Zedge, Inc.
For the period ended Jul 31, 2026. Filed Oct 28, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Oct 28, 2026
ZDGE$2.24-2.6%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2025-07-31; filed 2025-10-28.
0001213900-25-103098
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2026-07-31; filed 2026-10-28.
0001213900-26-113312
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 251 previous paragraphs and 269 current paragraphs.
117 unchanged; 94 reworded; 57 added; 38 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 107 previous and 109 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (57)
Current report
In addition, a portion of our advertising revenue has historically come from a limited number of large advertisers, including social media platforms, and government action affecting a single major advertiser can reduce our revenue quickly. In April 2024, the Protecting Americans from Foreign Adversary Controlled Applications Act (“PAFACA”) was enacted, generally restricting the distribution of certain foreign-adversary-controlled applications, including TikTok, absent a qualifying divestiture. The service interruption and regulatory uncertainty that followed in early 2025 coincided with a decline in TikTok advertising spend on our platform and a decline in our U.S. advertising revenue during that period. The ownership and regulatory status of TikTok’s U.S. operations has continued to evolve. In September 2025, the President issued an executive order determining that a proposed divestiture of TikTok’s U.S. operations would constitute a “qualified divestiture” under PAFACA upon execution of the applicable implementation agreements. In January 2026, the transaction was completed, transferring majority ownership of TikTok’s U.S. operations to a group of U.S. and international investors, with ByteDance retaining a minority interest. Future legal, regulatory or operational developments affecting TikTok or other significant advertisers or demand partners, including any resulting reduction or withdrawal of advertising spend, could materially and adversely affect our revenue and results of operations
Current report
Litigation and regulatory developments have led Google and Apple to expand alternative payment and, in certain markets, app distribution options and to revise the associated rules and fee structures. The availability and terms of these options vary by jurisdiction and remain subject to evolving platform policies, legal requirements and applicable fees. We cannot predict how these or further changes will affect our distribution arrangements, payment options or costs.
Current report
Implementing alternative payment or distribution options could require additional development and compliance resources, including maintaining jurisdiction-specific versions of our apps, introduce payment processing and fraud risks, and disrupt the user experience or reduce paying user conversion rates. These alternatives may not produce cost savings or revenue benefits and could increase our overall costs, while choosing not to offer them could limit our monetization opportunities. Changes to platform requirements, or our failure to comply with them, could restrict available payment or distribution options and materially adversely affect our business, financial condition and results of operations.
Current report
We provide DataSeeds datasets and services through discrete projects rather than under recurring contracts, and our results may fluctuate significantly from period to period.
Current report
Customers typically engage DataSeeds to deliver a unique content need. Each engagement is separately sourced and separately specified, and completing one does not necessarily generate follow-on work, so we must continuously identify new opportunities. The requirements we are asked to meet change frequently, including between successive engagements with the same customer and across data types, formats and collection methods as customers’ model development priorities evolve, and we may be unable to win new engagements on comparable terms or at all. Many engagements begin as limited initial orders that allow a customer to evaluate our content against its specification and to compare us with other suppliers before committing to larger or recurring volumes. An initial order generates only modest revenue relative to the engagement that may follow, and we may perform satisfactorily and still not be selected for the larger engagement, for reasons unrelated to the quality of our work, including price, a customer’s preference for an existing supplier, or a decision to source the content internally. As a result, revenue recognized in a period may not reflect the size of the engagements we are pursuing, and the failure of an initial order to convert may not become apparent for some time. Because revenue is generally recognized as datasets and other deliverables are delivered or accepted, the timing of large deliveries can cause our revenue and results of operations to fluctuate significantly from quarter to quarter and may make forecasting difficult. Customers may also reduce, delay or discontinue projects for reasons unrelated to our performance, including changes in their product plans, research priorities or funding, or the discontinuation of the products for which the data was intended. In addition, we frequently price commissioned collection and studio production work on a fixed-fee or per-deliverable basis, which requires us to estimate in advance the cost and time required to source, produce, validate and deliver content to specification. If our estimates prove inaccurate, if contributor or production partner costs increase, or if a project requires additional rounds of collection or quality assurance, a project may generate lower margins than we anticipated or may be unprofitable. We also expect to face pricing pressure from customers and from competitors, many of whom are substantially larger and better capitalized than we are, and we may be unable to raise prices to offset increases in contributor compensation, production partner fees or other input costs. Any of these developments could materially and adversely affect our revenue, margins, results of operations and financial condition.
Current report
We depend on a network of third-party production partners to fulfill certain DataSeeds requirements, and our business could be harmed if that network is unavailable, underperforms or increases its prices.
Current report
We rely on the DataSeeds Production Cloud, a curated global network of professional production partners, to produce content that requires professional equipment, controlled conditions or specialized expertise. We do not own production facilities and generally contract for capacity on a project basis. Partners may be unavailable when we need them, may lack capacity for large or time-sensitive engagements, may fail to meet our quality or specification requirements, or may increase their prices. Because a meaningful portion of the content that we deliver through DataSeeds is produced through this network, third-party production costs represent a significant component of our cost of revenue for that work, and growth in this channel may reduce our overall gross margin. We also depend on our partners to obtain and pass through to us the consents, releases and other rights necessary for us to deliver rights-cleared content to our customers. If a partner’s representations regarding those rights prove inaccurate, we may remain liable to our customer, may be required to remediate or replace delivered content, and may incur costs that exceed the revenue earned on the engagement. The loss of one or more significant partners, or our inability to add partners with the capabilities or in the geographies we require, could limit the customer requirements we are able to serve and could materially and adversely affect our business, results of operations and financial condition.
Current report
Sales of DataSeeds dataset and service offerings have been concentrated among a small number of customers, and a reduction in their spending, or our inability to broaden our customer base, could materially reduce our revenue.
Current report
Sales of DataSeeds dataset and service offerings to date have been concentrated among a small number of customers, and we expect that to continue for the foreseeable future. Those customers are under no obligation to place additional orders or to renew existing arrangements, and no assurance can be given that they will do so on comparable terms. Because they may have substantially greater bargaining power than we do, they may impose terms that reduce our margins or restrict our flexibility, including requests for broader indemnities, exclusivity or extended payment terms. If we fail to meet our contractual obligations to a significant customer, including delivery, specification or service level requirements, we could lose that customer and the revenue associated with it. The loss of a significant customer, or a decision by one to reduce or discontinue its purchases of externally sourced data, could materially reduce our revenue.
Current report
The largest current budgets for externally sourced training and evaluation data sit with frontier model developers, large technology companies and robotics manufacturers. Their spending is discretionary, is influenced by their own funding levels and research priorities, and may decline for reasons unrelated to our performance, including a shift toward data they generate internally, acquire through direct arrangements with content producers, or obtain from our competitors. Consolidation among these organizations, or a decision by any of them to build in-house data operations, could reduce the demand available to us.
Current report
We intend to reduce this concentration by broadening the range of customers we serve, including enterprises applying AI within specific industries, consumer and creative software platforms and data services companies. We may not succeed in doing so. Those customers are reached through a different sales approach, individual engagements are typically smaller, and the cost of winning and serving each customer is higher relative to the revenue it produces, so diversifying our customer base will require us to add commercial and operational resources and may not produce meaningful revenue in the near term. If we are unable to broaden our customer base, we will remain dependent on a small number of customers, and any of the developments described above could materially and adversely affect our revenue, results of operations and growth prospects.
Current report
Advances in synthetic data generation and other technologies could reduce demand for the real-world content that we source and produce.
Current report
Our DataSeeds offerings depend on demand for content captured in the real world by human creators and professional producers. Techniques for generating synthetic training data continue to advance, and customers may conclude that synthetic data is adequate for some or all of their requirements, particularly where real-world capture is expensive or slow. Customers may also develop their own collection capabilities or contract directly with content producers, reducing the role of intermediaries such as us. We intend to offer synthetic data generation among our services, but we may be unsuccessful in doing so, may enter that market later than competitors, or may find that such services carry lower margins or afford less differentiation than our current offerings. If demand shifts away from real-world content, the value of our catalog, our contributor network and our production capabilities could decline materially, and our revenue, results of operations and financial condition would be adversely affected.
Current report
We compete for contributors with better capitalized companies that pay cash for human-generated data, and our cost advantage may erode.
Current report
Our ability to source content and human judgment at attractive cost depends on our ability to attract and retain contributors. We compensate GuruShots players in part with virtual currency that can be used within the game, and we provide recognition and competitive standing rather than cash consideration in many cases. A growing number of companies recruit individuals to supply content, annotation, evaluation and other human input used in the development of AI models, frequently for cash compensation, and many of these companies are substantially better capitalized than we are. Zedge Premium artists and other creators may likewise find other platforms more attractive because of higher royalties, simpler submission processes or exclusivity incentives. If contributors conclude that our incentives are insufficient, we may be required to increase cash compensation, which would increase our cost of content and reduce our margins, or we may be unable to source content of the volume, diversity or quality that our customers require. Either outcome could materially and adversely affect our business, results of operations and competitive position.
Current report
A downturn in the AI market could reduce demand for our datasets and services and adversely affect our growth prospects.
Current report
Demand for DataSeeds datasets and services depends in part on continued investment in AI development and deployment. An industry-wide downturn, reduced availability of funding, or a failure of AI applications to achieve anticipated commercial returns could cause existing and prospective customers to reduce, delay or cancel spending on datasets and related services, even without a broader economic downturn. These developments could reduce our revenue and margins and adversely affect our growth prospects.
Current report
We have raised capital to accelerate DataSeeds, and we may not realize a return on that investment.
Current report
In August 2026 we agreed to issue shares of our Class B common stock and warrants in a direct investment of approximately $7.8 million, and we intend to use the proceeds, together with cash generated by our existing businesses, to accelerate the growth of DataSeeds. Planned areas of investment include recruiting experienced personnel, expanding our technology and infrastructure, and acquiring or licensing specialized datasets, and we may pursue acquisitions or the hiring of teams in order to add capabilities, expertise or industry relationships. Spending on these activities will increase our operating expenses in advance of any revenue that may result, and the proposed expansion may never produce revenue at all. Our plans assume that demand for the kinds of services we intend to offer will develop broadly enough, and at prices sufficient, to justify the investment, and that assumption may prove incorrect. We may also be unable to hire the people we intend to hire, to acquire or license datasets on acceptable terms, or to identify and complete acquisitions, and any acquisition we do complete carries the integration and other risks described elsewhere in these risk factors.
Current report
The OECD has established a global minimum tax framework under Pillar Two, which generally imposes a 15% minimum effective tax rate on multinational enterprises meeting certain revenue thresholds. Many jurisdictions, including member states of the European Union, have enacted legislation implementing these rules. In January 2026, the OECD announced a side-by-side arrangement providing certain exemptions for qualifying U.S.-parented multinational groups. Based on our current assessment, we do not expect Pillar Two to have a material impact on our consolidated financial statements.
