Q4 2024 Zedge Inc Earnings Call
Speaker Change: Good morning, everyone. Please stay on the line. Your conference will begin in just a few moments. Again, please stay on the line. Your conference will begin in just a few moments.
Speaker Change: Good day and welcome to the ZEDGE earnings conference call for the fourth quarter and end of year fiscal 2024 results. During management's prepared remarks, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation by the ZEJDG management team, there will be an opportunity to ask questions.
Speaker Change: To ask a question, please press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. I will now turn the call over to Brian Siegel. Please go ahead.
Brian Siegel: Thank you, Operator. In today's presentation, Jonathan Reich, ZEDGIS Chief Executive Officer at Yi Tsai, ZEDGIS Chief Financial Officer, will discuss ZEDGIS financial and operating results that were reported today.
Speaker Change: 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.
Speaker Change: 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 they forecast.
Speaker Change: 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. Thank you all for joining us today.
Jonathan Reich: We wrapped up fiscal 2024 with strong momentum, posting 14% year-over-year revenue growth in the fourth quarter, driven by continued expansion in the Zedge Marketplace.
Jonathan Reich: with subscription revenue up 31% and average revenue per monthly active user, or ARPMAU, soaring by 43%, hitting a record 7.9 cents.
Jonathan Reich: Zedge Premium's gross transaction value, or GTV, increased by 56%, driven by enhancements in content and monetization, further showcasing the positive impact of our team's execution.
Jonathan Reich: For all of fiscal 2024, we delivered revenue growth of 11%, representing $30.1 million in revenue, non-GAAP net income of $1.8 million, and flat non-GAAP EPS.
Jonathan Reich: of $0.13, even while beginning to reposition Gurushots, continuing to roll out innovative product enhancements.
Jonathan Reich: testing new offerings and scaling marketing and user acquisition initiatives across our core platforms.
Jonathan Reich: While the Zedge Marketplace's monthly active user numbers fluctuated between 25 and 30 million, we significantly improved the revenue generation capabilities of our user base.
Jonathan Reich: as evidenced by the growth in our premium offerings, including 25% growth in subscription revenue to a record $4.3 million.
Jonathan Reich: a nearly 40% increase in Zedge Premium's GTV to a record $2.2 million and a nearly 10x increase in iOS revenue all leading to the record ARP mail we reported in Q4.
Jonathan Reich: We also strengthened our balance sheet during the year.
Jonathan Reich: or $1.38 per share, even after repurchasing $600,000 in stock.
Jonathan Reich: not to mention the material investments we made in marketing and user acquisition mentioned earlier.
Jonathan Reich: Additionally, Zegid's stock appreciated by 71% from $2.12 at the end of FY23 to $3.62 at the end of FY24, leading to our inclusion in the Russell Mid-Cap Index.
Jonathan Reich: Despite this performance, we still believe that, at a trailing enterprise value to EBITDA of less than 6x,
Jonathan Reich: We are significantly undervalued on both an absolute and relative basis.
Jonathan Reich: looking to fiscal year 25.
Jonathan Reich: We are committed to driving growth by further scaling our businesses and optimizing our offerings with innovative product enhancements.
Jonathan Reich: testing new product initiatives and expanding our reach across all business areas, capitalizing on the solid foundation laid in Fiscal 24.
Jonathan Reich: One of our primary goals is to convert our user base, historically composed of content consumers, into content creators.
Jonathan Reich: a transformation critical to positioning us as a leader in the creator economy.
Jonathan Reich: To accomplish this, we will continue embedding generative AI capabilities across our product portfolio, driving innovation and enhancing users' experiences.
Jonathan Reich: Our focus in the coming year is on agility and growth. In fiscal 2024, we centralized key support functions including marketing, monetization, data, and analytics.
Jonathan Reich: in fiscal year 2025.
Jonathan Reich: We are turning more of our attention to evolving our technology platform to better enable rapid development of new apps and products by creating an engine with modular and reusable components that can be easily recycled and or refactored from project to project.
Jonathan Reich: Optimizing our tech platform enables us to increase efficiency, reduce costs, and fosters a rapid-fire organization.
