Zedge Inc

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from future results. Factors that may cause such differences include, but are not limited to: (1) economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price; (2) our ability to successfully make acquisitions and/or successfully integrate acquisitions that we have made into Zedge without incurring unanticipated costs or without being subject to other integration issues that may disrupt our existing operations; (3) delay or failure to realize the expected synergies and benefits of the GuruShots acquisition; (4) the impact of the Covid-19 pandemic on our employees, customers, partners, and the global financial markets; (5) Russia’s invasion of Ukraine, and the international community’s response; and (6) recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them. For further information regarding risks and uncertainties associated with our business, please refer to Item 1A to Part I “Risk Factors” in the 2023 Form 10-K. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including the 2023 Form 10-K.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from future results. Factors that may cause such differences include, but are not limited to: (1) economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price; (2) our ability to successfully make acquisitions and/or successfully integrate acquisitions that we have made into Zedge without incurring unanticipated costs or without being subject to other integration issues that may disrupt our existing operations; (3) delay or failure to realize the expected synergies and benefits of the GuruShots acquisition; (4) the impact of the Covid-19 pandemic on our employees, customers, partners, and the global financial markets; (5) Russia’s invasion of Ukraine, and the international community’s response; and (6) recent attack by Hamas and other terrorist organizations from the Gaza Strip and Lebanon and Israel’s war against them. For further information regarding risks and uncertainties associated with our business, please refer to Item 1A to Part I “Risk Factors” in the 2024 Form 10-K. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including the 2024 Form 10-K.

Previous wording

Given our operations in Israel, the impact of economic, political, geopolitical, and military conditions in the region directly affects us, including conflicts involving missile strikes, infiltrations, and terrorism. Notably, on October 7, 2023, Hamas launched attacks in southern Israel, resulting in casualties and military engagement. In addition, Hezbollah, another terrorist organization based in Lebanon has been indiscriminately shelling Israel. The extent and duration of this conflict remain uncertain, potentially involving other groups. Israel’s response led to the mobilization of reservists, affecting our workforce. Prior to this, proposed changes to Israel’s judicial system had already raised concerns about the business environment, compounded by recent events, potentially impacting foreign investment, currency fluctuations, credit ratings, interest rates, and security markets. Furthermore, regional political unrest and threats from extremist groups, notably Iran, pose additional risks. Management and our Board of Directors are closely monitoring the situation in Israel to address potential business disruptions and implications and cannot reasonably estimate the impact to the consolidated financial statements at this time.

Current wording

Given our operations in Israel, the impact of economic, political, geopolitical, and military conditions in the region directly affects us, including conflicts involving missile strikes, infiltrations, and terrorism. Notably, on October 7, 2023, Hamas launched attacks in southern Israel, resulting in casualties and military engagement. In addition, Hezbollah, another terrorist organization based in Lebanon has been indiscriminately shelling Israel since October 8, 2023. The extent and duration of this conflict remain uncertain, potentially involving other groups. Israel’s response led to the mobilization of reservists, affecting our workforce. Prior to this, changes in Israel’s judicial system had already raised concerns about the business environment, compounded by recent events, potentially impacting foreign investment, currency fluctuations, credit ratings, interest rates, and security markets. Furthermore, regional political unrest and threats from extremist groups, notably Iran, pose additional risks. Management and our Board of Directors are closely monitoring the situation in Israel to address potential business disruptions and implications.

Previous wording

Zedge, Inc. (“Zedge”) 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.

Current wording

Zedge 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.

Previous wording

The Zedge Ringtones and Wallpapers app (which is named “Zedge Wallpapers” in the App Store), which we refer to as our “Zedge App,” offers a wide array of mobile personalization content including wallpapers, video wallpapers, ringtones, and notification sounds, and is available both in Google Play and the App Store. As of April 30, 2024, our Zedge App had been installed nearly 661 million times since inception and had 27.7 million monthly active users (“MAU”). MAU is a key performance indicator (“KPI”) that captures the number of unique users that used our Zedge App during the final 30 days of the relevant period. Our platform allows creators to upload content to our marketplace and avail it to our users either for free or for a price, via ‘Zedge Premium,’ the section of our marketplace where we offer premium content (i.e., for purchase). In turn, our users utilize the content to personalize their phones and express their individuality.

