Q3 2024 Zedge Inc Earnings Call
Operator: Good afternoon. Welcome to Zedge's earnings conference call for the third fiscal quarter 2024 results. During management's prepared remarks, all participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation by Zedge's management, there will be an opportunity to ask questions. To ask a question, please press star, then 1 on your touchtone phone. To withdraw your question, please press star 2. I will now turn the call over to Brian Siegel.
Good afternoon, welcome to <unk> earnings Conference call for the third fiscal quarter 2024 results.
<unk> management: During managements prepared remarks, all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation by <unk> management, there will be an opportunity to ask questions to ask a question. Please press Star then one on your Touchtone phone.
Brian: To withdraw your question. Please press star two I will now turn the call over to Brian to go.
Brian S. Siegel: Thank you, Operator. In today's presentation, Jonathan Reich, Zedge's Chief Executive Officer, and Yi Tsai, Zedge's Chief Financial Officer, will discuss Zedge's financial and operating results that were reported today. Any forward-looking statements made during this conference call, during the prepared remarks, or in the question and answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results in the future to differ materially from those discussed on today's call.
Brian: Thank you operator, and today's presentation, Jonathan Reich, <unk>, Chief Executive Officer, you site, such as Chief Financial Officer will discuss <unk> financial and operating results that were reported today.
Jonathan Reich: Forward looking statements made during this conference call during the 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 in the future to differ materially from those discussed on today's call. These.
Jonathan Reich: These risks and uncertainties include but are not limited to specific risks and uncertainties disclosed in the reports because edge parent periodically files with the SEC.
Speaker Change: Seems no obligation to update any forward looking statements or to update the factors that may cause actual results to differ materially from those that they forecast.
Speaker Change: Please note that our earnings release is available on the Investor Relations page on <unk> website. The earnings release has also been filed on form 8-K, with the SEC I would like to turn the call over to Jonathan.
Brian S. Siegel: These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in the reports Zedge periodically files with the SEC. Zedge assumes no obligation to update any forward-looking statements or to update the factors that may cause actual results to differ materially from those that it forecasts. Please note that our earnings release is available on the Investor Relations page on the Zedge website. The earnings release has also been filed on Form 8K with the SEC. I would like to turn the call over to Jonathan.
Jonathan Reich: Thank you, Brian and thank you all for joining US today I will start by briefly reviewing our third quarter results, which continued to show the positive impact of our investments in fiscal year 'twenty three to set their job for sustainable long term growth. After my remarks, he will provide a deeper.
Jonathan Reich: Thank you, Brian, and thank you all for joining us today. I will start by briefly reviewing our third quarter results, which continue to show the positive impact of our investments in fiscal year 23 to set Zedge up for sustainable long-term growth. After my remarks, Yi will provide a deeper dive into the quarter. Q3 revenue increased 14% from last year, as we continued managing the geopolitical, macroeconomic, and industry-specific challenges spanning the landscape.
Jonathan Reich: The Zedge Marketplace was the driver of this performance, with ad revenue up 20% from last year and ZedgePlus, our Marketplace subscription offering, boosting revenue by 35%, including the first jump in net subscriber gains in over seven quarters. Additionally, Zedge Premium's GTV, or Gross Transaction Value, was up 44%, primarily driven by improvements to content and monetization. These factors resulted in average revenue per monthly active user, or ARPMAO, jumping 39% to a record 7.4%.
Speaker Change: For dive into the quarter.
Speaker Change: Q3 revenue increased 14% from last year as we continued managing the geopolitical macroeconomic and industry specific challenges spanning the landscape.
Ed: As Ed marketplace was the driver of this performance with AD revenue up 20% from last year and that plus our marketplace subscription offering boosting revenue up by 35%, including the first jump in net subscriber gains at over seven quarters.
Speaker Change: Additionally, there's premiums G television or gross transaction value was up 44%, primarily driven by improvements to content and monetization.
Speaker Change: Factors resulted in the average revenue per monthly active user or arc Mayo jumping, 39% to a record $7.04.
Jonathan Reich: Let's turn to our strategic priorities for the fourth quarter and the beginning of fiscal 2025. As you recall, one of our goals for this year was to build a full-stack marketing team. We've achieved much of our goal as the core team now has dedicated SEO, ASO, user acquisition, and creative resources that are focused on unlocking growth. Going into fiscal 25, we expect to address influencer marketing and also invest in product marketing. Furthermore, the additions and upgrades that we've made to our product development organization are resulting in innovation and product diversification, while also driving cost deficiencies that we expect to propel revenue and profit growth in the years to come. Take generative AI.
Speaker Change: Let's turn to our strategic priorities for the fourth quarter and the beginning of fiscal 'twenty 'twenty five as you recall one of our goals for this year was to build a full stack marketing team.
Speaker Change: We've achieved much of our goal as the core team now has a dedicated S. T O.
Speaker Change: User acquisition and creative resources that are focused on unlocking growth going into fiscal 'twenty five we expect to address influencer marketing and also invest in product marketing. Furthermore, the additions and upgrades that we've made to our product development organization our reserve.
Speaker Change: Nothing in innovation and product diversification, while also driving cost efficiencies that we expect to propel revenue and profit growth in the years to come.
