- Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to Zedge's Earnings Conference Call for the First Fiscal 2023 Quarterly Results.

During management's prepared remarks, all participants will be in a listen-only mode. [Operator Instructions] After today's presentation by Zedge's management, there will be an opportunity to ask questions. [Operator Instructions] I will now turn the call over to Brian Siegel.

Brian Siegel

Thank you, operator. fiscal Reich, Financial Executive financial Officer, results its Jonathan Tsai, and and presentation, October for Chief ended Zedge's will first today's Zedge's Officer; Chief Yi operational XX, In XXXX. XXXX quarter discuss Zedge's those results call differ risks made in on remarks may and discussed session, general uncertainties conference question-and-answer materially nature, in actual the or prepared that Any forward-looking specific this in are call. during to statements whether during from the or future the subject today's cause to These uncertainties risks with and Zedge the include, risks limited but files to, and reports are specific the periodically in not SEC. uncertainties disclosed that that Zedge forward-looking may they statements assumes factors any to that to cause the no update or actual to those differ forecast. obligation update results from materially Please on earnings of note Relations page available Zedge release Investor is the the website. our that earnings X-K has Form The with the been on also release filed SEC. Jonathan. I conference over would to to the now turn like

Jonathan Reich

Brian. I’m QX most were the last for line revenue Good been results, QX all which our afternoon. generally you start you, ahead weaker The seasonally GuruShots. from our historically quarter increased holidays. reviewing of significant as expectations, the to year. And driver briefly attributable with is to going XX% Thank first thank today. has in us of addition joining by

in advertising when compared spend of However, past. rising interest the economic global uncertainty, lighter combination rates to geo-political and risk, resulted inflation years

The the as the that were in spend at campaigns QX, ad ultimately of late anomaly quarter Aside Zedge in by attributes, declines. an is usage spending the some to tried too the from new resulting optimizing in news improved that, was there offset but user end App. testing earlier our advertisers trends their acquisition also good lower

making GuruShots, to mix initiatives previously, relates gain we to about performance it operating, to still and platforms new to flow platforms across aiming each by new Apple paid while profitable to QX. basis growth and expansion profits for discussed On new platform. the positive. associated and reported GuruShots have Specific their user and are acquisition difficult GAAP we advertising with track in been and performance adding The cash remain information per As other net, diversifying and more into to user our share reinvesting consolidated attributes we a harder app to developers the marketing for purposes. losses challenges detailed optimizing

business creators tech, the For those Zedge, new like two and this, Zedge creator brief and to content to at community across connects intersection building major across a and sits casual mobile To friendly with strategic approach and that messaging, communities our a gaming flywheel discussion economy. and capitalize is platforms, that consumer start networks, in trends and I’d a value gaming. of on the leverages through engages This multitude our commerce. of marketplace of portfolio; strategy. social synergies online growth our including competition, Zedge provides with

in-app bespoke and something million Zedge’s and become an and subscriptions phone Our memes, creative DALL-E photos, are This excellent In consumers October. to which through people’s content envision illustrations, a people amateur now type game they spurs wallpapers, served create and gain and validation. content leading ringtones, that photography mobile Today, description of image our their users marketplace, the Technology express simply roughly offers sharing have themselves today total, allows users products rendition. sounds freemium videos. purchases. a and creators, digital wallpapers, in most XX notification needs products content to social like smartphone GuruShots enables video and model,

market as these online following creators Many a enough that and the their known last This popularity massively recognition of and has value community. years. “creator their addition, grown significant content. friendly monetize a economy,” five to is they garner In talented competition over are and from attract the

acquiring sell to in tokens, an still end, Easy’, to these of XXXX. million more long-term users mature Made monthly experts their their directly GuruShots, year-ago, This ARPMAU. marketplace see customers and easy-to-use, growth for product, Zedge active our currency. content Despite higher tokenize and Zedge artists significant gross served the we opportunity to lies XX to in-app tokens. this our contributing eco-friendly XX value, monetize non-crypto virtual potential also a while offering enhancement a purchases introduced has or GTV, million core To platform sell customers drive provides We transaction Zedge was profits. drive with being with October ‘NFTs which to users. One our allowing which to about our Before advertising, we and subscriptions, helped in opportunities higher growth art

