to 1.00 July 31, 2023 1.75 to 1.00 October 31, 2023 1.25 to 1.00 January 31, 2024 1.25 to 1.00 April 30, 2024 1.25 to 1.00 July 31, 2024 1.25 to 1.00 Thereafter To be agreed upon |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Oct. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of operating segment using revenue and income (loss) from operations | Three Months Ended October 31, Change 2022 2021 $ % Revenue: Zedge App $ 5,571 $ 6,028 $ (457 ) -7.6 % GuruShots App 1,329 - 1,329 nm Total Revenue $ 6,900 $ 6,028 872 14.5 % Segment income (loss) from operation Zedge App $ 1,371 $ 2,588 $ (1,217 ) -47.0 % GuruShots App (1,572 ) - (1,572 ) nm Segment income (loss) from operation $ (201 ) $ 2,588 (2,789 ) -107.8 % |
Schedule of Net long-lived assets and total assets held outside of the United States | United Foreign Total Long-lived assets, net: October 31, 2022 $ 7,634 $ 14,904 $ 22,538 July 31, 2022 $ 7,818 $ 15,217 $ 23,035 Total assets: October 31, 2022 $ 27,342 $ 28,254 $ 55,596 July 31, 2022 $ 26,229 $ 28,397 $ 54,626 |
Revenue (Details)
Revenue (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 01, 2022 | Jul. 31, 2022 | Oct. 31, 2022 | Jul. 31, 2022 | |
Revenue (Details) [Line Items] | ||||
One-time integration bonus | $ 2,000,000 | |||
Deferred revenue balance | $ 1,400,000 | $ 1,700,000 | ||
Unsatisfied performance obligations, description | The Company records deferred revenues related to the unsatisfied performance obligations with respect to subscription revenue. As of October 31, 2022, the Company’s deferred revenue balance related to paid subscriptions was approximately $1.4 million related to approximately 674,000 active subscribers. As of July 31, 2022, the Company’s deferred revenue balance related to paid subscribers was approximately $1.5 million, related to approximately 692,000 active subscribers. The amount of revenue related to subscribers recognized in the three months ended October 31, 2022 that was included in the deferred balance at July 31, 2022 was $0.7 million. | |||
Zedge Premium [Member] | ||||
Revenue (Details) [Line Items] | ||||
Deferred revenue balance | $ 252,000 | $ 259,000 | ||
Deferred revenues decreased | $ 3,100,000 | |||
Zedge Premium [Member] | Minimum [Member] | ||||
Revenue (Details) [Line Items] | ||||
Deferred revenues decreased | $ 300,000 | |||
Zedge Premium [Member] | Maximum [Member] | ||||
Revenue (Details) [Line Items] | ||||
Deferred revenues decreased | $ 3,400,000 |
Revenue (Details) - Schedule of
Revenue (Details) - Schedule of revenue disaggregated by segment and type - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Zedge App | ||
Total Revenues | $ 6,900 | $ 6,028 |
Revenues percentage | 14% | |
Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 5,571 | 6,028 |
Revenues percentage | (8.00%) | |
Advertising revenue [Member] | Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 3,957 | 4,569 |
Revenues percentage | (13.00%) | |
Paid subscription revenue [Member] | Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 391 | 960 |
Revenues percentage | (7.00%) | |
Zedge Premium revenue [Member] | Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 187 | 186 |
Revenues percentage | 1% | |
Emojipedia revenue [Member] | Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 260 | 310 |
Revenues percentage | (16.00%) | |
AppLovin integration bonus amortization [Member] | Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 250 | |
Revenues percentage | ||
Other revenues [Member] | Zedge App [Member] | ||
Zedge App | ||
Total Revenues | $ 26 | 3 |
Revenues percentage | 767% | |
Virtual items used for online game [Member] | GuruShots App [Member] | ||
Zedge App | ||
Total Revenues | $ 1,329 | |
Revenues percentage |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Oct. 31, 2022 USD ($) |
Fair Value Measurements [Abstract] | |
Fair value of contingent consideration | $ 150 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details) - Schedule of balance of assets and liabilities measured at fair value on a recurring basis - USD ($) $ in Thousands | Oct. 31, 2022 | Jul. 31, 2022 |
Liabilities: | ||
Contingent consideration-short term | $ 17 | $ 215 |
Contingent consideration-long term | 1,776 | 1,728 |
Foreign exchange forward contracts | 101 | 141 |
Fair Value, Recurring [Member] | Level 1 [Member] | ||
Liabilities: | ||
Contingent consideration-short term | ||
