Zedge, Inc. Files Q1 2024 10-Q Report

TL;DR

Zedge filed its 10-Q for Q1 2024, showing its latest financial snapshot.

AI Summary

Zedge, Inc. filed its 10-Q for the quarterly period ended April 30, 2024. The company, incorporated in Delaware with its principal executive offices in New York, reported its financial status. Zedge's Class B common stock is registered on the NYSE American exchange.

Why It Matters

This filing provides investors with an update on Zedge's financial performance and operational status for the most recent quarter, crucial for investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial information.

Key Numbers

• 001-37782 — Commission File Number (Identifies the specific SEC filing)
• 26-3199071 — IRS Number (Company's Employer Identification Number)

Key Players & Entities

• Zedge, Inc. (company) — Registrant
• April 30, 2024 (date) — Quarterly period end date
• NYSE American (company) — Stock exchange
• Delaware (location) — State of incorporation
• New York (location) — Principal executive offices location

FAQ

Key Financial Figures

• $2.4 million — or paid subscriptions was approximately $2.4 million related to approximately 654,000 active
• $1.5 m — 0 active subscribers, and approximately $1.5 million, related to approximately 647,000

Filing Documents

• ea0207470-10q_zedge.htm (10-Q) — 833KB
• ea020747001ex31-1_zedge.htm (EX-31.1) — 10KB
• ea020747001ex31-2_zedge.htm (EX-31.2) — 10KB
• ea020747001ex32-1_zedge.htm (EX-32.1) — 4KB
• ea020747001ex32-2_zedge.htm (EX-32.2) — 4KB
• image_001.jpg (GRAPHIC) — 20KB
• image_002.jpg (GRAPHIC) — 22KB
• image_003.jpg (GRAPHIC) — 21KB
• image_004.jpg (GRAPHIC) — 20KB
• 0001213900-24-051744.txt ( ) — 5202KB
• zdge-20240430.xsd (EX-101.SCH) — 52KB
• zdge-20240430_cal.xml (EX-101.CAL) — 38KB
• zdge-20240430_def.xml (EX-101.DEF) — 236KB
• zdge-20240430_lab.xml (EX-101.LAB) — 415KB
• zdge-20240430_pre.xml (EX-101.PRE) — 237KB
• ea0207470-10q_zedge_htm.xml (XML) — 559KB

Financial Information

PART I. Financial Information 1 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations and Comprehensive Loss 2 Condensed Consolidated Statements of Changes In Stockholders' Equity 3 Condensed Consolidated Statements of Cash Flows 4 Notes To Condensed Consolidated Financial Statements 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3.

Quantitative and Qualitative Disclosures About Market Risks

Quantitative and Qualitative Disclosures About Market Risks 30 Item 4.

Controls and Procedures

Controls and Procedures 30

OTHER INFORMATION

PART II. OTHER INFORMATION 31 Item 1.

Legal Proceedings

Legal Proceedings 31 Item 1A.

Risk Factors

Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 32

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Condensed Consolidated Financial Statements

