Thank you, operator.And thank you all for joining us 2 today.3
Good afternoon.Welcome to Zedge’s earnings 5 conference call for the first quarter fiscal year 2022,
6 ended October 31 st , 2021.
I’m Jonathan Reich, CEO of
7 Zedge, and with me is our Chief Financial Officer, Yi Tsai, 8 who will provide additional insight into our financial
9 performance.We will then be happy to take your 10 questions.
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For those of you that are new to the Zedge story or haven’t followed us in a while, we own a portfolio of leading digital consumer brands that served 43 million users around the globe in October of 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 1
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 currently in beta, focused on short- form storytelling.We possess deep expertise in monetizing our digital real-estate whether through advertising, subscriptions, or content sales.
Our products appeal to a wide range of customer segments globally, and we have a strong user base in North America and Europe as well as in emerging markets, including India in particular.30
We topped our record fiscal 2021 in the first quarter, surpassing $6 million in revenue for the first time while reporting revenue growth of 60%, a 43% operating margin, $2.1 million in net income, $3 million in EBITDA, and GAAP EPS growth of 64% to 14 cents.We closed the quarter with over $27 million of cash on our balance 2
sheet and almost no debt.Advertising revenue remained robust as we continue to optimize our ad stack to drive higher prices received for every 1,000 advertising impressions, known as CPMs.
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Subscription revenue and active subscriptions increased 48% and 25%, respectively, versus last year.After a pause last quarter, we were pleased to see subscriptions return to modest growth.46
Given our acquisition of Emojipedia at the beginning of fiscal 2022, in our release today we clarified that monthly active users, or MAU, and average revenue per monthly active user, or ARPMAU, are KPIs that have always referred only to the Zedge mobile app and neither include the Shortz beta nor Emojipedia, the latter of which today is desktop or mobile web only.Note, the underlying data is unchanged from what we have been 3
reporting.
MAU increased 6% with emerging markets up 11%, driven mainly by continued demand in India.Developed markets remained a challenge with MAU declining in the high single digits.Despite this, ARPMAU increased 47% versus last year.60
Now I’d like to update you on the strategic priorities I outlined on our last earnings call.
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• To start with, growing our customer base and improving engagement, particularly in well-developed markets.
During the fiscal first quarter, we began rolling out social and community features starting with giving our users the ability to follow artists they find interesting.We are also continuing to use machine learning algorithms to improve content discovery.As the year unfolds we expect to add more social and 4
community features while also starting to focus on search and user on-boarding.
In addition to these efforts, we are ramping up paid user acquisition campaigns and will continue to expand this effort as long as it proves to be accretive.77
• Next, we continue to invest in the parts of the business that offer optionality.Zedge Premium is a big part of this opportunity.Tomorrow, we expect to start rolling out our NFT offering, called NFTs Made Easy, in the Zedge Premium marketplace for both Android and iOS.Our approach to NFTs allows Zedge Premium artists to create and sell NFTs to our users without being crypto- currency experts.Our users are able to purchase NFTs in the same manner as they have always purchased any item in Zedge Premium, mainly by buying and spending Zedge tokens, our existing virtual currency, 5
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