Current report
Scaling this business is operationally unlike scaling our consumer applications. Each engagement begins with translating a customer’s specification into a collection plan, then recruiting or assigning contributors and production partners with the required capabilities and in the required locations, then validating deliverables against acceptance criteria, with rework performed at our cost where deliverables do not conform. We must also coordinate a globally dispersed contributor base and partner network across languages, time zones, payment arrangements and local requirements. If these capabilities do not scale as volumes increase, we may deliver late or out of specification, incur unplanned costs, or be unable to accept engagements that we would otherwise win.
Current report
Substantially all of our personnel are located in Israel and Lithuania, and armed conflict or instability affecting either country could disrupt our operations and our ability to serve our customers.
Current report
The substantial majority of our employees, including many of our senior managers, are located in Israel and Lithuania. Our product development, our consumer operations, and the personnel responsible for DataSeeds are concentrated in those two countries, although we expect to add personnel in the United States. Because DataSeeds deliveries are made against contractual schedules and acceptance criteria, a disruption affecting our personnel in either country could delay or prevent delivery, expose us to customer remedies, and damage relationships with enterprise customers for whom we are a new supplier.
Current report
Israel has been in a state of armed conflict since the October 7, 2023 attack by Hamas and other organizations from the Gaza Strip. A ceasefire took effect in October 2025 and remains in effect as of the date of this report, but implementation is incomplete, military operations have continued at a reduced level, and the arrangements governing Gaza’s future have not been settled. Israel was also engaged in direct hostilities with Iran in June 2025, and has been engaged in cross-border hostilities involving Hezbollah in Lebanon and Houthi forces in Yemen. Regional conditions remain unsettled, existing ceasefires may not hold, and hostilities involving Israel, Iran or Iran-aligned groups could resume or expand with little or no notice.
Current report
Conflict in the region also has broader economic effects that reach us indirectly, including currency volatility, higher borrowing costs, reduced access to capital, changes in Israel’s sovereign credit ratings, reduced foreign investment in Israeli companies, and shifts in advertiser and consumer spending. Israel’s credit ratings were downgraded during the conflict and rating agency outlooks have since improved, but they remain sensitive to a renewal of hostilities.
Current report
Israel and Israeli companies have also been the subject of economic boycotts, and several countries restrict business with Israel and with Israeli companies. Campaigns advocating boycott, divestment and sanctions continue. These restrictions and campaigns could limit where we can sell, complicate relationships with customers, partners and payment providers, and adversely affect our results.
Current report
Lithuania borders both the Russian exclave of Kaliningrad and Belarus, which is aligned with Russia in its invasion of Ukraine. That places Lithuania at heightened risk of military conflict and of hybrid activity such as GPS interference, drone incursions, border closures and disruption to energy or communications infrastructure, any of which could impair travel to and from Lithuania, disrupt our development center in Vilnius, or damage the Lithuanian economy.
Current report
Any of the foregoing, individually or together, could disrupt our operations, delay our initiatives, increase our costs, impair our ability to meet customer commitments, and materially and adversely affect our business, results of operations, cash flows and financial condition.
Current report
We recently changed our chief executive officer, and the transition in senior leadership could disrupt our business.
Current report
Effective October 1, 2026, Morris Berger became our Chief Executive Officer, and Jonathan Reich, who had served as Chief Executive Officer, became our President and Chief Operating Officer. A change in chief executive officer creates a period of transition during which management attention is directed to the handover rather than to operations, and during which employees, customers, contributors and investors may be uncertain about our direction. Our new Chief Executive Officer may pursue changes in strategy, organization or personnel, and we cannot predict how those changes, or the reaction to them, will affect our business. The transition also comes as we are increasing our investment in DataSeeds and as the executive who led its development moves into a different role. If the transition is not managed effectively, if key employees leave as a result of it, or if the working relationship among our senior executives, our Chairman and our Vice Chairman does not function as intended, our business, results of operations and financial condition could be adversely affected. We also depend on a small senior management team, and the loss of any of them could be disruptive.
Current report
We also rely on artificial intelligence tools supplied by third parties across our operations, including software development, marketing and content production, design, data analysis and general knowledge work. As described in Item 1, we have adopted these tools broadly and have reallocated personnel on the basis of the efficiencies they provide. The market for these tools is concentrated among a small number of providers, pricing models continue to evolve, and a provider may change or withdraw a model, alter its usage terms, restrict permitted use cases, impose usage limits or increase prices with limited notice. If the tools we use become materially more expensive, less capable or unavailable, our operating costs could increase, the productivity we have assumed in our plans may not be sustained, and we could be required to restore capacity that we have reallocated to other work.
Current report
Relying on these tools also introduces risk in the work they produce. Output may be inaccurate or incomplete, code generated with these tools may contain defects or vulnerabilities or may incorporate third-party material, including open-source code, in ways we do not detect, and analysis they produce may be wrong in ways that are not apparent, so we depend on human review that may not identify every error. Their use also requires care in what information is submitted to them, because providing proprietary information, or data belonging to our customers or contributors, to a third-party service could breach a contractual obligation or the terms on which the data was provided to us, or expose confidential information. Questions of intellectual property ownership in material produced with these tools are addressed under Risks Related to Content and Intellectual Property, and the regulatory treatment of our use of artificial intelligence is addressed under Legal and Regulatory Risks.
Current report
A public health emergency or similar event that restricts movement and in-person activity could disrupt our operations, delay our content production and reduce demand for our services.
Current report
Our workforce is concentrated in Israel and Lithuania. Widespread illness, absence from work, office closures or restrictions on movement in either country could reduce our productivity and delay both our development work and our delivery commitments to customers. The vendors and service providers on which we depend may be subject to similar disruptions.
Current report
Sourcing and producing content and commissioned collection may require travel to specified locations or work in person. The DataSeeds Production Cloud depends on studios, crews and equipment and, where content depicts people, on individuals taking part in person and providing releases or other compliance records. Restrictions on movement or gathering, or a general unwillingness to participate, could prevent us from fulfilling a customer’s specification on schedule, expose us to customer remedies and reduce our revenue in the affected period.
Current report
Demand could decline at the same time. Our enterprise customers could delay or reduce orders if their own operations or funding were affected, and our advertising and consumer revenue is sensitive to the broader economic conditions described elsewhere in this section. The COVID-19 pandemic showed that effects of this kind can arise quickly, differ between markets and persist after restrictions are lifted.
Current report
Content depicting identifiable individuals may expose us to privacy, right of publicity, artificial intelligence, and other data processing-related laws, including with respect to alleged processing of biometric data, geographic information, and minors’ information, as well as to evolving regulatory obligations, including, for example, with respect to data brokers, and non-compliance could result in liability.
Current report
A portion of the content that we license and produce depicts identifiable individuals, and certain content, including egocentric video, is captured in homes and other private settings and may capture individuals who are not our contributors. Even where we obtain permissions from a contributor or production partner, those permissions may not establish that every identifiable individual depicted in the content has authorized its collection, licensing or subsequent use. Depending on the nature and use of the content, applicable requirements could arise under a variety of laws and regulations, including, for example, the Illinois Biometric Information Privacy Act, the Texas Capture or Use of Biometric Identifier Act, Washington’s biometric identifier statute, the European Union General Data Protection Regulation, and other U.S. state and non-U.S. laws governing privacy, right of publicity, data brokerage, geographic information, minors’ information, and biometric information laws. Data-governance requirements under the European Union’s Artificial Intelligence Act apply to specified high-risk AI systems at phased future dates and may affect the documentation and provenance information that our customers require from us, even where we are not ourselves the provider of such systems. Depending on the content and processing activity, compliance with applicable laws may require a valid legal basis for processing personal data, appropriate licenses, registration obligations, consents or releases, documentation of content provenance, and procedures for responding to individual rights requests. Certain AI systems are already prohibited and certain transparency rules already apply whilst requirements for high-risk AI are pending. These laws continue to evolve, are subject to differing interpretations, and in certain cases provide for private rights of action and statutory damages. If we fail to comply, or if a customer, contributor or regulator asserts that we have failed to comply, we could face regulatory investigations, enforcement actions, fines, litigation and reputational harm, and we could be required to remove content from our catalog, seek to remediate or restrict the use of previously delivered content, or provide other remedies to customers or affected individuals.
Current report
Privacy, data protection and emerging artificial intelligence laws expose us to sanctions, litigation and increased costs of compliance.
Current report
We utilize AI, which could expose us to liability or adversely affect our business. The adoption of generative AI technologies in our products and operations introduces distinct risks, notably in data management and data privacy. No assurance can be provided that our use of such AI technologies will enhance our products or operations or produce the intended results. We incorporate AI into products and features such as pAInt and AI-powered content creation, use AI and machine learning for content moderation, personalization and recommendations, and employ AI tools in software development, marketing and other internal workflows. These AI systems could inadvertently process or expose sensitive information relating to our users, creators, contributors, customers or business. Information submitted to third-party AI tools could, depending on the relevant service’s terms and settings, be retained, used to train or improve models, or disclosed without authorization. If this were to occur, we could face reputational damage and legal challenges, particularly if confidential information were exposed or false or inaccurate information were disseminated. Any integration of AI technologies into our or any of our third-party service providers’ operations, products or services may pose new or unknown cybersecurity risks and challenges. Even if we successfully integrate AI technologies into our workflows, subsequent developments in underlying AI models could result in output that is incorrect, insufficient or outdated. Additionally, the use of AI systems in connection with personal and proprietary business information may heighten the risk of unauthorized access to or disclosure of sensitive customer, contributor, user and company information. Such disclosures could result in identity theft, financial fraud and non-compliance with privacy and data protection laws and regulations, thereby exposing us to regulatory penalties and legal liabilities. Further, AI algorithms may be flawed, insufficient, of poor quality, reflect unwanted forms of bias or contain other errors or inadequacies, any of which may not be easily detectable. We increasingly rely on AI and machine learning to personalize content and recommendations, support content moderation and user engagement, and assist with software development, content production and other internal operations. If these algorithms are flawed, or if the underlying data is inaccurate, it could lead to inappropriate or inaccurate content and recommendations, software defects, impaired user experiences or flawed operational decisions, which could negatively impact our revenues, margins and financial performance.
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Removed paragraphs (38)
Previous report
We may not experience growth or engagement in certain geographic locations due to local factors.
Previous report
We may not experience rapid user growth or continued engagement in countries that have unreliable telecommunications infrastructure or in countries where mobile and internet usage are expensive or limited in regular accessibility. Any decrease in user retention, growth or engagement may have a material and adverse impact on our popularity, revenue, business, reputation, financial condition, and results of operations.
Previous report
In addition, on April 24, 2024, President Biden signed the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA), which required ByteDance, TikTok’s Chinese owner, to divest the app’s U.S. operations by January 19, 2025, or face a nationwide ban. This law was upheld by the U.S. Supreme Court in January 2025 inTikTok v. Garland.
Previous report
After briefly going offline in mid-January, TikTok continued to operate in the U.S. under a series of executive orders signed by President Trump, each delaying enforcement of the federal ban by 75- to 90-day increments. The most recent extension set a compliance deadline of September 17, 2025. Shortly before that date, the U.S. and China announced they had reached a framework agreement to transition TikTok’s U.S. operations toward a U.S.-based ownership structure, aimed at preserving continued operation in the U.S. while satisfying national security concerns. Consistent with this framework, on September 16, 2025, the President signed a new executive order further extending the compliance deadline to December 16, 2025.