Jonathan Reich: We introduced Paint in 2023, and since January 2024 alone, our users have created close to 14 million wallpapers. Paint led to the development of a stand-alone Gen AI creation app, Wishcraft, which is currently in beta with select invited users.
Speaker Change: Take generative AI, we introduced <unk> in 2023 and since January 'twenty 'twenty four alone. Our users have created close to 14 million wallpapers paint led to the development of a standalone Gen AI creation App.
Speaker Change: Witchcraft, which is currently in beta with select invited users. Additionally, we introduced the print on demand capability, enabling AI creators that prints their art on home decor, Ts hoodies and alike.
Jonathan Reich: Additionally, we introduced a print-on-demand capability, enabling AI creators to print their art on home decor, tees, hoodies, and the like. We are also in the midst of expanding Zedge Marketplace's AI capabilities, which will provide users with fun, exciting, and easy ways to transform themselves into creators beyond the app itself, so that users can apply the same techniques to items from their personal photo library. At GuruShots, we forked the game's code base, enabling us to inexpensively develop AI Artmaster, a hybrid casual game that remains in soft launch while we focus on returning GuruShots to growth.
Speaker Change: We are also in the midst of expanding zich marketplaces, AI capabilities, which.
Speaker Change: Which will provide users with fun exciting and easy ways to transform themselves into creators beyond the app itself. So that users can apply the same techniques to items from their personal photo libraries.
Speaker Change: Jewelry shops, we for the game's codebase, enabling us to inexpensively developed AI art Master a hybrid casual game that remains in soft launch, while we focus on returning garou shots to grip. These.
Jonathan Reich: These initiatives are aside from the operational benefits that we are realizing by embedding AI into many aspects of our operations, including marketing, coding, and analysis. Emojipedia didn't perform as well as in past quarters, which we primarily attribute to an issue relating to the website redesign not yielding the outcome we expected. After identifying the issue, we promptly remedied it.
Speaker Change: These initiatives are aside from the operational benefits that we are realizing by embedding AI into many aspects of our operations, including marketing coding and analysis emergent PDR didn't perform as well as in past quarters, which we primarily attribute to an issue relating to.
The website redesign not yielding the outcome we expected.
Speaker Change: After identifying the issue, we probably remedy dis.
Jonathan Reich: In addition, we are looking forward to releasing several new exciting features ahead of this year's celebration of World Emoji Day on July 17. Moving to Gurusha, where the mandate is to unleash the growth that was core to our investment thesis at the time of the acquisition. As previously reported, our upgraded team is heavily focused on feature development, which hadn't received the attention it deserved since the acquisition. The updated product roadmap is full of innovative new features designed to drive 10-30% revenue growth that successful new feature intros delivered in the past by making GuruShots more accessible to a broader audience.
Speaker Change: In addition, we are looking forward to releasing several new exciting features ahead of this year's celebration of World Emoji day.
On July 17th move.
Speaker Change: Moving to go to a shop, where the mandate is to unleash the growth that was core to our investment thesis at the time of the acquisition as previously reported our upgraded team is heavily focused on future development, which hadn't received the attention it deserved since the acquisition the updated product roadmap.
Speaker Change: His full of innovative new features designed to drive 10% to 30% revenue growth that successful new feature intro is delivered in the past by making guru shots more accessible to a broader audience. Additionally, by innovating and tying the marketing dollars to new features we are being more efficient.
Jonathan Reich: Additionally, by innovating and tying marketing dollars to new features, we are being more efficient with our ad spend. Currently, we rolled out a new onboarding experience to 25% of our Android audience, which is already monetizing better than the legacy experience. While it is too early to know if this is scalable or sustainable over the mid and long term, it does give reason for optimism. By creating an outstanding onboarding experience, we enable newbies to immerse themselves in gameplay in a seamless, intuitive, and simplified manner. Furthermore, we have capped the number of participants in each onboarding challenge in order to increase a player's chances of winning.
Speaker Change: With AD spend currently we rolled out a new onboarding experience to 25% of our Android audience, which is already monetizing better than the legacy experience. While it is too early to know if this is a scalable or sustainable over the mid and long term it does give <unk>.
Speaker Change: Isn't for optimism.
Speaker Change: By creating an outstanding Onboarding experience, we enable newbies to immerse themselves in game play and a seamless intuitive and simplified manner.
Furthermore, we have kept the number of participants in each Onboarding challenge in order to increase a player's chances of winning.
Jonathan Reich: The funnel will introduce more features and complexity as the player progresses in the game, enabling skill-based user segmentation, which ultimately creates a more fun experience for everyone. We are also poised to overhaul the game's economy. The release of a new multi-currency coin-based economy is imminent, and we believe that it will be crucial in adding and retaining new users by opening up significant opportunities for more players to earn and spend in-game
Speaker Change: The funnel will introduce more features and complexity as the player progresses in the game, enabling skill based user segmentation, which ultimately creates a more fun experience for everyone.
Speaker Change: We are also poised to overhaul the game's economy.
Speaker Change: The release of a new multi currency coin based economy is imminent and we believe that it will be crucial in adding and retaining new users by opening up significant opportunities for more players to earn and spend in game resources.