industry believe edition digital goods limited the is the is we effects Although table. for innovation of a grappling the to brings there ‘crypto-winter,’ with the need fundamental a benefits of still technology this

coming see opportunities ‘NFTs expanding Made to content ‘NFTs directly to trading line, is GTV. several for we is this mainstream in grow in the within and These which quarters, as for and Made by Easy’ cryptocurrency win In verticals and consumers. new provides how the Zedge provenance, offering We auctions, creators domain. continue we both proceed include adding app. payments the will execute cautiously Easy’ for and a built to Bottom

one GuruShots acquired of and we App. announced when on as we sell the the Zedge mainly to the in we players photographs started GuruShots, their identified ability synergies addition, realizing In just Monday, for

to Zedge Users Making the is Marketing can AI app. in growth discuss feature drive create can user MAU it growth, now phrases. overall potential user growth. and introduced way to typing the in another believe We based Zedge by this is detail believe art an make on in App. plans also our phrases and generates significant the We this image high-quality App. simply and algorithm AI in generator images exceptionally drive to crucial, easy pAInt, relevant has Earlier and descriptive few ARPMAU, those in more engagement drive we will month, I content Zedge find the we new, a minutes.

are we to Initially, over developed We time. limited images users first anticipate over weeks subset we early rollout of as interest, generated release, over it further by with countries, opening following up the encouraged pAInt. the the XXX,XXX but its a

Our improve to to grow pAInt is and use base engagement. goal user both our

with room game until to fuses showcases growth, game who across in The features, use category XX of together being join GuruShots, compete ultimately progressively Players mastering photography perspective, their title. a competitions, successful as gaming, participating skills to every and contests amateur individually in their functionality, coveted be enabling next chat the a a or continuing that and estimate photo more have XX to sense can and scaled team. level smartphones mechanics killer the 'Guru' wide rates we The regularly leaderboards, players product interested web, the then anyone include we up. that difficult to for belonging, as a Android, earning their community to inspiration, Moving in that photos with photo compete contests and smartphone penetration includes enthusiasts photographers and a a which The variety million month. essentially several of photos. with iOS, leave and high-quality would much competition. publicly are share take From developments promising create

first onboarding. relates The customer to

process the better months, we convert into past players. players new to paying onboarding revamped the several Over

is paying a installs which than key would to a short-form spend, XX% with more rise of in in As XX% players result, converting our or this ramp onboarding we first-time nearly ‘ROAS.’ to TikTok-style, photographic users, ’Learn,‘ technique. ad Android engage introduced offers on surveying yielded return our gauge which they app, a improve said the Next, recently new users regularly. instructional their content videos measuring When

We are introducing ways monetize the subscription-based a can evaluating ‘Learn,’ different we including offering.

competing testing that are and simplified photo to built short, a offers still economy. a way which we're for limited in 'Battles,' competitions newbies on Finally, coin-based quick in start size,

engagement, ultimately more We on, advance into will to us game and expect early that revenue. ’Battles‘ convert players more users our drive economy allow increase

Turning to support XX Emojipedia, different languages. now we

Going on version. with native expanding and the mobile we a stack will product forward, app potentially focus optimizing offering, the ad

low believe very growth we’ve in gross drive very We excited triple-digit about the and with rates, over are changes fiscal past can high the high they year double-digit, XXXX. made margins,

all growth across user marketing, drive our to Looking meaningful properties, a new our player engagement. to committed have improve dollars company, we and and for focus

in fruit, not bearing investing all and The the acquisition needed re-engagement respect profitably. customer are and with do team user building to campaigns marketing are already this entire data only infrastructure but organization. paid additions the We to to our across

the pAInt was in down road we’ve in of the evaluating are this. example we information for content Stay an Finally, coming this more addition today. new tuned quarters. viability the of to products on discussed in ones the

increase in XXXX our Before a off for economic would investors, a industry-specific employees and momentous to marked with to partners, and I your like Board handing thank year support. Yi, has been it continued risk. geo-political, members,

new also business opportunities. has our opened it to However, exciting and

continue that we will our doing and challenges and long-term, sustainable are wish you I best build each of season. the safe facing. value are healthy, a effectively peaceful, holiday to address We and

like turn financial I Yi Yi? Now results. to will review call over the would to who our

Yi Tsai

I fiscal on those October that to want Jonathan. XXXX you, ended remind call Thank QX the our XX.

