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What changed in Zedge, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Zedge, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+517 added−440 removedSource: 10-K (2025-10-28) vs 10-K (2024-10-29)

Top changes in Zedge, Inc.'s 2025 10-K

517 paragraphs added · 440 removed · 299 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Zedge Marketplace’s monetization stack consists of advertising revenue generated when users view advertisements when using the Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a monthly or annual subscription.
Biggest changeWe often refer to our freemium ringtones and wallpapers, our subscription offering, the functionality for creators to market their products and ancillary offerings and features both in our Zedge App and website, as our Zedge Marketplace. 1 https://www.coherentmarketinsights.com/industry-reports/global-creator-economy-market 2 https://market.us/report/creator-economy-market/ 3 https://inbeat.agency/blog/creator-economy-statistics 4 https://demandsage.com/creator-economy-statistics/ 5 https://www.forbes.com/sites/stevenbertoni/2025/06/16/forbes-top-creators-2025/ 6 https://www.wpbeginner.com/research/creator-economy-statistics-that-will-blow-you-away/ 7 https://nealschaffer.com/creator-economy-statistics/ 8 https://www.spiralytics.com/blog/content-creator-statistics-2025/ 9 https://blog.invitemember.com/how-much-do-content-creators-make/ 10 https://brentonway.com/top-influencer-marketing-statistics/ 11 https://blog.hootsuite.com/instagram-statistics/ 1 The Zedge Marketplace’s monetization stack consists of advertising revenue generated when users view advertisements when using the Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a monthly or annual subscription.
Our leading products include Zedge Ringtones and Wallpapers, which we refer to as our “Zedge App,” a freemium digital content marketplace offering mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted source for ‘all things emoji’.
Our leading products include Zedge Ringtones and Wallpapers, which we refer to as our “Zedge App,” a freemium digital content marketplace offering mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper and ringtone maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted source for ‘all things emoji’.
We believe that our products and customer base are attractive to advertisers, brands, artists, and players and will yield new monetization opportunities. In addition, we expect that we will be able to capitalize on cross marketing our suite of products to this customer base. ● Continue to invest in product and technology investment in and across our product suite .
We believe that our products and customer base are attractive to advertisers, brands, artists, and players and will yield new monetization opportunities. In addition, we expect that we will be able to capitalize on cross marketing our suite of products to this customer base. ● Continue to invest in product and technology in and across our product suite .
We invest significant resources in product development, design, and usability. We beta test product enhancements extensively and closely monitor customer feedback to ensure that we meet users’ needs. To date, our Zedge App has received more than 15 million reviews in Google Play where it boasts a 4.7 star rating out of a maximum of 5 stars.
We invest significant resources in product development, design, and usability. We beta test product enhancements extensively and closely monitor customer feedback to ensure that we meet users’ needs. To date, our Zedge App has received more than 16 million reviews in Google Play where it boasts a 4.7 star rating out of a maximum of 5 stars.
The Android version of the Zedge App is available in 17 languages and Emojipedia is available in 19 languages. We possess a highly diversified portfolio of content and attribute this in part to our global reach which makes us attractive to creators interested in meeting various customer tastes and preferences.
The Android version of the Zedge App is available in 14 languages and Emojipedia is available in 19 languages. We possess a highly diversified portfolio of content and attribute this in part to our global reach which makes us attractive to creators interested in meeting various customer tastes and preferences.
We expect to continue devoting resources to growing our user base profitably by: ○ analyzing user demographics to identify key segments that yield the highest profitability and quickest return on ad spend (ROAS); 3 ○ testing to determine which user segments are most responsive to new offerings and crafting targeted marketing strategies based on those insights; ○ studying our users’ needs and enhancing our products to align with the preferences of our most profitable segments; ○ developing and offering new features and services that are attractive to both new and existing users; ○ investing in paid user acquisition campaigns that yield profitable customers, based on empirical data and focused, primarily, on well-developed markets; and ○ exploring crossover marketing opportunities between user segments to maximize reach and engagement; ○ expanding our reach by collaborating with strategic partners. ● Improve monetization .
We expect to continue devoting resources to growing our user base profitably by: ○ analyzing user demographics to identify key segments that yield the highest profitability and quickest ROAS; 3 ○ testing to determine which user segments are most responsive to new offerings and crafting targeted marketing strategies based on those insights; ○ studying our users’ needs and enhancing our products to align with the preferences of our most profitable segments; ○ developing and offering new features and services that are attractive to both new and existing users; ○ investing in paid user acquisition campaigns that yield profitable customers, based on empirical data and focused, primarily, on well-developed markets; and ○ exploring crossover marketing opportunities between user segments to maximize reach and engagement. ● Improve monetization .
Every month, GuruShots stages more than 300 competitions that result in players uploading in excess of 670,000 photographs and casting close to 3.2 billion “perceived votes,” which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related to that user.
Every month, GuruShots stages more than 300 competitions that result in players uploading in excess of 550,000 photographs and casting close to 2.8 billion “perceived votes,” which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related to that user.
We have benefitted from the investment we have made in our data and business analytics teams enabling us to make data driven decisions in shortened timeframes and also expand the number of A/B tests that we use to compare various product changes. ● Build our marketplace into a compelling platform for artists and creators .
We have benefited from the investment we have made in our data and business analytics teams enabling us to make data driven decisions in shortened timeframes and also expand the number of A/B tests that we use to compare various product changes. ● Build our marketplaces into a compelling platform for artists and creators .
Zedge Holdings, Inc. was incorporated in Delaware in 2008, and our name was changed to Zedge, Inc. in 2016. In 2016, IDT Corporation spun off our stock to its stockholders, and our Class B common stock was listed on the NYSE American with the ticker symbol “ZDGE”.
In December 2006, IDT Corporation acquired 90% of Zedge. Zedge Holdings, Inc. was incorporated in Delaware in 2008, and our name was changed to Zedge, Inc. in 2016. In 2016, IDT Corporation spun off our stock to its stockholders, and our Class B common stock was listed on the NYSE American with the ticker symbol “ZDGE”.
Players can use this currency to unlock competitions or gain an edge by purchasing resources and participating in additional gameplay. Over the past seven years, the monthly average paying player spend has increased in excess of 9.9% annually to more than $50.9 per player.
Players can use this currency to unlock competitions or gain an edge by purchasing resources and participating in additional gameplay. Over the past eight years, the monthly average paying player spend has increased in excess of 6.2% annually to more than $40.9 per player.
In January 2019, we started offering freemium Zedge App Android users the ability to convert into paying subscribers in exchange for removing unsolicited advertisements from our Zedge App. As of July 31, 2023, we had approximately 638,000 active subscribers. In April 2023, we introduced a subscription tier in the iOS version of the app.
In January 2019, we started offering freemium Zedge App Android users the ability to convert into paying subscribers in exchange for removing unsolicited advertisements from our Zedge App. In April 2023, we introduced a subscription tier in the iOS version of the app. As of July 31, 2025, we had approximately 984,000 active subscribers, including approximately 693,000 lifetime subscriptions.
The Zedge App has a global customer base of approximately 26 million MAU as of July 31, 2024, enabling users to easily personalize their mobile phones with a wide variety of free, high-quality ringtones, wallpapers, notification sounds, video wallpapers, custom app icons (only available for iOS), as well as create bespoke wallpapers with pAInt, our generative AI wallpaper maker.
The Zedge App has a global customer base of approximately 23.3 million MAU as of July 31, 2025, enabling users to easily personalize their mobile phones with a wide variety of free, high-quality ringtones, wallpapers, notification sounds, video wallpapers, custom app icons (only available for iOS), as well as create bespoke wallpapers with pAInt, our generative AI creation suite.
There are many online platforms that offer content creators an ecosystem in which they can make their content available to consumers. Some of these platforms may have better incentives, paid or other, that may potentially make them more attractive than our marketplace. ● Advertisers . We face significant competition in securing spend from advertisers. ● Other Game Developers .
There are many online platforms that offer content creators an ecosystem in which they can make their content available to consumers. Some of these platforms may have better incentives, paid or other, that may potentially make them more attractive than our marketplace. ● Advertisers .
Using our current products as an example, GuruShots is a skill-based game that attracts creators (mainly, amateur photographers) with friendly photo competitions in which they compete to gain recognition and pedigree.
One example of this approach in practice using our current is GuruShots. GuruShots is a skill-based game that attracts creators (mainly, amateur photographers) with friendly photo competitions in which they compete to gain recognition and pedigree.
We benefit from having a large customer base. As of July 31, 2024, the Zedge App had 26.1 million MAU, of which approximately 21.1% were in well-developed markets and 78.9% were in emerging markets. Typically, customers in well-developed markets monetize at a material premium when compared to those in emerging markets.
We benefit from having a large customer base. As of July 31, 2025, the Zedge App had 23.3 million MAU, of which approximately 23.3% were in well-developed markets and 76.7% were in emerging markets. Typically, customers in well-developed markets monetize at a material premium when compared to those in emerging markets.
These competitors, many of whom we may not be aware of, may be more proficient at capitalizing on user acquisition channels in order to gain access to large user bases and their network effects to expand virally and quickly. ● Alternative options and products for mobile personalization, generative AI image creation, games and emojis .
Game and mobile app developers that offer engaging and interesting products are competitors and we may not be aware of many of them who may be more proficient at capitalizing on user acquisition channels in order to gain access to large user bases and their network effects to expand virally and quickly. ● Alternative options and products for mobile personalization, generative AI creation tools, games and emojis .
In addition, we have obtained trademark registrations for “GuruShots” in the United States, applied for trademark protection for “GuruShots” in Canada, India, the European Union and the United Kingdom, and have obtained copyright registrations for the GuruShots mobile and web-based applications. Human Capital Our headcount totaled 99 as of July 31, 2024.
In addition, we have obtained trademark registrations for “GuruShots” in the United States, Canada, European Union, and United Kingdom applied for trademark protection for “GuruShots” in India, and have obtained copyright registrations for the GuruShots mobile and web-based applications.
In December 2022, we introduced ‘pAInt’ our generative AI wallpaper maker within the Zedge App. pAInt enables users to create high quality images by typing a brief description of what they are interested in and tuning with different style types.
In December 2022, we introduced ‘pAInt’ our generative AI creation suite within the Zedge App. pAInt enables users with the ability to create high quality AI images and audio by typing a brief description of what they are interested in or by uploading visual content that they want to tune with AI.
As of July 31, 2024, our Zedge App had been installed nearly 674 million times since inception and, over the past two fiscal years, has had between 26.1 million and 32.2 million monthly active users (“MAU”), ending with 26.1 million MAU as of July 31, 2024.
Over the past two fiscal years, our Zedge App has had between 22.1 million and 28.7 million monthly active users (“MAU”), ending with 23.3 million MAU as of July 31, 2025.
The agreements we enter into with our employees also provide that all software, inventions, developments, works of authorship, and trade secrets created by them during the course of their employment are our property. 7 We have been granted trademark protection for “Zedge” in the United States, European Union, United Kingdom, India, and Canada, “We Make Phones Personal,” and “Zedge, Everything You,” “Tattoo Your Phone,” “Shortz – Chat Stories By Zedge,” and “NFTs Made Easy” in United States and a stylized “D” logo in the European Union, United Kingdom, the United States, and Canada.
We have been granted trademark protection for “Zedge” in the United States, European Union, United Kingdom, India, and Canada, “We Make Phones Personal,” “Zedge, Everything You,” “Tattoo Your Phone,” “Shortz – Chat Stories By Zedge,” and “NFTs Made Easy” in United States and a stylized “D” logo in the European Union, United Kingdom, the United States, and Canada.
Based on analyzing user data and performing extensive user testing, we will determine whether to refine the user experience and scale or cease development of this title. 2 In August 2021, we acquired Emojipedia Pty Ltd (“Emojipedia”), the world’s leading authority dedicated to providing up-to-date and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards.
In August 2021, we acquired Emojipedia Pty Ltd (“Emojipedia”), the world’s leading authority dedicated to providing up-to-date and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards.
We maintain leased facilities in Trondheim, Norway and Vilnius, Lithuania that accommodate our product, design, monetization, marketing and technology teams, and in Tel Aviv, Israel that accommodates members of both the GuruShots and Zedge teams. Our servers are hosted in leased data centers in different geographic locations in the United States.