Jonathan Reich: By enabling more value adds for players, we can manage resource consumption to optimize coin purchases further while making the game even more compelling and fun. While our focus is on attracting new users, switching to a new economy will potentially introduce some volatility from existing players, who may be averse to change. Despite falling short of the initial expectations we had for Guru Shots at the time of the acquisition, Guru Shots remains the leading photo competition game available on the market, with more than 170 million photos that have been in active competition. Photography in general continues growing exponentially due to the ubiquity of mobile phones, and with the advent of AI enhancement tools, high-quality pictures are within everyone's reach.
Speaker Change: By enabling more value adds for players, we can manage resource consumption to optimize quaint purchases further while making the game, even more captivating and spot.
While our focus is on attracting new users switching to a new economy will potentially introduce some volatility from existing players who may be averse to change.
Speaker Change: Despite falling short of the initial expectations, we had for Guru shots at the time of the acquisition Guru shots remains the leading photo competition game available on the market with more than 170 million photos that have been in active guru shot competitions.
Speaker Change: However fee in general continues growing exponentially due to the ubiquity of mobile phones and with the advent of AI enhancement tools high quality pictures are within everyone's reach.
Jonathan Reich: With all the innovation opportunities in the pipeline, I believe we are approaching a turning point for this business, and I look forward to sharing details as they unfold in Q4 and in fiscal 2025. In summary, I believe we are on the right path to accelerate revenue growth and profits, and we are just beginning to realize the potential in each of our products. When combined with our stock flow valuation and our active buyback, I believe we are well positioned to deliver shareholder value in the quarters and years to come. Now, I would like to turn the call over to Yi, who will review our financial results.
Speaker Change: With all the innovation opportunities in the pipeline I believe we are approaching a turning point for this business and I look forward to sharing details as they unfold in Q4 and in fiscal 'twenty 'twenty five in summary, I believe we are on the right path to accelerate revenue growth and profits.
Speaker Change: And we are just beginning to realize the potential in each of our products when combined with our stocks low valuation and our active buyback I believe we are well positioned to deliver shareholder value in the quarters and years to come now I would like to turn the call over to E who will.
E: To review our financial results.
Yi Tsai: Thank you, Jonathan. Total revenue in the third quarter was $7.7 million, up 14% from last year. This growth comes despite decreases in mail, which came in at $27.7 million for the month of April. Digital goods and services, which encompasses revenue from Gurusha, came in at $0.9 million, down 20% from last year. Google Shot's revenue continues to be negatively impacted by Apple's AT&T framework, macroeconomic issues, and geopolitical unrest.
E: Thank you Jonathan total revenue in the third quarter was $7.7 million up 14% from last year.
E: This growth comes despite decreases in now.
E: Which came in at 27.7 million for the month of April.
E: Digital goods and services, which encompasses revenue from Guru Russia.
Speaker Change: Came in at $9 million.
Speaker Change: Around 20% from last year.
Speaker Change: Ghoulish as revenue continues to be negatively impacted by outflows a T T frameworks Matt.
Yi Tsai: Substitution revenue was up 35% versus last year. This matrix was upped sequentially for the full 3 quarters. As our net active subscriber train continues to improve, and our higher value iOS subscription and value-added Zedge Plus offering for Android replace lower cost legacy subscription, which only removes air.
Speaker Change: The macroeconomic issues and geopolitical unrest.
Speaker Change: Subscription revenue was up 35% versus last year.
Speaker Change: This metric was up sequentially for the fourth straight quarter.
Speaker Change: I saw a net active subscribers train continue to improve.
Speaker Change: In our higher value of Ireland as a person and that I had is that plus offering tour and jewelry.
Speaker Change: Replace lower cost legacy subscription.
Speaker Change: Which only removed ads.
Yi Tsai: Zedge Premium's GTV, which came in at a record $590,000, grew 45% from last year. Additionally, our mile was a record 7.4 cents, up 40% year over year, reflecting stability in air pricing and the positive impact of our new iOS and Android subscription. Cost of revenue declined by 9% and was 5.9% of revenue. HG&A increased by 35% to $6.8 million. This increase was driven mainly by marketing expenses related to an increase in paid user acquisition, which is helping to drive growth.
Speaker Change: That's premiums JV, which came in at a record 590000 dollar curve, 45% from last year.
Speaker Change: And now with a record seven 4% up 40% year over year, reflecting stability in our pricing and a positive impact of our new well adds an Android separations.
Speaker Change: Cost of revenue declined by 9% and was five 9% of revenue SG&A increased by 35% to 6.8 million. This increase was driven mainly by marketing expenses related to an increase in paid user acquisition.
Speaker Change: Which is helping to drive growth.
Yi Tsai: As we scale, we expect to see operating leverage rebound. Additionally, the higher marketing expense reflects the growth in subscription revenue, which means we receive cash up front, but also pay a higher upfront fee to Google and Apple. Now, revenue on this subscription is recognized over the life of this subscription, but at a 100% operating margin.
Speaker Change: As we scale and expect to see operating leverage rebound.
Speaker Change: Additionally, the higher marketing expense reflect the growth in subscription revenue, which mean would receive cash upfront.