Current wording

Our Zedge app (which is named “Zedge Wallpapers” in the App Store) offers a wide array of mobile personalization content including wallpapers, video wallpapers, ringtones, and notification sounds, and is available both in Google Play and the App Store. As of October 31, 2024, our Zedge App had been installed nearly 686 million times since inception and, over the past two fiscal years, has had between 25.0 million and 32.2 million monthly active users (“MAU”), ending with 25.0 million MAU as of October 31, 2024. MAU is a key performance indicator (“KPI”) for our Zedge app that captures the number of unique users that used our Zedge App during the final 30 days of the relevant period. Our platform allows creators to upload content to our marketplace and avail it to our users either for free or, via ‘Zedge Premium,’ the section of our marketplace where we offer premium content for purchase. In turn, our users utilize the content to personalize their phones and express their individuality.

Previous wording

The Zedge Marketplace monetization stack consists of advertising revenue generated when users view advertisements when using the Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a weekly, monthly, annual or lifetime subscription. In April 2023, we introduced a subscription tier in the iOS version of the Zedge App. As of April 30, 2024, we had approximately 654,000 active subscribers.

Current wording

The Zedge Marketplace’s monetization stack consists of advertising revenue generated when users view advertisements when using the Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a monthly, annual or lifetime subscription. In April 2023, we introduced a subscription tier in the iOS version of the app. As of October 31, 2024, we had approximately 698,000 active subscribers.

Previous wording

In April 2022, we acquired GuruShots, a recognized category leader focused on gamifying the photography vertical. GuruShots offers a platform spanning iOS, Android, and the web that provides a fun, educational and structured way for amateur photographers to compete in a wide variety of contests showcasing their photos while gaining recognition with votes, badges, and awards. We estimate that the total addressable market of amateur photographers using their smartphones to take and publicly share artistic photos is 30-40 million people per month and that the market is still in its infancy. Every month, GuruShots stages more than 300 competitions that result in players uploading approximately 600,000 photographs and casting close to 3 billion “perceived votes, which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related to that user. To improve engagement, GuruShots has adopted a set of retention dynamics focused on individual, team and community dynamics that create a sense of belonging, inspiration, recognition, improvement, and competition.

Current wording

In April 2022, we acquired GuruShots Ltd, a recognized category leader focused on gamifying the photography vertical. GuruShots offers a platform spanning iOS, Android, and the web that provides a fun, educational and structured way for amateur photographers to compete in a wide variety of contests showcasing their photos while gaining recognition with votes, badges, and awards. We estimate that the total addressable market of amateur photographers using their smartphones to take and publicly share artistic photos is 30-40 million people per month and that the market is still in its infancy. Every month, GuruShots stages more than 300 competitions that result in players uploading in excess of 600,000 photographs and casting close to 2.4 billion “perceived votes,” which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related to that user. To improve engagement, GuruShots has adopted a set of retention dynamics focused on individual, team and community dynamics that create a sense of belonging, inspiration, recognition, improvement, and competition.

Previous wording

We market GuruShots to prospective players, primarily via paid user acquisition channels, and utilize a host of creative formats including static and video ads in order to promote the game. Our marketing team invests material resources in analyzing all attributes of a campaign ranging from the creative assets, offer acquisition channel, and platform (i.e., iOS, Android, and web), just to name a few, with the goal of determining whether a specific campaign is likely to yield a profitable customer. When we unearth a successful combination of these variables we scale up until we experience diminishing returns. Ultimately, we believe that the efforts we are making to advance the product coupled with the investment in user acquisition can significantly increase GuruShots’ player base.

Current wording

We market GuruShots to prospective players, primarily via paid user acquisition channels, and utilize a host of creative formats including static and video ads in order to promote the game. Our marketing team invests material resources in analyzing all attributes of a campaign ranging from, among others, the creative assets, offer acquisition channel and platform (i.e., iOS, Android, and web), with the goal of determining whether a specific campaign is likely to yield a profitable customer. When we unearth a successful combination of these variables we scale up until we experience diminishing returns. Ultimately, we believe that the efforts we are making to advance the product coupled with the investment in user acquisition can significantly increase GuruShots’ player base.