Again, remain in a Premium's days believe time million EBITDA that Subscription X% mainly crypto MAU and situation return however prior the continued $X.X operating that since offering to our consists decrease loss impacted was loss Zedge for X% from of in the Russian for to invasion app last business significantly sales Zedge first unique by the are Europe. growth. the combined in quarter the to growth both XX.X% $XXX,XXX believe differentiated play in and MAU integration MAU, an revenue broader year-over-year $X.X are From The in strategy with this significant and to to fiscal market AppLovin’s in increased investment XX Similar to XX.X $X.XX, quarter and this XX% growth a XX% related our bonus, Premium of down XX%. as in in consideration MAU versus role EBITDA the other of markets its at to improving a especially were million, results. and was strategies revenue. year, ASPs per share liquidity we down is reported we QX $XX mode, decreased the contributes marketing lower new a the fair to the the decreased the equivalents. will to which XXXX million. hit was contingent as NFTs. standpoint, return which cash for subscriptions that our $X.X still winter, we by advertising in of quarter’s in GTV period, NFT and leading come. opened XX million buying we solid million ad markets Europe, cash advertising count million. in was QX churn. believe us revenue a from XX% emerging order to $XXX,XXX, to Gaming was adjusted million. Despite related new year-ago investment ultimately the $XXX,XXX. revenue, negatively a in our GuruShots year-over-year. share of $X.XX in XX% nearly somewhat decline quarters Net providing our last working the last gaming well-developed Jonathan X%; XXXX. Adjusted features, offset increase the margin by ARPMAU to $X the volume decrease metrics, year. with challenges, was a offering of Total that cash not was over temporary crisis, Ukraine reflecting in we metrics, period, impacted down and to Moving XXXX, of discussed, $XXX,XXX while of during decline. versus of which the lower energy hard strong the first expense will and period. X% revenue while net led also on X%. in and position the Emojipedia, we QX in users increase of amortization Zedge by an was Operating increased XXXX, us revenue its defined came with number Active acquisition, was versus decreases subscription was did value in QX revenue year Other value diluted the Since GuruShots’ both in a loss was the first drive to insulates

line term and mentioned we access quarter. showed sheet million last draw on our loan, down a credit an we on gained call, to up which to our As million balance $XX $X had this

of December speaking when Moving for to repurchase call, XXX,XXX our next activity, on and for with you September our our again Thank we Q&A. started look you listening and I shares back quarter earnings buyback repurchased between first forward to Operator, XX, to Class the to B stock X, you stock. program, XXXX, call. XXXX, we common

Operator

you. Thank

the We Allen Allen your Your begin is from line will Klee. first now Instructions] live. question-and-answer is session. question [Operator coming

Allen Klee

Yes. afternoon. Good

going question elements and First on sequential a From will just this that potentially will forward, is cause key monthly what start growing? basis be active stabilize the to users.

Jonathan Reich

you? are Yes. How Allen. Hey,

couple that. of a contributing to are there So that initiatives are

well app to app. drive from on said of talked sequential to the user basically in the that, as our flat. about various flat. obviously quarter-to-quarter couple a But and First and emerging quarters, for basis, install or it that active was some was of developed users the all, market. geographies, of monthly will it variation is basically different we've saying with Having terms all, There last I'm aggregate, is, several whether it's One download in count reengage in contributors. the was features

users out which pent-up where be that. fans to you we've from most forth Those order recently, more And is two for see following adding features My so social tools amount what our friends would know app. their of features this. demand or wallpaper tremendous so the So community and like added we been either examples to to in rolled pAInt, a of on generator. regularly drive coming artists that or and press, AI Zedge, are contribute there's will as that back and the

their six where app installed and to to paid into drive that them last, we to on app of we that user campaigns, of because where then take features XX added over market the Secondly is reengagement have the been have up scaling acquisition, includes users or course or back have we app that efforts, that months. Zedge the with to marketing the content coupled And give accordingly. phone is the