Previous report
Should TikTok fail to complete an approved divestiture or meet U.S. requirements under the PAFACA and its implementing regulations by December 16, 2025, enforcement of the federal ban could resume, including removal of the app from U.S. app stores and other restrictions. This poses material risks to advertising and e-commerce, including revenue tied to TikTok-based promotions on Zedge’s platform.
Previous report
For example, pursuant to Google’s policy whereby only Google Play’s in-app billing system could be used for transactions in its store, we were mandated to stop the provision of non-native payment options to our users on Android during 2021, which caused disruptions for users and led to a decline in Paying Users. Since announcing this policy in 2020, following industry pushback and country-specific regulations Google has introduced in select markets the option of “user choice billing,” which allows eligible developers to offer users an additional billing system alongside Google Play’s billing system, and in the European Economic Area the option for eligible developers to offer users an alternative to Google Play’s billing system. In July 2025, the Japan Fair Trade Commission approved a settlement requiring Google to allow alternative billing systems in Japan beginning in 2026, and other jurisdictions are considering similar measures. We are exploring such solutions on a country-by-country basis. However, as these solutions are in their infancy, they may evolve following subsequent regulatory mandates or organically at Google’s behest, and as such we will need to be ready to continuously adapt to such changes. Any deadlines imposed on developers by future iterations of Google’s policy will require prompt and active development; failure to comply could result in the discontinuation of alternative billing methods for our users. Additionally, a December 2024 ruling inEpic Games v. Google, now under appeal, requires Google to permit third-party app stores and direct app downloads on Android devices in the United States from November 1, 2024 through November 1, 2027, which could alter app distribution economics, fee structures, and competitive dynamics in ways that may materially affect our business.
Previous report
Similarly, Apple is experiencing industry pushback and country-specific regulations. In response to a recent U.S. antitrust settlement, effective January 2025 Apple now allows all digital apps in the United States to include a “prominent link” or button directing users to the developer’s website to process payments for in-app purchases, subject to Apple’s updated commission structure and compliance requirements. In the EU, pursuant to the Digital Markets Act (DMA) and related March 2025 enforcement actions, Apple has been required to (i) permit third-party app stores, (ii) allow side-loading of apps from the web, and (iii) support alternative in-app payment systems without imposing anti-steering restrictions, with similar obligations anticipated for Google. South Korea and Australia have also advanced legislative proposals that, if enacted, could mandate alternative billing options. Further complicating the competitive landscape, regulators in the United Kingdom are reviewing Apple’s compliance with its existing commitments under the UK Competition and Markets Authority’s mobile ecosystem investigation. These global regulatory shifts may require us to adopt highly nuanced, jurisdiction-specific billing and distribution strategies, devote additional resources to compliance, and manage multiple app versions tailored to local rules. Changes to billing options and distribution channels may disrupt the user experience and payment flow, potentially reducing paying user conversion rates. Conversely, opting not to implement alternative options where available could result in missed monetization opportunities. Any of these developments could materially adversely affect our business, financial condition, and results of operations.
Previous report
Should we choose to explore such policy initiatives for the benefit of our business and our users, we may potentially become subject to highly nuanced, country-specific billing policies and commissions of major app store operators, we may need to devote more resources and time in creating and managing separate app bundles for each country in which we want to offer alternative billing options, which could become burdensome, and/or we could become subject to higher commissions overall. Furthermore, changes to billing options may cause a disruption to the user journey, which could cause a decrease in paying user conversion rates. Alternatively, choosing not to explore such policy initiatives could present a risk of missed opportunity. Any of the foregoing could materially adversely affect our business, financial condition and results of operations.
Previous report
Zedge Premium, the section of our marketplace where we offer premium content (i.e., for purchase), may not yield the strategic goals and objectives that we envision.
Previous report
Although we believe that Zedge Premium will act as an important driver in helping our platform become a leading platform for professional artists, individual creators and brands looking to distribute their work to consumers looking for an easy, entertaining and unique way to express their voice, individuality and essence, it’s premature to conclude this as being the case.
Previous report
Although Zedge Premium’s gross transaction revenue has shown impressive growth it is still too early to state with conviction that Zedge Premium will have a materially positive impact on our business. In order to do so, we still need, among other things, to:
Previous report
If Zedge Premium fails to yield the strategic goals and objectives that we envision, our business, results of operations and financial condition will be materially and adversely affected.
Previous report
We may fail to develop popular new features or expand into new verticals, successfully, negatively impacting our ability to attract new users or retain existing users, which could negatively impact our business, financial condition, and result of operations.
Previous report
Dependence on a limited number of prospective licensing partners could restrict our growth and profitability.
Previous report
Our content licensing business may initially rely on a relatively small number of potential licensing partners. The market for such content is novel and unproven, and revenue depends on a few partners, with no assurance of additional orders, renewals or favorable terms. We may fail to meet contractual obligations, such as API performance requirements, or prevent unauthorized use of our content by third parties, which could require costly enforcement efforts. Regulatory or market factors may reduce the value of AI training content, and failure to prevent partner misuse could harm our reputation. If we fail to establish or maintain these relationships, or if prospective licensors reduce or discontinue their reliance on third-party content providers, our ability to scale and sustain our licensing business could be significantly impaired. Because these partners may have substantial bargaining power, they may also impose unfavorable terms that reduce our margins or restrict our flexibility. As a result, there can be no assurance that our licensing business will achieve or sustain commercial success.
Previous report
The GuruShots acquisition may fail to yield growth opportunities and achieve beneficial synergies.
Previous report
Zedge acquired GuruShots with the expectation that the transaction will yield growth on a standalone basis. To date this has not been the case. In addition, the acquisition was meant to deliver strategic synergies on a combined basis. Our success in realizing these growth opportunities and strategic synergies, and their associated timing depends, amongst other things, on the successful integration of the respective businesses. Even if we are successful with the integration, there is no guarantee that the strategic synergies that we envisioned will bear fruit.
Previous report
The OECD introduced significant changes to the international tax law framework through the Pillar Two guidelines. The framework outlines a coordinated set of rules to prevent multinational enterprises from shifting profits to low-tax jurisdictions by implementing a 15% global minimum tax. Many countries in which we operate, including the member states of the EU, have enacted Pillar Two. Pillar Two rules began applying to us in fiscal year 2025. In January 2025, the United States issued an executive order announcing opposition to aspects of these rules. In late June 2025, a shared understanding of a new “side-by-side” solution to address U.S. concerns with Pillar Two was announced. If agreed upon and legislated by the OECD countries, this would exclude U.S.-parented groups from certain provisions of Pillar Two. The potential effects of Pillar Two may vary depending on the specific provisions and rules implemented by each country that adopts Pillar Two and may include tax rate changes, higher effective tax rates, potential tax disputes and adverse impacts to our cash flows, tax liabilities, results of operations and financial position.
Previous report
In 2021, Apple released iOS 14 which started requiring users to opt in to share their identifier for advertisers IDFA with app developers. Apple’s IDFA is a unique string of alphanumeric characters assigned to Apple devices which advertisers use to identify app users in order to deliver personalized and targeted advertising. According to Statista, the worldwide opt-in rate enabling app tracking after the release of iOS 14 was less than 25%. As a consequence, the ability of advertisers to accurately target, measure and optimize their advertising campaigns at the user level has become significantly more difficult typically resulting in higher user acquisition costs. Further, other companies upon whom the industry depends to identify potential users such as Google may implement similar changes with respect to its Android operating system. The longer-term impact of these changes on the overall mobile advertising ecosystem, our competitors, our business, and the developers, partners, and advertisers within our community remains uncertain, and depending on how we, our competitors, and the overall mobile advertising ecosystem adjusts, and how our partners, advertisers, and users respond, our business could be seriously harmed. If we are unable to mitigate or respond to these and future developments, and alternative solutions do not become widely adopted by our advertisers, then targeting, measurement, and optimization capabilities will be materially and adversely affected, which would in turn negatively impact our advertising revenue.
Previous report
Conditions in Israel, including the October 7, 2023 attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may adversely affect our operations adversely affect operations and financial condition, particularly given the ongoing war in Gaza, the June 2025 ’12-Day War’ between Israel and Iran, broader regional instability, and potential long-term impacts on Israel’s economy, technology sector, and foreign investment.
Previous report
Political, economic and military conditions in and surrounding Israel, including the ongoing war in Gaza, the June 2025 ’12-Day War’ between Israel and Iran and related cross-border hostilities involving Hezbollah in Lebanon and Houthi militants in Yemen, may materially and adversely affect our business, operations and financial condition. A portion of our personnel and operations are located in Israel; accordingly, regional instability and escalation directly affect our people, facilities, vendors and service continuity (including potential airspace or infrastructure disruptions, cyberattacks, electricity or network interruptions, impaired logistics, or temporary office closures). Israeli reserve-duty mobilizations may require some employees or contractors to serve for extended periods, which can delay product development, reduce support capacity and impact hiring and retention. The security situation can also impair domestic demand, international travel, partner engagement and supplier reliability, and may increase insurance costs or leave certain risks uninsurable. Broader macroeconomic effects, such as currency volatility, higher risk premia, capital-market dislocation, sanctions or trade restrictions, and shifts in advertiser or consumer spending, could further pressure our results. Although temporary ceasefires have occurred, cross-border rocket, drone and missile activity has persisted intermittently, and future flare-ups or a wider regional conflict (including renewed hostilities with Iran or coordinated attacks by Iran-aligned groups) could occur without notice. Any of these developments, together or separately, could disrupt our operations, harm our ability to execute our strategy, increase costs, delay initiatives, or otherwise negatively affect our business, results of operations, cash flows and financial condition.
Previous report
Prior to the Hamas attack in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate, mass protests, and civil unrest. In response to such initiative, many individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions. The risk of such negative developments has increased in light of the war with Hamas. To the extent that any of these negative developments do occur, they may have an adverse effect on our business and our results of operations.
Previous report
In addition, recent political uprisings and conflicts in various countries in the Middle East, including Syria and Lebanon, are affecting the political stability of those countries. In addition, the ongoing threats that Iran and various extremist groups in the region make against Israel may escalate in the future and turn violent, which could affect the Israeli economy in general and us in particular. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions, harm our results of operations and make it harder for us to raise capital.
Previous report
Additionally, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our results of operations, financial conditions or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business.
Previous report
We have offices and other significant operations in Lithuania and Israel, and, therefore, our results may be adversely affected by political, economic and military instability in these countries.
Previous report
The overwhelming majority of our employees are located in Lithuania and Israel and many of our senior managers live in these countries. For those that reside in Israel and Lithuania political, economic and military conditions directly affect our business. Any hostilities involving these countries or the interruption or curtailment of trade between these countries and their trading partners could adversely affect our business and results of operations. Furthermore, there is always the chance that the citizens in these countries will be required to serve in the army or perform public duty in the event of an armed conflict.
