Q2 2020 Earnings Call
Thank you for holding ladies and gentlemen, you were in line for these edge conference call. At this time, we are still gather industry participants who will get started momentarily. We thank you for your patience enough that you. Please continue to hold.
[music].
Good afternoon, and welcome to that just second quarter 2020 earnings conference call. During management's prepared remarks, all participants will be Anna listen only mode.
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After today's presentation by doctors management there'll be an opportunity to ask questions to ask your question. Please press Star then one on your Touchtone phone.
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In today's presentation Elliot get worse, I, just interim Chief Executive Officer, and Jonathan Reich, such as Chief Financial Officer, and Chief operating officer, well discuss that just financial and operational results for the three month period that ended on January 31st 2020.
Any forward looking statements made during this conference call either in prepared remarks or in the question answer session, whether general or specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those wish a company anticipates.
These risks and uncertainties include but are not limited to specific risks and uncertainties disclosed in their reports it files periodically with the U.S. Securities and Exchange Commission.
I just seems no obligation either chapter any forward looking statements that have been made or may make or to update the factors that may cause actual results to differ from those they forecast.
Please note that does that earnings release is available on the Investor Relations page I was actually website.
The earnings release has also been filed on form 8-K, what does he see.
I would now like to turn the conference over to Mr. Elliot Gilbert.
Thank you operator, thank you all for joining us today.
I know you'd give or interim CEO of as.
Welcome to is that just second quarter fiscal 2020 earnings conference call crop recapping. The three months ending January 31st Twentytwenty. Joining me today is Jonathan Reich, Chief financial and Chief operating Officer.
Who will provide additional insight into the numbers that we reported earlier this afternoon.
I know, there's some people on todays call who are new to this edge likes to take a minute to tell you a little about the company.
Legacy isn't being one of the leading providers imobile personalization content focused on offering consumers a richer ray of high quality wallpapers video wallpapers, Ringtones and notification sounds.
Today, our legacy up Zap.
Zedge wallpapers and Ringtones have surpassed 420 million organic installs that's close to 35 million monthly active users we generate revenue from this up from advertising recently added paid prescriptions and two is that premium a market.
Place, which enables license holders to sell the digital content to our customers are.
Our users based cons consist mostly of Android users and approximately 23% about uses.
Located in well developed economies.
Summer 2019, we completed the rollout new Standalone entertainment focused up shorts, jot stories buys edge, which will help us and extending our presence beyond the world of mobile phone. Please personalization.
Hi, shorts for Biosimilars shorts, low friction stories rendered in the text messaging like format.
You too is an exciting quarter for us a team focused on growing revenue and Lori expenses to continue driving towards our goal of becoming cash flow positive and introducing new products, mainly shorts, we call due to all of this with a smaller workforce, it's great to see our neighbors bear the fruit and it's exciting.
Moving to be positioned to up for new products that extend their offerings beyond phone personalization.
Since our last conference call, we rolled out shorts on iOS. This is the moment momentous Big. This is monument is because we have an offering that is equally viable across both Android and iOS. You first was edge the product evolves well, we will be able to capitalize on the conventional believe the iOS users monetized.
Better than the Android counterparts, we stand to benefit from this untapped upside.
Our vision for shorts calls to the building a rich <unk> echo system centered on short form content.
Well, we launch with a chat stories, we leave the opportunity goes far beyond indeed, we think of shorts as a platform that offers bite size snackable content. Our goal is to provide ubiquity and avail users the content not only us tax, but also is audio impossible video as well.
No we want to offer users the ability to consume the content across a multitude of media.
Oh, my new users should have the option to read listen or watch stories based on what most appeals to them.
We envision a wells are the content is deeply coupled labeling for seamless continuity is the consumption media changes for example, they usually start reading the story and then shift to listening to the story on the same point when they had outside.
Our current focus is ensuring that we can meet the conversion average revenue per year per user on churn targets, we established for shorts beta.
<unk> conversions I, usually that installed the up and then sign up for subscription.
So far we are on track. In addition, we expect to start testing audio this fiscal year.