Allen Klee

able Okay. your That – user. despite what next held to revenues, normalize? the feel statistic like advertising of year-over-year Excellent. that were back you guess, kind I And the per revenue more you some advertisers mentioned think but then it kind that you of Do active away, average of forgetting on, Jon, for like how come Or about could quarter? the up – I'm of going potentially seemed you it think that? you do monthly would

Jonathan Reich

Yes.

on the course a in the More reads budgets north there are There mobile over XX% to years I here that uncertainty analysts provide decline. correctly, market, year compared CAGR spend five or one press. recall will in difficult economic certainly in are also that complication pressure XXXX past, so will the expecting with years on I calendar been, yesterday of has across advertising clarity the it's of an year. decline So to overall that, downward growth. the of But there. saying the where if is trade and And depending some think I is that what recently, came but article advertising the pockets like, last

tremendous will we our that amount invest do certainty industry-wide we me clarity. that. on answer to a our Too be has in and or that impact will can't a with for whether year optimizing with you business. material inventory, say I fiscal early not something the continue in As But to know, that trend

Allen Klee

per revenue to user I'm over Yes. monthly year-over-year. assuming decline XX% average is model, your I advertising my mean, that in going

we'll in, that hopefully, So knows. I but factor see. Nobody

it's engagement? that benefit think so today, evolves? sounded I just with Or a you is the been pAInt do how you so the free it reception is – exceptionally product then has but to about strong. more how a This So net like of initial pAInt, – understand,

Jonathan Reich

Sure.

or product to not called free in-app the purchase users is rewarded an can product have app. through balance or make of as AI Bolts they purchases Bolt Zedge insofar order in to to or do either acquire currency create in-app a experiences So need art. an do subscribing a a and through in-app ad those the through They

results make through they ads with is that art don't purchase, necessary can way benefits But not purchase. rewarded existing they time they on more watching in-app those an heavily that this to only securing Zedge the for it's And the we ads. data or an evolves determine and revenue in-app if associated on accumulate based So out tool place or to make And more more growth are upon this revenue based on that with in and in users as focus associated viewing Tier-X and goals quickly only customers at future. rolling how going out not-too-distant we've both then initially an different well markets take driver a whether various over as to analyze benefit. well-developed we it And rolled new re-engagement like. in to in planning We're may look We're and infrastructure we heavily over the tests for other a as have a got we've we test, undertake. time, the the markets. this the growth the prioritize And upon region. react

Allen Klee

Okay. photos Great. sell question your had GuruShots generators to a marketplace I to of try them. to them to related shifting

just have would of or those demand? but an more I issue issue that the I you is issue you Or setting philosophical that more if to theoretical to But do know people the announced commentary how have buying a things? think be yet? Like And is think will there up. Or supply talk about degree create thing, interested to things? you been on do happening maybe enough if supply, create versus you what's too the in it demand? you about don't think what it's you any if there. that early

Jonathan Reich

the announced content availability sell the Zedge just their we for to in and yesterday. As GuruShots market you app know, players

And between to minimize GuruShots early. that to very hurdles. contribute stream always process will there overall the goal. obviously that achieving those if you marketplace, be as supply upon demand. players with an with the with balance and to improve of said And healthy enable think addition friction we least amount it's income needs that Having to we will, that, of continue something and any content, is new will that a this So

to We and where more best which the previous segments those our Premium efficiently focused really and And is the fashion improve in that have to in earnings call in revenue mean to building business. our data areas we one said we Zedge segment our a in order are are theoretically speaking, we that team content also marketing optimizes will will to and marketing be capabilities. overall very that various today able the user in the avail users product contribution its of out than that inventory the pie we that have on of

Allen Klee

That's great.

