Zedge Announces Record First Quarter Results

Reports record first quarter with revenue growth of 60% to $6.0 million; Net income of $2.1 million; earnings per share (EPS) of $0.14, EBITDA ¹ of $3.0 million

NEW YORK, NY / ACCESSWIRE / December 13, 2021 / Zedge, Inc. (NYSE American:ZDGE), a global app publisher with a portfolio of leading digital consumer brands serving 43 million users across the portfolio in October 2021, today announced results for its first-quarter fiscal year 2022 ended October 31, 2021.

"We experienced strong performance in both our core and emerging businesses despite tougher year-over-year comps," said Jonathan Reich, chief executive officer. "Advertising revenue continued to expand to record levels, while active subscriptions ² returned to modest sequential growth and average revenue per monthly active user (ARPMAU) ² increased by over 46%. Our emerging businesses also performed well with the Zedge Premium marketplace experiencing gross transaction value (GTV) ² growth of 58%.

"Our priorities for fiscal 2022 remain unchanged. Tomorrow morning, we will launch an exciting, high-potential NFT product called "NFTs Made Easy" to select Zedge Premium artists. In the months to come, we plan to expand this unique offering to more artists and introduce additional features and capabilities to build out the ecosystem. To drive monthly active user (MAU) ² growth, especially in well-developed markets, we have begun to scale paid user acquisition and also recently rolled out our first social and community features for our Zedge app, including "Follow Me," with additional features expected in the new year. Furthermore, we continue to look at new content categories for our personalization and Shortz entertainment offerings and are working on new monetization opportunities for Emojipedia. In addition, new and enhanced subscription and product localization capabilities remain on the roadmap for several products. Finally, we continue to evaluate complementary M&A. Overall, we are executing on the plan I laid out during our last earnings call, and I am excited to see what we can accomplish in fiscal 2022 and beyond," continued Reich.

Fiscal First-Quarter Highlights (Fiscal 2022 versus Fiscal 2021)

• Revenue increased 60.2% to $6.0 million versus $3.8 million;
• Active subscriptions and subscription revenue increased 25.3% and 47.7%, respectively;
• Operating income and operating margin of $2.6 million and 42.9% versus $1.1 million and 29.1%, respectively;
• Net income and diluted EPS of $2.1 million and $0.14 versus $1.0 million and $0.08, respectively;
• Cash flow from operations increased 81.2% to a record $2.7 million versus $1.5 million;
• EBITDA increased 110.9% to $3.0 million versus $1.4 million;
• MAU ² increased by 5.6%;
• Zedge Premium GTV increased 58.2% to $0.33 million.

¹ Throughout this release, EBITDA is a Non-GAAP financial measure intended to provide useful information that supplements Zedge's results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanation of Zedge's formulation of EBITDA and reconciliations to the most directly comparable GAAP measure.

² We use the following business metrics in this release because we believe they are useful in evaluating Zedge as an investment.

• Monthly active users, or MAU, captures the number of unique users that used our Zedge app during the previous 30-days of the relevant period, is useful for evaluating consumer engagement with our app which correlates to advertising revenue as more users drive more ad impressions for sale. It also allows readers and potential advertisers to evaluate the size of our user base.
• Zedge Premium Gross Transaction Value, or GTV, is the total dollar amount of transactions conducted through the Zedge Premium Marketplace. As Zedge Premium is an internal focus for growth, we believe that this metric will help investors evaluate the progress we are making in growing this part of our business.
• Average Revenue Per Monthly Active User for our Zedge app, or ARPMAU, is a useful statistic in evaluating how well we are monetizing our user base.
• The term Active Subscriptions is a subscription that has commenced and not been canceled, including paused subscriptions, and subscriptions in free trials, grace periods, or account hold.
• Total Installs - Cumulative is a measure of the cumulative number of times our Zedge app has been downloaded since inception.

Fiscal 2022 Commentary

"Similar to last year when we also reported a record first quarter, we will wait until after we report our second fiscal quarter earnings to update the annual financial guidance we provided in our fourth fiscal quarter earnings report," concluded Reich.

Earnings Announcement and Supplemental Information

Zedge's earnings release will be filed on Form 8-K and posted on the Zedge investor relations website ( https://investor.zedge.net ) at approximately 4:10 p.m. Eastern on December 13, 2021. Management will host an earnings conference call beginning at 4:30 p.m. Eastern followed by a Q&A with investors.

To participate in the call, please dial Toll-Free: 888-506-0062 or International: 973-528-0011, at least five minutes before the 4:30PM Eastern start. Please ask for the Zedge earnings conference call with Participant Access Code: 499616

The call will also be webcast through the Zedge investor relations website: https://investor.zedge.net and will be available through Tuesday, December 13, 2022.

Following the call and continuing through Monday, December 27, 2021, a call replay will be available by dialing Toll-Free: 877-481-4010 or International: 919-882-2331 and entering the replay access code: 43673

About Zedge

Zedge is an app publisher that owns a portfolio of leading digital consumer brands serving 43 million users globally in October 2021. Our portfolio consists of Zedge Ringtones and Wallpapers, the leading mobile app used for mobile phone personalization, social content, and fandom art; Zedge Premium, a marketplace for artists, celebrities, and emerging creators to market their digital content, to Zedge's users; Emojipedia, the leading source of all things emoji; and Shortz, a mobile entertainment app in beta, focused on short-form storytelling. Zedge monetizes its content through ad-supported offerings, tokens, and subscriptions. For more information, visit https://www.zedge.net .

Forward-Looking Statements

All statements above that are not purely about historical facts, including, but not limited to, those in which we use the words "believe," "anticipate," "expect," "plan," "intend," "estimate," "target" and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Our filings with the SEC provide detailed information on such statements and risks and should be consulted along with this release. To the extent permitted under applicable law, we assume no obligation to update any forward-looking statements.

Contact:

Brian Siegel IRC, MBA Managing Director
Hayden IR
(346) 396-8696
ir@zedge.net

Use of EBITDA as a Non-GAAP Measure

EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization. EBITDA represents a measure that we believe is customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures that we present. Our management also believes that EBITDA is useful in evaluating our core operating results. However, EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income or operating income as an indicator of our operating performance or to net cash provided by operating activities as a measure of our liquidity.

SOURCE: Zedge, Inc.