We maintain leased facilities in Vilnius, Lithuania and Tel Aviv, Israel for members of both GuruShots and Zedge teams and that make up our product, design, monetization, marketing and technology teams.
Intellectual Property Our trademarks, copyrights, domain names, proprietary technology, know-how, and other intellectual property are vital to our success. We seek to protect our intellectual property rights by relying on federal, state, and common law rights in the United States and other countries, as well as contractual restrictions.
We seek to protect our intellectual property rights by relying on federal, state, and common law rights in the United States and other countries, as well as contractual restrictions. We enter into confidentiality and nondisclosure agreements with our employees and business partners.
To interface with a generative AI image maker, a user enters a text description of the image they want to create, and the software generates an image based on that description. In addition, we upgraded Zedge+, our paid subscription offering by bundling together an ad-free experience with value adds making the offering more compelling.
In addition, we upgraded Zedge+, our paid subscription offering by bundling together an ad-free experience with value adds making the offering more compelling.
Although the foundation of our strategy is currently centered around the Zedge Marketplace and GuruShots, over time we expect to expand into other content verticals that have relevance beyond gameplay.
Although the foundation of our strategy is currently centered around existing offerings, over time we expect to expand into other content verticals that have relevance beyond gameplay and we continuously evaluate our units to determine which best fit into our strategic goals in their current forms, which need revamping and which no longer support our long term goals.
In addition, we migrated to a coin-based economy with multiple currencies in order to enable more players to earn and spend their currency on in-game resources. We market GuruShots to prospective players, primarily via paid user acquisition channels, and utilize a host of creative formats including static and video ads in order to promote the game.
In addition, we migrated to a coin-based economy with multiple currencies in order to enable more players to earn and spend their currency on in-game resources. Since the acquisition, GuruShots has faced challenges in growth and profitability, and its revenue has declined.
We also have a set of product initiatives specific to Emojipedia that will enable new revenue streams from this asset. ● Selectively pursue strategic investments, partnerships, and acquisitions . On a selective basis, we will look to invest in, partner with, or purchase entities that can provide synergistic growth opportunities for our Zedge Marketplace and otherwise.
On a selective basis, we will look to invest in, partner with, or purchase entities that can provide synergistic growth opportunities for our Zedge Marketplace and otherwise. For example, in April 2022 we acquired GuruShots and in August 2021 we acquired Emojipedia.
In July 2024, Emojipedia received approximately 37.6 million monthly page views and has approximately 9.6 million monthly active users as of July 31, 2024 of which approximately 46.7% are located in well-developed markets. It is the top resource for all things emoji, offering insights into data and cultural trends.
In July 2025, Emojipedia received approximately 48.4 million monthly page views and has approximately 8.9 million monthly active users as of July 31, 2025 of which approximately 46.2% are located in well-developed markets.
Executing this strategy calls for concentrating our efforts on the following goals: ● Invest in growing our user base and improving profitably .
This is an example of our ongoing efforts to apply our assets and strengths to support existing or new offerings that will enhance the value creation of our company. Executing this strategy calls for concentrating our efforts on the following goals: ● Invest in growing our user base and improving profitably .
We believe that adding the ability to sell their content to Zedge Marketplace’s 25+ million MAU is an attractive benefit that enables players not only to have fun, but also to earn money while doing so.
We believe that adding the ability for them to benefit by availing their content to third-parties is an attractive benefit that enables players not only to have fun, but also to earn money while doing so. If this dual purpose resonates well with our players it may contribute to improving user growth and increasing the lifetime value.
The mobile app ecosystem changes quickly and regularly with new apps capturing massive audiences competing for consumers’ time, mindshare, and money.
The mobile app ecosystem changes quickly and regularly with new apps capturing massive audiences competing for consumers’ time, mindshare, and money. This is an ongoing competitive threat requiring us to do our best to adapt as necessary to remain relevant and meaningful. ● Distribution and Discovery Platforms including Google, Apple, OpenAI, and other large intermediaries.
This is an ongoing competitive threat requiring us to do our best to adapt as necessary to remain relevant and meaningful. 6 Our History In 2003, Tom Arnoy, Kenneth Sundnes, and Paul Shaw launched a consumer website at www.zedge.net that people used to upload and download ringtones. In December 2006, IDT Corporation acquired 90% of Zedge.
Their algorithms, policies and AI-driven results increasingly surface answers and content within the platform UI, which may diminish referral traffic to our properties and impact acquisition costs and monetization. 6 Our History In 2003, Tom Arnoy, Kenneth Sundnes, and Paul Shaw launched a consumer website at www.zedge.net that people used to upload and download ringtones.
Finally, we have utilized AI to quickly and efficiently create many different creatives in order to attract new customers. ● Diversify our revenue stack . Historically, the majority of our revenue has been derived from advertising.
Finally, we utilize AI to quickly and efficiently market to prospective users. ● Diversify our revenue stack . Historically, the majority of our revenue has been derived from advertising. We plan to diversify our revenue streams, most recently by enabling GuruShots’ players to monetize their content, with the Company retaining a portion of the proceeds. ● Product Innovation Team.
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We are part of the ‘Creator Economy,’ which Goldman Sachs estimates is worth $250 billion globally. 1 According to Linktree, over 200 million individuals identify as creators, people who use their influence, skill, and creativity to amass an audience and monetize it. 2 Furthermore, Influencer Marketing Hub reports that out of 2,000 surveyed creators, 44.9% identify as full-time creators, 3 and Exploding Topics reports that 10% of influencers earn more than $100,000 per year. 4 We view the Creator Economy as an opportunity for Zedge to expand our business, especially as we execute by connecting our gamers with our marketplace.
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We are part of the ‘Creator Economy,’ which is estimated to be worth between $191 billion and $250 billion globally in 2025, with some forecasts placing the global market size as high as $848 billion by 2032 123 .
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We often refer to our freemium ringtones and wallpapers, our subscription offering, the functionality for creators to market their products and ancillary offering and features both in our Zedge App and website, as our Zedge Marketplace.
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According to multiple reports, there are now over 207 million active content creators worldwide. 45 Furthermore, between 45% and 47% of creators identify as working full-time in this space 678 . Most creators earn modest incomes, and studies suggest that only a small portion, approximately 4%, of creators earn more than $100,000 per year 91011 .
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In April 2023, we introduced a subscription tier in the iOS version of the app. As of July 31, 2024, we had approximately 669,0000 active subscribers. 1 https://www.latimes.com/business/story/2024-01-08/creator-influencer-economy-2024-predictions-social-media-stars 2 https://linktr.ee/creator-report 3 https://influencermarketinghub.com/creator-earnings-benchmark-report 4 https://explodingtopics.com/blog/creator-economy-stats# 1 In April 2022, we acquired GuruShots Ltd (“GuruShots”) a recognized category leader focused on gamifying the photography vertical.
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We view the Creator Economy as an opportunity for Zedge to expand our business, especially as we execute by connecting our gamers with our marketplace.
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Our marketing team invests material resources in analyzing all attributes of a campaign ranging from, among others, the creative assets, offer acquisition channel and platform (i.e., iOS, Android, and web), with the goal of determining whether a specific campaign is likely to yield a profitable customer.
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To interface with a generative AI image maker, a user enters a text description of the image they want to create, and the software generates an image based on that description. Today, pAInt is available for text-to-image, image-to-image, and text-to-audio creation.
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When we unearth a successful combination of these variables we scale up until we experience diminishing returns. Ultimately, we believe that the efforts we are making to advance the product coupled with the investment in user acquisition can significantly increase GuruShots’ player base.
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In April 2023, we introduced a subscription tier in the iOS version of the app. As of July 31, 2025, we had approximately 984,000 active subscribers. In fiscal 2025, we began building DataSeeds.AI (“DataSeeds”), a business-to-business marketplace offering access to our rapidly growing catalog of over 30 million high-quality, fully rights-cleared images for AI training, ecommerce, and stock photos.
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Since the start of fiscal 2025, Cost per Install (CPI) have trended down considerably leading us to believe that our efforts are yielding fruit. It’s too early to say with conviction whether this trend is sustainable as we scale user acquisition and whether these users will provide sufficient long-term ROI; however, we believe that these early results are encouraging.
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Uniquely positioned to deliver custom content at scale, DataSeeds leverages its global creator network, tens of thousands of photographers from GuruShots and creators from Zedge to fulfill highly specific client briefs across geographies, themes, and use cases. DataSeeds addresses a critical challenge facing foundational models today: the need for edge-case visual content to improve accuracy and performance.
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Beyond our commitment to growing both the Zedge App and GuruShots on a standalone basis, we believe that there are many potential synergies that we can capitalize on that exist between the two businesses.
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Each asset can be enhanced with detailed annotations, segmentation masks, technical metadata, and peer-based quality rankings, ensuring datasets are both robust and production-ready. With scalable infrastructure and fast turnaround times, DataSeeds is a powerful partner for enterprises building the next generation of AI-powered applications.
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Specifically, we plan to enable GuruShots players to become Zedge Premium artists and sell their photos to our audience of 25+ million MAU (as of July 31, 2024) as standard digital images. In addition, we are benefitting from the experience that the GuruShots team possesses in gamifying the Zedge App.
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In April 2022, we acquired GuruShots Ltd (“GuruShots”), a gamified photography platform that engages a global community of photographers through daily challenges, real-time feedback, and a competitive, interactive experience.
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We believe that successful gamification can contribute to increasing engagement, retention, and lifetime value, all critical KPIs for our business. Longer term, we believe that there are complementary content verticals that lend themselves to gamification.
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We have cut costs at GuruShots, including as part of the restructuring implemented in January 2025, and have materially scaled back on paid user acquisition (PUA) for the unit.
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One example is our hybrid casual title, ‘AI Art Master,’ which has been in soft-launch in the Philippines, Poland, and India, that enables players to create generative AI images and compete in themed-based competitions with these images.
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In parallel, we are developing a plan, referred to as GuruShots 2.0, to revamp GuruShots’ offering in order to put it on a growth trajectory and unlock the potential value of this asset. Our strategy focuses on attracting new users and converting them into recurring, paying players.
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As a member of the Unicode Consortium, the standards body responsible for approving new emojis, Emojipedia works alongside major emoji creators including Apple, Google, Meta, and X, formerly known as Twitter. We believe that Emojipedia provides growth potential to the Zedge App, and it was immediately accretive to earnings post acquisition in August 2021.
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To date, we have introduced a fun and comprehensive onboarding experience to draw new users into the gameplay with ease and migrated to a coin-based in-game economy to enable more opportunities to reward and monetize players Historically, we marketed GuruShots to prospective players primarily via PUA channels including Google, Meta, TikTok and other platforms, utilizing a variety of advertising media, formats, such as static and video ads.
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In the past year, we have made many changes to Emojipedia including overhauling its backend, redesigning the Emojipedia website, and introducing new entertainment-focused features to the site. We will continue to enhance this offering and are exploring additional new features which use artificial intelligence, some of which will be released before the end of the calendar year.
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As part of the GuruShots 2.0 development plan, we have significantly reduced PUA investment for GuruShots to improve Return-on-Ad-Spend (ROAS) and intend to continue managing PUA spend in the current timeframe.
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This dual purpose will likely improve user growth, engagement, retention, and monetization while simultaneously expanding our relevance to a broader community interested in high-quality photographs.
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In addition to its potential as a standalone game, we believe that the extensive library of photographs generated by GuruShots players through submissions to GuruShots’ competitions represents a valuable dataset for our emerging DataSeeds offering.
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If our strategy is correct, we will have a flywheel that drives the aforementioned KPIs while also enabling us to expand into new verticals (through internal development or acquisition), gamify them, and add new content to our marketplace.
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To date, we have secured rights to license a portion of this library for various applications, including AI training, and we continue to expand the licensable catalog by securing rights to additional photographs. We believe the scale and distinctive characteristics of this dataset position it as a meaningful resource for DataSeeds’ target market.
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Our goal is to build our marketplace into one that artists view as prioritizing their needs and addressing all aspects of their marketing and revenue generation goals including, but not limited to, ease in managing their virtual storefront, promotion, education, reporting, and distribution. ● Increase our marketing efforts .
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It is the top resource for all things emoji, offering insights into data and cultural trends. 2 Post its acquisition in August 2021, Emojipedia was immediately accretive to earnings. In the past year, we have implemented multiple changes to Emojipedia including an AI-powered emoji sticker generator tool as well as an extensive emoji sticker library.