Viewers to plug published the stories as short podcast, what we call micro caps and make them access to a both with the up as well as major podcasting platforms.
Let me provide you some background about or interest in podcasting.
As you likely know in 2019 was assembled here for the podcasting industry in the U.S. approximately 20.2% of Americans listen to park is on a weekly basis what 2019.
This is consumed six plus hours a week other consuming more content every year explosion in wireless audio devices headsets and smarts because has resulted in a big in ubiquity and accessibility.
There has also been some impressive acquisitions over the past year, Spotify or Pandora Spotify alone purchasing three podcasting companies for an estimated total of $400 million Yeah podcast against Ddos is in its infancy. Its ultimate success is tied to content to that.
And when viewing the podcasting space the todays content prism shortfall in pockets focus on news sports and weather.
Sure form storytelling hasn't yet emerged as a significant contact vertical in the world of podcasting.
This is unlike video think snap pick Taco should logically be which has experience explosive growth.
Thesis is that the short form podcasts and will become a powerful media, but we want to claim a leadership position in this evolving format.
I believe that shorts gives us an opportunity to start cutting our teeth in this space opening the doors to a whole set of uses that may not discover us if we limit short strictly to readers as I said. This is in there we believe can be accretive it accretive and beneficial in developing the shorts Echo system looks.
Oh, just sharing our success with you.
Now I'm going to turn the call over to Johnson Rice will provide an overview of the quarter's financial results. Thank you.
Thank you only my remarks today will focus on our key operational and financial results for the second quarter of our fiscal year Twentytwenty for a comprehensive in detailed discussion of our results. Please read our earnings release issued earlier today, and our form 10-Q, which we expect.
With the FCC next week.
Following my comments, we will open the call to any questions that you may have.
Throughout my remarks, the second quarter refers to November 2019 through January 2020, and comparisons are to the corresponding period in 2018 through 2019, or our first quarter, which was August three two okay.
Over 2019.
Monthly active users. We're now that is the number of unique users that opened during last three days in the quarter decreased.
6.5% to 34.3 million during January Twentytwenty from 36.7 million in the corresponding period a year ago.
As you recall in late September 2019, Google suspended our App from the Google play store for three days as a result of buggy code in a standard technology integration with one of our third party advertising partners.
When we were made aware of the issue we remove these pending code and the suspension was quick we lifted however, during the suspension Google sense, a notification to all users that had the problematic version of the App on their phone recommending that the on install it.
This accelerated the drop of 20.9% in math in well developed markets.
Q2 fiscal 2019.
Despite the action by Google now in emerging markets increased by 2.6% in the same comparative periods.
Furthermore, on a sequential quarter basis, now grew by 15.5% globally, including 12.4% growth in well developed markets and 17% in emerging markets.
The sequential increase in May I was likely positively impacted by seasonal growth.
Marketing initiatives and users that reinstall the app following our being read emitted into Google play following the suspension.
Total revenue in the second quarter increased 2.8% and 30.1% to $2.6 million compared to the you're going to corridor and the previous sequential quarter respectively.
The sequential increase was a result of several factors, including mabrouk across all regions.
Growth in paid subscriptions continued promotion of Zedge premium.
Further optimizations in our AD stack and the benefit of strong AD spend during the holiday season.
I'd be remiss, if I didn't come in the team for doing an excellent job in delivering these results, especially in light of the adverse impact of the Google play suspension, which hit us at the beginning of the core your efforts aren't going I noticed kudos to you.
Zedge premiums gross transaction volume or GTV that is the total sales volume transacted through the platform was $190000 in Q2 compared to $118000, a year ago and $192000 last quarter, although GTB.
By 60% on a year over year basis. It was basically flat quarter over quarter, we are likely going to see a short to mid term declining GTV and associated stage premium revenue due to the recent redesign of our accident age which prioritizes.
Shorts promotion and Zedge premium the redesign mostly made up for the GTB impact by enabling better optimization of our advertising inventory and associated revenue.
After we complete redesign of our home page later this year, we expect to invest in brings into premium.
Paid subscriptions also grew materially surpassing 300000 subscribers at the end of the corner.