Contingent consideration-long term | ||
Foreign exchange forward contracts | ||
Fair Value, Recurring [Member] | Level 2 [Member] | ||
Liabilities: | ||
Contingent consideration-short term | ||
Contingent consideration-long term | ||
Foreign exchange forward contracts | 101 | 141 |
Fair Value, Recurring [Member] | Level 3 [Member] | ||
Liabilities: | ||
Contingent consideration-short term | 17 | 215 |
Contingent consideration-long term | 1,776 | 1,728 |
Foreign exchange forward contracts |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details) - Schedule of contingent consideration related to gurushots acquisition - Business Acquisitions [Member] $ in Thousands | 3 Months Ended |
Oct. 31, 2022 USD ($) | |
Business Acquisition, Contingent Consideration [Line Items] | |
Balance at July 31, 2022 | $ 1,943 |
Change in fair value | (150) |
Balance at October 31, 2022 | $ 1,793 |
Derivative Instruments (Details
Derivative Instruments (Details) - Schedule of outstanding contracts - 3 months ended Oct. 31, 2022 € in Thousands, kr in Thousands, $ in Thousands | USD ($) | NOK (kr) | EUR (€) |
U.S.Dollar Amount [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | $ 1,575,000 | ||
U.S.Dollar Amount [Member] | Nov-22 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Nov-22 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Dec-22 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Dec-22 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Jan-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Jan-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Feb-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Feb-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Mar-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Mar-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Apr-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | Apr-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | May-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | 225,000 | ||
U.S.Dollar Amount [Member] | May-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | $ 225,000 | ||
NOK Amount [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | kr 15,791,626 | ||
NOK Amount [Member] | Nov-22 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | 2,000,925 | ||
NOK Amount [Member] | Dec-22 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | 2,297,948 | ||
NOK Amount [Member] | Jan-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | 2,296,103 | ||
NOK Amount [Member] | Feb-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | 2,294,685 | ||
NOK Amount [Member] | Mar-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | 2,293,065 | ||
NOK Amount [Member] | Apr-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | 2,291,355 | ||
NOK Amount [Member] | May-23 [Member] | Western Alliance Bank [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | kr | kr 2,317,545 | ||
EUR Amount [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | € 1,528,383 | ||
EUR Amount [Member] | Nov-22 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | 201,848 | ||
EUR Amount [Member] | Dec-22 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | 222,332 | ||
EUR Amount [Member] | Jan-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | 221,653 | ||
EUR Amount [Member] | Feb-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | 221,195 | ||
EUR Amount [Member] | Mar-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | 220,826 | ||
EUR Amount [Member] | Apr-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | 220,459 | ||
EUR Amount [Member] | May-23 [Member] | |||
Derivative Instruments (Details) - Schedule of outstanding contracts [Line Items] | |||
Amount | € | € 220,070 |
Derivative Instruments (Detai_2
Derivative Instruments (Details) - Schedule of fair value of outstanding derivative instruments - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Jul. 31, 2022 | |
Schedule Of Fair Value Of Outstanding Derivative Instruments Abstract | ||
Balance Sheet Location | Accrued expenses and other current liabilities | |
Foreign exchange forward contracts | $ 101 | $ 141 |
Derivative Instruments (Detai_3
Derivative Instruments (Details) - Schedule of derivative instruments on the condensed consolidated statements of operations and comprehensive (loss) income - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Schedule Of Derivative Instruments On The Condensed Consolidated Statements Of Operations And Comprehensive Loss Income Abstract | ||