Previous wording

Beyond our commitment to growing both the Zedge App and GuruShots on a standalone basis, we believe that there are many potential synergies that we can capitalize on that exist between the two businesses. Specifically, we plan to enable the ability for GuruShots players to become Zedge Premium artists and sell their photos to our audience of 27+ million MAU (as of April 30, 2024) as standard digital images or NFTs. In addition, we look to benefit from the experience that the GuruShots team possesses and test gamifying the Zedge App. We believe that successful gamification can contribute to increasing engagement, retention, and lifetime value, all critical performance criteria for our business. Longer term, we believe that there are complementary content verticals that lend themselves to gamification. To this end, we have a new hybrid casual title, ‘AI Art Master,’ which is in soft-launch in the Philippines, Poland, and India, that enables players to create generative AI images and compete in themed-based competitions with these images. Based on analyzing user data and performing extensive user testing, we will determine whether to refine the user experience and scale or cease development of this title.

Current wording

Beyond our commitment to growing both the Zedge App and GuruShots on a standalone basis, we believe that there are many potential synergies that we can capitalize on that exist between the two businesses. Specifically, we plan to enable GuruShots players to become Zedge Premium artists and sell their photos to our audience of 25+ million MAU (as of October 31, 2024) as standard digital images. In addition, we are benefitting from the experience that the GuruShots team possesses in gamifying the Zedge App. We believe that successful gamification can contribute to increasing engagement, retention, and lifetime value, all critical KPIs for our business. Longer term, we believe that there are complementary content verticals that lend themselves to gamification. One example is our hybrid casual title, ‘AI Art Master,’ which has been in soft-launch in the Philippines, Poland, and India, that enables players to create generative AI images and compete in themed-based competitions with these images. Based on analyzing user data and performing extensive user testing, we will determine whether to refine the user experience and scale or cease development of this title

Previous wording

In August 2021, we acquired the assets of Emojipedia Pty Ltd (“Emojipedia”), including Emojipedia.org the world’s leading authority dedicated to providing up-to-date and well-researched emoji definitions, information, and news as well as World Emoji Day and the annual World Emoji Awards. In April 2024, Emojipedia received approximately 36 million monthly page views and has approximately 10.4 million MAU as of April 30, 2024 of which approximately 55.5% are located in well-developed markets. It is the top resource for all things emoji, offering insights into data and cultural trends. As a member of the Unicode Consortium, the standards body responsible for approving new emojis, Emojipedia works alongside major emoji creators including Apple, Google, Meta, and X, formally known as Twitter.

Current wording

In August 2021, we acquired Emojipedia Pty Ltd, the world’s leading authority dedicated to providing up-to-date and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards. In October 2024, Emojipedia received approximately 38.8 million monthly page views and has approximately 10.3 million monthly active users as of October 31, 2024 of which approximately 48.9% are located in well-developed markets. It is the top resource for all things emoji, offering insights into data and cultural trends. As a member of the Unicode Consortium, the standards body responsible for approving new emojis, Emojipedia works alongside major emoji creators including Apple, Google, Meta, and X, formerly known as Twitter.

Previous wording

We believe that Emojipedia provides growth potential to the Zedge App, and it was immediately accretive to earnings post acquisition in August 2021. In the past year, we have made many changes to Emojipedia including overhauling its backend and redesigning the Emojipedia website. We will continue to enhance this offering and are exploring new features, some of which will be released before the end of the calendar year.

Current wording

We believe that Emojipedia provides growth potential to the Zedge App, and it was immediately accretive to earnings post acquisition in August 2021. In the past year, we have made many changes to Emojipedia including overhauling its backend, redesigning the Emojipedia website, and introducing new entertainment-focused features to the site. We will continue to enhance this offering and are exploring additional new features which use artificial intelligence, some of which will be released before the end of the calendar year.

Previous wording

Our unaudited condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in the 2023 Form 10-K. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to revenue recognition, business combination, intangible assets and goodwill, capitalized software and technology development costs, and stock-based compensation. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2023 Form 10-K.

