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Zedge Inc (ZDGE)
:ZDGE
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Zedge
(NYSE MKT:ZDGE)
52Neutral
Positive Factors
Financial Health
The company had $20.1M in cash and no debt, allowing it to fund organic growth without the need to raise additional capital.
Financial Performance
Higher average revenue per monthly active user, marketplace sales, and subscriptions were key positives in the quarter.
Valuation
ZDGE trades at an EV/EBITDA multiple significantly lower than a peer group average, contributing to a Buy rating.
Negative Factors
Advertising Spend
Underperformance was a result of a material pullback in TikTok’s U.S. ad spend, declining monthly active users (MAUs), and GuruShots continuing to underperform.
Revenue Performance
Revenue and adjusted EBITDA missed estimates due to underperformance from GuruShots.
User Engagement
There were 26.1M monthly active users as of July 2024, down 16% year-over-year, with well-developed markets down 19% and emerging markets down 15%.
Zedge (ZDGE) vs. S&P 500 (SPY)
Market Cap
$26.49M
Dividend YieldN/A
Average Volume (3M)38.50K
Price to Earnings (P/E)―
Beta (1Y)1.35
Revenue Growth4.26%
EPS Growth88.30%
CountryUS
Employees106
SectorCommunication Services
Sector Strength80
IndustryInternet Content & Information
Share Statistics
EPS (TTM)-0.01
Shares Outstanding13,343,099
10 Day Avg. Volume47,661
30 Day Avg. Volume38,498
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.11
Price to Cash Flow (P/CF)11.50
P/FCF Ratio9.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$3.50Price Target Upside52.17% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Zedge Business Overview & Revenue Model
Company DescriptionZedge, Inc. is a leading provider of digital content distribution platforms, specializing in mobile phone personalization products. The company operates in the mobile software and services sector, offering a diverse range of free and premium content such as ringtones, wallpapers, and notification sounds. Zedge's platform enables users to customize their mobile devices with unique and personalized content, enhancing the user experience and engagement.
How the Company Makes MoneyZedge makes money primarily through its freemium business model, which includes both advertising revenue and in-app purchases. The company offers free access to its basic content and services, while generating revenue through advertisements displayed within its app. Additionally, Zedge provides a premium subscription service known as 'Zedge Premium,' where users can purchase exclusive content and ad-free experiences. This premium model allows artists and content creators to sell their work on the platform, with Zedge taking a commission from these sales. The combination of ad revenue, subscription fees, and content sales forms the core of Zedge's monetization strategy.
Zedge Financial Statement Overview
Summary
Zedge exhibits strength in its balance sheet and cash flow management, with zero debt and positive cash flows. However, the decline in revenue and persistent net losses indicate potential challenges in profitability and growth. The company must focus on reversing revenue declines and improving its margins to enhance overall financial health.Income Statement
Zedge's TTM revenue shows a contraction with a significant decline from prior periods. Gross profit margin remains strong at 91.8%, indicating cost efficiency. However, negative EBIT and net profit margins highlight ongoing profitability challenges, with net income deeply in the red.45
Neutral
Balance Sheet
The company's balance sheet is robust with no debt, resulting in a debt-to-equity ratio of 0. The equity ratio stands at a healthy 76.0%, indicating strong capitalization. However, the decline in stockholders' equity over the recent periods is a concern.75
Positive
Cash Flow
Zedge maintains positive operating cash flow, and the free cash flow to net income ratio is strong due to improvements in free cash flow. However, the free cash flow growth rate is negative, indicating a decrease compared to previous periods. Nonetheless, the ability to sustain operations without external financing is a positive.65
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 29.41M | 30.09M | 27.24M | 26.55M | 19.57M | 9.47M | Gross Profit |
| 27.01M | 28.23M | 25.00M | 24.90M | 18.38M | 8.28M | EBIT |
| -2.87M | -11.80M | -6.91M | 4.20M | 7.80M | -251.00K | EBITDA |
| -948.00K | 2.61M | 3.14M | 9.84M | 9.06M | 1.17M | Net Income Common Stockholders |
| -1.94M | -9.17M | -6.10M | 9.71M | 8.25M | -559.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 20.05M | 20.00M | 18.13M | 17.09M | 24.91M | 5.11M | Total Assets |
| 37.09M | 38.20M | 46.83M | 54.63M | 37.48M | 12.01M | Total Debt |
| 0.00 | 203.00K | 1.99M | 195.00K | 231.00K | 282.00K | Net Debt |
| -20.05M | -19.80M | -16.14M | -16.89M | -24.68M | -4.83M | Total Liabilities |
| 8.89M | 7.30M | 7.97M | 10.44M | 4.32M | 3.12M | Stockholders Equity |
| 28.20M | 30.90M | 38.86M | 44.19M | 33.16M | 8.88M |
| Cash Flow | Free Cash Flow | ||||
| 4.49M | 4.66M | 1.70M | 10.88M | 9.48M | 1.36M | Operating Cash Flow |
| 4.92M | 5.85M | 3.16M | 11.49M | 10.13M | 2.12M | Investing Cash Flow |
| -660.00K | -1.19M | -2.42M | -18.95M | -5.48M | -759.00K | Financing Cash Flow |
| -2.13M | -2.64M | 387.00K | -223.00K | 15.10M | 2.17M |
Zedge Technical Analysis
Neutral
2.30
Price Trends
2.31
Negative
2.50
Negative
2.89
Negative
Market Momentum
-0.08
Negative
50.01
Neutral
54.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZDGE, the sentiment is Neutral. The current price of 2.3 is above the 20-day moving average (MA) of 2.12, below the 50-day MA of 2.31, and below the 200-day MA of 2.89, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 50.01 is Neutral, neither overbought nor oversold. The STOCH value of 54.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ZDGE.