An increase of 51% on a sequential quarter basis.
Paid subscriptions have generated cumulative gross revenue of $1.5 million since their introduction in January 2019.
As you recall when a freemium user converts into a paid subscriber Google takes a 30% cut which shows up in S. Fiennes. However, if the subscriber reuse their subscription from an after the 13th month, Google lowers its C to 15%.
Overall average revenue per monthly active user generated from our apps or are now increased 21% to 2.62 cents year over year and by 24.8% sequentially.
The improvement is attributable to the actions we've taken to further optimize our AD stack better monetize users in emerging markets and the growth.
In paid subscriptions.
Direct cost of revenues in Q2 was $308000 or 11.6% of revenue representing a 6.4% decrease from $328000, which represented 12.8 presented revenue in the year ago quarter and 16.2%.
Revenue in a previous sequential quarter.
We expect absolute direct caused revenue to decline during the remainder of this year.
SP in a in the second quarter was $1.9 million, a 12.4% decrease compared to the year ago quarter, and a 2.6% decrease compared to the prior sequential quarter did decrease primarily relates to lower compensation costs and discretionary spend offset by.
Increases in the Google fee on paid subscriptions severance payments and shorts content acquisition expense net income in the second quarter was $100000 compared to losses of $240000 in a year ago period and 800 in $1000.
Previous sequential quarter. This was the first quarter with positive net income since Q1 fiscal 2017, reversing 12 consecutive quarterly net losses.
Net income per share improved to one said from losses of two cents, an eight cents and the year ago in prior quarters, respectively.
At January 31st we reported $2.3 million in cash and cash equivalents compared to $2.7 million a year earlier and $1.7 million at October 31st.
2090, 835% increase.
$593000.
Sequentially quarter increase $318000 is primarily attributable to the increase in revenue and decrease in SGN, a net investment in software and technology development costs of $204000. We added another $1.9 million in pro.
Seats from our registered direct offering in early February.
Zedge has no outstanding debt, we have access to a revolving credit facility of up to $2.5 million from Western Alliance Bank. If needed in conclusion Q2 was a good quarter for Zedge, we continue making progress in our goal of becoming cash flow positive in fiscal Twentytwenty major.
He performance indicators improved including Mal revenue and SGN day, we completed the launch of the shorts beta across Android and iOS, we have a formidable set of goals for the remainder of the year, including building out the shorts Echo system described by Elliot continuing our investment in driving.
Subscriptions in our flagship App better optimizing our AD stack further reducing our costs with improved infrastructure and exploring new product introductions that extend our relevance beyond the world in mobile personalization.
No back to you operator for today [laughter].
Thank you we will now begin the question answer session you weigh press Star and then one on your Touchtone phone using our speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press one.
At this time, we will pause momentarily to assemble our roster.
Well go first to you I name with Edison Group.
Yes, Hi, how are you first off congratulations on the 1% earnings per share I think that's great you guys doing a great job.
My main question is in regards to the monthly active users or just.
All the Adama that you guys had so far.
What steps are you taking to do a better penetration and converting them into paying.
Subscribers, because it's still pretty low it's like last I calculate almost 1% and it's kind of trickle down there. Thank you.
Hi, you I'm, sorry, Jonathan Thanks, so much.
Yes, so we have set of initiatives to.
Continue to improve the take rate.
And.
Have a premium users convert into paying users.
And we have.
Actually improved that overall rate.
But if you take.
Gaming as a comparable.
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The general rule of thumb is 90, 790% of your users are going to be free users with as much smaller percent either subscribing are making in app purchases.
The user dynamic around.
The product that we offer is clearly different than gaming, but.
As we.
We continue to grow that business. There are value adds that we are testing in terms of potentially bundling content offering coins and.
And things of that short and one we find that you know the triggers that.
Help improve conversion rates.
We will you know product ties those and make available to will all perspective subscribers, having said all of that.
There are set of other activities going around our that we're investing in.
Our to try to optimize the return from these customers we have various price sensitivity testing that we have undertaken.
Said in.
My earlier comments when users.
We knew there subscription.
In the 13th month, whether it be.