Speaker Change: But also pay a higher upfront fee to Google and Apple.
Speaker Change: None of the revenue on this substation is recognized over the life of the separation, but at 100% operating margin.
Yi Tsai: Job loss from operation was $0.1 million versus a loss from operation of $8.4 million last year. Last year's loss included an 8.7% non-cash accounting write-down related to acquisition. The gap in income and EPS was $0.1 million and 1 cent, versus a loss and loss per share of $7.7 million and $0.55, respectively, in the prior year. Last year's loss reflected the tax-adjusted non-cash accounting rate-off for acquisitions I just mentioned. Non-gap net income and non-gap dilutive EPS for the quarter increased 60% and 54% to $0.5 million and 3 cents, versus $0.3 million and $0.02 in the prior year, respectively. Adjusted EBITDA was $0.9 million versus $1.7 million in the prior year. Note that DNA decreased 35% versus last year, primarily due to the impairment loss on intangible assets recorded in Q2.
Speaker Change: GAAP loss from operation was pulling 1 million versus a loss from operations of $8 4 million last year.
Speaker Change: Last year's loss included $8, seven noncash accounting write down related to acquisition.
Speaker Change: And income and EPS was <unk> 1 million in one sentence.
Speaker Change: <unk>, a loss and loss per share of $7 7 million and 55 cents respectively in the prior year.
Speaker Change: Last year's loss reflected the tax adjusted noncash accounting write off for acquisition I just mentioned.
Speaker Change: non-GAAP net income and non-GAAP diluted EPS for the quarter increased 60% and 54% to <unk> 5 million and three cents.
Speaker Change: Versus point $3 million.02 in the prior year respectively.
Speaker Change: Adjusted EBITDA was <unk> 9 million versus $1 $7 million in the prior year.
Speaker Change: Nowadays DNA decreased 35% versus last year, primarily due to the impairment loss on intangible assets recorded in Q2.
Operator: From a liquidity standpoint, we added nearly $2 million in cash to our balance sheet and finished the quarter with $19.9 million in cash and cash equivalents. We also bought back 60,000 shares of stock. As average daily trading volume would lower, and our buyback parameter was 6 ahead of the closed window period. When our window opens up in a few days, we plan to more aggressively buy back stock in the market. Thank you for listening to our third-quarter earnings call, and I look forward to speaking with you again on our year-end call in October. Operator, back to you for Q&A. We will now begin the question and answer session.
Speaker Change: From a liquidity standpoint, we added nearly 2 million in cash to our balance sheet and finished the quarter was $19 9 million in cash and cash equivalents.
Speaker Change: We also bought back 60000 shares of stock.
Speaker Change: Average daily trading volume was lower and our buyback parameter with fix ahead of a closed window period.
When a window opens up in a few days, we plan to more aggressively buy back stock in the market.
For listening to our third quarter earnings call and look forward to speaking with you again hung our year end call in October operator back to you for Q&A.
Operator: We will now begin the question and answer session. To ask a question, you may press a star, then one, on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing this key. To withdraw your question, please press star 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Alan Klee with Maxim Group. Please proceed. Yes, good afternoon. For guru shots, could you please?
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press star two at this time, we will pause momentarily to assemble our roster.
Okay.
Speaker Change: Okay.
Speaker Change: The first question comes from Allen Klee with Maxim Group. Please proceed.
Allen Robert Klee: Yes, good afternoon. For Guru Shots, could you please, I'm not sure if I caught this, what was the revenue for Guru Shots in the quarter?
Allen Robert Klee: Yes, good afternoon.
Allen Robert Klee: <unk> coover shots could you I am not sure if I caught what what was the revenue per gerber shots in the quarter.
Allen Robert Klee: Yes.
Allen Robert Klee: E.
Allen Robert Klee: Sure.
Allen Robert Klee: Yeah.
Yi Tsai: Sorry, Adam. It's.9 million.
Allen Robert Klee: Sorry, it's Paul and $9 million.
Allen Robert Klee: That's what I thought I heard, and that shows up in the. [inaudible] and Services, right? Correct. Okay, so within Guru Shastra, I mean, the You're, this is the one you're hitting, you're doing really well, pretty much everywhere else. I'm trying to understand a little. Like, new features that you said could cause a 10 to 30% jump in revenue. What is the plan for adding these new features?
Speaker Change: That's what I thought I heard.
Speaker Change: And that shows up in the.
Speaker Change: Digital goods.
Speaker Change: And services right.
Speaker Change: Correct.
Okay. So.
Speaker Change: Within the Cougars shots.
Speaker Change: The.
Speaker Change: This is the one.
Speaker Change: Youre, hitting and you're doing really well pretty much everywhere else.
Speaker Change: Hum I'm trying to understand a little.
Speaker Change: Like like New features that you said could cause a 10% to 30% jump in revenue what is the plan for adding these new features.
Jonathan Reich: A great question, Alan. So during the earlier part of the call, I mentioned we've got essentially three major areas that we are working on. First is onboarding, and that is the experience that a new user will have when they download the app for the first time. And Stark Plan.
Alan: Great question Alan.
So sorry.
Speaker Change: During the call during the <unk>.