Location of Loss Recognized on Derivatives | Net loss resulting from foreign exchange transactions | |
Foreign exchange forward contracts | $ (121) | $ 10 |
Business Combination and Asse_3
Business Combination and Assets Acquisition (Details) - USD ($) | 3 Months Ended | |||
Oct. 31, 2022 | Jul. 31, 2022 | Apr. 12, 2022 | Jul. 31, 2021 | |
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Preliminary purchase price | $ 5,900,000 | |||
Fair value | $ 1,800,000 | |||
Business combination and assets acquisition description | the Company has committed to a retention pool of $4 million in cash and 626,242 shares of the Company Class B common stock (the number of shares was determined based on a value of $4 million or $6.39 per share which was the volume weighted average closing prices of the Class B common stock on the NYSE American Exchange for the thirty trading days ended April 12, 2022) for GuruShots’ founders and employees that will be payable or vest, as applicable, over three years from closing based on the beneficiaries thereof remaining employed by the Company or a subsidiary. | |||
Retention bonus amount | $ 766,000 | |||
Recognition of goodwill | 8,900,000 | |||
Accounts payable balance | $ 180,000 | |||
Fund amount | $ 4,800,000 | |||
Estimated useful lives | fifteen years | |||
Maximum [Member] | ||||
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Fair value | $ 5,900,000 | |||
Minimum [Member] | ||||
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Fair value | $ 1,900,000 | |||
Business Combination [Member] | ||||
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Acquisition-related costs | $ 860,000 | |||
GuruShots Acquisition [Member] | ||||
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Outstanding equity securities percentage | 100% | |||
Purchase price for the equity securities | 18,000,000 | |||
Cash consideration paid includes deposited | 2,700,000 | |||
Maximum earnout amount | $ 16,800,000 | |||
Compensation expenses description | The Company has issued 616,848 (net of forfeiture of 9,394 shares) shares of the Company’s Class B common in respect of the retention pool to the GuruShots founders and employees, which will be held by a trustee based in Israel. These shares will vest, in equal tranches, over three years assuming that the recipients remain employed by the Company or a subsidiary through the vesting dates. The $4 million fair value of these unvested restricted stock is not included as purchase consideration above, as it has a post-combination service requirement and will be accounted for separately from the business combination as stock compensation expense. Additionally, the founders and employees are also entitled to receive an aggregate of up to $4 million retention cash bonus over three years subject to the same continued service requirement, which was not included in the purchase price above. As of October 31, 2022, the Company has accrued $766 thousand in retention bonus which is included in the accrued expense and other current liabilities. | |||
GuruShots Acquisition [Member] | Maximum [Member] | ||||
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Purchase price for the equity securities | $ 8,400,000 | |||
Emojipedia Acquisition [Member] | ||||
Business Combination and Assets Acquisition (Details) [Line Items] | ||||
Purchase agreement description | Pursuant to an Asset Purchase Agreement, on August 1, 2021 (“Closing”), the Company consummated the acquisition of substantially all of the assets of Emojipedia Pty Ltd, a proprietary company organized under the laws of Australia. The total purchase price of the assets was $6.7 million of which $4.8 million was paid on August 2, 2021, $917,000 was paid on February 1, 2022, and the remaining $962,000 paid on August 2, 2022. |
Business Combination and Asse_4
Business Combination and Assets Acquisition (Details) - Schedule of allocation of the preliminary purchase price $ in Thousands | 3 Months Ended |
Oct. 31, 2022 USD ($) | |
Purchase price consideration: | |
Cash consideration paid at close | $ 15,242 |
Cash contributed to escrow accounts at close | 2,700 |
Cash deducted from purchase price and contributed to GuruShots’ working capital | 58 |
Fair value of contingent consideration to be achieved at year 1 | 3,396 |
Fair value of contingent consideration to be achieved at year 2 | 2,508 |