Current wording

Our unaudited condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in the 2024 Form 10-K. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to revenue recognition, intangible assets, goodwill, capitalized software and technology development costs, stock-based compensation and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2024 Form 10-K.

Previous wording

MAU decreased 13.4% in the three ended April 30, 2024 when compared to the same period a year ago. Additionally, we have experienced a continuing shift in our regional customer make-up with MAU in emerging markets (particularly India) representing an increasing portion of our user base. As of April 30, 2024, users in emerging markets represented about 78.3% of our MAU, as compared to 77.5% from the same period a year ago. ARPMAU for the three months ended April 30, 2024 increased 39.7% when compared to the same period a year ago, primarily due to the increase in price per advertising impression from the same period a year ago, which was driven by increased competition for our ad inventory as well as strong year-over-year subscription revenue growth.

Current wording

ARPMAU for the three months ended October 31, 2024 increased 22.1% when compared to the same period a year ago, primarily due to the increase in price per advertising impression from the same period a year ago, which was driven by increased competition for our ad inventory as well as strong year-over-year subscription revenue growth. Subscription revenue and subscription billings for the three months ended October 31, 2024 increased 21.1% and 56.0%, respectively, when compared to the same period a year ago, as discussed below.

Previous wording

MAP decreased 20.7% in the three months ended April 30, 2024 when compared to the same period a year ago, primarily attributable to Apple’s App Tracking Transparence (“ATT”) framework which impedes our ability to invest in paid user acquisition (“PUA”) campaigns profitably in terms of return on ad spend or (“ROAS”). As such, we continued to scale back our PUA spend for GuruShots while testing new campaigns and creatives in order to unearth attractive ROAS scaling opportunities. ARPMAP decreased 0.4% to $53.0 in the three months ended April 30, 2024 from $53.2 in the three months ended April 30, 2023.

Current wording

MAP decreased 25.9% in the three months ended October 31, 2024 when compared to the same period a year ago, primarily attributable to Apple’s App Tracking Transparence (“ATT”) framework which impedes our ability to invest in paid user acquisition (“PUA”) campaigns profitably in terms of return on ad spend or (“ROAS”). As such, we continued to scale back our PUA spend for GuruShots while testing new campaigns and creatives in order to unearth attractive ROAS scaling opportunities. ARPMAP decreased 15.4% to $43.3 in the three months ended October 31, 2024 from $51.2 in the three months ended October 31, 2023

Previous wording

Comparison of Our Results of Operations for the Three and Nine months Ended April 30, 2024 and 2023

Current wording

Comparison of Our Results of Operations for the Three months ended October 31, 2024 and 2023

Previous wording

The following table sets forth the composition of our revenues for the three and nine months ended April 30, 2024 and 2023:

Current wording

The following table sets forth the composition of our revenues for the three months ended October 31, 2024 and 2023 (in thousands):

Previous wording

The following table summarizes our subscription revenue for the three and nine months ended April 30, 2024 and 2023:

Current wording

The following table summarizes our subscription revenue for the three months ended October 31, 2024 and 2023:

Previous wording

The following table summarizes Zedge Premium gross and net revenue for the three and nine months ended April 30, 2024 and 2023:

Current wording

The following table summarizes Zedge Premium gross and net revenue for the three months ended October 31, 2024 and 2023:

Previous wording

For the three months ended April 30, 2024, our advertising revenue increased 19.4% compared to the same period in the prior year primarily due to the increase in price per advertising impression paid by the advertisers on our platform when compared to the same period a year ago, which was driven by increased competition for our ad inventory.

Current wording

For the three months ended October 31, 2024, our advertising revenue decreased 1.3% compared to the same period in the prior year primarily due to a 12.3% decrease in MAU partially offset by an increase in price per advertising impression paid by the advertisers on our platform when compared to the same period a year ago, which was driven by increased competition for our ad inventory.

Previous wording

For the three months ended April 30, 2024, our subscription revenue increased 34.9% compared to the same period in the prior year primarily due to the introduction of our iOS subscription offering in April 2023 and the lifetime subscriptions for Android users we rolled out in August 2023. Both initiatives contributed to the 80.3% increase in subscription billings in the three months ended April 30, 2024 compared to the same period in the prior year.