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We plan to continue diversifying our revenue streams by advancing our existing subscription offering, optimizing the newly introduced coin-based economy in GuruShots, and introducing advertising into GuruShots. Furthermore, we expect to continue testing our print on demand offering.
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In late September 2025, Google released an update to its Search Engine Results Page (SERP) enabling users to copy emojis directly from search results rather than being directed to third-party sites such as Emojipedia. In addition, AI platforms, including ChatGPT and Claude, now return emoji results in response to user queries.
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For example, in April 2022 we acquired GuruShots and in August 2021 we acquired Emojipedia.
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While it is too early to accurately quantify the impact of these changes on Emojipedia’s monthly active users (MAU), we believe they are likely to result in reduced traffic and adversely affect revenue. In light of these developments, we are evaluating potential mitigation strategies and will determine whether such measures warrant investment given the associated costs and expected benefits.
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Game developers that offer engaging and interesting games.
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It will also enable us to expand our marketplace with a business-to-business offering where we can sell to enterprises including technology companies, stock photo sites, ecommerce vendors, to name a few. Recently, we have begun to utilize the extensive library of photographs generated by GuruShots players through submissions to GuruShots’ competitions as a dataset for our emerging DataSeeds offering.
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Our Technology Our ecosystem is powered by a scalable distributed platform that comprises both open source and proprietary technologies centered on content management and discovery, web and app development, data science and analytics, deep learning, mobile content/device compatibility, advertising/marketing tech, and reporting.
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One goal we have set for ourselves is to build marketplaces where artists’ needs are prioritized and where they can generate incremental income or benefits from their artwork. As we upgrade offerings (including the developing GuruShots 2.0) or introduce new products and services, we seek to determine which features can support this goal. ● Increase our marketing efforts .
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We have built a robust platform that allows us to ideate, test, analyze, and launch where warranted by the outcome. We enhanced our users’ content creation options with generative AI models, we embraced machine learning, including AI and LLM throughout our technology stack in order to improve content recommendations and relevancy.
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We have established a Product Innovation Team to leverage AI, vibe coding, and automations in order to accelerate the development of minimally viable products (“MVPs”) and rapidly determine, based on empirical data, which concepts merit further investment.
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From an end user’s perspective, our platform minimizes response latency while factoring in cost and focuses on key areas including content creation, relevancy and discoverability. We optimize our platform by utilizing systems, algorithms, and heuristics that organize our content based on real user data and that renders the content in a relevant fashion.
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Our enterprise-wide adoption of AI is yielding efficiencies that are enabling us to achieve this goal, allowing us to reallocate employees from existing product responsibilities to new product development.
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We focus on delivering the highest quality content to users while minimizing our infrastructure costs on used bandwidth.
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In early fiscal 2026, we launched an MVP of an app, developed in just weeks by a streamlined team of two engineers and one designer. ● Selectively pursue strategic investments, partnerships, and acquisitions .
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With GuruShots, we have added open source and proprietary technologies around gamification, including ranking algorithms that ensure fair exposure to all content in a competition, and real-time voting/ranking functionality at scale, and a personal competition recommendations system based on users’ photos and historical activity. Our infrastructure provides a fully redundant production environment in a cloud-hosted, virtual-server environment.
Added
We face significant competition in securing spend from advertisers. ● Other Game and Mobile App Developers .
Removed
We enter into confidentiality and nondisclosure agreements with our employees and business partners.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf these platforms adopt policies including those relating to advertising, privacy, or monetization that are counter to our strategy it could result in materially and adversely affecting our business. ● Zedge Premium, the section of our marketplace where we offer premium content (i.e., for purchase), may not yield the strategic goals and objectives that we envision, and our revenues, profitability and prospects may be materially and adversely negatively affected. ● If we fail to maintain and enhance our various brands, or if we incur excessive expenses in this effort, our business, results of operations and prospects may be materially and adversely affected. ● We may not be able to effectively manage our growth or implement our future business strategies, in which case our business and results of operations may be materially and adversely affected. ● If we fail to keep up with rapid technological changes in the internet and smartphone industries and adapt our products and services accordingly, our results of operations and future growth may be adversely affected. ● We have offices and other significant operations located in Lithuania, Israel, and Norway, and, therefore, our results may be adversely affected by political, economic and military instability in these countries. ● A key component of our growth strategy involves the adoption and utilization of artificial intelligence (AI), which introduces certain risks. ● Failure to detect or prevent fraudulent activities on our platform could cause users to lose confidence in our products and harm our business. ● The GuruShots acquisition may fail to yield growth opportunities and achieve beneficial synergies. ● Data privacy and security laws and regulations in the jurisdictions in which we do business subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties in the event of non-compliance, additionally the need to observe these regulations increases the cost of doing business and these laws and regulations are continually evolving.
Biggest changeContributors may choose not to provide their content for licensing purposes, which could prevent us from scaling our licensing business. ● If we fail to maintain and enhance our various brands, or if we incur excessive expenses in this effort, our business, results of operations and prospects may be materially and adversely affected. ● We may not be able to effectively manage our growth or implement our future business strategies, in which case our business and results of operations may be materially and adversely affected. ● We have offices and other significant operations located in Lithuania, and Israel, and, therefore, our results may be adversely affected by political, economic and military instability in these countries. ● Data privacy, security, and emerging AI laws and regulations in the jurisdictions in which we operate subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties in the event of non-compliance.
This action also negatively impacted GuruShots because it utilizes a small number of outsourced contractors based in the Ukraine. This resulted in temporarily disrupting the work product associated with these contractors at the outset of the war.
This action also negatively impacted GuruShots because it utilizes a small number of outsourced contractors based in Ukraine. This resulted in temporarily disrupting the work product associated with these contractors at the outset of the war.
The application of existing domestic and international laws and regulations to us relating to issues such as user privacy and data protection, artificial intelligence, security, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, consumer protection, artificial intelligence and machine learning, accessibility, content regulation, quality of services, law enforcement demands, telecommunications, mobile, and intellectual property ownership and infringement in many instances is unclear or unsettled.
The application of existing domestic and international laws and regulations to us relating to issues such as user privacy and data protection, security, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, consumer protection, artificial intelligence and machine learning, accessibility, content regulation, quality of services, law enforcement demands, telecommunications, mobile, and intellectual property ownership and infringement in many instances is unclear or unsettled.
In addition, we have been granted trademark protection for “Zedge” in the United States, European Union, United Kingdom, India, and Canada, “We Make Phones Personal,” “Zedge, Everything You,” “Tattoo Your Phone,” “Shortz – Chat Stories by Zedge,” and “NFTs Made Easy” in the United States, a stylized “D” logo in the European Union, the United Kingdom, and United States, and Canada, “Emojipedia” in the United States, the European Union, the United Kingdom and Australia, “World Emoji Day” in the United States and United Kingdom, and “GuruShots” in the United States.
In addition, we have been granted trademark protection for “Zedge” in the United States, European Union, United Kingdom, India, and Canada, “We Make Phones Personal,” “Zedge, Everything You,” “Tattoo Your Phone,” “Shortz – Chat Stories by Zedge,” and “NFTs Made Easy” in the United States, a stylized “D” logo in the European Union, United Kingdom, United States, and Canada, “Emojipedia” in the United States, the European Union, the United Kingdom and Australia, “World Emoji Day” in the United States and United Kingdom, and “GuruShots” in the United States, Canada, European Union, and the United Kingdom.
However, Article 17 effectively creates a new liability exemption regime for OCSSPs (albeit a more onerous one than is currently provided by the E-Commerce Directive) under which OCSSPs will not be liable for the copyright-protected works that they communicate to the public provided that they cooperate with rightsholders by: ● making best efforts to obtain the necessary authorization (i.e., a license); ● expeditiously taking down or disabling access to content upon receiving a sufficiently substantiated notice to do so by rightsholders (i.e., similar to the existing ‘notice and take-down’ requirements); ● making best efforts to prevent future uploads of content in respect of which they have received a notice from rightsholders pursuant to the previous requirement (i.e., a ‘notice and stay down’ requirement); and ● making best efforts, in accordance with high industry standards of professional diligence, to ensure the unavailability of specific works in respect of which rightsholders have provided the ‘relevant and necessary information.’ The article also extends any licenses granted to OCSSPs to their users, as long as those users are not acting “on a commercial basis.” Additionally, our increased use of artificial intelligence (AI), including generative AI, in our product offerings presents additional risks.
However, Article 17 effectively creates a new liability exemption regime for OCSSPs (albeit a more onerous one than is currently provided by the E-Commerce Directive) under which OCSSPs will not be liable for the copyright-protected works that they communicate to the public provided that they cooperate with rightsholders by: ● making best efforts to obtain the necessary authorization (i.e., a license); ● expeditiously taking down or disabling access to content upon receiving a sufficiently substantiated notice to do so by rightsholders (i.e., similar to the existing ‘notice and take-down’ requirements); ● making best efforts to prevent future uploads of content in respect of which they have received a notice from rightsholders pursuant to the previous requirement (i.e., a ‘notice and stay down’ requirement); and ● making best efforts, in accordance with high industry standards of professional diligence, to ensure the unavailability of specific works in respect of which rightsholders have provided the ‘relevant and necessary information.’ The article also extends any licenses granted to OCSSPs to their users, as long as those users are not acting “on a commercial basis.” Our increased use of artificial intelligence (AI), including generative AI, in our product offerings presents additional risks.
For example, in 2022 the United States imposed broad-ranging economic sanctions against Russia and Belarus because of Russia’s illegal invasion of the Ukraine; ● stringent local labor laws and regulations; ● the uncertainty of enforcement of remedies in foreign jurisdictions; ● strict and unclear laws around data privacy; ● longer payment cycles; ● credit risk and higher levels of payment fraud; ● profit repatriation restrictions and foreign currency exchange restrictions; ● political or social unrest, economic instability, repression, or human rights issues; ● geopolitical events, including natural disasters, acts of war and terrorism; ● import or export regulations; ● compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery and corrupt payments to government officials; ● antitrust and competition regulations; ● potentially adverse tax developments; 25 ● seasonal volatility in business activity and local economic conditions; ● economic uncertainties relating to European sovereign and other debt; ● laws, regulations, licensing requirements, and business practices that favor local competitors or prohibit foreign ownership or investments; ● laws, regulations or rulings that block or limit access to our products; ● different, uncertain or more stringent user protection, content, data protection, privacy, intellectual property and other laws; ● risks related to other government regulation, required compliance with local laws or lack of legal precedent; and ● risks specific to operating in war-torn regions where employees may be mobilized for army service and where damage and/or loss of life may occur when under attack.
For example, in 2022 the United States imposed broad-ranging economic sanctions against Russia and Belarus because of Russia’s illegal invasion of Ukraine; ● stringent local labor laws and regulations; 29 ● the uncertainty of enforcement of remedies in foreign jurisdictions; ● strict and unclear laws around data privacy; ● longer payment cycles; ● credit risk and higher levels of payment fraud; ● profit repatriation restrictions and foreign currency exchange restrictions; ● political or social unrest, economic instability, repression, or human rights issues; ● geopolitical events, including natural disasters, acts of war and terrorism; ● import or export regulations; ● compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery and corrupt payments to government officials; ● antitrust and competition regulations; ● potentially adverse tax developments; ● seasonal volatility in business activity and local economic conditions; ● economic uncertainties relating to European sovereign and other debt; ● laws, regulations, licensing requirements, and business practices that favor local competitors or prohibit foreign ownership or investments; ● laws, regulations or rulings that block or limit access to our products; ● different, uncertain or more stringent user protection, content, data protection, privacy, intellectual property and other laws; ● risks related to other government regulation, required compliance with local laws or lack of legal precedent; and ● risks specific to operating in war-torn regions where employees may be mobilized for army service and where damage and/or loss of life may occur when under attack.
Any failure to do so could adversely affect our business, financial condition, and results of operations. ● If we are unable to compete for advertisers or if advertisers reduce their spend with us, our revenues, profitability and prospects may be materially and adversely affected. ● The digital advertising market may deteriorate or develop more slowly than expected, which could materially harm our business and results of operations. ● A material amount of our revenue is generated from a limited number of geographies and third-party advertising demand partners.