For a monthly user or an annual user we retain.
A greater portion of revenue because Google at that point only takes 15%.
As opposed to the 30%. So we have a whole set of activities that will hopefully enable us to see to it that.
More than you know the 40% that we're experiencing today, well actually renew and remain with us or 13 months and <unk> and beyond.
I see okay, I'm going ask another question.
Sure.
Oh, I'm, a really big fan of the close Shing platform. The thing that you guys have done a nibbles artist to create their own content that's sort of.
Put it on the store the online store that you guys have for purchase by other people.
Has there been anymore, maybe you mentioned I didn't hear but has there been any more color on that maybe has grown at all because I think that's an amazing.
Really amazing thing that you guys have.
Thanks, so much so as stated earlier on a year over year basis, we have seen substantial growth quarter over quarter basis, we made a call to dedicate.
More of our homepage inventory to promote shorts.
And.
Simultaneously we have a.
Major.
Creative underway to redo the entire design of our homepage.
When that project is completed and there are some contingencies there based on some backend technology and migration and so on and so forth, but once that process has been completed.
Later this year than we expect to see a continued growth in nahs edge premium. So it's a short term hit deliberately so in order to avail, what we expect to be a longer term benefits for the company and we.
We are aligned we think that there is.
Great opportunity untapped opportunity that we can capitalize on with a continued investment in inject screen.
I see so the focus is gonna be mostly on shorts and the near future rather than publishing platform the online sort of thing.
We are prioritizing the use of our marketing inventory for shorts at this point.
And.
In parallel with that.
We have a comprehensive redesign of our homepage.
Just to give you some more detail around that currently our homepage.
Separates.
Our premium content from the rest of the content in the App.
When we're done with that when we're done with this.
Redesign, we're going to see to it.
Hi, users go into the App and their availed of all content from the on page directly.
As opposed to having to Peel off.
And enter a particular.
Portion of the App, which either houses the premium content or the other content accordingly.
We think that that's a more logical our way of presenting the content and it also allows for us to do some pretty interesting things when it comes to serving our content.
On a daily users content that is relevant to them independent as to whether that content is premium content or.
Non premium content.
Got it and.
My last question I wanted us I hope I'm, not taking that Mike too much is.
A little bit of kind of what's going on the market with Corona and everything.
Is there a specific play her cards to judge for what's going on maybe people might be using their phones more I don't know I just wanted to see if you guys have given any thought.
Sure absolutely given a lot of thought so let me start by saying our you know priority is to make sure do with that.
Our workforce is ER.
Protected we are instituting a work from home policy.
It.
Takes place starting this Friday, we want to make sure that we can afford our employees the ability to remain healthy to the best of our ability having said that from a commercial perspective, it's too early to tell what the outcome and impact does that will be on the upside.
Just by taking a as a proxy.
Times, when there were hurricanes or other natural disasters.
We would typically see an uptick in traffic.
As people were confined to their homes and didn't have the opportunity and going out as much.
And that translates into a higher number monthly active users which is.
Critical for our business on the flip side, it's unclear as to what happens in the.
Advertising portion of the business.
Clearly any businesses that are.
Linked to travel are not advertising however.
Performance advertisers like mobile gaming companies.
It is reasonable to believe that they are actually going to.
Spend more money at this point because people have so to speak more.
Free time, all their hands.
And.
That actually.
May be a very very good outcome for us.
As these game advertisers are performance advertisers overall covered our inventory and our customer base.
I think that over the course the next couple of weeks, we'll have more details and we'll be able to talk about this.
When we announce our Q3 results accordingly.
Sounds good thank you very much.
Thank you.
Once again at a star one for any questions or comments from him next to Investor Daryls Huh.
Hi, congratulations on returned to profitability.
Good question actually couple of questions regarding shorts.
First I'd like to know about the conversion rate from beta if you can give me a percent that'd be great. If you could just give me a little feel on how satisfied the world right.
Oh, okay.
Okay sure. So we're not.
At the point, where we're going to be sharing those conversion rates, but suffice it to say that we had several targets.
Around conversion rates around average revenue per user and alike.