Fair value of total consideration transferred | 23,904 |
Total purchase price, net of cash acquired | 23,384 |
Fair value allocation of purchase price: | |
Cash and cash equivalents | 520 |
Trade accounts receivable | 282 |
Prepaid expenses | 145 |
Property and equipment, net | 17 |
Other assets (including ROU) | 151 |
Accounts payable and accrued expenses | (1,351) |
Operating lease liabilities, current | (53) |
Operating lease liabilities, noncurrent | (34) |
Acquired intangible assets | 15,320 |
Goodwill | 8,907 |
Total purchase price | $ 23,904 |
Business Combination and Asse_5
Business Combination and Assets Acquisition (Details) - Schedule of intangible assets $ in Thousands | 3 Months Ended |
Oct. 31, 2022 USD ($) | |
Identified intangible assets: | |
Asset Value | $ 15,320 |
Trade names [Member] | |
Identified intangible assets: | |
Asset Value | $ 3,570 |
Useful Life | 12 years |
Acquired developed technology [Member] | |
Identified intangible assets: | |
Asset Value | $ 3,950 |
Useful Life | 5 years |
Customer relationships [Member] | |
Identified intangible assets: | |
Asset Value | $ 7,800 |
Useful Life | 10 years |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 579 | $ 115 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill (Details) - Schedule of intangible assets - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Oct. 31, 2022 | Jul. 31, 2022 | |
Gross Carrying Value [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Emojipedia.org and other internet domains acquired | $ 6,711 | $ 6,711 |
Acquired developed technology | 3,950 | 3,950 |
Customer relationships | 7,800 | 7,800 |
Trade names | 3,570 | 3,570 |
Total intangible assets | 22,031 | 22,031 |
Accumulated Amortization [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Emojipedia.org and other internet domains acquired | 559 | 447 |
Acquired developed technology | 436 | 238 |
Customer relationships | 428 | 233 |
Trade names | 163 | 89 |
Total intangible assets | 1,586 | 1,007 |
Net Carrying Value [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Emojipedia.org and other internet domains acquired | 6,152 | 6,264 |
Acquired developed technology | 3,515 | 3,713 |
Customer relationships | 7,372 | 7,567 |
Trade names | 3,407 | 3,481 |
Total intangible assets | $ 20,446 | $ 21,025 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill (Details) - Schedule of estimated future amortization expense $ in Thousands | Oct. 31, 2022 USD ($) |
Schedule Of Estimated Future Amortization Expense Abstract | |
Fiscal 2023 | $ 1,737 |
Fiscal 2024 | 2,315 |
Fiscal 2025 | 2,315 |
Fiscal 2026 | 2,315 |
Fiscal 2027 | 2,315 |
Thereafter | 9,449 |
Total | $ 20,446 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill (Details) - Schedule of carrying amount of goodwill $ in Thousands | 3 Months Ended |
Oct. 31, 2022 USD ($) | |
Schedule Of Carrying Amount Of Goodwill Abstract | |
Balance beginning | $ 10,788 |
Foreign currency translation adjustments | (142) |
Balance ending | $ 10,646 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Oct. 31, 2022 | Jul. 31, 2022 | |
Schedule Of Accrued Expenses And Other Current Liabilities Abstract | ||
Accrued vacation | $ 596 | $ 585 |
Accrued income taxes payable | 77 | 169 |
Accrued payroll taxes | 277 | 214 |
Accrued payroll and bonuses | 1,504 | 1,084 |
Accrued expenses | 328 | 262 |
Operating lease liability-current portion | 133 | 142 |
Derivative liability for foreign exchange contracts | 101 | 141 |
Due to artists | 282 | 301 |
Other | 2 | |
Total accrued expenses and other current liabilities | $ 3,300 | $ 2,898 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Nov. 10, 2021 | Sep. 07, 2021 | Mar. 23, 2022 | Oct. 31, 2022 | Oct. 31, 2021 | |
Stock-Based Compensation (Details) [Line Items] | |||||
Employees and consultants share | 291,320 | ||||
Options period | 4 years | ||||
Restricted stock units | 3 years | ||||
Service and market conditions per shares (in Dollars per share) | $ 7.19 | ||||
Total grant date fair value (in Dollars) | $ 1,500,000 | ||||
Service condition grant date fair value (in Dollars) | $ 1,300,000 | ||||
Grant date fair value percentage | 30% | ||||
Market-based condition amount (in Dollars) | $ 1,000,000 | ||||
Unrecognized stock-based compensation expense (in Dollars) | 500,000 | ||||
Unvested stock options (in Dollars) | 1,200,000 | ||||