Previous report
The Republic of Lithuania borders both the Russian exclave of Kaliningrad and the Republic of Belarus, who are aligned in Russia’s illegal invasion of Ukraine. This places Lithuania at a higher risk of military conflict, may negatively impact the ability to travel to and from Lithuania, and may damage its economy. This action also negatively impacted GuruShots because it utilizes a small number of outsourced contractors based in Ukraine. This resulted in temporarily disrupting the work product associated with these contractors at the outset of the war.
Previous report
We operate a development center in Vilnius, Lithuania. If we are unable to recruit and retain well qualified candidates at an attractive rate or manage them well, our business will struggle to meet our development goals and objectives. In fiscal 2021 we adopted a “remote-first” work policy that enabled employees to work from home unless they were needed in the office. In fiscal 2023 we changed this policy to a hybrid model requiring most employees to work from the office several days a week. Although this policy has been well received by employees, it is as of yet unclear whether it will be further revised.
Previous report
In April of 2022 we completed the acquisition of GuruShots Ltd, an Israeli based company. GuruShots utilized a small number of outsourced contractors based in Ukraine. Russia’s illegal invasion of Ukraine in February 2022 resulted in temporarily disrupting the work product associated with these contractors. Furthermore, Zedge employees situated in Vilnius were distracted due to the proximity to the Belarusian border and uncertainty related to Belarus’ complicity with Russia’s illegal action and associated intent. In addition, consumer prices have risen materially throughout the Eurozone leaving uncertainty about how this may impact employment costs in the future.
Previous report
In October of 2023 Hamas, a designated terrorist organization, launched a savage terror attack in Israel along with launching thousands of rockets into Israeli sovereign territory. The State of Israel declared war against Hamas resulting in the mobilization of more than 300,000 army reserve. In addition, Hezbollah, another designated terrorist organization, based in Lebanon, has been indiscriminately shelling Israeli territory. Some GuruShots employees were impacted and the regular and consistent rocket barrage is taking a toll on productivity. Coupled with this, most, if not all, schools are along with our office closed making the work environment complex. In June of 2025 Israel and Iran entered into the ’12-Day War’ during which our office and schools were closed and there were shelter in place orders that were issued. The constant barrage of ballistic missiles launched from Iran and Yemen interrupted our operations.
Previous report
Our business, results of operation and financial condition could be adversely affected by the Covid 19 pandemic, other global epidemics and the restrictions put in place in connection therewith and/or the loosening of such restrictions could adversely impact our business.
Previous report
Pandemics, epidemics, medical emergencies and other public health crises outside of our control could have a negative impact on our business. Large-scale medical emergencies can take many forms and result in widespread business interruptions due to illness and death. For example, in December 2019, a strain of coronavirus surfaced in Wuhan, China soon evolving into a global pandemic without proven medical treatments or vaccines for prevention. When vaccines started to become available demand for the vaccines exceeded the supply in the countries in which we operate. Furthermore, the vaccines were not fully effective in preventing illness. All of these factors introduced challenges in operating our business including the productivity of our employees and third-party vendors that we depend on while adjusting to shelter-in-place and health regulations. We also had to comply with an assortment of regulations specific to returning to our offices, creating additional uncertainty and confusion.
Previous report
Widespread pandemics, epidemics or other health crises could result in significant market volatility, regionally or globally. Furthermore, health crises may disrupt or negatively impact behaviors of large numbers of users or potential users due to either mandated stay at home orders or the lifting of such orders or non-mandated changes in consumer behavior. These changes are almost impossible to predict and could either serve to accelerate, slow down or make user behavior more volatile which could negatively impact our operating results.
Previous report
In the event of a new coronavirus surge or other health emergency we plan to execute to the best of our ability recognizing that the nature and scope of the crisis may result in delays or changes to our goals and initiatives.
Previous report
Data privacy, security, and emerging AI laws and regulations in the jurisdictions in which we operate subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties in the event of non-compliance. The need to observe these evolving requirements increases the cost of doing business and may impose operational burdens that could adversely affect our products, user experience, and competitiveness. Compliance failures by us, our partners, or our vendors could harm our business, reputation, and financial results.
Previous report
New laws may impact our business, such as those affecting artificial intelligence, online platforms, and digital content providers, and efforts by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties for failings in these areas. Monitoring (and, if applicable, complying with) these developments is likely to increase the cost of doing business, and any failure to comply with new laws may harm our business and reputation.
Previous report
Furthermore, legislators’ and regulators’ future approach to AI may impact our business. In the United States, state-level AI laws continue to proliferate, with notable developments in California and Colorado, and additional states actively considering similar legislation. In the EU, the AI Act introduces tiered compliance requirements, bans certain “unacceptable-risk” systems, and mandates transparency and risk-management obligations for “high-risk” AI systems. Other jurisdictions, including Canada (through the proposed Artificial Intelligence and Data Act), Brazil, and several Asia-Pacific markets, are advancing their own AI regulatory frameworks. We currently offer a number of products, services, and features that make use of AI, and we are exploring ways to further utilize the technology. The full extent and applicability of potential AI laws and regulations will require continuous monitoring to help ensure we remain in compliance and any associated risks are appropriately mitigated.
Reworded paragraphs (94)
Previous wording
The internet and smartphone industries are characterized by rapid and innovative technological changes. Our future success will depend, in part, on our ability to respond to fast changing technologies, adapt our products and services, including those of Emojipedia, to evolving industry standards and improve the performance, functionality and reliability of our products and services. For example, AI platforms, including ChatGPT and Claude, now return emoji results in response to user queries. While it is too early to accurately quantify the impact of these changes on Emojipedia’s monthly active users (MAU), we believe they are likely to result in reduced traffic and adversely affect revenue. Our increasing reliance on AI technologies for various operational aspects, such as content moderation, personalization, and user engagement, may pose risks if these systems fail or produce unintended outcomes. Technical issues, data inaccuracies, or system malfunctions could disrupt our services and negatively impact user experience. Ensuring the reliability and accuracy of AI systems requires ongoing maintenance, testing, and potential human oversight, which may increase operational complexity and costs. Our failure to continue to adapt to such changes could harm our business. If we are slow to develop products and services that are compatible with smartphones, or if the products and services we develop are not widely accepted and used by smartphone users, we may not be able to capture a significant share of this important market. In addition, the widespread adoption of new internet, networking or telecommunications technologies or other technological changes for smartphones could require substantial expenditures to modify or adapt our products, services or infrastructure. If we fail to keep up with rapid and innovative technological changes to remain competitive, our future growth may be materially and adversely affected and our results of operations could be materially and adversely affected.
Current wording
The internet and smartphone industries are characterized by rapid and innovative technological changes. Our future success will depend, in part, on our ability to respond to fast changing technologies, adapt our products and services, including those of Emojipedia, to evolving industry standards and improve the performance, functionality and reliability of our products and services. For example, AI platforms, including ChatGPT and Claude, now return emoji results in response to user queries. The impact of these changes on Emojipedia’s monthly active users (MAU) was 3.1 million, or 35% year over year decline in MAU, resulting in reduced traffic and adversely affecting revenue. As a result, we recorded an impairment charge of $3.7 million for the quarterly results ended January 31, 2026. Our increasing reliance on AI technologies for various operational aspects, such as content moderation, personalization, and user engagement, may pose risks if these systems fail or produce unintended outcomes. Technical issues, data inaccuracies, or system malfunctions could disrupt our services and negatively impact user experience. Ensuring the reliability and accuracy of AI systems requires ongoing maintenance, testing, and potential human oversight, which may increase operational complexity and costs. Our failure to continue to adapt to such changes could harm our business. If we are slow to develop products and services that are compatible with smartphones, or if the products and services we develop are not widely accepted and used by smartphone users, we may not be able to capture a significant share of this important market. In addition, the widespread adoption of new internet, networking or telecommunications technologies or other technological changes for smartphones could require substantial expenditures to modify or adapt our products, services or infrastructure. If we fail to keep up with rapid and innovative technological changes to remain competitive, our future growth may be materially and adversely affected and our results of operations could be materially and adversely affected.
Previous wording
Further, our use of generative AI in aspects of our platforms may present risks and challenges that could increase as AI solutions become more prevalent. AI algorithms may be flawed. Datasets may be insufficient or contain biased information. These deficiencies and other failures of AI systems could have negative impacts on our users’ experience and subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm. Contractual indemnities from vendors may be unavailable or insufficient. We may also face claims related to privacy (including the processing of personal or biometric information), publicity rights, deceptive practices, or content moderation failures. Defending such claims can be costly and time-consuming, could require changes to our products or processes, and could harm our reputation and financial results.
Current wording
Further, our use of generative AI in aspects of our platforms may present risks and challenges that could increase as AI solutions become more prevalent. AI algorithms may be flawed. Datasets may be insufficient or contain biased information. These deficiencies and other failures of AI systems could have negative impacts on our users’ experience and subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm. Contractual indemnities from vendors may be unavailable or insufficient. We may also face claims related to privacy (including the processing of personal or biometric or other sensitive information), publicity rights, deceptive practices, or content moderation failures. Defending such claims can be costly and time-consuming, could require changes to our products or processes, and could harm our reputation and financial results.
Previous wording
We offer a suite of freemium apps and we may not be successful in adding new users or in retaining existing users, or if our users decrease their level of engagement with our products or do not make optional purchases of tokens, coins, resources, or content, or convert into paying subscribers and renew their paid subscriptions our revenue, financial results and business may be significantly harmed.
Current wording
Our monthly active users have declined, and if we are unsuccessful in adding new users or in retaining existing users, or if our users decrease their level of engagement with our products or do not make optional purchases of tokens, coins, resources, or content, or convert into paying subscribers and renew periodic paid subscriptions, our revenue, financial results and business may be significantly harmed.
Previous wording
The size of our user base and our users’ level of engagement and paid conversion are fundamental to our success. Our financial performance has been and will continue to be dependent on our ability to successfully add new users, retain and engage existing users and convert them into paying users and/or subscribers. We expect that the size of our user base will fluctuate or decline in one or more markets from time to time. If consumers and/or creators do not perceive our products as useful, effective, entertaining, reliable, and/or trustworthy, we may not be able to attract or keep users or otherwise maintain or increase the frequency and duration of their engagement or the percentage of users that are converted into or remain paying subscribers. We may continue to see declines in our user base or engagement levels, which could further erode our ability to maintain or grow revenue. User engagement can be difficult to measure, particularly as we introduce new and different products and services, and as various privacy regulations evolve. Any number of factors can negatively affect user retention, growth, engagement and conversion, including if:
Current wording
The size of our user base and our users’ level of engagement and paid conversion are fundamental to our success. Our financial performance has been and will continue to be dependent on our ability to successfully add new users, retain and engage existing users and convert them into paying users and/or subscribers. Our MAU declined in fiscal 2026 compared with fiscal 2025, and in fiscal 2025 compared with fiscal 2024, and we expect that the size of our user base will continue to decline (or fluctuate) in one or more markets over time. If consumers and/or creators do not perceive our products as useful, effective, entertaining, reliable, and/or trustworthy, we may not be able to attract or keep users or otherwise maintain or increase the frequency and duration of their engagement or the percentage of users that are converted into or remain paying subscribers. We may continue to see declines in our user base or engagement levels, which could further erode our ability to maintain or grow revenue. User engagement can be difficult to measure, particularly as we introduce new and different products and services, and as various privacy regulations evolve. Any number of factors can negatively affect user retention, growth, engagement and conversion, including if:
Previous wording
Certain of these factors have, at various times, negatively impacted user and creator growth, MAU and engagement. If we are unable to maintain or increase our user base and user engagement, our revenue and financial results may be materially adversely affected.