Any failure to do so could adversely affect our business, financial condition, and results of operations. ● If we are unable to compete for advertisers or if advertisers reduce their spend with us, our revenues, profitability and prospects may be materially and adversely affected. 9 ● The digital advertising market may deteriorate or develop more slowly than expected, which could materially harm our business and results of operations. ● A material amount of our revenue is generated from a limited number of geographies and third-party advertising demand partners.
Any number of factors can negatively affect user retention, growth, engagement and conversion, including if: ● users opt to utilize other competitive products or services instead of our own; ● user behavior changes with respect to our products and services resulting in a decrease of engagement and/or session time; ● users decrease their engagement, session time, or uninstall our apps because they feel their experience is diminished due to product decisions that we make with respect to introducing new features, feature enhancements, an/or monetization techniques; ● users become concerned about our user data practices or other matters related to privacy, security and the sharing of user data; 10 ● users are no longer willing to pay for subscriptions or in-app purchases or we are unable to increase the price of our subscriptions or in-app purchases; ● users have difficulty installing, updating or otherwise accessing our products and services as a result of our actions or those of third parties that we rely on to distribute our products and deliver our services; ● we fail to introduce new features, products or services that users find engaging or enhance the existing products and services with improvements that users are interested in; ● we are unable to acquire users through cost-effective marketing efforts, including both organic and paid channels; ● we are unable attract sufficient new paying users to offset and exceed those lost through natural churn thus making it more difficult to maintain and grow revenues; ● initiatives designed to attract and maintain users and increase engagement are unsuccessful because of errors that we make or policies instituted by third parties that we use to distribute our products or deliver our services; ● third-party initiatives that may enable greater use of our products, including low-cost or discounted data plans, are discontinued; ● we adopt terms, policies or procedures related to areas such as privacy, user data, content ownership, or monetization techniques that are received negatively by our users or creators; ● we fail to combat inappropriate or abusive activity on our platforms; ● we are unable to offer relevant content to our users; ● we fail to provide adequate support for our users and creators; ● there are outages or other technical problems that result in making our products and services inaccessible, unreliable or that result in a poor user experience; ● there are actions by governments that affect accessibility to our products and services in any market; or ● there are regulations and/or litigation that result in users not accepting our terms of use because of measures that we have taken in order to ensure compliance.
Any number of factors can negatively affect user retention, growth, engagement and conversion, including if: ● users opt to utilize other competitive products or services instead of our own; ● user behavior changes with respect to our products and services resulting in a decrease of engagement and/or session time; ● users decrease their engagement, session time, or uninstall our apps because they feel their experience is diminished due to product decisions that we make with respect to introducing new features, feature enhancements, and/or monetization techniques; ● users become concerned about our user data practices or other matters related to privacy, security and the sharing of user data; ● users are no longer willing to pay for subscriptions or in-app purchases or we are unable to increase the price of our subscriptions or in-app purchases; ● users have difficulty installing, updating or otherwise accessing our products and services as a result of our actions or those of third parties that we rely on to distribute our products and deliver our services; ● we fail to introduce new features, products or services that users find engaging or enhance the existing products and services with improvements that users are interested in; ● we are unable to acquire users through cost-effective marketing efforts, including both organic and paid channels; ● we are unable attract sufficient new paying users to offset and exceed those lost through natural churn thus making it more difficult to maintain and grow revenues; ● initiatives designed to attract and maintain users and increase engagement are unsuccessful because of errors that we make or policies instituted by third parties that we use to distribute our products or deliver our services; ● third-party initiatives that may enable greater use of our products, including low-cost or discounted data plans, are discontinued; ● we adopt terms, policies or procedures related to areas such as privacy, user data, content ownership, or monetization techniques that are received negatively by our users or creators; 13 ● we fail to combat inappropriate or abusive activity on our platforms; ● we are unable to offer relevant content to our users; ● we fail to provide adequate support for our users and creators; ● there are outages or other technical problems that result in making our products and services inaccessible, unreliable or that result in a poor user experience; ● there are actions by governments that affect accessibility to our products and services in any market; or ● there are regulations and/or litigation that result in users not accepting our terms of use because of measures that we have taken in order to ensure compliance.
We have encountered and will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving industries, like mobile apps, digital marketplaces and gaming, including the need to: ● accurately forecast our revenue and plan our operating expenses; 19 ● hire, integrate, and retain key personnel; ● successfully integrate and realize the benefits of the acquisitions that we have made; ● develop a scalable technology infrastructure that can efficiently and reliably address increased usage, as well as new features and services; ● comply with existing and new laws and regulations applicable to our business; ● anticipate and effectively respond to the global economy and the markets in which we operate; ● establish and expand our various digital brands; ● maintain our reputation and build trust with users, artists, advertisers and employees; ● offer competitive economics to advertisers and users alike; ● maintain and expand revenue producing initiatives including ad sales, in-app purchases and subscriptions; ● deliver superior experiences and results for users, artists and advertisers alike; ● identify, attract, retain and motivate new users and artists; and ● manage our expanding operations.
We have encountered and will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving industries, like mobile apps, digital marketplaces and gaming, including the need to: ● accurately forecast our revenue and plan our operating expenses; 24 ● hire, integrate, and retain key personnel; ● successfully integrate and realize the benefits of the acquisitions that we have made; ● develop a scalable technology infrastructure that can efficiently and reliably address increased usage, as well as new features and services; ● comply with existing and new laws and regulations applicable to our business; ● anticipate and effectively respond to the global economy and the markets in which we operate; ● establish and expand our various digital brands; ● maintain our reputation and build trust with users, artists, advertisers and employees; ● offer competitive economics to advertisers and users alike; ● maintain and expand revenue producing initiatives including ad sales, in-app purchases and subscriptions; ● deliver superior experiences and results for users, artists and advertisers alike; ● identify, attract, retain and motivate new users and artists; and ● manage our expanding operations.
In fiscal 2023 we changed this policy to a hybrid model requiring most employees to work from the office several days a week. Although this policy has been well received by employees, it is as of yet unclear whether it will be further revised. In April of 2022 we completed the acquisition of GuruShots Ltd, an Israeli based company.
In fiscal 2023 we changed this policy to a hybrid model requiring most employees to work from the office several days a week. Although this policy has been well received by employees, it is as of yet unclear whether it will be further revised. 32 In April of 2022 we completed the acquisition of GuruShots Ltd, an Israeli based company.
For example, in September 2019, our Zedge App was temporarily removed from Google Play because they asserted that the Zedge App violated their malicious behavior policy. As a result, prospective Android users were prevented from installing our Zedge App, freemium users were unable to convert into paying subscribers and existing users we unable to purchase Zedge Credits.
For example, in September 2019, our Zedge App was temporarily removed from Google Play because they asserted that the Zedge App violated their malicious behavior policy. As a result, prospective Android users were prevented from installing our Zedge App, freemium users were unable to convert into paying subscribers and existing users were unable to purchase Zedge Credits.
Any change in the licensing terms, costs, availability, or user acceptance of these technologies could materially and adversely affect our business, revenues and profitability. We track certain key performance indicators with internal and third-party tools and do not independently verify that all of this data is accurate.
Any change in the licensing terms, costs, availability, or user acceptance of these technologies could materially and adversely affect our business, revenues and profitability. 33 We track certain key performance indicators with internal and third-party tools and do not independently verify that all of this data is accurate.
We could also be negatively impacted by existing and proposed laws and regulations in the United States, Lithuania, Israel, Norway the European Union, and other jurisdictions, as well as government policies and practices related to cybersecurity, data privacy, data localization and data protection. Furthermore, the exploitation of our systems can adversely affect our products and services.
We could also be negatively impacted by existing and proposed laws and regulations in the United States, Lithuania, Israel, the European Union, and other jurisdictions, as well as government policies and practices related to cybersecurity, data privacy, data localization and data protection. Furthermore, the exploitation of our systems can adversely affect our products and services.
Monitoring (and, if applicable, complying with) these developments is likely to increase the cost of doing business and any failure to comply with new laws may harm our business and reputation. 9 ● Our business depends on our ability to collect and effectively use data to serve relevant advertising, deliver suitable content, and identify appropriate customer prospects, and any limitation on the collection and use of this data could significantly diminish the value of our services, cause us to lose clients, make us less attractive to prospective customers and revenues. ● Any significant system or network disruption or cyberattack could have a material adverse effect on our business prospects and results of operations. ● We are controlled by our majority stockholder, which limits the ability of other stockholders to affect our management.
Monitoring (and, if applicable, complying with) these developments is likely to increase the cost of doing business and any failure to comply with new laws may harm our business and reputation. 10 ● Our business depends on our ability to collect and effectively use data to serve relevant advertising, deliver suitable content, and identify appropriate customer prospects, and any limitation on the collection and use of this data could significantly diminish the value of our services, cause us to lose clients, make us less attractive to prospective customers and revenues. ● Any significant system or network disruption or cyberattack could have a material adverse effect on our business prospects and results of operations. ● We are controlled by our majority stockholder, which limits the ability of other stockholders to affect our management.
Our existing corporate structure and intercompany arrangements have been implemented in a manner that we believe comply with current prevailing tax laws. However, the tax positions that we take advantage of could be undermined due to changing tax laws, both in the United States and in other applicable jurisdictions, including Norway, Lithuania, and Israel.
Our existing corporate structure and intercompany arrangements have been implemented in a manner that we believe comply with current prevailing tax laws. However, the tax positions that we take advantage of could be undermined due to changing tax laws, both in the United States and in other applicable jurisdictions, including Lithuania, and Israel.
If we fail to manage our economy well, we risk confusing or upsetting users to the point that they reduce their purchases which could negatively hurt the business. If we are unable to compete for advertisers or if advertisers reduce their spend with us, our revenues, profitability and prospects may be materially and adversely affected.
If we fail to manage our economy well, we risk confusing or upsetting users to the point that they reduce their purchases which could negatively hurt the business. 14 If we are unable to compete for advertisers or if advertisers reduce their spend with us, our revenues, profitability and prospects may be materially and adversely affected.
Although we had positive cash flow from operating activities fiscal 2023 and 2024, we had previously incurred, and may once again incur, net losses and experience negative cash flow from operating activities in the future and may not be able to obtain additional capital in a timely manner or on acceptable terms, or at all.
Although we had positive cash flow from operating activities fiscal 2023, 2024 and 2025, we had previously incurred, and may once again incur, net losses and experience negative cash flow from operating activities in the future and may not be able to obtain additional capital in a timely manner or on acceptable terms, or at all.
In addition, consumer prices have risen materially throughout the Eurozone leaving uncertainty about how this may impact employment costs in the future. 28 In October of 2023 Hamas, a designated terrorist organization, launched a savage terror attack in Israel along with launching thousands of rockets into Israeli sovereign territory.
In addition, consumer prices have risen materially throughout the Eurozone leaving uncertainty about how this may impact employment costs in the future. In October of 2023 Hamas, a designated terrorist organization, launched a savage terror attack in Israel along with launching thousands of rockets into Israeli sovereign territory.
If we fail to compete effectively, our market share would decrease and our results from operations, revenues and profits would be materially and adversely affected. We are attempting to expand our Zedge Premium marketplace where professional artists, individual creators and brands offer their content to our users.
If we fail to compete effectively, our market share would decrease and our results from operations, revenues and profits would be materially and adversely affected. 23 We are attempting to expand our Zedge Premium marketplace where professional artists, individual creators and brands offer their content to our users.
The Republic of Lithuania borders both the Russian exclave of Kaliningrad and the Republic of Belarus, who are aligned in Russia’s illegal invasion of the Ukraine. This places Lithuania at a higher risk of military conflict, may negatively impact the ability to travel to and from Lithuania, and may damage the economy.
The Republic of Lithuania borders both the Russian exclave of Kaliningrad and the Republic of Belarus, who are aligned in Russia’s illegal invasion of Ukraine. This places Lithuania at a higher risk of military conflict, may negatively impact the ability to travel to and from Lithuania, and may damage its economy.
Namely, uncertain legal and regulatory treatment around the provision and use of such technologies, for example in the areas of privacy and intellectual property, may create increased and uncertain litigation exposure, the possibility of regulatory scrutiny, costly compliance requirements and limit or prohibit certain of our product offerings.
For example, uncertain legal and regulatory treatment around the provision and use of such technologies, for example in the areas of privacy and intellectual property, may create increased and uncertain litigation exposure, the possibility of regulatory scrutiny, costly compliance requirements and limit or prohibit certain of our product offerings.