Alan: Earlier part of the call I had mentioned.
Speaker Change: We've got.
Speaker Change: Essentially three major areas that we are working on.
Speaker Change: First is on <unk>.
Speaker Change: And that is the experience that a new user.
Well.
Speaker Change: Half when they download the app for the first part.
Jonathan Reich: We've rolled out a new onboarding experience in beta to 25% of our Android audience, and what we're seeing is that deeper funnel events are generating more revenue for us. Deeper funnel events, meaning a user that downloads the app, joins a competition, and then continues to the second, third, fourth, and fifth competition, by way of example. That onboarding process is one that we will optimize. And if we are successful in that, Endeavor, we believe that we will accomplish two goals.
Speaker Change: And start planning.
Speaker Change: We've rolled out a new onboarding experience and data.
Speaker Change: 225% of our.
Speaker Change: Android audience.
Speaker Change: And what we're seeing is the deeper funnel events are generating more revenue for us deeper funnel events, meaning.
Speaker Change: A user of that.
Speaker Change: Download the App joins the competition and then.
<unk> continues to second third fourth and fifth competition.
Speaker Change: Way of example.
Speaker Change: Hum.
Speaker Change: That onboarding process.
Speaker Change: Is one which we will optimize.
Speaker Change: And.
Speaker Change: If we are successful in that.
Speaker Change: Endeavor we.
Speaker Change: We believe that we.
We will accomplish two goals one is that we will attract more users to actively begin playing the game on a recurring basis.
Jonathan Reich: One is that we will attract more users to actively begin playing the game on a recurring basis, and number two is that we will retain those users, thus generating more revenue as I described a couple of minutes ago. Secondarily, changes with respect to our economy.
Speaker Change: And number two is that we will retain those users.
Speaker Change: <unk>.
Speaker Change: Thus generating more revenue as I described a couple of minutes ago.
Speaker Change: Secondary of.
Speaker Change: Changes with respect to our economy today.
Jonathan Reich: Today, the economy is a resource-based economy, which is fueled by a user making an in-app purchase or a specific game resource. We expect that later this month we are going to turn on a brand new economy, which will be a coin-based economy that has multiple currencies. That opens up the door for many different possibilities, but by way of example, you have a new user. They begin playing the game. They don't do very well because they're really trying to acclimate themselves and assimilate all the information that's being thrown before them.
Speaker Change: Today the economy.
Speaker Change: Is a resource based economy.
Speaker Change: Which is fueled by a user making an in app purchase or a specific game resource.
Speaker Change: We expect that later this month, we are going to.
Ill begin with card not begin, but we will.
Speaker Change: I'll turn on a brand new economy, which will be a coin based economy that has multiple currencies that opens up the door for many different possibilities.
Speaker Change: But by way of example.
Speaker Change: You have a new user.
Speaker Change: Begin playing the game.
Speaker Change: They haven't done super well, because theyre really trying to.
Speaker Change: Acclimate themselves and assimilate all the information thats being strong before them.
Jonathan Reich: Nonetheless, we have the ability to reward them with different currencies in order to keep them motivated and ultimately allow them to spend those currencies on game resources. The more that they spend on game resources, then the likelihood is that they will want to replenish their currency and make more purchases. And that, like I said, is expected to be rolled out this month. And then the third area of focus, which will take place after we've tuned the economy and the onboarding process, will be a program progression dynamic.
Nonetheless, we have the ability of rewarding them with.
Speaker Change: Different currencies.
Speaker Change: In order to keep them motivated and ultimately allow for them to send those currencies.
Speaker Change: On.
Speaker Change: <unk> resources.
Speaker Change #101: The more that they spend on game resources than the likelihood is that they will want to replenish their currency and make more purchases.
Speaker Change: And that like I said is expected to be rolled out.
Speaker Change: In this month.
Speaker Change: And then the.
Speaker Change: Third area of focus which will take place after we have.
Speaker Change #100: Tuned the economy in the Onboarding process will be.
Jonathan Reich: So today, we have users who get stuck, they get stuck at a certain level, and they can be stuck there for a very, very long time, even though they are active players. Progression analysis or progression mechanics is really the focus that we will have in order to help those users progress to the next level based upon where they are struggling. So you can imagine that we have a set of users that get stuck at a certain level.
Speaker Change #104: A program ramp progression dynamic.
Speaker Change #102: So today, we have users they get sparks, they get stuck at a certain level and they can be stopped there for.
Speaker Change #103: Very very law.
Speaker Change #105: Even though they are active players progression analysis is.
Speaker Change #106: The progression mechanics is really the focus that we will have in order to help those users progressed to the next level based upon where they are struggling.
Speaker Change #107: You can imagine that.
Speaker Change #107: We have a set of users they get stuck in a certain level.
Speaker Change #107: And.
Jonathan Reich: In a certain sense, they don't know how to progress to the next level. We can then create competitions around that segment of users that will ultimately translate into those users being able to graduate and, you know, continue moving up the totem pole, if you will.
Speaker Change #108: In a certain sense, they don't know how to progress to the next level.
Speaker Change #109: We can then create competitions around that segment of users that will ultimately translate into those users.