Jonathan Reich: These efforts will enable us to explore, adapt, test, and launch new products, enhancements, or ideas quickly.
Jonathan Reich: We will also be positioned to make faster decisions to double down on the initiatives that deliver attractive ROIs or pull back on the ones that don't, ultimately allowing us to achieve sustainable and profitable long-term growth.
Jonathan Reich: core to our ongoing success.
Jonathan Reich: is the world-class marketing organization that we built and tuned in fiscal 2024.
Jonathan Reich: The team is scaling user acquisition investment responsibly and is delivering cohorts with attractive return on ad spend, or ROAS, profiles.
Jonathan Reich: At the same time, it is addressing a myriad of other challenges with skill and proficiency, including the need for producing lots of ads efficiently,
Jonathan Reich: Now I'd like to discuss several key product initiatives.
Jonathan Reich: For the Zedge Marketplace, Paint, our Gen AI image creator, has been a standout success with over 22 million images generated since its introduction in 2023.
Jonathan Reich: We are committed to converting our users who traditionally consumed our content into master creators.
Jonathan Reich: We are also working to attract new user cohorts that may not have found Zedge relevant when we only focused on mobile phone personalization.
Jonathan Reich: With the release of Paint 2.0 in September, we introduced a powerful set of image-to-image capabilities powered by AI. By enabling capabilities beyond creating wallpapers, users can now reimagine any image.
Jonathan Reich: creating entirely new visuals either by text prompting, via image upload, or even by taking a photo in real time.
Jonathan Reich: They can then add filters, edit photos, create avatars and or stickers, and render output in any size. We expect that these enhancements will unleash higher levels of creativity that will improve engagement and retention.
Jonathan Reich: We are working on the next iteration of our suite of AI tools, with the focus being on introducing an AI auto-generator. As the year progresses, we plan to release even more features and enhancements to provide best-of-breed service.
Jonathan Reich: Taken together, we expect these activities will assist in driving user growth, improving engagement, and bolstering retention.
Jonathan Reich: Turning to Emojipedia, we remain excited about its growth potential as we head into fiscal 2025.
Jonathan Reich: Over the past year, we introduced Emoji Playground, availing users with popular features like emoji mashups,
Jonathan Reich: and quizzes.
Jonathan Reich: in keeping with our consumer into creator theme for fiscal year 2025.
Jonathan Reich: We will soon enhance the Playground with custom emoji creation and digital sticker capabilities powered by GenAI.
Jonathan Reich: Additionally, in the second half of fiscal 2025, we expect to roll out a redesigned Emojipedia experience and improve the Playgrounds Games section.
Speaker Change: At Guru Shots, reversing our losses and resuming growth are our top priorities and we will chart its future based on how successful we are in these endeavors.
Speaker Change: To accomplish this, our strategy has shifted towards prioritizing product features and enhancements that can drive new user growth ahead of elements designed to appeal primarily to legacy player cohorts.
Speaker Change: This is evidence from the changes we have already made and the roadmap that we have planned for this fiscal year. To date, we have introduced a robust onboarding experience to ease more users into the engagement funnel.
Speaker Change: adopted a coin-based in-game economy with multiple currencies and, most recently, launched Missions, a proven gamification technique for driving engagement and improving retention by rewarding players for completing specific goals.
Speaker Change: Later this fall, we will introduce Duels, a fast-paced, real-time player-versus-player dynamic that allows users to compete against each other, even while they are playing in longer-duration GuruShots challenges.
Speaker Change: with robust marketing initiatives that seek to target a broader range of potential new players with attractive ROAS profiles, as well as utilizing LiveOps strategies to optimize in-app purchases.
Speaker Change: Taken together, we believe that this multi-layered approach will ultimately widen the top of the funnel, bring in more users, engage them in a fun, exciting, and strategic experience, and ultimately, unlock revenue growth.
Speaker Change: While not a slam-dunk, early results from the recent introduction of missions points to improved engagement.
Speaker Change: adding to the successes we've experienced with a new onboarding funnel and coin-based economy.