Current wording

For the three months ended October 31, 2024, our subscription revenue increased 21.1%, and our subscription billings increased 56.0% compared to the same period in the prior year primarily due to the introduction of our iOS subscription offering in April 2023 and the lifetime subscription product for Android users we rolled out in August 2023.

Previous wording

For the nine months ended April 30, 2024, our other revenue increased 8.9% compared to the same period in the prior year primarily due to higher Zedge Premium net revenue resulting from higher GTV. Zedge Premium net revenue increased 5.6% in the nine months ended April 30, 2024 compared to the same period in the prior year. For the nine months ended April 30, 2024, gross margin was 44% compared to 56% for the same period in the prior year. Lower gross margin in the current period was caused by the advanced royalty write-downs discussed above.

Current wording

For the three months ended October 31, 2024, our other revenue increased 122.5% compared to the same period in the prior year primarily due to the increase in Zedge Premium net revenue. For the three months ended October 31, 2024, Zedge Premium net revenue increased 141.7% compared to the same period in the prior year primarily attributable to additional revenue from certain AI generative features we rolled out in our Zedge App in fiscal 2024.

Previous wording

For the three months ended April 30, 2024, digital goods and services revenue declined 20.3% compared to the same period in the prior year primarily due to the 20.7% decrease in GuruShots’ MAP for the corresponding periods.

Current wording

For the three months ended October 31, 2024, digital goods and services revenue declined 31.8% compared to the same period in the prior year primarily due to the 25.9% decrease in GuruShots’ MAP coupled with 15.4% decrease in ARPMAP for the corresponding periods.

Previous wording

Direct cost of revenues decreased 8.6% in the three months ended April 30, 2024 compared to the same period in the prior year primarily due to the revamping of our backend infrastructure as part of the cost reduction initiatives implemented during fiscal 2023. As a percentage of revenue, direct cost of revenues in the three months ended April 30, 2024 declined to 5.9% from 7.4% for the same period in the prior year.

Current wording

Direct cost of revenues decreased 5.1% in the three months ended October 31, 2024 compared to the same period in the prior year primarily due to the revamping of our backend infrastructure implemented during fiscal 2023. As a percentage of revenue, direct cost of revenues in the three months ended October 31, 2024 declined to 6.4% from 6.9% for the same period in the prior year.

Previous wording

SG&A expense increased 34.6% in the three months ended April 30, 2024 compared to the same period in the prior year primarily due to higher PUA and higher compensation expenses offset by lower discretionary spends and lower stock-based compensation expense. We ramped up PUA for our Zedge App significantly but scaled back PUA spend for GuruShots in the three months ended April 30, 2024 as compared to the same period in the prior year. We expect to continue our investment in PUA for our Zedge App in the near term provided that the ROAS remains compelling. As a percentage of revenue, SG&A expense in the three months ended April 30, 2024 was 88.2% compared to 74.6% in the three months ended April 30, 2023.

Current wording

SG&A expense increased 23.8% in the three months ended October 31, 2024 compared to the same period in the prior year primarily due to higher PUA, higher compensation expenses (resulting primarily from lower capitalized software and technology development costs) and higher platform fee paid to Google and Apple offset by lower discretionary spends and lower stock-based compensation expense. In the three months ended October 31, 2024, we ramped up PUA for our Zedge App significantly but scaled back PUA spend for GuruShots as compared to the same period in the prior year. We expect to continue our investment in PUA for our Zedge App in the near term provided that the ROAS remains compelling. As a percentage of revenue, SG&A expense in the three months ended October 31, 2024 was 94.6% compared to 77.7% in the three months ended October 31, 2023.

Previous wording

Global headcount as of April 30, 2024 totaled 100 (including 29 at GuruShots) compared to 96 (including 31 at GuruShots) as of April 30, 2023 with the majority of our employees currently based in Lithuania and Israel.

Current wording

Global headcount as of October 31, 2024 totaled 102 (including 28 at GuruShots) compared to 95 (including 29 at GuruShots) as of October 31, 2023 with the majority of our employees currently based in Lithuania and Israel.