Current wording
Certain of these factors have negatively impacted user and creator growth, MAU and engagement, and have contributed to the declines in our MAU described elsewhere in this Annual Report. If we are unable to maintain or increase our user base and user engagement, our revenue and financial results may be materially adversely affected.
Previous wording
Revenues of freemium apps and websites typically rely on a small percentage of users that convert into paying users by making in-app purchases of digital goods and/or paid subscriptions; however, the vast majority of users play for free or only occasionally make purchases or opt-in for paid subscriptions. Accordingly, only a small percentage of our users are paying users. In addition, a small portion of paying users generate a disproportionate percentage of revenue. Because of this, it is imperative for us to both retain these valuable customers and to maintain or increase their spend over time. In fiscal 2025, we experienced a 17% increase in subscription revenue and a 29% increase in subscription billings. Conversely, over the past nine years, GuruShots has successfully increased the compounded annual growth rate of monthly spending per paying player by around 6.2%. There can be no assurance that we will be able to continue to retain paying users, grow or maintain subscription levels or that paying users will maintain or increase their spending. We may experience a net decline in paying players resulting in a decrease in revenue resulting in a materially adverse outcome for our business and financial results.
Current wording
Revenues of freemium apps and websites typically rely on a small percentage of users that convert into paying users by making in-app purchases of digital goods and/or paid subscriptions; however, the vast majority of users play for free or only occasionally make purchases or opt-in for paid subscriptions. Accordingly, only a small percentage of our users are paying users. In addition, a small portion of paying users generate a disproportionate percentage of revenue. Because of this, it is imperative for us to both retain these valuable customers and to maintain or increase their spend over time. In fiscal 2026, we experienced a 29.6% increase in subscription revenue and a 1.9% decrease in subscription billings. Conversely, over the past 10 years, GuruShots has successfully increased the compounded annual growth rate of monthly spending per paying player by around 6.7%. There can be no assurance that we will be able to continue to retain paying users, grow or maintain subscription levels or that paying users will maintain or increase their spending. We may experience a net decline in paying players, resulting in a decrease in revenue and a materially adverse outcome for our business and financial results.
Previous wording
In fiscal 2025, approximately 75% of our revenues (excluding GuruShots) were generated from selling advertising inventory. We generally enter into arrangements with the major programmatic advertising networks to monetize our advertising inventory. We need to maintain good relationships with these advertising networks to provide us with a sufficient inventory of advertisements. Online advertising, including through mobile applications, is an intensely competitive industry. Many large companies, such as Applovin, Meta and Google, invest significantly in data analytics to make their properties and platforms more attractive to advertisers. Our advertising revenue is primarily a function of the number and hours of engagement of our free users and our ability to provide innovative advertising products that are relevant to our users, maintain or increase user engagement and satisfaction with our products, and enhance returns and add incremental gains for our advertising partners. If our relationship with any advertising partners terminates for any reason, or if the commercial terms of our relationships are changed or do not continue to be renewed on favorable terms, or if we cannot source high-quality ads consistent with our brand or product experience, we would need to qualify new advertising partners, which could negatively impact our revenues, at least in the short term.
Current wording
In fiscal 2026, approximately 71% of our revenues (excluding GuruShots and DataSeeds) were generated from selling advertising inventory. We generally enter into arrangements with the major programmatic advertising networks to monetize our advertising inventory. We need to maintain good relationships with these advertising networks to provide us with a sufficient inventory of advertisements. Online advertising, including through mobile applications, is an intensely competitive industry. Many large companies, such as AppLovin, Meta and Google, invest significantly in data analytics to make their properties and platforms more attractive to advertisers. Our advertising revenue is primarily a function of the number and hours of engagement of our free users and our ability to provide innovative advertising products that are relevant to our users, maintain or increase user engagement and satisfaction with our products, and enhance returns and add incremental gains for our advertising partners. If our relationship with any advertising partners terminates for any reason, or if the commercial terms of our relationships are changed or do not continue to be renewed on favorable terms, or if we cannot source high-quality ads consistent with our brand or product experience, we would need to qualify new advertising partners, which could negatively impact our revenues, at least in the short term.
Previous wording
In addition, internet-connected devices and operating systems controlled by third parties increasingly contain features that allow device users to disable functionality that allows for the delivery of advertising on their devices or reduce the ability to provide personalized or targeted advertising, which results in less valuable ads. Device and browser manufacturers may include or expand these features as part of their standard device specifications. For example, when Apple announced that IDFA, a standard device identifier used in some applications, was being superseded and would no longer be supported, application developers were required to update their apps to utilize alternative device identifiers such as universally unique identifier, or, more recently, identifier-for-advertising, which simplifies the process for Apple users to opt out of behavioral targeting. Furthermore, laws and regulations may also make it more difficult to deliver personalized or targeted advertising or impose requirements that result in more users making elections to block our ability to deliver targeted ads. If users do not elect to participate in functionality that supports the delivery of targeted advertising on their devices, our ability to deliver effective advertising campaigns could suffer, which could cause our business, financial condition, or operating results to be adversely affected.
Current wording
In addition, internet-connected devices and operating systems controlled by third parties increasingly contain features that allow device users to disable functionality that allows for the delivery of advertising on their devices or reduce the ability to provide personalized or targeted advertising, which results in less valuable ads. Device and browser manufacturers may include or expand these features as part of their standard device specifications. For example, Apple’s App Tracking Transparency framework requires users to affirmatively opt in before an application may access the Identifier for Advertisers (“IDFA”), the device identifier historically used to target and measure advertising on iOS, and widespread opt-out has reduced the availability of that identifier and made targeting and measurement materially more difficult. Furthermore, laws and regulations may also make it more difficult to deliver personalized or targeted advertising or impose requirements that result in more users making elections to block our ability to deliver targeted ads. If users do not elect to participate in functionality that supports the delivery of targeted advertising on their devices, our ability to deliver effective advertising campaigns could suffer, which could cause our business, financial condition, or operating results to be adversely affected.
Previous wording
We anticipate that our growth and profitability will continue to depend on our ability to sell our advertising inventory. Companies that advertise with us may choose to utilize other advertising channels or may reduce or eliminate their marketing altogether for a variety of reasons, many of which are out of our control, including, without limitation, if the demand for mobile phone personalization industry declines or otherwise falls out of favor with advertisers or consumers. In addition, we previously disclosed that disruptions caused by U.S. regulatory action, specifically the TikTok ban that took effect in early 2025 shortly after President Trump assumed office, had an immediate impact on advertiser behavior. During that period, U.S. advertising revenue fell, with TikTok advertising spend for the most part disappearing. This experience illustrates how government-mandated restrictions on a major advertiser can impact revenue quickly. Should future regulation, such as a reinstated or expanded ban on TikTok or restrictions on other platforms result, our revenue could be materially and adversely affected.
Current wording
We anticipate that our growth and profitability will continue to depend on our ability to sell our advertising inventory. Companies that advertise with us may choose to utilize other advertising channels or may reduce or eliminate their marketing altogether for a variety of reasons, many of which are out of our control, including, without limitation, if the demand for mobile phone personalization content declines or otherwise falls out of favor with advertisers or consumers. In addition, we previously disclosed that disruptions caused by U.S. regulatory action, specifically the regulatory restrictions and uncertainty affecting TikTok in early 2025 shortly after President Trump assumed office, had an immediate impact on advertiser behavior. During that period, U.S. advertising revenue fell, with TikTok advertising spend for the most part disappearing. This experience illustrates how government-mandated restrictions on a major advertiser can impact revenue quickly. Should future regulation or restrictions on other platforms result, our revenue could be materially and adversely affected.
Previous wording
Further, our advertisers’ ability to effectively target their advertising to our user’s interests may be negatively impacted by the degree to which our privacy control measures that we have implemented or may implement in the future in connection with regulations, regulatory actions, the user experience, or otherwise, and our advertising revenue may decrease or otherwise be curtailed as a result. Changes to operating systems’ practices and policies, such as Apple’s deprecating the Identifier for Advertisers (“IDFA”) and changes by Google to its advertising and tracking policies, including the planned deprecation of third-party cookies in Chrome and a shift away from certain elements of its Privacy Sandbox initiative, as well as efforts to block covert tracking techniques like fingerprinting, may also reduce the quantity and quality of the data and metrics that can be collected or used by us and our partners. These limitations may adversely affect our advertisers’ ability to effectively target advertisements and measure their performance, which could reduce the demand and pricing for our advertising products and harm our business. As such, our digital property’s current and potential advertiser clients may ultimately find digital advertising to be less effective than traditional advertising media or marketing methods or other technologies for promoting their products and services, and they may even reduce their spending on mobile advertising from current levels as a result or for other reasons.
Current wording
Further, our advertisers’ ability to effectively target their advertising to our user’s interests may be negatively impacted by the degree to which our privacy control measures that we have implemented or may implement in the future in connection with regulations, regulatory actions, the user experience, or otherwise, and our advertising revenue may decrease or otherwise be curtailed as a result. Changes to operating systems’ practices and policies, such as Apple’s App Tracking Transparency requirements limiting access to the IDFA and changes by Google to its advertising and tracking policies, including its April 2025 decision to retain third-party cookies in Chrome and its October 2025 decision to discontinue most Privacy Sandbox technologies on Chrome and Android, which leaves the longer-term availability of advertising identifiers and measurement signals unresolved, as well as efforts to block covert tracking techniques like fingerprinting, may also reduce the quantity and quality of the data and metrics that can be collected or used by us and our partners. These limitations may adversely affect our advertisers’ ability to effectively target advertisements and measure their performance, which could reduce the demand and pricing for our advertising products and harm our business. As such, our digital properties’ current and potential advertiser clients may ultimately find digital advertising to be less effective than traditional advertising media or marketing methods or other technologies for promoting their products and services, and they may even reduce their spending on mobile advertising from current levels as a result or for other reasons.
Previous wording
In fiscal 2025, revenue from well developed economies accounted for approximately 81% of our total revenues and 72% of our total advertising revenues were generated by three advertising demand partners. While our end users are located around the world, the revenue is generated in the United States from our advertising partners. During the past five years, we have experienced a shift in our Zedge App’s regional customer make-up with the percentage of our total MAU from emerging markets increasing, while the portion from well-developed markets is decreasing. In fiscal 2025, 76.7% of our Zedge App’s users were located in emerging markets with 23.3% of users in well-developed regions compared to 21.1% and 78.9% respectively in fiscal 2024. India comprised 32.5% of our MAU as of July 31, 2025. This shift has negatively impacted revenues because well-developed markets command materially higher advertising rates when compared to those in emerging markets. Although we are investing in reversing this trend, we may not be successful in this effort which may result in lower revenues and profitability. Although GuruShots’ and Emojipedia’ s user bases are more heavily weighted to well-developed economies, our overall revenue remains sensitive to the regional composition of our Zedge App’s user base.