It is difficult to predict the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations and financial condition and could require significant investment in systems and personnel. 20 If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could suffer and lower the expectations of equity analysts and investors, resulting in a decline in the market price of our common stock.
It is difficult to predict the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations and financial condition and could require significant investment in systems and personnel. 25 If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could suffer and lower the expectations of equity analysts and investors, resulting in a decline in the market price of our common stock.
To the extent either or both of them do so, our business, financial condition and results of operations could be materially adversely affected. 15 For example, pursuant to Google’s policy whereby only Google Play’s in-app billing system could be used for transactions in its store, we were mandated to stop the provision of non-native payment options to our users on Android during 2021, which caused disruptions for users and led to a decline in Paying Users.
To the extent either or both of them do so, our business, financial condition and results of operations could be materially adversely affected. 18 For example, pursuant to Google’s policy whereby only Google Play’s in-app billing system could be used for transactions in its store, we were mandated to stop the provision of non-native payment options to our users on Android during 2021, which caused disruptions for users and led to a decline in Paying Users.
In addition to possible stockholders’ approval, we may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs. 32 LEGAL AND REGULATORY RISKS Legal or regulatory proceedings or allegations of impropriety could have a material adverse impact on our reputation, results of operations, financial condition and liquidity.
In addition to possible stockholders’ approval, we may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs. 35 LEGAL AND REGULATORY RISKS Legal or regulatory proceedings or allegations of impropriety could have a material adverse impact on our reputation, results of operations, financial condition and liquidity.
For example, when Apple announced that UDID, a standard device identifier used in some applications, was being superseded and would no longer be supported, application developers were required to update their apps to utilize alternative device identifiers such as universally unique identifier, or, more recently, identifier-for-advertising, which simplifies the process for Apple users to opt out of behavioral targeting.
For example, when Apple announced that IDFA, a standard device identifier used in some applications, was being superseded and would no longer be supported, application developers were required to update their apps to utilize alternative device identifiers such as universally unique identifier, or, more recently, identifier-for-advertising, which simplifies the process for Apple users to opt out of behavioral targeting.
Any such equity financing could occur at prices below, or well below, the then-current trading price of our Class B common stock, which would further exacerbate the ownership interests of our stockholders. 40 Our business, financial condition and results of operations, as well as our ability to obtain additional financing, may be adversely affected by downturn in the global economy.
Any such equity financing could occur at prices below, or well below, the then-current trading price of our Class B common stock, which would further exacerbate the ownership interests of our stockholders. 43 Our business, financial condition and results of operations, as well as our ability to obtain additional financing, may be adversely affected by downturn in the global economy.
This may include but is not limited to the user’s name, telephone number, email address, web cookies, Meta and other login credentials, phone model, operating system, location, Android Advertising ID (“AAID”), Apple’s Identifier for Advertising, IDFA, as well as information relating to their interaction with advertisements and content appearing within our products.
This may include, but is not limited to, the user’s name, telephone number, email address, web cookies, Meta and other login credentials, phone model, operating system, location, Android Advertising ID (“AAID”), Apple’s Identifier for Advertising (“IDFA”), as well as information relating to their interaction with advertisements and content appearing within our products.
Existing ad-blocking technologies that have not been effective on our platform may become effective as we make certain platform changes, and new ad-blocking technologies may be developed in the future. 16 Activities of our advertiser clients and/or users could damage our reputation or give rise to legal claims against us.
Existing ad-blocking technologies that have not been effective on our platform may become effective as we make certain platform changes, and new ad-blocking technologies may be developed in the future. 19 Activities of our advertiser clients and/or users could damage our reputation or give rise to legal claims against us.
In order to do so, we still need, among other things, to: ● successfully market the recently-launched web-based offering to both creators and consumers; ● expand the digital content types we offer to include more types of creators ● continue to ensure that we build best-of-breed tools for Zedge Premium content creators that, amongst other things, meet their needs and properly address marketing, distribution, monetization, reporting, support, and ease of use; ● continue to develop a wide array of monetization mechanisms Zedge Premium creators in order to optimize revenue generation; ● continue evolving exclusive, limited edition digital content functionality that meets the needs of both creators and consumers ● successfully market Zedge Premium to the creative community and secure their adoption as a must-have in their omnichannel distribution mix; ● effectively market and convert GuruShots’ players into Zedge Premium artists; ● establish that Zedge Premium can be valuable to a sufficient number of creators in achieving their marketing and monetization objectives; and ● continue to offer an excellent and differentiated consumer experience in Zedge Premium, including all end-user facing attributes ranging from the user interface to customer support.
In order to do so, we still need, among other things, to: ● successfully market the recently-launched web-based offering to both creators and consumers; ● expand the digital content types we offer to include more types of creators; ● continue to ensure that we build best-of-breed tools for Zedge Premium content creators that, amongst other things, meet their needs and properly address marketing, distribution, monetization, reporting, support, and ease of use; ● continue to develop a wide array of monetization mechanisms Zedge Premium creators in order to optimize revenue generation; ● continue evolving exclusive, limited edition digital content functionality that meets the needs of both creators and consumers; ● successfully market Zedge Premium to the creative community and secure their adoption as a must-have in their omnichannel distribution mix; ● establish that Zedge Premium can be valuable to a sufficient number of creators in achieving their marketing and monetization objectives; and ● continue to offer an excellent and differentiated consumer experience in Zedge Premium, including all end-user facing attributes ranging from the user interface to customer support.
Although Zedge Premium’s gross transaction revenue has shown modest growth it is still too early to state with conviction that Zedge Premium will have a materially positive impact on our business.
Although Zedge Premium’s gross transaction revenue has shown impressive growth it is still too early to state with conviction that Zedge Premium will have a materially positive impact on our business.
New laws may impact our business, such as those affecting artificial intelligence, and efforts by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties for failings in these areas.
New laws may impact our business, such as those affecting artificial intelligence, online platforms, and digital content providers, and efforts by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties for failings in these areas.
Our ability to successfully retain or expand our user base will depend on our ability to achieve the following, among others: ● anticipate and effectively respond to the growing number of internet users in general and our users in particular; ● attract, retain and motivate talent, including but not limited to application developers, visual designers, product and program managers and engineers who have experience developing consumer facing digital products or other mobile internet products and services; ● effectively market our existing and new products and services in response to evolving user needs; ● develop in a timely fashion and launch new products and features, and develop and launch other internet products cost-effectively; ● funnel our existing users and prospects into new products that we develop, independent of our current product suite, and convert them into recurring users of these new products; ● successfully recruit new users, artists, individual creators and brands that offer their content to our users; ● further improve our platform to provide a compelling and optimal user experience through integration of products and services provided by existing and new third-party developers or business partners; and ● continue to provide quality content to attract and retain our users and advertisers. 17 We cannot assure you that our existing products and services, will remain sufficiently popular with our users.
Our ability to successfully retain or expand our user base will depend on our ability to achieve the following, among others: ● anticipate and effectively respond to the growing number of internet users in general and our users in particular; ● attract, retain and motivate talent, including but not limited to application developers, visual designers, product and program managers and engineers who have experience developing consumer facing digital products or other mobile internet products and services; ● effectively market our existing and new products and services in response to evolving user needs; ● develop in a timely fashion and launch new products and features, and develop and launch other internet products cost-effectively; ● funnel our existing users and prospects into new products that we develop, independent of our current product suite, and convert them into recurring users of these new products; ● successfully recruit new users, artists, individual creators and brands that offer their content to our users; ● further improve our platform to provide a compelling and optimal user experience through integration of products and services provided by existing and new third-party developers or business partners; and ● continue to provide quality content to attract and retain our users and advertisers.
A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business. We have offices and other significant operations located in Lithuania, Israel, and Norway, and, therefore, our results may be adversely affected by political, economic and military instability in these countries.
A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business. 31 We have offices and other significant operations in Lithuania and Israel, and, therefore, our results may be adversely affected by political, economic and military instability in these countries.
Any change to this mix could result in negatively impacting our business, financial condition, and results of operations. ● Our apps’ user base is heavily weighted to the Android operating system and our revenues and profitability may suffer if the market demand for Android smartphones decreases. ● We rely on third-party platforms, such as the iOS App Store, Meta, and Google Play Store, to distribute our apps and collect revenues generated on these platforms.
Any change to this mix could result in negatively impacting our business, financial condition, and results of operations. ● Our apps’ user base is heavily weighted to the Android operating system and our revenues and profitability may suffer if the market demand for Android smartphones decreases. ● We rely on third-party platforms, primarily the iOS App Store, Meta, and Google Play Store, to distribute our apps, process payments, and collect revenues generated on these platforms.
We may not be successful in diversifying our revenue mix in order to reduce our significant dependence on third-party advertisers. In fiscal 2024, approximately 79% of our revenues excluding GuruShots were generated from advertising sales. We cannot assure you that we will be successful in diversifying our revenue mix by identifying new revenue drivers that complement our advertising-heavy business.
We may not be successful in diversifying our revenue mix in order to reduce our significant dependence on third-party advertisers. In fiscal 2025, approximately 75% of our revenues excluding GuruShots were generated from advertising sales. We cannot assure you that we will be successful in diversifying our revenue mix by identifying new revenue drivers that complement our advertising-heavy business.
Although our Privacy Policy and Terms of Service provide extensive details about how we use customer data our clients may decide not to allow us to collect some or all of this data or may limit how we can use this data.
Although our Privacy Policy and Terms of Service provide extensive details about how we use customer data, our clients or advertising partners may decide not to allow us to collect some or all of this data or may limit how we can use it.
Our future success depends, in part, on our ability to aggregate and host compelling content and deliver that content to our users via our digital properties.
Our future success depends, in part, on our ability to develop or aggregate and host compelling content and deliver that content to our users via our digital properties.
In fiscal 2024, approximately 79% of our revenues (excluding GuruShots) were generated from selling advertising inventory. We generally enter into arrangements with the major programmatic advertising networks to monetize our advertising inventory. We need to maintain good relationships with these advertising networks to provide us with a sufficient inventory of advertisements.
In fiscal 2025, approximately 75% of our revenues (excluding GuruShots) were generated from selling advertising inventory. We generally enter into arrangements with the major programmatic advertising networks to monetize our advertising inventory. We need to maintain good relationships with these advertising networks to provide us with a sufficient inventory of advertisements.
We have also applied for trademark protection for “pAInt,” and “Zedge pAInt” in the United States, a stylized “D” logo in India, and “GuruShots” in Canada, India, the European Union, and the United Kingdom, and have obtained copyright registrations for the GuruShots mobile and web-based applications, and have obtained a copyright registration for our flagship app, Zedge.
We have also applied for trademark protection for “pAInt,” and “Zedge pAInt” in the United States, a stylized “D” logo in India, and “GuruShots” in India, and have obtained copyright registrations for the GuruShots mobile and web-based applications, and have obtained a copyright registration for our flagship app, Zedge.
Conversely, over the past seven years, GuruShots has successfully increased the compounded annual growth rate of monthly spending per paying player by around 9.9%. There can be no assurance that we will be able to continue to retain paying users, grow or maintain subscription levels or that paying users will maintain or increase their spending.
Conversely, over the past nine years, GuruShots has successfully increased the compounded annual growth rate of monthly spending per paying player by around 6.2%. There can be no assurance that we will be able to continue to retain paying users, grow or maintain subscription levels or that paying users will maintain or increase their spending.
Compliance failure either by us or our partners, or vendors could harm our business. ● New laws may impact our business, such as those affecting artificial intelligence and efforts by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties for failings in these areas.
Compliance failures by us, our partners, or our vendors could harm our business, reputation, and financial results. ● New laws may impact our business, such as those affecting artificial intelligence and efforts by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties for failings in these areas.
Our apps’ user base is heavily weighted to smartphones running the Android operating system, which constituted approximately 96% of our MAU (excluding Emojipedia) as of July 31, 2024, and most of our revenues for fiscal 2024.
Our apps’ user base is heavily weighted to smartphones running the Android operating system, which constituted approximately 95% of our MAU (excluding Emojipedia) as of July 31, 2025, and most of our revenues for fiscal 2025.
The overwhelming majority of our employees are located in Lithuania, Israel, and Norway and many of our senior managers live in Israel or Lithuania. For those that reside in Israel and Lithuania political, economic and military conditions directly affect our business.