Speaker Change: Finally, from a new product standpoint, in early fiscal 2025, we began testing Wishcraft, a stand-alone Gen-AI app created with the goal of radically simplifying the creation process.
Speaker Change: We also continue monitoring A.I. Art Master, a casual A.I. art battle game born from Guru Shastra's leadership in the photo competition Vertical.
Speaker Change: where players create AI art and compete in themed and fast paced competitions in order to earn accolades for creativity, style, and aesthetic talent.
Speaker Change: While these products remain in beta, we are, as described earlier, hard at working at filling our pipeline with a host of products that we can iterate on quickly with a fail-fast approach. I feel compelled to underscore that.
Speaker Change: that we believe that this strategy can yield outsized returns with Rovio as a great example. Rovio launched 51 games prior to hitting the jackpot with Angry Birds.
Speaker Change: which as of February 2023 had grossed in excess of $500 million and 360 million installs.
Speaker Change: Long story short, we have a great team of products, marketing, monetization, designers, and engineers, all focused on unearthing that diamond in the rough and taking it to the next level.
Speaker Change: Both our fourth quarter and full year results show that we are on the right track to generating sustainable, profitable long-term growth. Our strong performance is a testament to the investments we've made in growth and innovation, and despite the ongoing industry,
Speaker Change: and geopolitical challenges and macroeconomic uncertainties, we remain well positioned to capture market opportunities across our product lines.
Speaker Change: Lastly, as part of optimizing our business, we are committed to smart capital allocation strategies, including implementing the new stock repurchase program for up to $5 million, which, when combined with our operating leverage, we believe will deliver long-term shareholder value.
Speaker Change: Now, I'll turn the call over to Yi to review the financials in more detail.
Yi Tsai: Thank you, Jonathan. Total revenue in the fourth quarter was $7.6 million, up 14% from last year.
Yi Tsai: For the year, revenue grew 11% to a record $30.1 million.
Yi Tsai: The continuous work we do on optimizing our ad stack goes through this year with advertising revenue up 13% for the quarter and 15% for the year.
Yi Tsai: Substitution revenue was up 31% for the quarter and 25% for the year versus last year.
Yi Tsai: Our net active subscriber trend continued to improve and was up sequentially for the 5th straight quarter.
Yi Tsai: For Android, replace lower-cost legacy submission, which only removes ads.
Yi Tsai: Thank you.
Speaker Change: That's Freeman J.T.V. achieved quarterly and yearly revenue record at $600,002.1 million, up 56% and 39% respectively versus last year.
Speaker Change: This growth showed record RMI of 7.9 cents, up 43% year-over-year.
Speaker Change: Two things have become clear. First, our strategy to drive growth is working. And second, the initiatives Jonathan spoke about are driving higher quality revenue for the ZEG marketplace.
Speaker Change: Unfortunately, this growth was partially offset by year-over-year revenue decline for Gurusha.
Speaker Change: which is reported under Digital Goods and Services.
Speaker Change: of 24% in the quarter and 25% for the year.
Speaker Change: Given the shift in strategy to prioritize new player positions,
Speaker Change: This decline was not unexpected, but we are cautiously optimistic based on the early positive return from the new feature releases that the business will return to growth soon.
Speaker Change: Cost of revenue was 6% of revenue for both the quarter and the year, and decreased 4% and 17% respectively when compared to the same period in a prior year.
Speaker Change: HG&A increased by 33% to $6.9 million during the fourth quarter. For the fourth year, HG&A increased 17% to $25.6 million.
Speaker Change: These increases were mainly driven by marketing expenses related to an increase in pay user opposition.
Speaker Change: which is helping to drive growth. As we scale, we expect to see operating levels rebound.
Speaker Change: But today, between the higher spending and lower revenue from Gurusha, we are seeing the impact of high operating leverage.
Speaker Change: Additionally, our subscription model costs higher near-term expenses as revenue and costs don't align.
Speaker Change: to demonstrate when we get a lifetime subscription, we receive the cash upfront but also pay upfront fees to Google and Apple.
Speaker Change: based on a full amount of subscription.
Speaker Change: However, Reveille Lange recognized over 2.5 years.