commentary of a on marketing what lot your marketing those dollars? from increase year is to paid getting to of seen of preliminarily you've initiatives one returns too it that this kind Is your spend, or targeted any early GuruShots. So

Jonathan Reich

it's is lot to user there too What base. early. XXXX, grow to you Yes, rewind a needed I was less XXXX the to order in if say effort can clock

defined You lookalike audience go so scale into a just and would from platform, begin there. to speak, to

course, complicated acquisition those benefits array Of user use of campaigns. things. of to has has that test in of platforms more beginning and to what process data limit to in and in sort is of our the a order and acquisition wider data in came I'm Apple When optimize in become the game rules case, resulted simplifying our the order changed available,

platforms, if I that into optimize know doesn't important conceptualize One on as platform type of to will new so with what experience. out. user know will One search that that best a to doesn't speak, one think acquisition platform. is it's really it work expands

that with well. scale. it and data one another And in inherently, certain of for of one a research as find of expanding have well, portion has much can be scale? which you is has data. one And some perspective. the approaches what that what will has a creatives, underestimated overall happening upon very certain And market that's undertaken would limited this. against to their changes because development, can by of the policy is then question up piece one or back, the it's my that There they terms impact can to comes So campaigns, budget terms is that in window will Apple slightly from window Apple that the their optimizing time of, how I had in what if that to based acquisition respect comment of been then launch So suspicion will. of a terms understanding collect allocate opened in user certain

just hard work. we're at So

right the right doing over the we've use and campaigns, ultimately to order got the making optimize data the best accordingly. can that to our pipes sure to We’re that in we data the platforms, unearth mid good right longer-term spend

Allen Klee

Thank you.

else? then report testing wider is something mean a that of do Does it us Zedge Or mean doing? you your enough are you acquisition data Can And Android could platforms? until have what how you how said you clarify you mean you just long the versus plans array acquisition would So marketing think that on back by you platforms. do be to Apple?

Jonathan Reich

platforms would platforms third-party or ads. search Instagram or like Facebook Google Apple or be Acquisition

And bid that with platforms the is our buying instances, try – get advertiser then have, respect as we unearth for machine we it, their learning but So these that have illustrations, These upon Zedge, KPIs attributes. consider these attributes in order are identify and promise to selling we we to in platforms and data, seem to we acquirers many an certain making to looking and improve and capabilities inventory campaigns to that are on various analyze platforms for. just decisions. some like in those that

breakeven. would we're I the you back process we when that being around where to that now. the In GuruShots, we bring properly the need to said in right roll give can would months period take, we acquired if that, time, undertaking more back. or time terms XX of that say business of we And report is

that the are ingredients and all what on spend. contribute day-in this we're of And a ad that return becoming day-out incrementally, is on basis, a So we to more attuned basis. to doing on quarterly

period to get I to an goal that still of that So that aggregate closing time gap us to think XX-month the with we're incremental holding in basis profitability quarter-by-quarter. on

Allen Klee

My made question, feel revenue and guidance the for text, the have in your profitable comment fiscal you a grow prior fiscal on how just you your could little comment investing cash just now, XXXX, the and positive but your is for anything feel year about you and ability and about while quarter, to given flow a how feel changed Has in last continue Great. if little how you you it give takes, about? first given how outlook the to about year? your

Jonathan Reich

Yes.

generally if in going long-term. we to to everything should goal past, be that within loss, of runway. threshold profitable, maintaining quarters business to over that a we go us positive. said Board we cash pursue. goal. incredible some have is is as which growth Our of that assets our And our we continues think the power would have to can most philosophy that, something achieve and opportunity, I've are runway and one scaling is And see in the why that explain to one got to them flow really we're do the would that of terms to being And opportunity barring that important But the meet we've require we then

Allen Klee

That's you execution. congrats on great. so your and Thank much,

Jonathan Reich

Thank you, and happy holidays.

Allen Klee

too. You

Operator

and you call. today's attending session conference you, Thank Thank concludes our for Instructions] [Operator Allen. This question-and-answer presentation. Okay.

You disconnect. now may

Zedge (ZDGE) 14 Dec 222023 Q1 Earnings call transcript