Current wording
Our advertising revenue is sensitive to the geographic composition of our Zedge App user base because advertising rates in developed markets are generally materially higher than those in emerging markets. During the past five years, the portion of our total MAU from emerging markets has increased, and the portion from well-developed markets has decreased. In fiscal 2026, 78.2% of our Zedge App’s users were located in emerging markets with 21.8% of users in well-developed regions, compared to 76.7% and 23.3% respectively in fiscal 2025. In fiscal 2026, revenue from well developed economies accounted for approximately 80.5% of our total revenues and 70.2% of our total advertising revenues were generated by three advertising demand partners. Although we are investing in reversing this trend, we may not be successful in this effort - which may result in lower revenues and profitability. In Q4 of fiscal 2026, our Zedge App’s users in emerging markets declined by 15.2% while its users in well-developed regions declined 22.2%, when compared to fiscal 2025. India comprised 37.0% of our MAU as of July 31, 2026. While our end users are located around the world, the revenue is generated in the United States from our advertising partners. Although GuruShots’ and Emojipedia’s user bases are more heavily weighted to well-developed economies, our overall revenue remains sensitive to the regional composition of our Zedge App’s user base.
Previous wording
Three advertising demand partners, mainly, Google, Liftoff, and AppLovin were responsible for 72% of advertising revenue in fiscal 2025. If any of these advertising demand partners were to alter their spend on our digital properties the outcome could result in lowering revenues and profitability.
Current wording
Three advertising demand partners, mainly, Google, Liftoff and Digital Turbine were responsible for 70.2% of advertising revenue in fiscal 2026. If any of these advertising demand partners were to alter their spend on our digital properties the outcome could result in lowering revenues and profitability.
Previous wording
Our apps’ user base is heavily weighted to smartphones running the Android operating system, which constituted approximately 95% of our MAU (excluding Emojipedia) as of July 31, 2025, and most of our revenues for fiscal 2025. Any significant downturn in the overall demand for Android smartphones or the use of Android smartphones could significantly and adversely affect the demand for our products and services and would materially affect our revenues.
Current wording
Our apps’ user base is heavily weighted to smartphones running the Android operating system, which constituted approximately 94.9% of our MAU (excluding Emojipedia) as of July 31, 2026, and most of our revenues for fiscal 2026. Any significant downturn in the overall demand for Android smartphones or the use of Android smartphones could significantly and adversely affect the demand for our products and services and would materially affect our revenues.
Previous wording
In fiscal 2025, approximately 75% of our revenues excluding GuruShots were generated from advertising sales. We cannot assure you that we will be successful in diversifying our revenue mix by identifying new revenue drivers that complement our advertising-heavy business. Although the Zedge App had initial success in converting freemium users into paid subscribers, starting with zero in January 2019 and ending fiscal 2024 with approximately 669,000, we ended fiscal 2025 with 984,000 subscribers, a 47% increase and we may not be successful in improving subscriber base growth or in maintaining our current subscriber base. Furthermore, the subscription growth we experienced in fiscal 2025 was fueled by converting users to lifetime subscriptions and offers that aligned with localized pricing dynamics. We may not be able to continue to be able to drive this growth as market dynamics may change. To date, Zedge Premium has taken longer to scale than we originally anticipated. Furthermore, we are still integrating GuruShots and have not achieved its expected growth trajectory or realized synergies between GuruShots and our legacy operations. Finally, Android users constitute approximately 95% of our overall MAU and are prone to spend less money in apps than iOS and web users. Even if our new initiatives are successful on one platform, we may not be able to replicate that success across other platforms.
Current wording
In fiscal 2026, approximately 71.4% of our revenues excluding GuruShots were generated from advertising sales. We cannot assure you that we will be successful in diversifying our revenue mix by identifying new revenue drivers that complement our advertising-heavy business. Although the Zedge App had initial success in converting freemium users into paid subscribers, starting with zero in January 2019 and ending fiscal 2025 with approximately 984,000, we ended fiscal 2026 with 1,332,000 subscribers, a 35.3% increase and we may not be successful in improving subscriber base growth or in maintaining our current subscriber base. Furthermore, the subscription growth we experienced in fiscal 2025 was fueled by converting users to lifetime subscriptions and offers that aligned with localized pricing dynamics. We may not be able to continue to be able to drive this growth as market dynamics may change. To date, Zedge Premium has taken longer to scale than we originally anticipated. Furthermore, we have not developed a seamless way for GuruShots players to monetize their content in Zedge Premium and do not expect to realize synergies from our legacy operations. Finally, Android users constitute approximately 94.9% of our overall MAU and are prone to spend less money in apps than iOS and web users. Even if our new initiatives are successful on one platform, we may not be able to replicate that success across other platforms.
Previous wording
Google and Apple are able to terminate our distribution agreements with them, without cause, with 30 days prior written notice (to the extent allowed by applicable local law). They also may terminate our agreements with them immediately (unless a longer period is required by applicable law) under certain circumstances, including upon our uncured breach of such agreements. To the extent that they or any other third party platform provider on which we rely make such changes or terminates our agreements with them, our business, financial condition and results of operations could be materially adversely affected.
Current wording
Google and Apple are able to terminate our distribution agreements with them, without cause, with 30 days prior written notice (to the extent allowed by applicable local law). They also may terminate our agreements with them immediately (unless a longer period is required by applicable law) under certain circumstances, including upon our uncured breach of such agreements. To the extent that they or any other third party platform provider on which we rely makes such changes or terminates our agreements with them, our business, financial condition and results of operations could be materially adversely affected.
Previous wording
A platform provider may also change its fee structure to our disadvantage, change how we are able to advertise on the platform, limit how user information is made available to developers, curtail how personal information is used for advertising purposes, or restrict how users can share information with their friends on the platform or across platforms. For example, in April 2021 Apple released iOS 14 which started requiring users to opt in to share their IDFA with app developers, on an app-by-app basis. As a consequence, the ability of advertisers to accurately target and measure their advertising campaigns at the user level becomes significantly more difficult, typically resulting in higher user acquisition costs.
Current wording
A platform provider may also change its fee structure to our disadvantage, change how we are able to advertise on the platform, limit how user information is made available to developers, curtail how personal information is used for advertising purposes, or restrict how users can share information with their friends on the platform or across platforms. For example, in April 2021 Apple released iOS 14.5, which began requiring users to opt in on an app-by-app basis before an application could access their IDFA, as discussed above. That change made advertising campaigns significantly more difficult to target and measure at the user level and typically resulted in higher user acquisition costs. Google may implement similar changes with respect to identifiers available on the Android operating system, on which the substantial majority of our users are located, and the longer-term impact of changes of this nature on the advertising ecosystem remains uncertain.
Previous wording
We are subject to the standard policies and terms of service of third-party platforms, which govern the marketing, promotion, distribution, content and operation of our apps on their platforms. Each platform provider has the discretion to make changes to its operating system, payment services, manner in which their mobile operating system operates as well as change and interpret the terms and conditions of its developer policies. These changes may be harmful to our business and result in a negative outcome. For example, in September 2019, our Zedge App was temporarily removed from Google Play because they asserted that the Zedge App violated their malicious behavior policy. As a result, prospective Android users were prevented from installing our Zedge App, freemium users were unable to convert into paying subscribers and existing users were unable to purchase Zedge Credits. Shortly after the notice was issued, two of our major advertising suppliers ceased serving advertisements to our Zedge App. In addition, Google Play sent a notification to users that had the problematic version of the app on their phone recommending that they uninstall it. We identified the source of the problem as buggy code from a long-term, third-party advertising partner’s standard technology integration in our app. We corrected the problem by removing the offensive code, releasing a new version of our app and our Zedge App was reinstated after approximately 72 hours and concurrently the two major advertising suppliers resumed purchasing our advertising inventory. We estimate the immediate financial impact of the suspension resulted in approximately $100,000 in lost revenue and a material decline in MAU with the majority of uninstalls in emerging markets.
Current wording
If we violate, or if a platform provider believes we have violated, its terms of service or applicable policies, the provider may limit or terminate our access to its platform, with or without notice. This risk extends to emerging AI-content compliance rules, such as disclosure or watermarking requirements, which may be interpreted differently across jurisdictions. Given our dependence on single-source distribution via Google Play and the App Store, any limitation or termination could significantly reduce our reach, impair monetization, and materially harm our business. For example, in September 2019, our Zedge App was temporarily removed from Google Play because they asserted that the Zedge App violated their malicious behavior policy. As a result, prospective Android users were prevented from installing our Zedge App, freemium users were unable to convert into paying subscribers and existing users were unable to purchase Zedge Credits. Shortly after the notice was issued, two of our major advertising suppliers ceased serving advertisements to our Zedge App. In addition, Google Play sent a notification to users that had the problematic version of the app on their phone recommending that they uninstall it. We identified the source of the problem as buggy code from a long-term, third-party advertising partner’s standard technology integration in our app. We corrected the problem by removing the offensive code, releasing a new version of our app and our Zedge App was reinstated after approximately 72 hours and concurrently the two major advertising suppliers resumed purchasing our advertising inventory. We estimate the immediate financial impact of the suspension resulted in approximately $100,000 in lost revenue and a material decline in MAU with the majority of uninstalls in emerging markets.
Previous wording
The internet business is characterized by constant changes, including but not limited to rapid technological evolution, continual shifts in user expectations, frequent introductions of new products and services and constant emergence of new industry standards and practices. As a result, our users may leave us for our competitors’ products and services more quickly than in other sectors. Thus, our success will depend, in part, on our ability to respond to these changes in a timely and cost-effective basis, including improving and marketing our existing products and services and developing and pricing new products and services in response to evolving user needs. Our ability to successfully retain or expand our user base will depend on our ability to achieve the following, among others:
Current wording
The internet business is characterized by constant changes, including but not limited to rapid technological evolution, including the growth of AI related advances, continual shifts in user expectations, frequent introductions of new products and services and constant emergence of new industry standards and practices. As a result, our users may leave us for our competitors’ products and services more quickly than in other sectors. Thus, our success will depend, in part, on our ability to respond to these changes in a timely and cost-effective basis, including improving and marketing our existing products and services and developing and pricing new products and services in response to evolving user needs. Our ability to successfully retain or expand our user base will depend on our ability to achieve the following, among others:
Previous wording
Our efforts to develop and expand our content licensing business exposes us to a number of risks that could limit our ability to grow, achieve commercial success, and maintain our overall, business, results of operations, and financial condition. Contributors may choose not to provide their content for licensing purposes, which could prevent us from scaling our licensing business.
Current wording
Our efforts to develop and expand DataSeeds, our business-to-business data offering, expose us to a number of risks that could limit our ability to grow, achieve commercial success, and maintain our business, results of operations, and financial condition. Contributors may choose not to make their content available for AI training and related uses, which could prevent us from scaling DataSeeds.