Speaker Change: while this disproportionately negatively impact expenses in the current quarter when the subscription is sold.
Speaker Change: over the remaining recognition period.
Speaker Change: The revenue is recognized at a 100% gross and operating margin.
Speaker Change: Gap loss from operation was $0.1 million for the quarter compared to income from operation of $0.2 million in the full quarter last year.
Speaker Change: For the full year, loss from operation was $11.8 million compared to the loss from operation of $6.9 million last year.
Speaker Change: related to acquisition.
Speaker Change: Would the FY24 write-down be much higher at $12 million versus $6.8 million last year?
Speaker Change: At this point, we have written off 100% of the value of the asset on the book related to the Gurusha acquisition.
Speaker Change: So we don't expect any large write-down moving forward.
Speaker Change: Gap Net Income and EPS were near for the quarter compared to Net Income and EPS of $0.2 million and $0.1 cent last year.
Speaker Change: For the full year, gap net loss and loss per share were $9.2 million and $0.65 versus $6.1 million and $0.44 respectively.
Speaker Change: in the prior year.
Speaker Change: Both years' losses reflected the tax-adjusted non-cash accounting write-off for acquisitions I mentioned.
Speaker Change: For the full quarter, non-GAAP net income and diluted EPS were $0.3 million and 2 cents.
Speaker Change: versus 0.6 million and 4 cents in the prior year, respectively.
Speaker Change: Adjusted EBITDA for the quarter was $0.8 million versus $1.6 million in the prior year.
Speaker Change: Note that DNA decreased 56% versus last year, primarily due to the write-offs.
Speaker Change: For the full year, adjusted EBITDA was 4.7 million versus 5.7 million last year, primarily due to higher HGNA.
Speaker Change: From a liquidity standpoint, we added nearly $2 million in cash to our balance sheet and finished the year with $20 million in cash and cash equivalents.
Speaker Change: We also bought back about 200,000 shares of stock.
Speaker Change: Thank you for listening to our four-quarter earning call and I look forward to speaking with you again on our first quarter call in December
Speaker Change: operator back to you for Q&A
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star 1 on your touch-tone 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 2. At this time, we will pause momentarily to assemble our roster.
Speaker Change: Your first question is coming from Derek Greenberg with Maxim Group. Please pose your question. Your line is live.
Derek Greenberg: Hi, thanks for taking my question. In terms of guru shots, I was wondering if there's any metrics you can provide, whether it be like the number of users, how that's changing, as well as just retention and engagement rates associated with that app.
Jonathan Reich: Jonathan, thanks for the question. And at this point in time, the KPIs that we've included in the release are the ones that you should be looking at. Directionally, as I said during my call, during my comments,
Jonathan Reich: The focus for Guru Shastra is
Jonathan Reich: really geared towards new users and
Jonathan Reich: having them
Jonathan Reich: come into the funnel, convert into players, and then having them engage to a point where they are generating revenue by purchasing coins that they can use
Jonathan Reich: to accomplish.
Jonathan Reich: As, you know, those numbers hopefully continue to grow, that will also translate into driving revenue for us.
Jonathan Reich: And we will consider going forward if there are additional KPIs that we can provide.
Jonathan Reich: which will provide, which will yield greater detail with respect to how performance unfolds.
Speaker Change: Okay, got it. In terms of the wedge offering, could you just talk about what the fact is driving the growth in marketplace, gross transactional value, as well as subscription numbers, as well as how you're getting to that higher average monthly revenue per monthly active user?
Speaker Change: George, so in terms of GTV gross transactional value for our premium artists
Speaker Change: We are doing many things in the app in order to promote content, as well as making Zedge relevant to the creator economy. And for an artist,
Speaker Change: that wants to gain access to a massive customer base, CEDGE is one of the platforms that they can turn to.
Speaker Change: Coupled with that, and we've actually published a piece about this on our blog.
Speaker Change: ORM
Speaker Change: a month and a half ago.
Speaker Change: we are actually seeing growth in premium art.
Speaker Change: from the use of AI and the ability to
Speaker Change: offer outstanding content that meets the need and the desire of our users.
Speaker Change: Thank you.