Zedge Risk Analysis
Zedge disclosed 61 risk factors in its most recent earnings report. Zedge reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Zedge Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
58 Neutral | $13.61B | 6.75 | -2.45% | 3.85% | 2.33% | -35.55% | |
56 Neutral | $31.54M | ― | -218.25% | ― | 345.36% | -650.95% | |
54 Neutral | $522.31M | 38.28 | 5.15% | ― | 8.80% | -91.33% | |
52 Neutral | $26.49M | ― | -6.60% | ― | 4.26% | 88.30% | |
45 Neutral | $27.02M | ― | -27.19% | ― | -4.12% | 22.94% | |
45 Neutral | $29.94M | ― | -33.05% | ― | -0.92% | -140.08% |
* Communication Services Sector Average
Performance Comparison
ZDGE
Zedge
2.30
-0.10
-4.17%
SCOR
comScore
5.50
-8.42
-60.49%
IZEA
IZEA Worldwide
1.81
-0.80
-30.65%
SEAT
Vivid Seats
2.70
-3.23
-54.47%
MNY
MoneyHero Limited
0.80
-1.55
-65.96%
Zedge Earnings Call Summary
Earnings Call Date: Mar 12, 2025 | % Change Since: 7.48% | Next Earnings Date: Jun 16, 2025
Earnings Call Sentiment Neutral
The earnings call highlights positive strides in subscription and premium growth, as well as significant cost-cutting measures. However, these are overshadowed by a notable decline in overall revenue and ongoing challenges in specific segments like advertising and GuruShots. The sentiment reflects a company in transition, facing both promising opportunities and significant challenges.Highlights
Subscription Revenue Growth
Quarterly subscription revenue growth remained strong, increasing 13% year-over-year, with a 22% increase in active subscribers.
Zedge Premium Growth
Zedge Premium's Gross Transaction Value (GTV) grew 27% year-over-year, driven by monetization strategies like rewarded video, which saw usage grow nearly 40%.
Cost Reduction Initiatives
Restructuring is expected to reduce the annualized expense run rate by approximately $4 million, including a 22% reduction in global workforce.
Launch of pAInt 2.0
Introduction of new creation capabilities such as image-to-image and real-time photo editing, with engagement metrics for pAInt surging over 100% year-over-year.
Lowlights
Overall Revenue Decline
Total revenue declined 10% year-over-year to $7 million, primarily due to advertising headwinds and challenges at GuruShots.
GuruShots Performance
GuruShots revenue was down 33% year-over-year, though only 4% sequentially, with ongoing challenges leading to cost-cutting measures.
Negative Adjusted EBITDA
Adjusted EBITDA for the quarter was negative $0.1 million compared to positive $1.5 million in the prior year.
Cash Flow Decline
Cash flow from operations was $0.7 million and free cash flow was $0.6 million, both down from last year due to restructuring activities.
Company Guidance
During Zedge's second quarter fiscal 2025 earnings call, the company provided several key metrics and guidance. Total revenue declined by 10% year-over-year to $7 million, primarily due to a challenging macro environment and advertising headwinds. However, subscription revenue grew by 13%, with active subscribers increasing by 22%. Zedge Premium's gross transaction value rose by 27%, and the company achieved a 9% year-over-year increase in average revenue per monthly active user. The company initiated a restructuring plan, resulting in an expected annualized expense reduction of approximately $4 million. This includes a 22% workforce reduction, targeting $3 million in compensation-related cost savings and $1.2 million from expired retention bonuses. The restructuring is anticipated to reflect in financials by Q3 and culminate in Q4. Despite a GAAP net loss of $1.7 million for the quarter, Zedge remains optimistic about future growth opportunities, particularly in AI-driven offerings and user engagement strategies.Zedge Corporate Events
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Zedge Announces Strategic Initiatives and Share Buyback
Positive
Apr 23, 2025
Zedge Inc. announced a series of strategic initiatives aimed at enhancing its market position and operational efficiency. The company reported significant growth in revenue and subscriptions, driven by its innovative AI tools and content platforms. Recent restructuring efforts are expected to save $4 million annually, while a $5 million share buyback is underway to drive shareholder value. These actions reflect Zedge’s commitment to disciplined capital allocation and innovation, positioning it for future growth in the digital content space.
Spark’s Take on ZDGE Stock
According to Spark, TipRanks’ AI Analyst, ZDGE is a Neutral.
Zedge’s overall stock score reflects its strong balance sheet and positive cash flows. However, declining revenue, ongoing profitability challenges, and a bearish technical outlook weigh heavily. While subscription growth and cost reductions are promising, significant risks remain, particularly in valuation and advertising segments.
To see Spark’s full report on ZDGE stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.