Unable to graduate and.
Speaker Change #110: Continue moving up the.
Speaker Change #111: Total policy as well.
Jonathan Reich: So that progression mechanic piece or mechanics piece will begin to be focused on after we've completed the full rollout of onboarding coupled with game economy optimization. And with respect to onboarding and game economy, like I said, we've got 25% of the onboarding available to our Android user base today. And the new game economy will be rolled out. The new game economy will be rolled out, we expect, during the month of August. A lot of detail there. I hope that I was clear in that. If you have any further questions, I would love to hear them.
Speaker Change #111: So that progression mechanics piece.
Speaker Change #111: Our mechanics piece will begin to be focused on after we've completed.
Speaker Change #111: The full rollout.
Speaker Change #112: Onboarding, coupled with game economy optimization.
Speaker Change #112: With respect Onboarding in game economy, like I said.
We've got 25% of the Onboarding available to our Android user base today.
Speaker Change #112: And the game economy.
Speaker Change #113: <unk> will be rolled out the new game autonomy will be rolled out we expect during the month of June.
Speaker Change #113: A lot of detail there.
Speaker Change #114: I hope that.
Speaker Change #114: I was clear on that.
Speaker Change #115: If you have any further questions would love to hear that.
Allen Robert Klee: Are there any new features that you'll be adding in the next three months?
Speaker Change #116: Are there any new features that you'll be out again in the next three months.
Jonathan Reich: Well, onboarding is, you know, I don't know what you mean by features, but onboarding is... We're viewing that as being a feature-driven experience. If a new user downloads the app today and is not in the new onboarding experience, they are faced with a very, very complex user interface, which they need to master. There's a steep learning curve. The notion of onboarding is to gradually introduce new features, and Brian Klee, Brian Siegel, Jonathan Reich, Yi Tsai, Zedge So, we are describing that as, you know, a feature enhancement as opposed to some, let's call it, new feature like a new in-game resource or something like that.
Speaker Change #117: Well on boarding is I don't know what you mean by Ctrip.
Speaker Change #118: Onboarding is.
Speaker Change #118: We're viewing that as being a feature Caribbean and experience.
Speaker Change #119: If a new user downloads the app today and is not in the new Onboarding experience.
Speaker Change #119: They are faced with a very very.
Speaker Change #119: Complex.
Speaker Change #120: User interface.
Speaker Change #120: Which they need to master Theres, a steep learning curve there.
Speaker Change #121: The notion of Onboarding is too.
Speaker Change #121: Incrementally.
Speaker Change #121: AD.
Speaker Change #121: Complexity to the gameplay.
Speaker Change #122: With the goal of initially getting the user into a competition with you with access to fewer of the bells and whistles.
Speaker Change #123: They eventually.
Speaker Change #123: We will gain access to as they are.
Speaker Change #124: Master the game play.
Speaker Change #125: So we are describing that is.
Speaker Change #125: A feature enhancements as opposed to some.
Speaker Change #126: Call It new feature of life.
Speaker Change #127: Our new Indian resource or something like that.
Allen Robert Klee: Okay, great. Thank you. And you mentioned SG&A, incremental SG&As going into some paid marketing. Could you talk a little about where that, the paid marketing, what the focus is of the areas that you're trying to gain customers from? Of course.
Speaker Change #128: Okay, great. Thank you.
Speaker Change #129: And you mentioned.
Speaker Change #130: Uh huh.
Speaker Change #131: SG&A incremental SG&A is going into.
Speaker Change #132: Some paid marketing thank you.
Speaker Change #133: You talk a little about where that.
Speaker Change #134: Paid marketing what focuses of.
Speaker Change #135: The areas that youre trying to gain customers from.
Jonathan Reich: Sure. So, the paid marketing is, for the meantime, primarily focused on user acquisition for both Zedge and for Gurusha, and the focus there is not simply paid user acquisition, but it is focused around paid user acquisition tied to return on ad spend, as well as aligning our paid marketing spend with feature releases and improvements in the app. So, when you take a look at the Zedge app, it is a utility, has a lower lifetime value than GuruShops, and engagement is not as frequent.
Speaker Change #135: Oh sure so.
Speaker Change #135: The paid marketing is.
Speaker Change #136: For the meantime, primarily focused on user acquisition for both.
Speaker Change #137: And for Guru shots.
Speaker Change #137: And.
Speaker Change #137: The.
Speaker Change #138: Focus there is not simply.
Speaker Change #139: Paid user acquisition, but it is focused around paid user acquisition.
Speaker Change #139: Tied to return on Ad spend.
Speaker Change #139: As well as.
Speaker Change #140: <unk>, our paid marketing spend.
Speaker Change #140: With feature.
Speaker Change #141: Releases and improvements in the App.
Speaker Change #142: So when you take a look at the <unk> app.
Speaker Change #143: It is a utility.
Speaker Change #144: Has a lower lifetime value than <unk>.
Speaker Change #143: Shops.
Speaker Change #143: And.
Speaker Change #145: Engagement is.
Speaker Change #146: Not as frequent therefore, we target a faster payback period.
Speaker Change #146: For that Ad spend.