Speaker Change: Moving to subscriptions, we have done many many different things to optimize and improve our take rate on subscriptions. Things from the internal messaging and how that I've actually viewed. So going from a static in-app message to a
Speaker Change: a animated in-app message. We've been doing a lot of testing in terms of different price points and the value adds that we fold into the subscription offering.
Speaker Change: such as the AI features and the like. We've done a lot of work in terms of localization, localization in terms of both
Speaker Change: the messaging, as well as the pricing, and then we've also
Speaker Change: been trying
Speaker Change: and expanding with lifetime subscriptions, so pay once.
Speaker Change: and you are a subscriber into PURPITUITY. And if I were to provide a metaphor, it would be going into some sort of a lab where one is trying to...
Speaker Change: Thank you.
Speaker Change: solve for curing an illness. There are many, many different approaches that one will see in that lab, and that is what we have. So it's relentless A-B testing. And then, based upon the results of those A-B tests,
Speaker Change: another set of A-B tests and so on and so forth.
Speaker Change: And then, with respect to our overall ARP Now average revenue per monthly active user increasing, as we've said for many, many quarters, we are constantly focusing on improving our app stack and optimizing.
Speaker Change: and doing so in a fashion which is beneficial both from a financial perspective as well as from a UX perspective user experience perspective.
Speaker Change: And that is also an area where we literally have, you know, dozens of tests that unfold on a monthly basis. And the incremental value of a test, if it has a 2% improvement, well, when you begin to stack that up over time, based upon
Speaker Change: the volume of users and the volume of ads that our users are exposed to, that helps us in terms of improving that average monthly per active average revenue per monthly active user.
Speaker Change: I hope that answers your question.
Speaker Change: Yeah, definitely. That was helpful. Thank you.
Speaker Change: And then in terms of the advertising revenue, that's it.
Speaker Change: Can you just talk about how that's trending and how you've been able to respond to some of the industry changes in terms of the data you're available to access?
Speaker Change: I'm sorry, I didn't hear the last part of your question.
Speaker Change: just how you've been able to respond to like changes and how you're able to access data and target customers following you know changes on different platforms
Speaker Change: Thank you.
Speaker Change: OK, well, you know, remember, we're, you know.
Speaker Change: When you say advertising, do you mean our advertising revenue or do you mean how are we spending marketing dollars and advertising to customers to come to Zedge or GuruShots?
Speaker Change: I guess we could touch on both, but the primary was the advertising revenue side of the business.
Speaker Change: Okay, so from an advertising revenue perspective,
Speaker Change: You know, we are using
Speaker Change: offering that that third party has. So it's less around.
Speaker Change: our having specific customer segments that we are selling so let's say I don't know auto lovers or cigar you know aficionados and stuff like that however we are beginning to focus on
Speaker Change: Thank you. Thank you.
Speaker Change: collecting both zero-party and first-party data.
Speaker Change: cohorts of users that have a attraction to a particular type of demographic message or the like.
Speaker Change: from a marketing perspective.
Speaker Change: We are, you know, hard at work in terms of understanding what are the triggers that
Speaker Change: prospective Zedge or GuruShop users would be inclined to take and then using the benefit of having a mass volume of ads that can articulate those benefits.
Speaker Change: and make Zedge or any of our businesses attractive to prospective users and those that will install our apps and the like.
Speaker Change: Okay, got it.
Speaker Change: In terms of new products,
Speaker Change: and features. I saw in the press release that there was plans for an AI audio offering.
Speaker Change: and then on the call and in the press release you've mentioned the Wishcraft beta app. I was wondering if you could just give some
Speaker Change: some commentary around both.
Speaker Change: Sure, so as you know with Paint 2.0 we've taken our initial foray into the world of
Speaker Change: JAN AI creation, which
Speaker Change: was launched, you know, give or take around a year ago.
Speaker Change: And that was, you know, a text.
Speaker Change: to image experience.
Speaker Change: that would render a really great mobile phone wallpaper.
