ZDGE - Earnings call transcript Q1 2021

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Operator

Good afternoon. Welcome to Zedge’s First Quarter 2021 Earnings Conference Call.

During managements prepared remarks all participants will be in a listen-only mode. [Operator Instructions] In today's presentation, Jonathan Reich, Zedge’s Chief Executive Officer; and Yi Tsai, Zedge’s Chief Financial Officer will discuss Zedge’s financial and operational results for the three month period that ended on October 31, 2020. Any forward-looking statements made during this conference call, either in the prepared remarks or in the question-and-answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. include, disclosed not Zedge in with U.S. uncertainties risks to files and the uncertainties and the risks but limited are specific periodically These reports that Securities Exchange Commission. and that or to forecast. the to any obligation to no actual may update made those differ assumes make forward-looking materially factors Zedge from statements may or they cause update results that have they that relations Zedge note is investor the release the the earnings page that Zedge website. Please on available of X-K been also SEC. filed has with release Form the a earnings Their on I would turn to the conference over now like to Mr. Jonathan Reich.

Jonathan Reich

operating made the progress continue have believe from we in XX operations, continued demonstrated users will you operator and performance. fiscal as revenue our for you, call. and which bearing income, during amongst our insights is both our increasing Good we provide for me Executive Thank the today. previous is ample as plus year-over-year, earnings Zedge share, Chief cash additional afternoon. XXXX forward. to thank the I’m QX for Zedge, quarter initiatives an quarter. Financial EBITDA, financial The income, million outstanding flow net we fruit, quarter all first we of other eclipsed joining Chief up metrics. in five operating quarters XX% and Reich, said, over by past revenue, highs are to per That who monetizing with invested there earnings opportunity into Officer Zedge’s us Jonathan users was conference Officer, was moving margin, Welcome and year Tsai, Yi

mobile personalization app the story, developer and newer entertainment. of those focusing is Zedge to For a that are leading phone on you

video providers personalization one ringtones, offering rooted wallpapers, of focused Our wallpapers, and array rich the being on heritage of sounds. notification of high-quality in mobile leading consumers a content, is

located currently and and seeking personal fandom a Our phone personalization, Ringtones, for all active act creators XX% content a millions are subscriptions, content Zedge around for which Zedge XXX social mobile date, digital has million it to combination and marketplace, XX emerging content from the enables paid their sell identity, users. flagship to celebrities The Wallpapers Premium app and world-class which display and installs million app to of revenue self-expression ranging about is well-developed surpassed has our hub in of and monthly from artists, generates advertising, art. To our as app, popular organic market users, and markets.

improvements to in reported results, paid subscriptions our valuable XXX% reasons. revenue and ad Subscriptions to are driver, stack. Paid an grew and subscribers, higher we first to Moving year-over-year. growth by for quarter two the the growth our primarily record attribute important

margin level with are some second, First, Renewals we Google compared us higher for revenue XX% drop seasonal in revenue also pay they business, impressions. more inventory; what CPMs, advertisers robust recurring and even provide a when of have every improvement stream, our by us users. a we’ve yields predictability factors, in and they X,XXX as in in ad-supported to profitable which several the which pay growth fees MAU optimizing to improvements experienced including growth due year the made are Ad two. the

on revenue, that are focus we a impression couple partners ad per to demand our as basis. developing which to months, on of Over as number on yield should the inventory the of next experiences, regionalized expanding incremental able expect bid well

beyond. I investments fiscal to XXXX making Looking highlight growth and to we drive want future, are user further the to in the

icons social on overhauling even new release of widgets critical content and on management all community improving and – system, houses recent our in enhancements, features, content accounts, app personalized start premium, feeds, which content and iOS including personalized can we XX. now the both user and working With user-generated

to investments impact these markets. positively retention, Taken usage, together, in and user-growth, expect well-developed particularly we

addition, which believe mobile may users. offering which value-added beyond the make include expect personalization world content unique offers Premium more subscription content. the of or to that features Zedge potential unique offering, of paid broader should We set In great we attractive our enhance to a

to even We’re platform destination isn’t a swath directly relevant wrapping of and our and creators a can to related users, customers. heads their broader fandom around evolve and want it of execute a well, ringtones. stock we photo that section cross broader to if how become to it for monetize the make content, including wallpapers we communities coveted If

past look we we As XXXX, fiscal in areas. two optionality see

product new The introductions. is first

our Shortz la We of about entertainment entered genre beta user a product Shortz rendered as over and serialized messaging-like whether the For and at full-blown offers interest rollout app standalone example, quality as the both five the catalogue focus “Z” offering Shortz our a having a in XXXX, fiscal by to rich stories serialized entertainment Shortz podcasts remains believe short-form is short-form Zedge,” a stories. in beta continue fiction our carte offering about fiction. these clarity of new all space text by enhancing with the with format. a in Today, of we quarters. four high, We we envision well testing short “Shortz on “Shortcastz,” or app, ad-supported next a the to end. high will variants, short-form progresses

penetration eco-system. the to from has Apple relates Historically, away second of shied personalization The phone mobile Apple’s vertical.