Previous wording

The following table summarizes stock-based compensation expense included in the SG&A for the three and nine months ended April 30, 2024 and 2023:

Current wording

The following table summarizes stock-based compensation expense included in the SG&A for the three months ended October 31, 2024 and 2023:

Previous wording

Stock-based compensation expenses decreased 16.6% in the three months ended April 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to the lower compensation expense related to the DSU grants with both service and market conditions which are recognized based on the graded vesting method. Certain stock options, deferred stock unit and restricted stock grants are more fully described in Note 7Stock-Based Compensation to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Current wording

Stock-based compensation expenses decreased 25.2% in the three months ended October 31, 2024 compared to the same period in the prior year. The decrease was primarily attributable to the lower compensation expense related to the DSU grants with both service and market conditions which are recognized based on the graded vesting method. Certain stock options, DSUs and restricted stock grants are more fully described in Note 7Stock-Based Compensation to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Previous wording

Depreciation and amortization expenses decreased 35.0% in three months ended April 30, 2024 compared to the same period in the prior year primarily due to the $11.9 million impairment charge recorded in the three months ended January 31, 2024 discussed below.

Current wording

Depreciation and amortization expenses decreased 50.8% in three months ended October 31, 2024 compared to the same period in the prior year primarily due to the $11.9 million impairment charge recorded in Q2 of fiscal 2024

Previous wording

In the nine months ended April 30, 2024, interest and other income, net increased by $238,000 compared to the same period in the prior year, due primarily to higher interest income earned on our cash and cash equivalents and lower interest expense resulting from the $2 million prepayment of term loan in November 2023, offset by a $50,000 impairment charge related to our investment in a privately held company of which the carrying value was reduced to $0 as of October 30, 2023.

Current wording

In the three months ended October 31, 2024, interest and other income, net increased by $101,000 compared to the same period in the prior year, which included a deduction of $46,000 in interest expense related to the $2 million term loan which was repaid in November 2023 and a $50,000 impairment charge related to our investment in a privately held company of which the carrying value was reduced to $0 as of October 30, 2023.

Previous wording

In the three months ended April 30, 2024, net loss resulting from foreign exchange transactions decreased by $4,000 compared to the same period in the prior year.

Current wording

In the three months ended October 31, 2024, net loss resulting from foreign exchange transactions decreased by $215,000 or 93.6% compared to the same period in the prior year primarily due to higher Mark to Market (“MTM”) loss recorded in prior period.

Previous wording

We recognized Mark to Market (“MTM”) losses of $142,000 from NOK and EUR hedging activities and MTM gain of $19,000, respectively, as of April 30, 2024 and July 31, 2023, as more fully described in Note 4,Derivative Instruments, to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Current wording

We recognized MTM losses of $58,000 and $208,000 from NOK and EUR hedging activities for the three months ended October 31, 2024 and 2023, respectively, as more fully described in Note 4,Derivative Instruments, to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Previous wording

The following table presents the results for our Zedge Marketplace and GuruShots segment income (loss) from operations for the three and nine months ended April 30, 2024 and 2023:

Current wording

The following table presents the results for our Zedge Marketplace and GuruShots segment income (loss) from operations for the three months ended October 31, 2024 and 2023:

Previous wording

For the three months ended April 30, 2024, our income from operations related to the Zedge Marketplace decreased to $1.2 million from $1.9 million for the same period in the prior year, primarily due to higher SG&A expenses incurred in the current period.

Current wording

For the three months ended October 31, 2024, our income from operations related to the Zedge Marketplace decreased to $0.9 million from $1.7 million for the same period in the prior year, primarily due to higher SG&A expenses incurred in the current period.