Speaker Change: Paint 2.0 just elevates this experience. First of all, it is no longer text to image alone. It can be image to image, it can even be you click a phone, you click a photo from your phone and you can
Speaker Change: then use Paint 2.0 to accomplish all sorts of different things, whether it be make an avatar, do photo editing,
Speaker Change: render that picture, that image, in many different styles and so on and so forth, and it's no longer limited to simply wallpaper. You can determine the size of it, so it can be really any size that you would like.
Speaker Change: We feel that, based upon the fact that we are known in the world of personalization for not only wallpapers, but also ringtones,
Speaker Change: Believe it or not, there is a tremendous amount of demand.
Speaker Change: from our consumers to consume wallpapers engaged with, to consume ringtones engaged with the audio that we have. And that audio expands all sorts of different genres, to music, to humor, to funny sounds, and so on and so forth. And we feel that
Speaker Change: iteration of paint needs to be something specific to audio. We've actually found that when marketing Zedge to users, we see that there's actually improved results when focusing on the fact that we have
Speaker Change: audio ringtones and notification sounds for users to consume. And we think that it's a logical next step to say, well, now let's empower our
Speaker Change: consumers with the ability to actually go out and create.
Speaker Change: various forms of audio.
Speaker Change: specific train tones notifications to start with but then, you know, depending on how users...
Speaker Change: interact with that. There are many different things and paths that we can take in order to
Speaker Change: make sure
Speaker Change: that upcoming
Speaker Change: Product.
Speaker Change: Enhancement. Wishcraft, as we've talked about in the past, is a standalone GenAI image app, so either text-to-image or image-to-image.
Speaker Change: But what we've done differently in Wishcraft, and Wishcraft is, you know, beta. We are,
Speaker Change: meeting the thresholds, we continue, if not, that, you know, we can fail quickly and then focus our efforts on
Speaker Change: other opportunities that
Speaker Change: will provide greater
Speaker Change: success, but the notion of witchcraft really lies in a belief that many people are intimidated with the notion of
Speaker Change: figuring out how to use AI. What should they prompt? How do they actually engage with an image and make it better or transform it into something that they couldn't even wildly imagine, let alone explain?
Speaker Change: And at its core, what Wishcraft does is it has a alternative user interface where the user doesn't have to type, they can actually see tiles and begin to click on tiles and then they will see the output associated with those tiles.
Speaker Change: which can be used as well to improve or change an image that they've uploaded.
Speaker Change: Our hope is that with this enhanced and improved user interface that we will be able to draw in
Speaker Change: prospective users that would otherwise be latecomers to the world of Gen AI creation, and bring them in at an earlier point, build a relationship with them, entice them, and so on and so forth, so that they do not feel
Speaker Change: scared or anxious about, oh, like, what is AI? How do I do this? I don't want to try something because I'm not familiar with it.
Speaker Change: Does that answer your question?
Speaker Change: Yeah, that makes sense. I have one more question and then that will be it for me, but...
Speaker Change: For Emojipedia, I was just wondering your outlook for that in 25, as well as just how that performed Comparative to the third quarter, and I believe it was, I think, a redesign that impacted performance in that quarter. I was just wondering if this has been remedied and the business has returned to normal during the quarter.
Speaker Change: Great question. So yes, you're correct. In Q3, we had launched a redesign
Speaker Change: and that redesign did not perform as was anticipated. We made the changes that has been remedied and Emojipedia has been humming along nicely.
Speaker Change: for fiscal year 2025, we
Speaker Change: I think are focused on three areas. One is never-ending ad optimization and the ad stack and so on and so forth. That is a part of our standard operating procedures.
Speaker Change: Number two is testing and introducing some new content verticals. So we've talked about
Speaker Change: emoji stickers, or let's call them bespoke emojis that a user can create with AI. So that's a second area of focus.
Speaker Change: And third area of focus is a more comprehensive
Speaker Change: redesign of the Emojipedia property to add a little bit more, what shall I say, luster and excitement to it. Today it is a almost very much like a
Speaker Change: as it sounds, Emojipedia, a Wikipedia type of experience, but we believe that there is...
Speaker Change: encouraging retention and the like.
Speaker Change: with a design overhaul, and one of the things, which is, I think, you know, an obvious question would be, well, who's to say that you don't experience the same thing that happened in Q3, where we rolled something out.