Portion of retention bonus (in Dollars) | 4,000,000 | ||||
Purchased from employees, value (in Dollars) | $ 17,000 | $ 232,000 | |||
Class B Common Stock [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Additional shares | 685,000 | 501,000 | |||
Aggregate shares | 2,531,000 | 204,000 | |||
Including shares | 685,000 | ||||
Unvested stock options (in Dollars) | $ 3,000,000 | ||||
Employees [Member] | Class B Common Stock [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Shares purchased | 6,310 | 16,155 | |||
2016 Incentive Plan [Member] | Class B Common Stock [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Additional shares | 325,000 | ||||
Aggregate of shares | 1,846,000 | ||||
Deferred Stock Units [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Vesting percentage, description | Each DSU represents the right to receive one share of the Company’s Class B common stock.30% of the DSU’s (or 87,396) have service vesting conditions only, with a vesting schedule of 25% on September 7, 2022, 33% on September 7, 2023, and as to all remaining DSUs on September 7, 2024. Vesting of the remaining 70% of the DSUs (or 203,924) is subject to continued service as well as a market condition. These DSUs will vest if the grantee remains in service to the Company and only if the aggregate market capitalization of the Company’s equity securities has reached or exceeded $451 million for five consecutive trading days between the grant date and the vest date. Subject to satisfaction of both of those conditions, these DSU’s with both service and market conditions have a vesting schedule of 25% September 7, 2022, up to 58% (the 25% eligible to vest in 2022 and an additional 33%) on September 7, 2023, and up to 100% on September 7, 2024. In the event the market capitalization condition has not been met prior to a vesting date, but is met by a subsequent vesting date, all DSUs with a market condition eligible for vesting prior to that date shall vest. In the event that the market capitalization condition has not been met by September 7, 2024, the DSUs with a market condition shall expire. |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of operations and comprehensive (loss) income - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Schedule Of Operations And Comprehensive Loss Income Abstract | ||
Stock-based compensation expense | $ 589 | $ 319 |
Stock-based compensation expense, Percentage | 84.60% |
Earnings Per Share (Details) -
Earnings Per Share (Details) - Schedule of weighted-average number of shares basic and diluted - shares | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Schedule Of Weighted Average Number Of Shares Basic And Diluted Abstract | ||
Basic weighted-average number of shares | 14,330 | 14,281 |
Effect of dilutive securities: | ||
Stock options | 653 | |
Non-vested restricted Class B common stock | 75 | |
Deferred stock units | 22 | |
Diluted weighted-average number of shares | 14,330 | 15,031 |
Earnings Per Share (Details) _2
Earnings Per Share (Details) - Schedule of the dilutive earnings per share - shares | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Schedule Of The Dilutive Earnings Per Share Abstract | ||
Stock options | 858 | 65 |
Non-vested restricted Class B common stock | 679 | |
Deferred stock units | 239 | 171 |
Shares excluded from the calculation of diluted earnings per share | 1,776 | 236 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Oct. 31, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Cash to be paid | $ 4 |
Term Loan and Revolving Credi_3
Term Loan and Revolving Credit Facilities (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Oct. 28, 2022 | Nov. 16, 2016 | Oct. 31, 2022 | Sep. 27, 2016 | |
Term Loan and Revolving Credit Facilities (Details) [Line Items] | ||||
Borrowing under the revolving credit facility | $ 2,500,000 | |||
Agreement description | On October 28, 2022, the Company entered into an Amended and Restated Loan and Security Agreement (“Amended Loan Agreement”) with Western Alliance Bank. Pursuant to the Amended Loan Agreement, Western Alliance Bank agreed to provide the Company with a new term loan facility in the maximum principal amount of $7,000,000 for a four-year term and a $4,000,000 revolving credit facility for a two-year term. | 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. | ||