The overwhelming majority of our employees are located in Lithuania and Israel and many of our senior managers live in these countries. For those that reside in Israel and Lithuania political, economic and military conditions directly affect our business.
For example, in 2024 and 2023 our marketing expenses were approximately $6.9 million and $3.2 million, respectively, and we expect our marketing expenses to continue to account for a significant portion of our operating expenses.
For example, in 2025 and 2024 our marketing expenses were approximately $8.2 million and $6.9 million, respectively, and we expect our marketing expenses to continue to account for a significant portion of our operating expenses.
Our effective tax rate for fiscal 2024 was 19.3% compared with 7.0% for fiscal 2023. In general, changes in applicable U.S. federal and state and foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our tax expense.
Our effective tax rate for fiscal 2025 was 11.9% compared with 19.3% for fiscal 2024. In general, changes in applicable U.S. federal and state and foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our tax expense.
Any change to this mix could result in negatively impacting our business, financial condition, and results of operations. In fiscal 2024, revenue from well developed economies accounted for approximately 80% of our total revenues and 69% of our total advertising revenues were generated by three advertising demand partners.
Any change to this mix could result in negatively impacting our business, financial condition, and results of operations. In fiscal 2025, revenue from well developed economies accounted for approximately 81% of our total revenues and 72% of our total advertising revenues were generated by three advertising demand partners.
Many factors, some of which are beyond our control, are important to maintaining and enhancing our various brands and may negatively impact our brand and reputation if not properly managed, such as our ability to: ● maintain an easy and reliable user experience as user preferences evolve and as our brands expand into new service categories and new service lines; ● remain relevant to users who can turn to other providers for digital content and marketplaces and mobile games; ● increase brand awareness among existing and potential users, advertisers and content providers through various marketing and promotional activities; ● adopt new technologies or adapt our products and services to meet user needs or emerging industry standards; and ● distinguish us from the competition and maintain this distinction.
Many factors, some of which are beyond our control, are important to maintaining and enhancing our various brands and may negatively impact our brand and reputation if not properly managed, such as our ability to: ● maintain an easy and reliable user experience as user preferences evolve and as our brands expand into new service categories and new service lines; ● remain relevant to users who can turn to other providers for digital content and marketplaces and mobile games; ● increase brand awareness among existing and potential users, advertisers and content providers through various marketing and promotional activities; ● adopt new technologies or adapt our products and services to meet user needs or emerging industry standards; ● distinguish us from the competition and maintain this distinction; and ● address ethical concerns related to our use of AI technologies, particularly if users perceive AI-driven decisions as opaque or unfair, which could harm our brand and user trust.
In addition, the acquisition was meant to deliver strategic synergies on a combined basis. Our success in realizing these growth opportunities and strategic synergies, and their associated timing depends, amongst other things, on the successful integration of the respective businesses.
To date this has not been the case. In addition, the acquisition was meant to deliver strategic synergies on a combined basis. Our success in realizing these growth opportunities and strategic synergies, and their associated timing depends, amongst other things, on the successful integration of the respective businesses.
We are exploring such solutions on a country-by-country basis. However, as these solutions are in their infancy, they may evolve following subsequent regulatory mandates or organically at Google’s behest, and as such we will need to be ready to continuously adapt to such changes.
However, as these solutions are in their infancy, they may evolve following subsequent regulatory mandates or organically at Google’s behest, and as such we will need to be ready to continuously adapt to such changes.
Although we have invested and continue to invest in systems and resources, which are intended to ensure that we are compliant with the requirements of the GDPR, CCPA, DMCA, the DSM Directive and other U.S. and international laws relating to, among other things, materials that infringe on copyrights and contain other objectionable content, our systems may not be sufficient or we may unintentionally err and fail to comply with these laws and regulations which could expose us to claims, judgments, monetary liabilities and other remedies, and to limitations on our business practices which could materially adversely affect our business and financial results. 34 Data privacy and security laws and regulations in the jurisdictions in which we do business subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties in the event of non-compliance, additionally the need to observe these regulations increases the cost of doing business and these laws and regulations are continually evolving.
Although we have invested and continue to invest in systems and resources, which are intended to help us comply with the requirements of the GDPR, CCPA, DMCA, the DSM Directive and other U.S. and international laws relating to, among other things, materials that infringe on copyrights and contain other objectionable content, our systems may not be sufficient or we may unintentionally err and fail to comply with these laws and regulations which could expose us to claims, judgments, monetary liabilities and other remedies, and to limitations on our business practices which could materially adversely affect our business and financial results. 37 Data privacy, security, and emerging AI laws and regulations in the jurisdictions in which we operate subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties in the event of non-compliance.
If we fail to keep up with rapid technological changes in the internet and smartphone industries and adapt our products and services accordingly, our results of operations and future growth may be adversely affected. The internet and smartphone industries are characterized by rapid and innovative technological changes.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY If we fail to keep up with rapid technological changes in the internet, smartphone industries, and artificial intelligence (“AI”), and adapt our products and services accordingly, our results of operations and future growth may be adversely affected. The internet and smartphone industries are characterized by rapid and innovative technological changes.
If the size of the digital advertising market does not increase from current levels, or if our digital brands are unable to capture and retain a sufficient share of that market, our ability to maintain or increase our current level of advertising revenues and our revenues, profitability and prospects could be materially and adversely affected. 12 The digital advertising market may deteriorate, which could materially harm our business and results of operations.
If the size of the digital advertising market does not increase from current levels, or if our digital brands are unable to capture and retain a sufficient share of that market, our ability to maintain or increase our current level of advertising revenues and our revenues, profitability and prospects could be materially and adversely affected.
The risk of such negative developments has increased in light of the recent Hamas attacks and the war against Hamas declared by Israel. To the extent that any of these negative developments do occur, they may have an adverse effect on our business and our results of operations.
The risk of such negative developments has increased in light of the war with Hamas. To the extent that any of these negative developments do occur, they may have an adverse effect on our business and our results of operations.
Our products and services depend on mobile app stores and other third parties such as data center service providers, as well as third party cloud infrastructure and service providers, payment aggregators, computer systems, internet transit providers and other communications systems and service providers.
Our products and services depend almost entirely on mobile app stores, particularly Google Play and Apple’s App Store, and on other third parties such as data center service providers, as well as third party cloud infrastructure and service providers, payment aggregators, computer systems, internet transit providers and other communications systems and service providers.
New EU laws related to the use of data, including the EU Regulation on a Single Market for Digital Services (2022/2065) (“DSA”), the EU Regulation (2023/2854) on fair access to and use of data (“EU Data Act”), and the EU Regulation on Artificial Intelligence (“EU AI Act”), may impose additional rules and restrictions on the use of the data in our products.
New EU laws related to the use of data, including the EU Regulation on a Single Market for Digital Services (2022/2065) (“DSA”), the EU Regulation (2023/2854) on fair access to and use of data (“EU Data Act”), and the EU AI Act, which entered into force in August 2024, may impose additional rules and restrictions on the use of the data in our products.
Such losses could adversely affect our business prospects, results of operations, cash flows and financial condition. 38 RISKS RELATED INFORMATION TECHNOLOGY AND DATA SECURITY Our business depends on our ability to collect and effectively use data to serve relevant advertising, deliver suitable content, and identify appropriate customer prospects, and any limitation on the collection and use of this data could significantly diminish the value of our services, cause us to lose clients, make us less attractive to prospective customers and revenues.
RISKS RELATED INFORMATION TECHNOLOGY AND DATA SECURITY Our business depends on our ability to collect and effectively use data to serve relevant advertising, deliver suitable content, and identify appropriate customer prospects, and any limitation on the collection and use of this data could significantly diminish the value of our services, cause us to lose clients, make us less attractive to prospective customers, and harm our revenues.
In Q4 of fiscal 2024, our Zedge App’s users in emerging markets declined by 15% while its users in well-developed regions declined 19% when compared to fiscal 2023. India comprised 30% of our MAU as of July 31, 2024. This shift has negatively impacted revenues because well-developed markets command materially higher advertising rates when compared to those in emerging markets.
In Q4 of fiscal 2025, our Zedge App’s users in emerging markets declined by 13.6% while its users in well-developed regions declined 1.8% when compared to fiscal 2024. India comprised 32.5% of our MAU as of July 31, 2025. This shift has negatively impacted revenues because well-developed markets command materially higher advertising rates when compared to those in emerging markets.
We may be subject to intellectual property infringement claims or other allegations, which could require us to pay substantial statutory penalties or other damages and fines, remove relevant content, enter into license agreements which may not be available on commercially reasonable terms or could result in our being barred from third-party distribution platforms, which could harm our business and competitive position. 37 From time to time, we are subject to claims from owners of technology patents, copyrights, trademarks, trade secrets and content, who assert claims against us.
We may be subject to intellectual property infringement claims or other allegations, which could require us to pay substantial statutory penalties or other damages and fines, remove relevant content, enter into license agreements which may not be available on commercially reasonable terms or could result in our being barred from third-party distribution platforms, which could harm our business and competitive position.
To date, Zedge Premium has taken longer to scale than we originally anticipated. Furthermore, we are still integrating GuruShots and have not achieved its expected growth trajectory or realized synergies between GuruShots and our legacy operations. Finally, Android users constitute approximately 96% of our overall MAU and are prone to spend less money in apps than iOS and web users.
Furthermore, we are still integrating GuruShots and have not achieved its expected growth trajectory or realized synergies between GuruShots and our legacy operations. Finally, Android users constitute approximately 95% of our overall MAU and are prone to spend less money in apps than iOS and web users.
Jonas is able to control matters requiring approval by our stockholders, including the election of all of the directors and the approval of significant corporate matters, including any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of our other stockholders to influence our management is limited.
Jonas is able to control matters requiring approval by our stockholders, including the election of all of the directors and the approval of significant corporate matters, including any merger, consolidation or sale of all or substantially all of our assets.
Our products face competition in all aspects of their business. If our apps fail to compete effectively or if their reputation is damaged, our business, financial condition and results of operations may be materially and adversely affected.
This could harm our reputation and negatively impact user participation of our various platforms. Our products face competition in all aspects of their business. If our apps fail to compete effectively or if their reputation is damaged, our business, financial condition and results of operations may be materially and adversely affected.
In addition, a small portion of paying users generate a disproportionate percentage of revenue. Because of this, it is imperative for us to both retain these valuable customers and to maintain or increase their spend over time. In fiscal 2024, we experienced an 8% decline in paid subscriptions.
In addition, a small portion of paying users generate a disproportionate percentage of revenue. Because of this, it is imperative for us to both retain these valuable customers and to maintain or increase their spend over time. In fiscal 2025, we experienced a 17% increase in subscription revenue and a 29% increase in subscription billings.
It is possible that the enactment of new legislation and/or issuance of IRS guidance could have a material effect on our financial condition, results of operations and cash flows in future periods. 21 We are exposed to fluctuations in foreign currency exchange rates.
It is possible that the enactment of new legislation and/or issuance of IRS guidance could have a material effect on our financial condition, results of operations and cash flows in future periods.
As such, we will likely incur legal costs in identifying the extent to which obligations under the DSA and OSA may impact our business and there may be ongoing compliance costs associated with these new laws (and any comparable changes in the law in other jurisdictions).
As such, we will likely incur legal costs in identifying the extent to which obligations under the DSA, OSA, and comparable laws in other jurisdictions may impact our business, and there may be ongoing compliance costs associated with these laws. Any breaches of such laws (to the extent they apply) may also lead to penalties and reputational damage.
We may be subject to fraudulent and/or malicious activities undertaken by persons seeking to use our platform for improper purposes. Examples of such activities include the use of bots or other automated or manual mechanisms to generate fraudulent activity through our platform, which could generate revenue for the perpetrators and involve our platform in their improper activity.
Examples of such activities include the use of bots or other automated or manual mechanisms to generate fraudulent activity through our platform, which could generate revenue for the perpetrators and involve our platform in their improper activity. Detecting fraudulent or malicious activity can be difficult.
Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition or operating results to be harmed, including, but not limited to, risks regarding the following: ● We offer a suite of freemium apps and we may not be successful in adding new users or in retaining existing users, or if our users decrease their level of engagement with our products or do not make optional purchases of tokens, resources, or content, or convert into paying subscribers and renew their paid subscriptions our revenue, financial results and business may be significantly harmed. ● We may not be successful in acquiring a sufficient number of users that become purchasers or retain existing users who generate profitable revenue for our apps. 8 ● We may not manage our in-app economy well and as a result, disincentivize users from making in-app purchases.
Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition or operating results to be harmed, including, but not limited to, risks regarding the following: ● If we fail to keep up with rapid technological changes in the internet, smartphone industries, and AI, and adapt our products and services accordingly, our results of operations and future growth may be adversely affected. ● A key component of our growth strategy involves the adoption, integration, and effective utilization of AI technologies across our products, services, and internal operations, which introduces significant and evolving risks. ● We offer a suite of freemium apps and we may not be successful in adding new users or in retaining existing users, or if our users decrease their level of engagement with our products or do not make optional purchases of tokens, resources, or content, or convert into paying subscribers and renew their paid subscriptions our revenue, financial results and business may be significantly harmed. ● We may not be successful in acquiring a sufficient number of users that become purchasers or retain existing users who generate profitable revenue for our apps. ● We may not manage our in-app economy well and as a result, disincentivize users from making in-app purchases.
Although the Zedge App had initial success in converting freemium users into paid subscribers, starting with zero in January 2019 and ending fiscal 2023 with approximately 647,000, we ended fiscal 2024 with 669,000 subscribers, a 3.4% increase and there is no guarantee that we will be successful in improving subscriber base growth or in maintaining our current subscriber base.
Although the Zedge App had initial success in converting freemium users into paid subscribers, starting with zero in January 2019 and ending fiscal 2024 with approximately 669,000, we ended fiscal 2025 with 984,000 subscribers, a 47% increase and we may not be successful in improving subscriber base growth or in maintaining our current subscriber base.
We are particularly susceptible to market conditions and risks associated with the mobile app ecosystem, which also include the popularity, price, and timing of our apps, changes in user demographics, the availability and popularity of other forms of entertainment.
We are particularly susceptible to market conditions and risks associated with the mobile app ecosystem, which also include the popularity, price, and timing of our apps, changes in user demographics, the availability and popularity of other forms of entertainment. Furthermore, critical reviews and general tastes and preferences may change quickly and without prior warning.
These legal challenges could be costly to defend against, leading to substantial financial obligations and reputational damage. The evolving regulatory environment and uncertain legal precedents in this field further increase our exposure to litigation risks, which could materially affect our business, financial condition, and results of operations.
The evolving regulatory environment and uncertain legal precedents in this field further increase our exposure to litigation risks, which could materially affect our business, financial condition, and results of operations.
These risks are not confined to our internal systems; they also extend to the networks and e-commerce platforms of console providers and online partners. External factors, such as extended remote work arrangements, geopolitical tensions, and internal factors like data migration and system maintenance, further exacerbate these risks.
These risks are confined to the networks and e-commerce platforms of console providers and online partners. External factors, such as extended remote work arrangements, geopolitical tensions, and internal factors like data migration and system maintenance, further exacerbate these risks. Our systems and those of our third-party service providers may not always be fully adequate against all vulnerabilities.
If we fail to keep up with rapid and innovative technological changes to remain competitive, our future growth may be materially and adversely affected and our results of operations could be materially and adversely affected. Our international operations expose us to additional risks that could harm our business, operating results and financial condition.
If we fail to keep up with rapid and innovative technological changes to remain competitive, our future growth may be materially and adversely affected and our results of operations could be materially and adversely affected.
If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections similar to those that are currently available in the U.S. or the EU, or if a court were to disagree with our application of those rules to our solutions, our potential liability for information or content created by third parties and posted to our platform could require us to expend significant resources to try to comply with the new rules and implement additional measures to reduce our exposure to such liability or we could incur liability and our business, financial condition and results of operations could be harmed.
If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections similar to those that are currently available in the U.S. or the EU, or if a court were to disagree with our application of those rules to our solutions, our potential liability for information or content created by third parties and posted to our platform could require us to expend significant resources to try to comply with the new rules and implement additional measures to reduce our exposure to such liability or we could incur liability and our business, financial condition and results of operations could be harmed. 36 The Digital Millennium Copyright Act (the “DMCA”) has provisions that limit, but do not necessarily eliminate, our liability for caching, hosting, listing or linking user-generated materials that infringe copyrights, so long as we comply with the statutory requirements in the DMCA.
The risks associated with such breaches may be heightened by global events, further complicating our cybersecurity posture. 39 Disruption to our information technology systems, network failures, or security breaches could negatively impact our business continuity, operations, and financial results.
A data intrusion into the servers hosting our products could disrupt operations, particularly for those offering online features. The risks associated with such breaches may be heightened by global events, further complicating our cybersecurity posture. 42 Disruption to our information technology systems, network failures, or security breaches could negatively impact our business continuity, operations, and financial results.
In fiscal 2024, 79% of our Zedge App’s users were located in emerging markets with 21% of users in well-developed regions compared to 78% and 22% respectively in fiscal 2023. India comprised 30% of our MAU as of July 31, 2024.
In fiscal 2025, 76.7% of our Zedge App’s users were located in emerging markets with 23.3% of users in well-developed regions compared to 21.1% and 78.9% respectively in fiscal 2024. India comprised 32.5% of our MAU as of July 31, 2025.
The costs of compliance with and other burdens imposed by evolving data-related laws, regulations, and standards may limit the use and adoption of our products and reduce overall demand. 36 Similarly, the UK has recently passed the Online Safety Act 2023 (“OSA”).
The costs of compliance with, and other burdens imposed by, evolving data-related and AI-related laws, regulations, and standards may limit the use and adoption of our products and reduce overall demand.
If we are unsuccessful in meeting our goal, our business may suffer resulting in diluting our value proposition, losing MAU and having lower revenues and profits. 24 If we are not able to effectively compete in any aspect of our business or if our reputation is harmed by rumors or allegations regarding our business or business practices, our overall user base may decline, making it less attractive to advertisers.
If we are not able to effectively compete in any aspect of our business or if our reputation is harmed by rumors or allegations regarding our business or business practices, our overall user base may decline, making it less attractive to advertisers.
Moreover, we cannot be sure that any of our new products and services will achieve widespread market acceptance or generate incremental revenue the way our existing products and services have.
Unexpected technical, commercial or operational problems could delay or prevent the introduction of one or more of our new products or services to our users. Moreover, we cannot be sure that any of our new products and services will achieve widespread market acceptance or generate incremental revenue the way our existing products and services have.
Our net loss in fiscal 2024 was $9.2 million, our net loss in fiscal 2023 was $6.1 million.
Our net loss in fiscal 2025 was $2.4 million, our net loss in fiscal 2024 was $9.2 million.
Substituting free traffic with paid alternatives could also lead to increased costs. These risks highlight the critical importance of continuous adaptation to the evolving search engine landscape and the potential consequences if we do not adequately navigate these challenges. User acquisition for our apps depends on a host of items including and especially on paid and organic app marketing initiatives.
These risks highlight the critical importance of continuous adaptation to the evolving search engine and AI landscape and the potential consequences if we do not effectively anticipate, respond to, and capitalize on these changes. User acquisition for our apps depends on a host of items including and especially on paid and organic app marketing initiatives.
These risks inherent in our international operations and expansion increase our costs of doing business internationally and could result in material harm to our business, operating results, and financial condition. Conditions in Israel, including the October 7, 2023 attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may adversely affect our operations.
These risks inherent in our international operations and expansion increase our costs of doing business internationally and could result in material harm to our business, operating results, and financial condition. 30 Conditions in Israel, including the October 7, 2023 attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may adversely affect our operations adversely affect operations and financial condition, particularly given the ongoing war in Gaza, the June 2025 ’12-Day War’ between Israel and Iran, broader regional instability, and potential long-term impacts on Israel’s economy, technology sector, and foreign investment.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Trondheim lease is due to expire in March 2027. We lease approximately 2,200 square feet of office space in Tel Aviv, Israel that accommodates members of both the GuruShots and Zedge teams. The Tel Aviv lease is due to expire in October 2026. Our servers are hosted in leased data centers in different geographic locations in the United States.
Biggest changeWe lease approximately 2,200 square feet of office space in Tel Aviv, Israel that accommodates members of both the GuruShots and Zedge teams. The Tel Aviv lease is due to expire in October 2026. Our servers are hosted in leased data centers in different geographic locations in the United States.
Item 2. Properties Since July 2020, we have not maintained a physical headquarters, but maintain a virtual presence as our headquarters as our corporate staff has been working remotely. We lease a 4,900 square-foot office in Trondheim, Norway, as well as a satellite development center in Vilnius, Lithuania, that accommodate our product, design, monetization, marketing and technology teams.
Item 2. Properties Since July 2020, we have not maintained a physical headquarters, but maintain a virtual presence as our headquarters as our corporate staff has been working remotely. We lease a 4,900 square-foot office in Trondheim, Norway, as well as a development center in Vilnius, Lithuania, that accommodate our product, design, monetization, marketing and technology teams.
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The Trondheim lease is due to expire in March 2027 and we are exploring alternatives for that space in light of the recent restructuring and shut down of that office.
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On June 6, 2025, we signed a lease for a 3,600 square feet office space in Vilnius with the estimated move-in date on or before October 31, 2025, Note 19, Subsequent Events , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We may from time to time be subject to legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, we do not expect any of those legal proceedings to have a material adverse effect on our results of operations, cash flows or financial condition. Item 4.
Biggest changeItem 3. Legal Proceedings We may from time to time be subject to claims, demands and legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, we do not expect any of those legal proceedings to have a material adverse effect on our results of operations, cash flows or financial condition.
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Item 4. Mine Safety Disclosures None. 48 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe repurchase program does not obligate us to acquire any particular amount of our Class A common stock, has no expiration date and may be modified, suspended, or terminated at any time at our discretion. 45 The following table summarizes the share repurchase activity for the fourth quarter fiscal of 2024: Total Number of Shares Purchased as Approximate Dollar Value of Shares that May Total Number of Average Price Part of Publicly Yet Be Purchased Period Shares Purchased Paid Per Share(1) Announced Programs Under the Program (in thousands) (in thousands) (in thousands) May 1, 2024 to May 31, 2024 16 $ 2.65 16 $ 1,227 June 1, 2024 to June 30, 2024 77 $ 2.88 77 $ 1,007 July 1, 2024 - July 31, 2024 59 $ 3.72 59 $ 788 Total 152 152 (1) The average price paid per share includes any broker commissions.
Biggest changeThe 2024 Repurchase Plan does not obligate us to acquire any particular amount of our Class B common stock, has no expiration date and may be modified, suspended, or terminated at any time at our discretion. 49 The following table summarizes the share repurchase activity for the fourth quarter of fiscal 2025: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) (in thousands) (in thousands) May 1, 2025 to May 31, 2025 62 $ 2.40 62 $ 3,631 June 1, 2025 to June 30, 2025 394 $ 3.72 394 $ 2,165 July 1, 2025-July 31, 2025 184 $ 4.27 184 $ 1,378 Total 640 640 (1) The average price paid per share includes any broker commissions.
Issuer Repurchases of Equity Securities In October 2021, our board of directors authorized a repurchase program of up to 1.5 million shares of our Class B common stock at a maximum aggregate purchase price of $3.0 million (“2021 Share Repurchase Plan”) which was completed on August 28, 2024.
Issuer Repurchases of Equity Securities In October 2021, our board of directors authorized a repurchase program of up to 1.5 million shares of our Class B common stock at a maximum aggregate purchase price of $3 million (“2021 Share Repurchase Plan”) which was completed on August 28, 2024.
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which we will file with the Securities and Exchange Commission within 120 days after July 31, 2024 and which is incorporated by reference herein. Recent Sales of Unregistered Securities None.
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which we will file with the Securities and Exchange Commission within 120 days after July 31, 2025 and which is incorporated by reference herein. Recent Sales of Unregistered Securities None.
On September 9, 2024, our Board approved a new $5 million share buyback program (the “2024 Share Repurchase Plan”).
On September 9, 2024, our Board approved a $5 million share buyback program (the “2024 Share Repurchase Plan”).
As of October 28, 2024, all shares of Class A common stock are beneficially owned by Michael Jonas. The number of holders of record of our Class B common stock does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers.
As of October 27, 2025, all shares of Class A common stock are beneficially owned by Michael Jonas. The number of holders of record of our Class B common stock does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers.