Jonathan Reich: Therefore, we target a faster payback period for that ad spend, give or take, somewhere around 90 days. So we spend a dollar on user acquisition today, and then we want to know that we are whole in around 90 days. With Google Shops, it has a longer payback period. Lifetime value is, you know, much higher when compared to Zedge, ringtones, and wallpapers, and Specific to GuruShots, because of the exercise that we have in onboarding and in the game economy, we are really trying to time the expansion of our marketing investment with the maturation of onboarding and the game economy rollout.
Speaker Change #147: Give or take somewhere around 90 days, so we spend a dollar on user acquisition today.
Speaker Change #148: Then we want to know that we are whole.
Speaker Change #148: And around 90 days.
Speaker Change #149: Have you ever shops.
Speaker Change #150: It has a longer payback period lifetime value is.
Speaker Change #151: Much higher when compared to as edge Ringtones wallpapers and.
Speaker Change #152: Specific to <unk> because of the exercise that we have in Onboarding and the game economy, we are really trying to.
Speaker Change #152: Time.
Speaker Change #153: Spansion of our marketing investments.
Speaker Change #154: With the maturation of.
Speaker Change #154: Onboarding and.
Speaker Change #154: The.
Speaker Change #155: Economy rollout.
Allen Robert Klee: Okay, that makes sense. [inaudible] and then advertise, so you probably can't add this, but your monthly, answer this, but your monthly active users you have and the Thinking about, like, getting that number to stabilize. Any thoughts on where you think that these actions will get that to kind of stabilize and then inflect positively?
Speaker Change #155: Okay that makes sense.
Speaker Change #155:
Speaker Change #155: And then advertising.
Speaker Change #155: You probably can't at this point your monthly answer this because your monthly active users.
Speaker Change #155: Yeah.
Speaker Change #155: Okay.
Speaker Change #156: Thinking about like getting that number to stabilize.
Speaker Change #157: And any thoughts on where you think that these actions will get us to kind of stay stabilize and inflect positively.
Jonathan Reich: Sure, so I can't give you a time on that. I can tell you that.
Sure. So I can't give you timing on that I can tell you that.
Jonathan Reich: Specific to Zed, Ringtones, and Wallpapers, there is a lot of time and effort going into how do we grow this user base, what are the features that we are adding, how do we use product marketing in order to keep users engaged, and so on and so forth. And it is a very high priority and significant area of focus for literally everyone in the company. The product team is constantly looking at ways in which we can not only retain users but grow that user base as well. And that will continue to be, you know, a major focus of pretty much all the investment that we have in terms of the Zedge ringtone and wallpaper market, if you will.
Speaker Change #158: Specific to that Ringtones and wallpapers.
Speaker Change #158: There is a.
Speaker Change #159: Who are.
Speaker Change #160: Time and effort going into <unk>.
Speaker Change #161: How do we grow this user base what are the features that we are adding how do we use product marketing in order to keep our users engaged.
Speaker Change #161: And.
Speaker Change #161: So on and so forth.
Speaker Change #162: And it is a very high priority and.
Speaker Change #162: Significant area of focus.
For.
Speaker Change #163: Literally everyone in the company.
Speaker Change #164: The product team is.
Speaker Change #165: Constantly looking at ways in which we can.
Not only retain users, but grow that user base as well.
Speaker Change #165: And that will continue to be.
Speaker Change #165: Hey.
Speaker Change #165: A major focus of.
Pretty much all.
Speaker Change #165: <unk>.
Speaker Change #165: Investment that we have.
Speaker Change #165: In terms of.
Speaker Change #166: Does that ring tone and wallpaper market if you will.
Allen Robert Klee: That's great. And Advertising has been very strong. Subscriptions are pretty solid. Could you maybe just comment a little on, I guess, advertising rates go up with subscriptions, and you have more in the bundle with subscriptions now than you had in the past, so there's more value. And you're also rolling it out to iOS users. Are those the main things, or are there any other things that we should also be thinking about?
Speaker Change #166: That's great.
Speaker Change #166: Hum.
Speaker Change #167: Advertising has been very strong subscriptions are pretty solid.
Speaker Change #166: Could you maybe just comment a little on I guess.
Speaker Change #166: Advertising rates go up with with subscriptions.
Speaker Change #166: And you have more in the bundle with subscriptions now then.
Speaker Change #166: Then you had in the past so theres more.
Speaker Change #168: Also rolling it out to iOS users.
Speaker Change #169: So those are the main things are there any other things that we should also be thinking about.
Jonathan Reich: So we are not only not only have we bulked up on the subscription offer, but we continue to look for additional value ads. And I think that over time, we will see additional value ads bundled into the subscription. But we are also optimizing with different types of subscription plans, testing one week subscriptions, testing two week subscriptions, testing one month subscriptions, testing annual subscriptions, testing lifetime subscriptions, as well as testing subscriptions on a more localized basis. So not only
Speaker Change #170: So we are not only not only have we bulked.
Speaker Change #171: Bulked up on subscription offer and we continue to look for additional value adds.
Speaker Change #172: And I think that overtime, we will see additional value adds bundled into the subscription.
Speaker Change #172: But we are also optimizing.
Speaker Change #173: With different types of subscription plans testing.