Previous wording
The success of our licensing business depends in part on contributors agreeing to make their content available for licensing, including through opt-in mechanisms across our platforms such as Zedge Premium and GuruShots. Contributors may decline to opt-in for licensing because of concerns over compensation, exclusivity, loss of control, or how their content may be used by third parties, such as for commercial applications including training AI systems. If we cannot secure sufficient contributor participation, the breadth, diversity, and quality of our licensing catalog may be inadequate, which would materially limit our ability to generate revenue from licensing activities and harm our overall growth prospects.
Current wording
The success of DataSeeds depends in part on contributors agreeing to make their content available for AI training and related uses, including through opt-in mechanisms across our platforms such as Zedge Audience and GuruShots. Contributors may decline to opt in because of concerns over compensation, exclusivity, loss of control, or how their content may be used by third parties, such as for commercial applications, including training AI systems. If we cannot secure sufficient contributor participation, the breadth, diversity, and quality of our catalog may be inadequate, which would materially limit our ability to generate revenue from DataSeeds and harm our overall growth prospects. In addition, contributors may seek to withdraw content or to revoke consents previously given, including in response to changes in public sentiment regarding the use of creative work for AI training, and our terms of service may not in all cases prevent them from doing so or may be subject to challenge, and privacy laws may require Zedge to honor such withdrawal requests in some cases. Any material withdrawal of content or revocation of consent could reduce the size and utility of our catalog, require us to remove content from datasets we have already delivered, and expose us to claims from customers.
Previous wording
Our licensing catalog may not contain the types of content prospective licensors seek, which could limit demand for our licensing business.
Current wording
Our catalog may not contain the types of content that our customers seek, which could limit demand for DataSeeds.
Previous wording
The success of our content licensing business depends on our ability to maintain a catalog of content that meets the specific and evolving needs of prospective licensors, including e-commerce vendors, stock photo libraries, and companies seeking datasets to train AI models. If our catalog is too limited in subject matter, quality, or format, licensors may choose to obtain content from other providers or develop their own sources. A mismatch between available content and market demand could diminish our licensing business’s viability, harm our reputation, and negatively impact user engagement and revenue across our broader ecosystem.
Current wording
Part of the success of DataSeeds depends on our ability to maintain a catalog of content that meets the specific and evolving needs of our customers, including companies that build and evaluate AI models, e-commerce vendors and stock photo libraries. If our catalog is too limited in subject matter, quality, or format, customers may choose to obtain content from other providers or develop their own sources. A mismatch between available content and market demand could diminish the viability of DataSeeds, harm our reputation, and negatively impact user engagement and revenue across our broader ecosystem.
Previous wording
Challenges in delivering “content-on-demand” could undermine our ability to secure or generate the content that prospective licensors require.
Current wording
Challenges in delivering content built to specification could undermine our ability to secure or produce the content that our customers require.
Previous wording
We aim to provide prospective licensors the ability to request content through on-demand generation tools, by engaging our contributor community, or by finding other methods of securing rights to content or development of content that we own. However, there is no assurance that we can fulfill such requests at the required scale, quality, or within the necessary timeframe due to limitations in our technology, contributor base, or compliance with regulatory requirements. If we are unable to deliver requested content, or if generated content raises intellectual property, authenticity, or ethical concerns, prospective licensors may elect not to engage with us. This could harm our reputation and limit the growth and sustainability of our licensing business.
Current wording
We enable customers to request content built to their specification, which we may fulfill by engaging our contributor community, through our network of professional production partners, or by otherwise securing rights to content. However, there is no assurance that we can fulfill such requests at the required scale, quality, or within the necessary timeframe due to limitations in our technology, our contributor base, the capacity of our production partners, or compliance with regulatory requirements. If we are unable to deliver requested content, or if generated content raises intellectual property, privacy, regulatory, authenticity, or ethical concerns, customers may elect not to engage with us. This could harm our reputation and limit the growth and sustainability of DataSeeds.
Previous wording
In the future, we may conduct various marketing and brand promotion activities to expand our brand. Some of these may require material investment. We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect. In addition, any negative publicity in relation to our mobile internet products, websites or services could harm our brand and reputation.
Current wording
We may conduct various marketing and brand promotion activities to expand our brand. Some of these may require material investment. We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect. In addition, any negative publicity in relation to our mobile internet products, websites or services could harm our brand and reputation.
Previous wording
Although our products are leaders in their specific verticals, including mobile phone personalization, emoji related content and information, and digital photo competitions, we cannot guarantee that our brands will be able to maintain their leadership position. Our products face potential competition from other internet companies, app developers and smartphone manufacturers, and new market entrants may also emerge. AI models used by competitors may produce biased or discriminatory outcomes if not properly managed, potentially giving us a competitive advantage if we effectively address algorithmic bias through robust data curation, model evaluation, and fairness measures; however, failure to do so could result in unfair treatment of users or creators, violating anti-discrimination laws and damaging our brand reputation, thereby harming our competitive position. If we are not able to differentiate our products from that of our competitors, drive value for our customers, and/or effectively align our resources with our goals and objectives, we may not be able to compete effectively against our competitors. Our failure to compete effectively against any of the foregoing competitive threats could materially and adversely harm our business. Increased competition may result in new products and offerings which may in turn require us to take actions to retain and attract our users and advertisers in such a fashion which would lower our gross margins. If we fail to compete effectively, our market share would decrease and our results from operations, revenues and profits would be materially and adversely affected.
Current wording
Although our consumer products are leaders in their specific verticals, including mobile phone personalization, emoji related content and information, and digital photo competitions, we cannot guarantee that our brands will be able to maintain their leadership position. Our products face potential competition from other internet companies, app developers and smartphone manufacturers, and new market entrants may also emerge. AI models used by competitors may produce biased or discriminatory outcomes if not properly managed, potentially giving us a competitive advantage if we effectively address algorithmic bias through robust data curation, model evaluation, and fairness measures; however, failure to do so could result in unfair treatment of users or creators, violating anti-discrimination laws and damaging our brand reputation, thereby harming our competitive position. If we are not able to differentiate our products from that of our competitors, drive value for our customers, and/or effectively align our resources with our goals and objectives, we may not be able to compete effectively against our competitors. Our failure to compete effectively against any of the foregoing competitive threats could materially and adversely harm our business. Increased competition may result in new products and offerings which may in turn require us to take actions to retain and attract our users and advertisers in such a fashion which would lower our gross margins. If we fail to compete effectively, our market share would decrease and our results from operations, revenues and profits would be materially and adversely affected.
Previous wording
We have only a limited operating history, especially with respect to Emojipedia and GuruShots, upon which you can evaluate our business and prospects. Although we experienced impressive year-over-year revenue growth of 36% and 107% in fiscal 2022 and 2021 respectively, our growth in fiscal 2020 was moderate and even declined in fiscal 2019. Impacting the growth figures in fiscal 2023 as compared to fiscal 2024 is the inclusion of GuruShots for all of fiscal 2023 as compared to only the final three and a half months of fiscal 2022. We have encountered and will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving industries, like mobile apps, digital marketplaces and gaming, including the need to:
Current wording
We have only a limited operating history, especially with respect to DataSeeds and GuruShots, upon which you can evaluate our business and prospects. Although we experienced year-over-year revenue growth in certain years, in other years revenue and net income have not improved, particularly with the impact of the inclusion of GuruShots. The investment in the growth of DataSeeds may also have a negative impact on future results. We have encountered and will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving industries, including the need to:
Previous wording
Our recent restructuring efforts may not achieve anticipated financial and operational goals, increasing our investment risk.
Current wording
The restructuring we undertook in Fiscal 2025 may not achieve anticipated financial and operational goals, increasing our investment risk.
Previous wording
Our recent restructuring efforts may not achieve the anticipated cost savings, operational efficiencies, or strategic benefits, which could hinder our ability to meet financial and operational goals and further complicate our growth trajectory. Failure to realize these expected outcomes could materially and adversely affect our business, financial condition, and results of operations.
Current wording
Our Fiscal 2025 restructuring efforts may not achieve the anticipated cost savings, operational efficiencies, or strategic benefits, which could hinder our ability to meet financial and operational goals and further complicate our growth trajectory. Failure to realize these expected outcomes could materially and adversely affect our business, financial condition, and results of operations.
Previous wording
Although we had positive cash flow from operating activities fiscal 2023, 2024 and 2025, we had previously incurred, and may once again incur, net losses and experience negative cash flow from operating activities in the future and may not be able to obtain additional capital in a timely manner or on acceptable terms, or at all.
Current wording
Although we had positive cash flow from operating activities in fiscal 2024, 202 and 2026, we had previously incurred, and may once again incur, net losses and experience negative cash flow from operating activities in the future and may not be able to obtain additional capital in a timely manner or on acceptable terms, or at all.
Previous wording
Our net loss in fiscal 2025 was $2.4 million, our net loss in fiscal 2024 was $9.2 million. Our ability to maintain profitability and positive cash flow from operating activities depends on various factors, including but not limited to, the acceptance of our products and services by mobile phone and internet users, the growth and maintenance of our user base, user acquisition spend and associated return, our ability to maintain existing and obtain new advertisers, our ability to grow our revenues, the success of each of our digital brands as measured by their respective key performance indicators, the effectiveness of our new product initiatives, selling and marketing activities as well as control our costs and expenses. We may not be able to sustain profitability or positive cash flow from operating activities, and any such positive cash flow may not be sufficient to satisfy our anticipated capital expenditures and other cash needs. As such, we may not be able to fund our operating expenses and expenditures out of cash flows, which would require us to utilize debt or equity financing which we may not be able to secure or which we may only secure on terms that are not favorable, which may result in significant dilution or voluntary or involuntary dissolution or liquidation proceeding of us and a total loss of your investment.
Current wording
Our net loss in fiscal 2026 was $0.1 million. Our net loss in fiscal 2025 was $2.4 million. Our ability to maintain profitability and positive cash flow from operating activities depends on various factors, including but not limited to, the acceptance of our products and services by mobile phone and internet users, the growth and maintenance of our user base, user acquisition spend and associated return, our ability to maintain existing and obtain new advertisers, our ability to grow our revenues, the success of each of our digital brands as measured by their respective key performance indicators, the effectiveness of our new product initiatives, selling and marketing activities as well as control our costs and expenses. We may not be able to sustain profitability or positive cash flow from operating activities, and any such positive cash flow may not be sufficient to satisfy our anticipated capital expenditures and other cash needs. As such, we may not be able to fund our operating expenses and expenditures out of cash flows, which would require us to utilize debt or equity financing which we may not be able to secure or which we may only secure on terms that are not favorable, which may result in significant dilution or voluntary or involuntary dissolution or liquidation proceeding of us and a total loss of your investment.
Previous wording
We prepare consolidated financial statements in accordance with accounting principles generally accepted in the United States. The accounting for our business is subject to change based on how the business model evolves, interpretation of various accounting principles, enforcement of existing or new regulations, and changes in policies, rules, regulations, and interpretations, of accounting and financial reporting requirements of the SEC or other regulatory agencies. A change in any of these principles or in their interpretations or application to our business, may have a significant effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported periods, which may negatively impact our financial statements our business prospects. It is difficult to predict the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations and financial condition and could require significant investment in systems and personnel.