Interest rate, description | Previously the interest rate was capped at 5.0%. Interest was payable monthly and all outstanding principal and any accrued and unpaid interest was due on the maturity date of September 26, 2022. | |||
Line of credit facility annual fee | $ 10,000 | |||
Loan agreement bear interest | 0.50% | |||
Loan agreement bear interest | 4% | |||
Revolving credit facility | $ 2,000,000 | |||
Existing revolving credit facility | $ 2,000,000 | |||
Revolving credit facility | $ 5,000,000 | |||
Amount drawdown | $ 1,000,000 | |||
Outstanding term loan percentage | 10% | |||
Maximum [Member] | ||||
Term Loan and Revolving Credit Facilities (Details) [Line Items] | ||||
Debt service coverage ratio | 1.25 | |||
Minimum [Member] | ||||
Term Loan and Revolving Credit Facilities (Details) [Line Items] | ||||
Debt service coverage ratio | 1 | |||
Foreign Exchange Contract [Member] | ||||
Term Loan and Revolving Credit Facilities (Details) [Line Items] | ||||
Line of credit facility, borrowing capacity, description | $ 3,200,000 | |||
Borrowing under the revolving credit facility | $ 315,000 | |||
Revolving Credit Facility [Member] | ||||
Term Loan and Revolving Credit Facilities (Details) [Line Items] | ||||
Agreement description | At the Company’s request in September 2020, advances under this facility were reduced to the lesser of $2.0 million or 80% of the Company’s eligible accounts receivable, subject to certain concentration limits. |
Term Loan and Revolving Credi_4
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio | 3 Months Ended |
Oct. 31, 2022 | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | To be agreed upon |
October 31, 2022 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.75 to 1.00 |
January 31, 2023 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.75 to 1.00 |
April 30, 2023 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.75 to 1.00 |
July 31, 2023 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.75 to 1.00 |
October 31, 2023 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.25 to 1.00 |
January 31, 2024 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.25 to 1.00 |
April 30, 2024 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.25 to 1.00 |
July 31, 2024 [Member] | |
Term Loan and Revolving Credit Facilities (Details) - Schedule of maximum debt to EBITDA ratio [Line Items] | |
Balance of Maximum Debt | 1.25 to 1.00 |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) - Schedule of operating segment using revenue and income (loss) from operations - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Revenue: | ||
Total Revenue | $ 6,900 | $ 6,028 |
Change, Total Revenue | $ 872 | |
Change, Total Revenue % | 14.50% | |
Segment income (loss) from operation | ||
Segment income (loss) from operation | $ (201) | 2,588 |
Change, Segment income (loss) from operation | $ (2,789) | |
Change, Segment income (loss) from operation % | (107.80%) | |
Zedge App [Member] | ||
Revenue: | ||
Total Revenue | $ 5,571 | 6,028 |
Change, Total Revenue | $ (457) | |
Change, Total Revenue % | (7.60%) | |
Segment income (loss) from operation | ||
Segment income (loss) from operation | $ 1,371 | 2,588 |
Change, Segment income (loss) from operation | $ (1,217) | |
Change, Segment income (loss) from operation % | (47.00%) | |
GuruShots App [Member] | ||
Revenue: | ||
Total Revenue | $ 1,329 | |
Change, Total Revenue | 1,329 | |
Segment income (loss) from operation | ||
Segment income (loss) from operation | (1,572) | |
Change, Segment income (loss) from operation | $ (1,572) |
Segment and Geographic Inform_4
Segment and Geographic Information (Details) - Schedule of Net long-lived assets and total assets held outside of the United States - USD ($) | Oct. 31, 2022 | Jul. 31, 2022 |
Long-lived assets, net: | ||
United States | $ 7,634 | $ 7,818 |
Foreign | 14,904 | 15,217 |
Total | 22,538 | 23,035 |
Total assets: | ||
United States | 27,342 | 26,229 |
Foreign | 28,254 | 28,397 |
Total | $ 55,596 | $ 54,626 |
Operating Leases (Details)
Operating Leases (Details) - USD ($) | Oct. 31, 2022 | Jul. 31, 2022 |
Operating Leases [Abstract] | ||
Other assets | $ 163,000 | $ 204,000 |
Provision for Income Taxes (Det
Provision for Income Taxes (Details) $ in Millions | Oct. 31, 2022 USD ($) |
Provision for Income Taxes (Details) [Line Items] | |
Deferred tax assets | $ 2.8 |
U.S. federal [Member] | |
Provision for Income Taxes (Details) [Line Items] | |
Deferred tax assets | $ 1.9 |