of customization app introduction with XX, icons. opened limited door the functionality, iOS widgets for with However, and specifically they the

about. for there evolves products QX, its resting outstanding, needle to the to expect is laurels We which to and thinking not move be to potential not QX months In our mention forward. to vertical going potential this are the want Depending way. a over these in Apple strong are this capitalize that a to iPhone benefit the several already if believe comes great embraces into benefit on advertising order committed off longer-term, the our closing, start. next We is year-end in in for the to while to potential is on our we spend, meaningful the it business was from there a content, we cycle. on position embedding and that from demand refresh

targeting We growth to from our have quarter. flow the for the and not these Thank up cash at without profitability the employees. in with We are operations positive could results and full-year and you of achieved each XX% revenue EBITDA be good work. keep least and dedication efforts still

continue for our for loyal the updates users, product look As come. to please months in to

turn to season. call safe Wishing Thank going our to Yi, holiday provide who healthy, details am performance. over I and Now, a you. happy, financial about will the all

Yi Tsai

improve that want XX. I metrics July changes on want year call making Jonathan. Thank to ends investors the to you, to I our those fiscal to by report start out also some point reminding are transparency. to we the we

QX we everyone want be quarter, operating fiscal release the that EBITDA margin our I tends to This for seasonally QX while historical our be year. tend to including added earnings last to remind tables, seasonal stronger, trends low. also and and comparisons from to QX

quarter period, Moving QX defined from XXXX that opened number of Monthly results. as or the MAU, last up growth markets to the was during in XX.X continued October of from X.X% during contract. and days end active while double-digit the to slightly of million of our XX.X strong markets the October to well-developed XX showed fiscal user XXXX, increased the XXXX. Emerging million first app unique users

Gross quarter. actively for are million main in Premium’s sales growth higher our we driver ago growth, Total X% The $XXX,XXX the mentioned, and and Jonathan rates. spur optimization that both quarter, markets well-developed revenue users year-ago growth for last Volume, volume year an steps to and the GTV, taking our to compared of to XX% Zedge the ad our offerings in to in Zedge XX% QX is compared $X.X Transaction enhance through marketplace, waterfall, subscription rates increased was compared advertising quarter. MAU or transacted Premium. was QX, As up to to increase in total

we position basis. As quarters Zedge XXX%increase the a on Premium the a to sequential end as year-over-year in growth and to of subscriber a XXX,XXX quarter, driver the want Paid Jonathan at XX% exceeded come. indicated,

up subscription premium our expense. or converts as a new As you pay into user when shows a purchases a a fee marketing recall, subscriber, paid which in a user we Google, XX% to SG&A a

monthly subscription the to XX However, XX%. after Google drops months, whether or their if annual, renews subscriber, fee a

which was revenue year-over-year advertising a ARPMAU see to rates considered generally XX% earlier. renewal increase sequentially. record within discussed benefits paid Overall, and improvement continue We to the XX%, to subscriptions The year-over-year surpassing is $X.XXX, of primarily XX% be annual attributable in growth industry. an strong the performance and is

$X.XX, respectively, income Our operating the share $XXX,XXX [G&A per QX. revenue last in This a year. year loss and of versus only] were net increased subscription and strong and a margin negative EPS and last containment as versus positive Net XX% and higher in reflects million XX% $X $X.XX diluted cost X% to of increased versus year. XX% prior loss

EBITDA metric remain a a introducing that year. are QX, report. million we strong as We quarter, we up was in million, last position EBITDA of $X.X in from $X.X liquidity. terms This In

over or sequential needed. further million to raise the by facility flow compared million lines, identify million to market” flexibility was balance million. these ago. known debt, place organic cash had market revolving cash in our provide increase into [shelf-registration] offering, this operating sheet. sell to We an opportunistic cash has opportunities directly generated positive if consecutive while a or have fortify As “at offering and as stock should from QX up access in-organic $X.X quarters. $XX we already primarily million In for as and maintaining XX, in operations $X to The in we and driven filed filed credit Along to in up positive November, $X.X a strong cash outstanding we October conditions almost cash ATM to investment flow, financial also now up increase the late to to we of no equivalents, increase a five million an year warrant. we to put $X.X Zedge $X a of registration a

quarterly you to the basis. and again you safe looking in business line cash operations and earlier, flow and on are targeting for XXXX, back remain positive said top from next excess XX%, a Q&A. of Operator, both of with forward rates in our fiscal at that you profitability full-year continued call. on each we hope look I Jonathan to speaking as I Finally, growth