And Directionally, we have either.
Beat those numbers or are on a course to meet those numbers accordingly and.
If you are engaging with the app regularly you'll see that we're making a lot of changes on a incremental basis and each of those changes we're measuring in terms of its impact overall things are headed in the right direction I also want to.
Highlight a critical item, which is shorts is equally viable across both Android and iOS.
As stated earlier this is really like the first time, where we've had an app, which is equal the Bible across both ACO systems and.
We.
Our excited by where this business can go based upon accessibility to.
Both eco systems accordingly.
Okay here is there a Google fee associated with this product through.
Yes, so any user that subscribes Google also.
We'll take a 30% caught and that's not unique to do all that is the operational model for the.
The dual play store and the.
Apple App store.
So typically for digital purchases, they take a 30% cod as.
Whatever the gross amount is that users pay.
Okay I want to address the SGN a issue here. That's a you appear to have done a pretty good job and getting that under control.
I wanted to know just how much more efficiency could be squeezed out and I kinda have my eye on that Google.
Seems to be good thing you might have.
Let's say more under control and then other aspects of it but yeah, you give me some color on the issue.
Sure so.
Generally speaking about SGN A. I would you know categorize as few nay savings and to a couple of buckets. One is a head count as you know we've gone through a restructuring.
And those numbers are ones, which we are benefiting from today.
Second relates to ER.
Infrastructure and technology, and we have and we'll continue to make changes there, which will inure to our benefit we've actually got some technology negating the need for some third party services. We have as you know over the course of the last several.
Quarters.
Have a migrated to a cloud infrastructure platform and continue to.
Find ways in which we can be more efficient there and in lower our cost structure.
The third bucket as it relates to Google play and the.
Apple I tunes store App store.
And again, that's sort of set other than.
I can tell her that but that is set at 30% when users enter their 13th month of.
Of engagements with us if they are paying subscriber that rate falls from 30% down to 15%. We're now at the very early phases of that with respect to our subscription based service, which we launched in January of 2019 and.
What we're seeing is give or take our renewal rates. Thus far are in the 40% plus bracket.
Meaning that we're squeezing and an incremental 15% added those users which.
It's clearly you know very valuable to us.
We don't really have a negotiation our inability to negotiate that it would Google or with Apple that standard, but where we are investing our time and effort is in order to do everything that we can in order to see to it that users renewing that 13th month occur.
Morning.
Okay. A final question, our I know you're looking to be cash flow positive for the year should I be expecting some lumpiness in here is there some seasonality I should be focusing on a joke by numbers.
Sure there is seasonality so our revenue base is still weighted towards advertising.
And.
Typically that means that our Q2 is the strongest quarter the year since it overlaps with the end of year holiday span.
And that you know Q3 being comparable to a you know the first quarter the calendar year more or less.
He is one where.
Without advertising or with lesser advertising spend.
There is the seasonal impact to us having said all that we have undertaken several.
Initiatives in order to.
Try to minimize that seasonal impact such as the ongoing.
Development in and investment in our subscription based business.
And.
The seasonality there is a from what we see today more muted.
And also.
Unlocking ways to better monetize.
Certain customer groups that.
Enable us to generate more revenue such as.
Customers in the.
Emerging markets and.
Finally.
We've also invested.
A considerable amount of time over the course of the last six months and.
Optimizing our ad stack.
And ultimately generating higher margin revenue.
From.
The investment that we've made in that and that continues to hold off and.
We believe that as the year unfolds that.
This will continue to Oh.
Be clear through the numbers of course, I can't tell you what happens.
With clarity because of krona virus, but or.
We're doing everything in that capacity as well in order to see to it that we still achieve our goal of being cash flow positive.
In fiscal year Twentytwenty.
I, just let me be clearer.
No the goal being cash flow positive is that.
Over the course of the year, we are on a.
We are on a path that we enter into recurring.
Corridors mountain and year, so on and so forth of being cash flow positive I can't tell you that we will necessarily be cash flow positive on an annual basis, but the goal is that we are in territory, where we continue to be cash flow positive.
As we.
I'm pleased to fiscal year.