Item 1. Condensed Consolidated Financial Statements ZEDGE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value data) April 30, July 31, 2024 2023 (Unaudited) Assets Current assets: Cash and cash equivalents $ 19,925 $ 18,125 Trade accounts receivable 3,325 2,883 Prepaid expenses and other receivables 374 569 Total current assets 23,624 21,577 Property and equipment, net 2,357 2,186 Intangible assets, net 5,481 18,709 Goodwill 1,802 1,961 Deferred tax assets, net 4,492 1,842 Other assets 383 556 Total assets $ 38,139 $ 46,831 Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 1,155 $ 669 Accrued expenses and other current liabilities 3,272 2,676 Deferred revenues 1,998 2,414 Total current liabilities 6,425 5,759 Term loan, net of deferred financing costs - 1,985 Deferred revenues--non-current 677 - Other liabilities 135 223 Total liabilities 7,237 7,967 Commitments and contingencies (Note 9) 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 April 30, 2024 and July 31, 2023 5 5 Class B common stock, $ .01 par value; authorized shares— 40,000 ; 14,866 shares issued and 13,967 shares outstanding at April 30, 2024, and 14,634 shares issued and 13,801 outstanding at July 31, 2023 149 146 Additional paid-in capital 47,795 46,122 Accumulated other comprehensive loss ( 1,878 ) ( 1,537 ) Accumulated deficit ( 13,074 ) ( 3,942 ) Treasury stock, 899 shares at April 30, 2024 and 833 shares at July 31, 2023, at cost ( 2,095 ) ( 1,930 ) Total stockholders' equity 30,902 38,864 Total liabilities and stockholders' equity $ 38,139 $ 46,831 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 1 ZEDGE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except for per share data) (Unaudited) Three Months Ended Nine Months Ended April 30, April 30, 2024 2023 2024 2023 Revenues $ 7,658 $ 6,726 $ 22,510 $ 20,609 Costs and expenses: Direct cost of revenues (excluding amortization of capitalized software and technology development costs which is included below) 455 498 1,399 1,762 Selling, general and administrative 6,752 5,016 18,773 16,713 Depreciation and amortization 583 897 2,120 2,505 Impairment of intangible assets - - 11,958 - Impairment of goodwill - 8,727 - 8,727 Change in fair value of contingent consideration - - - ( 1,943 ) Loss from operations ( 132 ) ( 8,412 ) ( 11,740 ) ( 7,155 ) Interest and other income, net 188 84 434 196 Net loss resulting from foreign exchange transactions ( 80 ) ( 84 ) ( 223 ) - Loss before income taxes ( 24 ) ( 8,412 ) ( 11,529 ) ( 6,959 ) Income tax benefit ( 137 ) ( 718 ) ( 2,397 ) ( 702 ) Net income (loss) $ 113 $ ( 7,694 ) $ ( 9,132 ) $ ( 6,257 ) Other comprehensive loss: Changes in foreign currency translation adjustment ( 224 ) ( 214 ) ( 341 ) ( 321 ) Total other comprehensive loss ( 224 ) ( 214 ) ( 341 ) ( 321 ) Total comprehensive loss $ ( 111 ) $ ( 7,908 ) $ ( 9,473 ) $ ( 6,578 ) Income (loss) per share attributable to Zedge, Inc. common stockholders: Basic $ 0.01 $ ( 0.55 ) $ ( 0.65 ) $ ( 0.44 ) Diluted $ 0.01 $ ( 0.55 ) $ ( 0.65 ) $ ( 0.44 ) Weighted-average number of shares used in calculation of income (loss) per share: Basic 14,191 14,017 14,077 14,221 Diluted 14,542 14,017 14,077 14,221 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 2 ZEDGE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands) (Unaudited) Class A Common Stock Class B Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Treasury Stock Total Stockholders' Shares Amount Shares Amount Capital Loss Deficit Shares Amount Equity Balance – July 31, 2023 525 $ 5 14,634 $ 146 $ 46,122 $ ( 1,537 ) $ ( 3,942 ) 833 $ ( 1,930 ) $ 38,864 Exercise of stock options - - 2 - 3 - - - - 3 Stock-based compensation - - 33 1 506 - - - - 507 Purchase of treasury stock - - - - - - - 6 ( 13 ) ( 13 ) Foreign currency translation adjustment - - - - - ( 367 ) - - - ( 367 ) Net loss - - - - - - ( 15 ) - - ( 15 ) Balance – October 31, 2023 525 5 14,669 $ 147 46,631 ( 1,904 ) ( 3,957 ) 839 ( 1,943 ) 38,979 Stock-based compensation - - 87 1 682 - - - - 683 Foreign currency translation adjustment - - - - - 250 - - - 250 Net loss - - - - - - ( 9,230 ) - - ( 9,230 ) Balance – January 31, 2024 525 5 14,756 148 47,313 ( 1,654 ) ( 13,187 ) 839 ( 1,943 ) 30,682 Stock-based compensation - - 110 1 482 - - - - 483 Purchase of treasury stock - - - - - - - 60 ( 152 ) ( 152 ) Foreign currency translation adjustment - - - - - ( 224 ) - - - ( 224 ) Net income - - - - - - 113 - - 113 Balance – April 30, 2024 525 $ 5 14,866 $ 149 $ 47,795 $ ( 1,878 ) $ ( 13,074 ) 899 $ ( 2,095 ) $ 30,902 Class A Common Stock Class B Common Stock Additional Paid-in Accumulated Other Comprehensive Retained Treasury Stock Total Stockholders' Shares Amount Shares Amount Capital Loss Earnings Shares Amount Equity Balance – July 31, 2022 525 $ 5 13,951 $ 139 $ 43,609 $ ( 1,391 ) $ 2,160 74 $ ( 334 ) $ 44,188 Stock-based compensation - - 30 1 589 - - - - 59

financial statements

financial statements. 3 ZEDGE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Nine Months Ended April 30, 2024 2023 Operating activities Net loss $ ( 9,132 ) $ ( 6,257 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 42 44 Amortization of intangible assets 1,270 1,738 Amortization of capitalized software and technology development costs 808 723 Amortization of deferred financing costs 15 2 Stock-based compensation 1,673 1,957 Impairment charge of intangible assets 11,958 - Impairment of investment in privately-held company 50 - Write-off from impairment of goodwill - 8,727 Change in fair value of contingent consideration - ( 1,943 ) Deferred income taxes ( 2,650 ) ( 955 ) Change in assets and liabilities: Trade accounts receivable ( 442 ) ( 645 ) Prepaid expenses and other current assets 195 ( 501 ) Other assets 34 50 Trade accounts payable and accrued expenses 1,073 653 Deferred revenue 261 ( 850 ) Net cash provided by operating activities 5,155 2,743 Investing activities Final payment for asset acquisitions - ( 962 ) Capitalized software and technology development costs ( 993 ) ( 1,110 ) Purchase of property and equipment ( 35 ) ( 57 ) Net cash used in investing activities ( 1,028 ) ( 2,129 ) Financing activities Prepayment of term loan ( 2,000 ) - Proceeds from term loan payable - 2,000 Payment of deferred financing costs - ( 18 ) Proceeds from exercise of stock options 3 - Purchase of treasury stock in connection with share buyback program and stock awards vesting ( 165 ) ( 1,454 ) Net cash (used in) provided by financing activities ( 2,162 ) 528 Effect of exchange rate changes on cash and cash equivalents ( 165 ) ( 160 ) Net increase in cash and cash equivalents 1,800 982 Cash and cash equivalents at beginning of period 18,125 17,085 Cash and

financial statements

financial statements. 4 ZEDGE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1—Basis of Presentation and Summary of Significant Accounting Policies Description of Business Zedge, Inc. builds digital marketplaces and friendly competitive games around content that people use to express themselves. Our leading products include Zedge Ringtones and Wallpapers, which we refer to as our Zedge App, a freemium digital content marketplace offering mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted source for all things emoji'. Our vision is to enable and connect creators who enjoy friendly competitions with a community of prospective consumers in order to drive commerce. Except where the context clearly indicates otherwise, the terms the "Company," "Zedge" "we," "us" or "our" refer to Zedge, Inc. and its consolidated subsidiaries. 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 and nine months ended April 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2024 or any other period. The balance sheet at July 31, 20

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