Operator

Klee Thank first Allen We you. to Instructions] will National Securities. [Operator at go

Allen Klee

strong think afternoon you to user talk this rolling content My work can and Good about the on the out? others a management first can of and a improve And personalization how pathway social that developing about maybe believe examples your said about will and on some you're what new relates question results. little bit system, give timing thinking retention, us on about of you how you this? of congratulations you you

Jonathan Reich

so Allen, Sure. Appreciate Hi, much. the thanks compliment.

before described, as potentially expect on sets more to lacked is able product started that briefly, has to know, we now appear half on being being to out premium like, base roll departure in these in will surely end base. management later So able that's there system being second we begin the And field. type and QA the the being our user resonate I to generated the of point to start but or user all the content, that you know, begin enhancements. some those under our one of incremental is an and it's introducing, roof, as the And as of fiscal content during where feature be whether goal sense, content entire the houses have the our slowly feature will basis content the introducing able things QX. able of available able of will experience. community that being app, be able user collect, such to to, one to will it that follow and in features on fiscal to of comment, with year. of think share our know, you we a And you to working And that to

Allen Klee

consumer, you'll have just advertising that follow to way that which more of engaged see net that should so I more that should The the retention, a this? viewership, up. there'll you is be more that, benefit And revenues, think is improve of

Jonathan Reich

Yeah.

with that of impact within growth. are begin it you that terms have items location in users the is that terms engagement social driving user following know, artists retention, the me forth. to on the then more with influencer, will in hey, that so they growth, helps of that so generally the expectation help all but Zedge know from premium we And Zedge that propelling can point know believe the ability of flow and certainly and users the connect at and sort that, other we and also to closely and user in when you to speaking will space, just of that So from you Because engage that. will say,

the monetization that but revenue, it certainly being ad the of generated incremental terms to see aspect, In expect there of will upside with help respect we we terms in marketplace. revenue premium also from

and are artists as buying release new they more creations, another that's retained better, As when users opportunity. engage potential

are So, two where that be the positively can those obvious we revenue most impacted. areas believe

Allen Klee

we how Thank Apple, also My think hopefully country, you numbers? that, to I the you're we things? steps those are relate monthly might in about And about talked users? grow question developed when next would you. guess is, two the And this you about active then just and what talking main the do with see to what said,

Jonathan Reich

Sure.

for And the so will more well-developed discretionary experience, Insofar will, monetization. on for so a ties have on, our customized, are advertising essentially growth markets, that and to very So, is that the developing higher economies. SKUs, user focus emerging different as the insofar you we income, if forth. reason back user much rates, and as

an our play the that happening app incremental expectation but And emerging on are in contribute may changes these incremental those we stack with many of basis. So, income, is markets. will that

entire are So out And depending achieve they or slowly then that change it as but roll a what is. surely the on really revenue we entire the stream. region success, the to we making into world

upon of continue hey, have began to say, we may way in achieve, experience be with header a to we experience on respect accordingly. we're example, or the region, but experience test region based one that experience a it trying regional global that region roll we maintain the that that that different whether when region was limit user to saw and following region, by working out specific another in in a that to let's changes, to bidding, we So, a basis or it different

Allen Klee

Okay.

CPM that this of there just and of think You quarters? quarter had about strong the mentioned the will seasonality a – four how quarter is how in the rule next you that thumb kind to there's about over be to ones, and think

Jonathan Reich

Sure.

January, So, budget typically, is you typically know, number quarter. know, is the and QX year big, as it quarter we all fiscal November, the a And in because of advertising retail. for, strongest a, our know, the know, November you December is December, you typically

not So, because, cash. already cut money budgets by contrast, spending prone going into of holiday January spent advertising to ton are know, they've people are, you their you know, a

So, to begins set QX and what down. is flatten to out the nose as to to begins QX up weaker begin which begins the see begins in QX, begin to then is some back September, then August, quarter. October to QX, some QX to dynamics we'll in. school we pick contrast, to We'll work find back QX is we'll recovery see [indiscernible] and a – by that in see then which

QX one the the QX, typically usually I fiscal four are and QX in sorry most confused associated quarters, has that So, with the and and which QX it. quarters stronger brief, year than significant is QX of the weakness I'm

Allen Klee

you. Thank

Operator

[Operator Instructions] for today's And We and question-and-answer conclude now session conference thank our we'll presentation. you call. attending

now may You disconnect.

Zedge (ZDGE) 10 Dec 202021 Q1 Earnings call transcript