Okay. Thank you very much appreciate your time.
Thank you.
Well move next to Joe Boskovich, an old west.
Yeah, Hi, Jonathan Haley It are you doing.
Doing good thank you Joe.
Good.
So I.
I see that so the subscribers grew.
From 225000 that 300000.
First the last quarter is that 300000 subscribers is that that only use edge premium subscribers shorts is not included in that.
It's it's a subscription subscribers and that does not include shorts in it that's correct.
Okay. So these are and these are these are the.
Zedge.
While Pete wallpaper and ring tone.
Paying subscribers.
So going forward and it sounds like you're not ready to disclose a number yet but at some point you will.
Reveal monthly.
Subscribers and you'll break that out between Zedge premium subscribers and shorts subscribers that correct.
I think that you know that's what we're leaning towards.
And let me just you know.
The.
Frame this a little bit so.
We have shorts out it is a beta we're investing a lot in order to make sure when I say investing a lot time resources and so on and so forth in order to make sure that the product is.
Really optimized and that we can justify to ourselves and secure that board support to continue to invest in this and grow this as a business.
And.
To date those numbers like I said either are on track or surpassing what our initial estimates were.
And in parallel with that I'm looking at different ways in which we can filled out the ecosystem that.
It had described.
Being that the business is or the business spoke it is much different than.
The flagship.
Personalization app.
I tend to believe that you know we will begin to.
Our provide information and detail around what's happening in short specifically, but we're just not their wallets in beta we think that it's a most likely not a.
Useful.
Set of data to to.
Provide to shareholders because we haven't reached that comfort level, where we're saying hey, this is absolutely going to be commercialized.
Okay.
And then I guess this question is kinda twofold.
You know on the shorts App when you go to the you know the Google play store the idea in stores and.
You can see it there's been quite a few downloads already and when you read.
User feedback.
It seems kind of unanimous that the users loves the content and the only pushed back is is you know the pricing and.
I believe at first you just had one annual subscription pricing and I think you mentioned that you'd be testing.
Weekly pricing monthly pricing pricing the finished a specific story.
Can you comment more on that.
Sure.
So when we launched the beta we took a a first pass in terms of pricing and or what sort of skews with me to we would offer sitting out of the starting game, we offered a weekly monthly and annual skew.
And Oh, we are spending a lot of time really in terms of trying to understand what the right business model is.
Meaning it could be not only.
Offering subscription.
But as you alluded to maybe it's in App purchases, meaning as opposed to subscribing on a weekly monthly or annual basis.
It could be a question of buying a series.
Or.
You know do we do some do we offer some sort of a freemium model, where we and expand.
The universe of users that begin to enter phase and utilize the ASP on a regular basis with the goal of ultimately optimizing around.
Conversion rate and having those users convert into paying users and then finally, we have a lot of elasticity testing going on with respect to.
What is the right pricing model.
And what skews do we prioritize.
Could very well be that we don't offer all three skews.
Based upon that myriad of testing that is underway.
So still a little bit early for us to have absolute clarity about this but suffice it to say that our marketing and product is our spending a lot of time gets their hands around what's the right business model in order to generate the best.
You know ROI.
Okay.
Just a couple more questions.
In terms of.
Shorts, and what you're doing I know that short form content.
I guess, specifically chat stories.
Yeah.
There are others doing that and it seems that some bad massive success.
And I'm sure that you're kind of maybe using some of the blueprint for what you could accomplish can you I guess talk more about the success that others have had in this kind of nice space and.
I guess.
What you envision the you know the upside or where that potentially can go over the you know the next couple of months in years.
Sure.
So last about.
You know.
The success that other providers are experiencing in this space.
Unfortunately, any the competition that we know of is a privately held so I can't really speak to you know details about their numbers, but I can tell you that oh.
What we're trying to build is this ubiquitous echo system at.
Elliott had had.
Talked about in his comments and he is one as you said is the text based stories that have both.
Reasonable and visual images.
And our delivered in this.
Text message type of format, but I think that the way to look at it more generically as were building an ecosystem around bites bite size Snackable short form content.
