Zedge, Inc.

Good day and welcome to Zedge's earnings conference call for the second quarter fiscal 2025 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 one on your touchtone phone. To withdraw your question, please press star two. I will now turn the call over to Brian Siegel.

Thank you, Operator. During today's call, Jonathan Wright, ZEDGE's Chief Executive Officer in Eastside, Zedge's Chief Financial Officer will discuss Zedge's financial and operational results that were reported today. Any forward-looking statements made during this conference call during the prepared marks 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 calls. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in Zedge's periodic SEC filings. 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. Please note that our earnings release is available on the investor relations page of the ZEDGE website, and it has also been filed on form 8K with the SEC. Finally, on this call, we will use non-GAAP measures. Examples include non-GAAP EPS, non-GAAP net income, and adjusted EBITDA. Please see our earnings release for an explanation of our use of these non-GAAP measures. Now I would like to turn the call over to Jonathan.

Thank you, Brian. Good afternoon, everyone, and thank you for joining us today to discuss Zedge's second quarter fiscal 2025 results. This quarter presented a challenging macro environment, negatively impacting ad revenue. For the most part, The unclear regulatory status of a TikTok ban resulted in TikTok pulling back on user acquisition spend, which had a ripple effect across the industry on companies where ad spend is an important revenue driver. Both Apple and Google removed TikTok from their storefronts for close to a month. With less demand from a high bidder, CPMs fell across the industry, although our optimization efforts did enable our overall CPMs to rise versus last year, helping offset the lower demand and lower MAU sets. While total revenue declined 10% year-over-year to $7 million, TikTok's return to the Apple and Google app stores in fiscal Q3 is yielding encouraging results even while we await a final outcome about TikTok's future in the U.S. The other key event during the quarter was our announced restructuring in order to improve operational efficiency, profitability, and free cash flow. Overall, between our restructuring and other items, we expect to reduce our annualized expense run rate by approximately $4 million, primarily related to a 22% reduction in our global workforce, driven by cuts to the GuruShots team and the closure of our Norway office. Taken together, this will yield annualized cost savings of approximately $3 million in compensation-related and other expenses and $1.2 million in savings resulting from the expiration of the retention bonus payments owed to GuruShot's employees under the terms of the April 2022 acquisition. Our financials will start reflecting these savings in Q3 and culminate in Q4. The impetus in undertaking the restructuring was to improve efficiency, enhance our ability to invest in growth opportunities, and position Zedge for sustainable profitability. In addition, we expect that this will help us in generating free cash flow. I also want to underscore that we acted decisively to mitigate the impact of TikTok's mandated withdrawal from the market by focusing efforts on areas under our control, such as further optimizing our ad inventory. For example, this quarter we added new demand partners and a new ad unit. With these continual optimizations, we are enhancing engagement-driven monetization strategies and strengthening our subscription and premium offerings. Our quarterly subscription revenue growth remained strong, increasing 13% year over year, reflecting our success in effectively monetizing our user base. We continue to reap the benefits of our revamped subscription offering and upselling legacy subscribers to higher value plans, which helped drive a 22% increase in active subscribers. This quarter, we not only experienced an uptick in subscriptions from well-developed markets, but also from emerging markets, which points to our ability to iterate until achieving success. Zedge Premium continued to see strong momentum, with GTV growing 27% year over year. Our relentless efforts to optimize monetization continues to pay off. For example, The work we've done with rewarded video has made this category a powerful monetization channel for increasing Zedge premiums GTV. Rewarded video usage grew nearly 40% with very impressive low double digit conversion rates, effectively activating a new segment of purchasers of smaller volumes of Zedge credits and expanding the overall ecosystem. The launch of Paint 2.0 on iOS in September and Android in October was also significant to our GenAI strategy, introducing powerful new creation capabilities including image-to-image and real-time photo editing. Paint has gained significant traction over the past year with increasing engagement metrics from a low single-digit percentage of Zedge Marketplace's daily users to a low double-digit percentage more recently. Engagement metrics specific to paint surged more than 100% year over year in February, further underscoring its growing popularity. Let's not forget that GenAI is still early in consumer market adoption, and we offer a great product for an attractive price. In the coming quarters, we are going to further expand the Zedge Marketplace's GenAI capabilities by offering an AI audio creator. This expansion represents a significant opportunity to further engage with users in an emerging and growing vertical with the goal of converting our consumers into creators by empowering them with an easy way to make awesome ringtones, sound effects, and personalized audio clips. By diversifying our AI-driven offerings, we aim to tap into the growing demand for customizable audio content while opening new monetization opportunities. While Guru Shots faced continued challenges in Q2, our late January restructuring plan will help lower costs and drive the business toward break-even as we revamp the unit for growth. Fortunately, there was only a slight sequential revenue decline when compared to Q1. Looking beyond the cost structure improvements we made, we are early in the process for reimagining Guru Shots 2.0 and looking at everything from gameplay to content generation to monetization and more to unlock value from this asset. Once the strategy and roadmap are solidified over the next few quarters, we will begin to allocate investment based on key milestones to enhance engagement and long-term revenue potential. Emojipedia's results were roughly flat compared to last year. On a positive note, The introduction of Emojipedia's first AI feature, an AI emoji generator, monetized with rewarded videos, has been encouraging. Users can now design their own custom emojis, allowing them to easily make their creative dreams a reality. This is in keeping with our goal of turning consumers into creators. Additionally, we plan to continue to expand the emoji sandbox over time with new content and features. And finally, we are in the process of redesigning the Emojipedia.org website to a more modern, user-friendly experience, which we believe will drive further engagement. Looking ahead, we are cautiously optimistic that the worst of the ad revenue decline is behind us. And while TikTok is back in the market at this time, like the rest of the industry, we will continue to monitor the situation and adjust if the situation is resolved in an adverse manner. That said, we are excited by the potential of the roadmap for all of our products. We continue to believe our stock is significantly undervalued based on multiple valuation metrics, and we expect to continue actively buying back shares under our existing $5 million authorization. With that, I'll now turn the call over to E to discuss our financials in more detail.