Previous wording

At April 30, 2024, we had cash and cash equivalents of $19.9 million and working capital (current assets less current liabilities) of $17.1 million, compared to $18.1 million and $15.8 million, respectively, at July 31, 2023. We expect that our cash and cash equivalents on hand and our cash flow from operations will be sufficient to meet our anticipated cash requirements for the twelve-month period ending June 10, 2025. We paid off a $2 million term loan in November 2023 and maintain a revolving credit facility of $4 million, including a foreign exchange contract facility of up to $7.5 million with WAB, as discussed below under Financing Activities and in Note 10,Term Loan and Revolving Credit Facility, to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Current wording

At October 31, 2024, we had cash and cash equivalents of $20.2 million and working capital (current assets less current liabilities) of $17.5 million, compared to $20.0 million and $17.7 million, respectively, at July 31, 2024. We expect that our cash and cash equivalents on hand and our cash flow from operations will be sufficient to meet our anticipated cash requirements for the twelve-month period ending December 16, 2025. We maintain a revolving credit facility of $4 million, including a foreign exchange contract facility of up to $7.5 million with WAB, as discussed below under Financing Activities and in Note 10,Term Loan and Revolving Credit Facility, to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Previous wording

The following tables present selected financial information for the nine months ended April 30, 2024 and 2023:

Current wording

The following tables present selected financial information for the three months ended October 31, 2024 and 2023:

Previous wording

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Cash provided by operating activities increased $2.4 million in the nine months ended April 30, 2024 to $5.1 million from $2.7 million in the same period in the prior year, primarily attributable to higher income from operations before accounting for the acquisition related charges and changes in assets and liabilities.

Current wording

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Cash provided by operating activities decreased by $90,000 in the three months ended October 31, 2024 to $1.2 million compared to $1.3 million in the same period in the prior year, primarily attributable to a higher net loss before accounting for the acquisition related charges and changes in assets and liabilities.

Previous wording

Gross trade accounts receivable increased $0.4 million to $3.3 million at April 30, 2024 from $2.9 million at July 31, 2023, primarily due to higher revenue in the preceding two months ended April 30, 2024 when compared to the same period ended July 31, 2023.

Current wording

Gross trade accounts receivable decreased $0.2 million to $3.2 million at October 31, 2024 from $3.4 million at July 31, 2024, primarily due to lower revenue in the preceding two months ended October 31, 2024 when compared to the same period ended July 31, 2024.

Previous wording

Cash used in investing activities in the nine months ended April 30, 2024 and 2023 also consisted of capitalized software and technology development costs related to various projects that we invested in specific to the various platforms on which we operate our service.

Current wording

Cash used in investing activities in the three months ended October 31, 2024 and 2024 consisted primarily of capitalized software and technology development costs related to various projects that we invested in specific to the various platforms on which we operate our service.

Previous wording

In the nine months ended April 30, 2024 and 2023, we purchased 6,328 shares and 6,310 shares, respectively of our Class B common stock from certain employees for $13,000 and $17,000 respectively, to satisfy tax withholding obligations in connection with the vesting of DSUs.

Current wording

In the three months ended October 31, 2024 and 2023, we purchased 6,903 shares and 6,328 shares, respectively, of our Class B common stock from certain employees for $22,000 and $13,000, respectively, to satisfy tax withholding obligations in connection with the vesting of DSUs.

Previous wording

In the nine months ended April 30, 2024 and 2023, we repurchased in connection with the share repurchase program 60,206 shares and 680,594 shares respectively of our Class B common stock for $152,000 and $1.4 million respectively.

Current wording

In the three months ended October 31, 2024 and 2023, we repurchased - in connection with the share repurchase program - 219,573 shares and 0 shares, respectively, of our Class B common stock for approximately $782,000 and $0, respectively.

Previous wording

In the nine months ended April 30, 2024, two customers represented 31% and 10% of our revenue. In the nine months ended April 30, 2023, three customers represented 29%, 19% and 13% of our revenue. At April 30, 2024, two customers represented 36% and 19% of our accounts receivable balance. At July 31, 2023, two customers represented 36% and 18% of our accounts receivable balance. All of these significant customers were advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from their advertisers.

Current wording

In the three months ended October 31, 2024, we had only one large customer, and that customer represented 30% of our revenue for the period. In the three months ended October 31, 2023, there were two customers that represented 30% and 11% of our revenue, respectively. At October 31, 2024, three customers represented 43%, 12% and 11% of our accounts receivable balance, respectively. At July 31, 2024, three customers represented 37%, 15% and 10% of our accounts receivable balance, respectively. All of these significant customers were advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from their advertisers.