One week subscription testing two weeks assertions testing one month subscriptions testing.
Speaker Change #173: You'll subscriptions.
Speaker Change #173: Testing.
Speaker Change #174: Tom subscriptions as well as testing subscriptions on a more localized basis.
Speaker Change #175: So not only.
Jonathan Reich: Testing, and pricing on a localized basis. Obviously, the cost of the subscription depends. India would be significantly different from what a cost of subscription would be in the United States, but also localizing the experience so that the messaging that's used to draw or to convert the user into a subscriber is highly, highly localized. So taken in concert with one another, we continue to see that growth. And, you know, that is apparent in the numbers that we shared with you today.
Speaker Change #175: Testing.
Speaker Change #176: Pricing on a localized basis, obviously the cost of the subscription.
Speaker Change #176: Hi.
Speaker Change #177: India would be significantly different than what cost of subscription wouldn't be in.
Speaker Change #177: The United States, but also.
Speaker Change #178: Localizing the experience.
So that the messaging that's used to draw are to convert the user into subscriber is.
Speaker Change #179: It is highly highly localized.
Speaker Change #179: So.
Speaker Change #179: Taken in concert with one another.
Speaker Change #180: We continue to.
Speaker Change #181: See that.
Speaker Change #182: Growth and.
Speaker Change #183: That is apparent in the numbers that we shared with you today.
Allen Robert Klee: That's great. And I know you gave some information on paint, which goes, um, creating kind of a creator economy. How do we think about, like, the amount that people are using? Does it seem like the percent of people that are using paint that there's still a lot of opportunity for that to grow?
Speaker Change #184: That's great and I think you gave some information on paint.
Speaker Change #184:
Speaker Change #184: Okay. Good.
Speaker Change #185: Great and kind of a creator economy.
Speaker Change #185: Yes.
Should we how do we think about like.
Speaker Change #186: The amount that people are using.
Speaker Change #187: Does it seem like the percent of people that are using paint that theres still a lot of opportunity for that to grow.
Speaker Change #187: Okay.
Jonathan Reich: I mean, our perspective is that our marketplace is The premium marketplace, I should say, is a growth opportunity for us. We do have several initiatives underway now that we are investing in in order to unlock incremental growth and see to it that, you know, as a part of the overall revenue pie that we have, that premium content is a larger portion of that pie. So there will be continued investment there. And as you know, GTV has grown nicely due to several initiatives that we delivered on in this past quarter.
IME.
Speaker Change #187: Sure.
Speaker Change #188: Our perspective is that our marketplace.
As.
Speaker Change #189: The premium marketplace I should say is.
Speaker Change #190: The growth opportunity for us we do have several initiatives underway now.
Speaker Change #190: That.
Speaker Change #190: We.
Speaker Change #190: Our investing in order to unlock.
Speaker Change #191: Incremental growth and seated with that as a part of the overall revenue pie that we have that.
Speaker Change #191: Premium.
Speaker Change #192: Content is a larger portion of that pie.
Speaker Change #193: So there will be continued investments there.
Speaker Change #193: And as you had mentioned <unk> had grown nicely due to several initiatives that we had.
Speaker Change #193: Delivered on in this past quarter.
Allen Robert Klee: Okay, and for Emojipedia, you mentioned there was a little bit of a step back on the website redesign. Do you view that as... kind of a temporary thing, or how are you thinking about that?
Speaker Change #193: Okay and <unk> you mentioned, there was a little bit of.
Speaker Change #194: Step back on our website redesign do you view that as.
Speaker Change #195: Kind of a temporary thing or how are you thinking about that.
Jonathan Reich: We do view that as a temporary thing, and The approach that we've taken, we tested, and I guess at scale, things did not ultimately reflect what our testing had indicated. So when we saw that the numbers were diverging, we pulled back. And in terms of new initiatives for Mojopedia, there is a whole set of initiatives around rolling out new product features, capabilities, and so on and so forth that will begin to come off the assembly line between now and the end of the calendar year.
Speaker Change #196: We do view that as a temporary thing.
Speaker Change #196: And.
Speaker Change #196: Yes.
Speaker Change #196: The approach that we've taken.
Speaker Change #196: Uh huh.
Speaker Change #197: <unk> tested.
Speaker Change #197: And.
Speaker Change #198: I guess it scale things did not ultimately.
Speaker Change #199: Reflect what.
Speaker Change #200: Our testing had.
Speaker Change #200: Indicated.
So when we saw the numbers were diverging we've pulled back.
And in terms of.
Speaker Change #201: New initiatives for motor PDR, there are a whole set of initiatives around.
Speaker Change #201: Rolling out new product features capabilities and so on and so forth that will.
Speaker Change #202: I'll begin to come off the assembly line between now and the end of the calendar year.
Allen Robert Klee: Okay, great. Well, that's it for me. Thank you so much.
Speaker Change #202: Okay great.
Speaker Change #203: That's it for me. Thank you so much.
Speaker Change #203: Thank you.
Operator: This concludes our question and answer session and conference call. Thank you for attending today's presentation. You may now disconnect.
Speaker Change #204: This concludes our question and answer session and conference call. Thank you for attending today's presentation. You may now disconnect.