Speaker Change: And then we found out that it did not perform as was anticipated. Well.
Speaker Change: when we remedied the Q3 issue from 24,
Speaker Change: We also had upgraded some of the technology, which essentially has positioned us in an area where we have a lot more data that we now have access to than we had had in the past.
Speaker Change: And I don't expect that that will be a problem that recurs again based upon the investment that we've made with respect to data capture and, you know, the technology around that accordingly.
Speaker Change: Okay, got it. All right. Well, thanks for taking my questions. I appreciate it.
Speaker Change: Sure, thank you.
Speaker Change: Your next question is coming from Allen Cleave with Maxim Group. Please pose your question. Your line is live.
Allen Cleave: Yes, hi. Two quick questions. One, how do you feel about the returns that you're getting from paid advertising?
Allen Cleave: And second, how do you feel about how you might manage your operating expense growth relative to revenue growth in the next fiscal year? Thank you.
Speaker Change: a commitment to building a world-class marketing team.
Speaker Change: And that not only includes the ability to create great ads.
Speaker Change: and lots of great ads.
Speaker Change: but also
Speaker Change: the ability to closely monitor how those ads are performing.
Speaker Change: and dialing up when we have a winner and dialing back when an ad does not perform well. And then how do we spend our test budgets so that we're very, very
Speaker Change: specific and and precise in terms of utilizing that money to the best of our ability without you know having a lot of wastage and that the marketing team is
Speaker Change: a very, very analytical team. So everything from attribution to creative funnel to conversions to monetization is being looked at. And we have actually seen
Speaker Change: just by way of focusing on the Zedge app, we've actually seen that we have been able to reduce our
Speaker Change: CPI, cost per install.
Speaker Change: do that by spending actually less money, but even seeing an improvement in terms of the number of installs.
Speaker Change: Long story short, that is core to how that team operates today, looking at not only those KPIs, but also dealing with incrementality, which is essentially
Speaker Change: By way of example, we are highly ranked in
Speaker Change: you know, the world of personalization. One goes into Google Play, just naturally our app ranks at the top, and then what does one do in order to ensure that
Speaker Change: when it comes back in the first or second spot, there's also not an ad there. So is it the fact that the ad is promoting an install or is it the fact that we are just so highly ranked?
Speaker Change: That notion of incrementality is also key to how we measure and better manage our budgets.
Speaker Change: to provide for improved return on ad spend.
Speaker Change: Overall, I feel pretty good that we're being very efficient in terms of how we're spending money and that will
Speaker Change: continue to improve over time. It's almost a compliment to what we've done with respect to ad optimizations in the ads back and the like.
Speaker Change: So that is, I think, really critical to how we operate. In terms of managing expenses compared to revenue, that is an area of great focus for us.
Speaker Change: We are very very much committed to ensuring that we're not racking up the expenses unless the ROI is there.
Speaker Change: However, if the ROI is there, then we want to pursue it. And I was just, by way of an example, in a meeting yesterday where we were having a conversation about a particular
Speaker Change: marketing endeavor and we want to ramp up, we want to accelerate, but the marketing team said let's be a little bit more patient right now in terms of
Speaker Change: what this specific goal was. We're in Q4, and we don't want to get too far ahead of ourselves.
Speaker Change: and then extend the payback period to a point where we're taking on more risk than we choose to.
Speaker Change: I think that, you know, there will be seasonality in that regard.
Speaker Change: And, like I said, and I've said this now for the last couple of...
Speaker Change: quarterly calls.
Speaker Change: We are managing our business based upon return on ad spend with ever-increasing and ever-improving
Speaker Change: to measure what the impact is of a particular ad unit, particular platform, a particular message, and so on and so forth, such that we can be efficient with how we spend money. And then when we have success, how do we...
Speaker Change: How do we
Speaker Change: add to that success by throwing more dollars there but at the same point in time looking for that point of
Speaker Change: optimization where, you know, throwing more money, the law of diminishing returns just doesn't make sense. So I hope that that answers your question. And if you have any others, please feel free to ask away.
Speaker Change: Thank you very much.