Today, we're availing that as a chat story could be that.
Down the road that it will not only be chap stories, but it will be just short stories that you would pick up a short story.
And we're going to be into a test audio and we expect that we will avail that audio both in app as well as syndicated cross third party platforms as an aside that may also open up the door for.
New revenue streams, whether be from advertising sponsorship and we also view that syndication and as a user acquisition strategy such that when you begin to listen to this content they engage with the content. They like the content that they will be inclined to or.
Go to shorts and download the App and.
Then if you push this out I don't know end of 2020, beginning or 2021.
We can envision that we have you all this content as a short form video as well.
And again that provides for ubiquity, certainly we know and all the short short form video, whether it be a snap chat or tick tock or potentially even quickly.
That that has been a fast paced sort of exponential growth market, where users really like to have that bite size content available to them.
And.
You know that is that is certainly on the radar screen for us in terms of.
Ah going out and getting our hands around when isn't the right time to to begin to.
Include that in the mix and what's the right way to do that accordingly.
Okay, Great and then I guess, just last question going back to that premium.
I noticed that on on the the premium that the App as promoted a few popular network shows.
Which makes me wonder our studio seem that isn't effective allocation of the of much of its marketing dollars.
Yes, so I think that you've seen in the past then it's certainly been the case, where Hollywood you know, whether it's big screen or screaming entities have.
Use the Zedge platform is an immersive way in order to.
Promote their contacts and.
Oh really build a fan base around that particular content we.
Continue to look for opportunities there, although I would say that more generally we have scaled back on that to some extent because what we found generally speaking in the world Hollywood is that.
These are not pipeline type of deals, but rather they are individual deals.
So on an opportunistic basis.
We do pursue them.
In the case of.
Net flicks and the case of streaming we're beginning to test the waters as to whether or not they follow the same model is Hollywood on the big screen side or whether or not we can actually build a more integrated a distribution.
Platform, where we would have a pipeline of content.
Associated you know what their releases and that's good that's a work in progress I don't have clarity as to where that falls out at this point.
Great. Thank you congratulations on.
A profitable quarter.
Thank you Joe.
<unk>.
Well go next to Investor Neal Shinsky Your line is open.
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Hi, gentlemen, thank you so much for but instead, a wonderful quarter and Oh, we look forward to more like it.
In a different this assertion <unk> growth was really encouraging do you have any color on what net growth looks like and subscriptions.
Once once we get sheet once he gets it just trying to see true.
I'm, sorry, once we get to what Neil.
Starting to just starting to trend. So January you started to turn out.
Allscripts and you're talking about 40% ignore it obviously at 60% turn right you know at what what do you think about net growth in subscriptions once that starts happening in scale.
Sure so, let's bifurcate between a new subscribers and renewals.
And we are still seeing very healthy growth in terms of.
The new subscribers.
We think that you know there are two classes of of subscribers. This product to one is more impulse buy.
That for a very very effective price point.
They can.
Gain the benefits of the subscription model and then let's call it more long term.
Hi per user is if you will that feel that now's the time, let's take the plot.
And we treat and how we market to those users is different than what we're trying to do in terms of.
The renewals, where there's a totally different marketing message.
And it's focused around benefits that we're bringing to the table.
And then there are things such as a you know credit card declines and what do we do in order to get people to update their credit cards. So that we can see more users more users for new and things of that swartz at this point.
We are not it point, yet where were.
Providing them the sort of projection that you're looking for but I think that.
From everything that I've seen up until now that we are in a place and again I can't speak to Corona virus, but.
Prior to the break out of the virus that we were still seeing nice healthy gross with respect to the first time purchasers and as I said, you know with respect to the renewals.
We.
Our pretty pleased that had minimum we're seeing a 40%.
Plus renewal rate and now we're really in the midst of trying to.
Increase that number.
Based upon a whole set of marketing initiatives.
Oh, Okay. Thank you Sir.
At the door.
I'm sorry.
Thank you so keep up the good work.
Thank you Neil great to be sure.
And with no other questions holding this will conclude today's question and answer session and the conference call. We thank you for attending today's presentation. You may now disconnect.
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