Current wording
We prepare consolidated financial statements in accordance with accounting principles generally accepted in the United States. The accounting for our business is subject to change based on how the business model evolves, interpretation of various accounting principles, enforcement of existing or new regulations, and changes in policies, rules, regulations, and interpretations of accounting and financial reporting requirements of the SEC or other regulatory agencies. A change in any of these principles or in their interpretations or application to our business, may have a significant effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported periods, which may negatively impact our financial statements and our business prospects. It is difficult to predict the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations and financial condition and could require significant investment in systems and personnel.
Previous wording
Our effective tax rate for fiscal 2025 was 11.9% compared with 19.3% for fiscal 2024. In general, changes in applicable U.S. federal and state and foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our tax expense.
Current wording
Our effective tax rate for fiscal 2026 was 50.8% compared with 11.9% for fiscal 2025. In general, changes in applicable U.S. federal and state and foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our tax expense.
Previous wording
Effective January 1, 2022, pursuant to the Tax Cuts and Jobs Act of 2017, R&D expenses are required to be capitalized and amortized for US tax purposes, which has delayed the deductibility of these expenses and potentially increase the amount of cash taxes we paid during the years ended July 31, 2024 and 2023. In the future, among other things, Congress may consider legislation that would defer the capitalization requirement to later years or eliminate the capitalization requirement, possibly with retroactive effect, and/or the IRS may issue guidance on the currently enacted tax law which differs from our interpretation. It is possible that the enactment of new legislation and/or issuance of IRS guidance could have a material effect on our financial condition, results of operations and cash flows in future periods.
Current wording
Effective January 1, 2022, pursuant to the Tax Cuts and Jobs Act of 2017, R&D expenses are required to be capitalized and amortized for US tax purposes, which has delayed the deductibility of these expenses and potentially increased the amount of cash taxes we paid during the years ended July 31, 2024 and 2023. In the future, among other things, Congress may consider legislation that would defer the capitalization requirement to later years or eliminate the capitalization requirement, possibly with retroactive effect, and/or the IRS may issue guidance on the currently enacted tax law which differs from our interpretation. It is possible that the enactment of new legislation and/or issuance of IRS guidance could have a material effect on our financial condition, results of operations and cash flows in future periods.
Previous wording
Global tax developments applicable to multinational companies may continue to result in new tax regimes or changes to existing tax laws, regulations, and taxation officer interpretations. If the U.S. or foreign taxing authorities change tax laws, our overall taxes could increase, lead to a higher effective tax rate, harm our cash flows, results of operations and financial position.
Current wording
Global tax developments applicable to multinational companies may continue to result in new tax regimes or changes to existing tax laws, regulations, and the interpretations of taxing authorities. If the U.S. or foreign taxing authorities change tax laws, our overall taxes could increase, which could lead to a higher effective tax rate and harm our cash flows, results of operations and financial position.
Previous wording
The substantial majority of our revenues are denominated in U.S. dollars, and our operating expenses are generally denominated in the local currencies of the countries where our operations are located. We have significant operations in Europe and Israel that are denominated in the Euro and Israeli Shekel. The strengthening or weakening of the U.S. Dollar versus these currencies impacts the expenses generated in these foreign currencies when converted into the U.S. Dollar. In fiscal 2025 and fiscal 2024, we recorded losses of $151,000 and $190,000, respectively, from foreign currency movements relative to the U.S. Dollar. Included in these amounts were gains from hedging activities of $44,000 and losses of $245,000 in fiscal 2025 and fiscal 2024, respectively. While we regularly enter into transactions to hedge portions of our foreign currency exposure, it is impossible to predict or eliminate the effects of this exposure. Fluctuations in foreign exchange rates could significantly impact our financial results.
Current wording
The substantial majority of our revenues are denominated in U.S. dollars, and our operating expenses are generally denominated in the local currencies of the countries where our operations are located. We have significant operations in Europe and Israel that are denominated in the Euro and Israeli Shekel. The strengthening or weakening of the U.S. Dollar versus these currencies impacts the expenses generated in these foreign currencies when converted into the U.S. Dollar. In fiscal 2026 and fiscal 2025, we recorded losses of $172,000 and $151,000, respectively, from foreign currency movements relative to the U.S. Dollar. Included in these amounts were a $1,000_loss from hedging activities in fiscal 2026 and gains of $44,000 from hedging activities in fiscal 2025. While we regularly enter into transactions to hedge portions of our foreign currency exposure, it is impossible to predict or eliminate the effects of this exposure. Fluctuations in foreign exchange rates could significantly impact our financial results.
Previous wording
We may not be capable of growing our business organically or with paid marketing campaigns, attract new players and artists and/or establish cooperation with strategic partners. Our business has experienced periods of rapid growth and expansion that has placed, and continues to place, significant strain on our management and resources. We cannot assure you that these periods will recur or be sustainable. We have also acquired other companies and made asset purchases and integrating those into Zedge has placed and continues to place significant strain on management and resources. We believe that continued growth of our business will depend on our ability to successfully develop and enhance our products and services, cost efficiently attract new artists and individual creators, maintain our relationship with various artists and content partners like Google, Meta and Apple, sustain our high rankings with the leading search engines including Google, capture the changes that are taking place in the industry in a timely fashion grow our user base at a cost effective rate, retain existing users, continue developing innovative technologies in response to user demand, increase brand awareness through marketing and promotional activities, react to changes in market trends, expand into new market segments, attract new advertisers, retain existing advertisers, get users to engage with our digital properties and convert into paying users or subscribers, and take advantage of the growth in the relevant markets. We cannot assure you that we will achieve any or all of the above. In the event that we are not successful in some or all of these areas we may not be able to retain our customers and advertisers.
Current wording
We may not be capable of growing our business organically or with paid marketing campaigns, attract new players and artists and/or establish cooperation with strategic partners. Our business has experienced periods of rapid growth and expansion that has placed, and continues to place, significant strain on our management and resources. We cannot assure you that these periods will recur or be sustainable. We have also acquired other companies and made asset purchases and integrating those into Zedge has placed and continues to place significant strain on management and resources. We believe that continued growth of our business will depend on our ability to successfully develop and enhance our products and services, cost efficiently attract new artists and individual creators, maintain our relationship with various artists and content partners like Google, Meta and Apple, sustain our high rankings with the leading search engines including Google, capture the changes that are taking place in the industry in a timely fashion, grow our user base at a cost effective rate, retain existing users, continue developing innovative technologies in response to user demand, increase brand awareness through marketing and promotional activities, react to changes in market trends, expand into new market segments, attract new advertisers, retain existing advertisers, get users to engage with our digital properties and convert into paying users or subscribers, and take advantage of the growth in the relevant markets. We cannot assure you that we will achieve any or all of the above. In the event that we are not successful in some or all of these areas, we may not be able to retain our users and advertisers.
Previous wording
To manage our growth and for us to attain and maintain profitability, we will also need to further expand, train, manage and motivate our workforce across multiple geographies and manage our relationships with users, consultants, business partners and advertisers globally. We anticipate that we will need to implement a variety of enhanced and upgraded operational and financial systems, procedures and controls, including the improvement of our accounting and other internal management systems. All of these endeavors involve risks and will require substantial management efforts and skills and additional expenditures.
Current wording
To manage our growth and for us to attain and maintain profitability, we will also need to further expand, train, manage and motivate our workforce across multiple geographies and manage our relationships with users, consultants, business partners and advertisers globally. We anticipate that we will need to implement a variety of enhanced and upgraded operational and financial systems, procedures and controls, including the improvement of our accounting and other internal management systems. All of these endeavors involve risks and will require substantial management efforts and skills and additional expenditures. We also expect to fund a substantial part of our investment in DataSeeds from cash generated by our consumer businesses, whose monthly active user base has declined, which links the pace at which we can pursue that strategy to the performance of businesses that are themselves under pressure. Our DataSeeds business increases these demands because it operates on a different model than our consumer properties. It sells to a relatively small number of enterprise customers rather than to a large base of consumers, it delivers against negotiated contracts with defined specifications, delivery schedules and acceptance criteria rather than through a self-service marketplace, and it depends on recruiting and coordinating contributors and professional production partners across many jurisdictions. Growing it requires enterprise sales, solutions engineering, project management, data engineering and quality assurance capabilities that differ from those required to operate our consumer applications and that we have only recently begun to build. It also requires us to operate two businesses with different customers, sales cycles, cost structures and working capital characteristics at the same time, while continuing to invest in our consumer properties. If we are unable to build these capabilities, or if management attention devoted to DataSeeds detracts from the operation of our consumer properties or the reverse, our business and results of operations could be materially and adversely affected.
Previous wording
Our products currently enjoy a global customer base. This geographic diversity may raise the level of difficulty in managing future growth and profitability. We cannot assure you that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations. In addition, we cannot assure you that we will be able to effectively manage our growth or implement our future business strategies effectively, and failure to do so may materially and adversely affect our business and results of operations.
Current wording
Our products currently enjoy a global user base. This geographic diversity may raise the level of difficulty in managing future growth and profitability. We cannot assure you that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations. In addition, we cannot assure you that we will be able to effectively manage our growth or implement our future business strategies effectively, and failure to do so may materially and adversely affect our business and results of operations.
Previous wording
We need to invest in paid user acquisition in order to grow our customer base. However, we may not be able to secure new users at scale with a positive return on investment. Even if we can secure new profitable customers these customers may not mature into sustainable long-term customers.
Current wording
We need to invest in paid user acquisition in order to grow our user base. However, we may not be able to secure new users at scale with a positive return on investment. Even if we can secure new profitable users, these users may not mature into sustainable long-term users.
Showing the first 40 of 94 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We are subject to the standard policies and terms of service of third-party platforms, which govern the marketing, promotion, distribution, content and operation of our apps on their platforms. Each platform provider has the discretion to make changes to its operating system, payment services, manner in which their mobile operating system operates as well as change and interpret the terms and conditions of its developer policies. These changes may be harmful to our business and result in a negative outcome.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
If we violate, or if a platform provider believes we have violated, its terms of service or applicable policies, the provider may limit or terminate our access to its platform, with or without notice. This risk extends to emerging AI-content compliance rules, such as disclosure or watermarking requirements, which may be interpreted differently across jurisdictions. Given our dependence on single-source distribution via Google Play and the App Store, any limitation or termination could significantly reduce our reach, impair monetization, and materially harm our business.
Previous report — wording carried elsewhere
During the past five years, we have experienced a shift in our Zedge App’s regional customer make-up with the portion of our total MAU from emerging markets increasing, and the portion from well-developed markets decreasing. In Q4 of fiscal 2025, our Zedge App’s users in emerging markets declined by 13.6% while its users in well-developed regions declined 1.8% when compared to fiscal 2024. India comprised 32.5% of our MAU as of July 31, 2025. This shift has negatively impacted revenues because well-developed markets command materially higher advertising rates when compared to those in emerging markets. Although we are investing in reversing this trend, we may not be successful in this effort which may result in lower revenues and profitability.