On October 28, 2024, the last sales price reported on the NYSE American for our Class B common stock was $3.05 per share. On October 28, 2024, there were 263 holders of record of our Class B common stock and 1 holder of record of our Class A common stock.
On October 27, 2025, the last sales price reported on the NYSE American for our Class B common stock was $3.79 per share. On October 27, 2025, there were 257 holders of record of our Class B common stock and 1 holder of record of our Class A common stock.
We may also, from time to time, enter into Rule 10b-5 trading plans to facilitate repurchases of its shares.
We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of our shares under the 2024 Repurchase Plan.
Removed
We do not anticipate paying dividends on our common stock until we achieve sustainable profitability (after satisfying all of our operational needs) and retain certain minimum cash reserves. Distributions will be subject to the need to retain earnings for investment in growth opportunities or the acquisition of complementary assets.
Removed
The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table sets forth certain of our consolidated results of operations data for the fiscal year ended July 31, 2024 compared to the fiscal year ended July 31, 2023: Fiscal Year Ended July 31, Change 2024 2023 $ % (in thousands, except percentages) Revenues $ 30,091 $ 27,241 $ 2,850 10.5 % Direct cost of revenues 1,859 2,242 (383 ) -17.1 % Selling, general and administrative 25,625 21,857 3,768 17.2 % Depreciation and amortization 2,454 3,269 (815 ) -24.9 % Impairment of intangible assets 11,958 - 11,958 nm Impairment of goodwill - 8,727 (8,727 ) nm Change in fair value of contingent consideration - (1,943 ) 1,943 nm Loss from operations (11,805 ) (6,911 ) (4,894 ) 70.8 % Interest and other income, net 626 311 315 101.3 % Net (loss) income resulting from foreign exchange transactions (190 ) 36 (226 ) nm Income tax benefit (2,198 ) (462 ) (1,736 ) 375.8 % Net loss $ (9,171 ) $ (6,102 ) $ (3,069 ) 50.3 % nm-not meaningful 56 Comparison of Our Results of Operations for the fiscal years ended July 31, 2024 and 2023 Revenues The following table sets forth the composition of our revenues for the periods indicated: Fiscal Year Ended July 31, 2024 2023 % Changes (in thousands, except percentages) Zedge Marketplace Advertising revenue $ 21,042 $ 18,273 15.2 % Paid subscription revenue 4,349 3,488 24.7 % Other revenues 1,225 833 47.1 % Total Zedge Marketplace revenue 26,616 22,594 17.8 % GuruShots Digital goods and services 3,475 4,647 -25.2 % Total revenue $ 30,091 $ 27,241 10.5 % The following table summarizes our subscription revenue for the periods indicated: Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except revenue per subscriber and percentages) Subscription Revenue $ 4,349 $ 3,488 24.7 % Active subscriptions net increase (decrease) 22 (45 ) nm Active subscriptions at end of period 669 647 3.4 % Average active subscriptions during the period 654 657 -0.5 % Average monthly revenue per active subscription $ 0.55 $ 0.44 25.0 % nm-not meaningful The following table presents a reconciliation of subscription billings to the most directly comparable GAAP financial measures for the fiscal years ended July 31, 2024 and 2023.
Biggest changeWe regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. 60 Results of Operations The following table sets forth certain of our consolidated results of operations data for the fiscal year ended July 31, 2025 compared to the fiscal year ended July 31, 2024: Fiscal Year Ended July 31, 2025 2024 $ Change % Change (in thousands, except percentages) Revenues $ 29,398 $ 30,091 $ (693 ) -2.3 % Direct cost of revenues 1,841 1,859 (18 ) -1.0 % Selling, general and administrative 27,187 25,625 1,562 6.1 % Depreciation and amortization 1,149 2,454 (1,305 ) -53.2 % Impairment of intangible assets - 11,958 (11,958 ) -100.0 % Restructuring charges 1,605 - 1,605 nm Loss on disposal of property and equipment 21 - 21 nm Impairment of capitalized software and technology development costs 827 - 827 nm Loss from operations (3,232 ) (11,805 ) 8,573 72.6 % Interest and other income, net 666 626 40 6.4 % Net loss resulting from foreign exchange transactions (151 ) (190 ) 39 20.5 % Income taxes benefit (325 ) (2,198 ) 1,873 85.2 % Net loss $ (2,392 ) $ (9,171 ) $ 6,779 73.9 % nm-not meaningful Comparison of Our Results of Operations for the fiscal years ended July 31, 2025 and 2024 Revenues The following table sets forth the composition of our revenues for the periods indicated: Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentage) Zedge Marketplace Advertising revenue $ 20,338 $ 21,042 $ (704 ) -3.3 % Paid subscription revenue 5,093 4,349 744 17.1 % Other revenues 1,782 1,225 557 45.5 % Total Zedge Marketplace revenue 27,213 26,616 597 2.2 % GuruShots Digital goods and services 2,185 3,475 (1,290 ) -37.1 % Total revenue $ 29,398 $ 30,091 $ (693 ) -2.3 % 61 The following table summarizes our subscription revenue for the periods indicated: Fiscal Year Ended July 31, 2025 2024 % Changes (in thousands, except revenue per subscriber and percentages) Subscription Revenue $ 5,093 $ 4,349 17.1 % Active subscriptions net increase 315 22 1331.8 % Active subscriptions at end of period 984 669 47.1 % Average active subscriptions during the period 789 654 20.6 % Average monthly revenue per active subscription $ 0.54 $ 0.55 -1.8 % The following table presents a reconciliation of subscription billings to the most directly comparable GAAP financial measures for the fiscal years ended July 31, 2025 and 2024.
Alternatively, the content owner may opt to place some items behind video ad gates, in which case the end user can acquire the content by watching a brief video ad. A user can earn Zedge Credits when taking specific actions such as watching rewarded videos or completing electronic surveys. Alternatively, users can buy Zedge Credits with an in-app purchase.
Alternatively, the content owner may opt to place some items behind video ad gates, in which case end users can acquire the content by watching a brief video ad. A user can earn Zedge Credits when taking specific actions such as watching rewarded videos or completing electronic surveys. Alternatively, users can buy Zedge Credits with an in-app purchase.
If a user purchases Zedge Credits, Google Play or App Store retains a fee of 30% of the purchase price.
If a user purchases Zedge Credits, Google Play or the App Store retains a fee of 30% of the purchase price.
We report subscription revenue gross of the fee retained by Google Play and App Store, as the subscriber is our customer in the contract and we control the service prior to the transfer to the subscriber.
We report subscription revenue gross of the fee retained by Google Play and the App Store, as the subscriber is our customer in the contract and we control the service prior to the transfer to the subscriber.
Direct cost of revenues consists primarily of content hosting, content serving and filtering, and data analytic tools, excluding amortization of capitalized software and technology development costs for both internal used software and software to be sold, leased, or marketed.
Direct cost of revenues . Direct cost of revenues consists primarily of content hosting, content serving and filtering, and data analytic tools, excluding amortization of capitalized software and technology development costs for both internal used software and software to be sold, leased, or marketed.
We performed an impairment assessment of intangible assets of our GuruShots reporting segment in Q2 of fiscal 2024 and determined that its fair value was approximately $0 and recorded a full impairment charge of $11.9 million, as more fully described in Note 7, Intangible Assets, Net and Goodwill , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information. 59 Impairment of goodwill.
We performed an impairment assessment of intangible assets of our GuruShots reporting segment in Q2 of fiscal 2024 and determined that its fair value was approximately $0 and recorded a full impairment charge of $11.9 million, as more fully described in Note 7, Intangible Assets, Net and Goodwill , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
The Zedge Marketplace’s monetization stack consists of advertising revenue generated when users view advertisements when using the Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a monthly or annual subscription.
The Zedge Marketplace’s monetization stack consists of advertising revenue generated when users view advertisements when using the Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a monthly, annual or lifetime subscription.
Sales and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in revenues or operating expenses. GuruShots’ performance obligation is to display the virtual goods in game play based upon the nature of the virtual item. GuruShots categorizes its virtual goods as consumable.
Sales and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in revenues or operating expenses. GuruShots’ performance obligation is to display the virtual goods in game play based upon the nature of the virtual item. 54 GuruShots categorizes its virtual goods as consumable.
Under ASC 350, Intangibles-Goodwill and Other , goodwill is not amortized, but instead is tested for impairment annually, or if certain circumstances indicate a possible impairment may exist. 51 We test goodwill for impairment on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances that indicate that the asset might be impaired.
Under ASC 350, Intangibles-Goodwill and Other , goodwill is not amortized, but instead is tested for impairment annually, or if certain circumstances indicate a possible impairment may exist. We test goodwill for impairment on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances that indicate that the asset might be impaired.
Should the estimates and assumptions prove to be incorrect, we may be required to record impairments in future periods and such impairments could be material. Intangible assets are carried at cost, less accumulated amortization, unless a determination has been made that their value has been impaired.
Should the estimates and assumptions prove to be incorrect, we may be required to record impairments in future periods and such impairments could be material. 55 Intangible assets are carried at cost, less accumulated amortization, unless a determination has been made that their value has been impaired.
Amortization of these costs is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss. 52 Capitalized Software and Technology Development Costs-Software to Be Sold, Leased, or Marketed We expense research and development costs incurred in the process of software development until technological feasibility has been established for the product.
Amortization of these costs is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss. Capitalized Software and Technology Development Costs-Software to Be Sold, Leased, or Marketed We expense research and development costs incurred in the process of software development until technological feasibility has been established for the product.
Actual results may differ from these estimates under different assumptions or conditions. 48 The methods, estimates, interpretations, and judgments we use in applying our most critical accounting policies can have a significant impact on the results that we report in our consolidated financial statements.
Actual results may differ from these estimates under different assumptions or conditions. The methods, estimates, interpretations, and judgments we use in applying our most critical accounting policies can have a significant impact on the results that we report in our consolidated financial statements.
Google Play and App Store process subscription prepayment on Zedge’s behalf, and retain a fee of up to 30%. Subscriptions are nonrefundable after a period of seven days. Paid subscriptions are automatically renewed at expiration unless cancelled by subscribers.
Google Play and the App Store process subscription prepayment on Zedge’s behalf, and retain a fee of up to 30%. Subscriptions are nonrefundable after a period of seven days. Paid subscriptions are automatically renewed at expiration unless cancelled by subscribers.
Net (loss) income resulting from foreign exchange transactions . Net (loss) income resulting from foreign exchange transactions is comprised of gains and losses generated from movements in Norwegian Krone (“NOK”) and Euros (“EUR”) relative to the U.S. Dollar, including gains or losses from our currency hedging activities.
Net loss resulting from foreign exchange transactions is comprised of gains and losses generated from movements in Norwegian Krone (“NOK”) and Euros (“EUR”) relative to the U.S. Dollar, including gains or losses from our currency hedging activities.
We believe that the following critical accounting policies reflect the more significant judgments, estimates and assumptions used in the preparation of our consolidated financial statements. ● Revenue Recognition ● Intangible Assets-Net ● Goodwill ● Capitalized software and technology development costs ● Stock-Based Compensation ● Income Taxes See Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for a complete discussion of our significant accounting policies.
We believe that the following critical accounting policies reflect the more significant judgments, estimates and assumptions used in the preparation of our consolidated financial statements. ● Revenue Recognition ● Intangible Assets-Net ● Goodwill ● Capitalized software and technology development costs ● Stock-Based Compensation ● Restructuring Charges ● Income Taxes See Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for a complete discussion of our significant accounting policies.
In August 2021, we acquired Emojipedia Pty Ltd, the world’s leading authority dedicated to providing up-to-date and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards.
In August 2021, we acquired Emojipedia Pty Ltd (“Emojipedia”), the world’s leading authority dedicated to providing up-to-date and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards.
Certain stock options, deferred stock unit and restricted stock grants are more fully described in Note 13, Stock-Based Compensation , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. The following table summarizes stock-based compensation expense for the fiscal year ended July 31, 2024 and 2023.
Certain stock options, deferred stock unit and restricted stock grants are more fully described in Note 13, Stock-Based Compensation , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. The following table summarizes stock-based compensation expense for the fiscal year ended July 31, 2025 and 2024.
Content providers are paid their portion of revenue which is a 70% share of the gross revenue calculated. Intangible Assets-Net We test the recoverability of its intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
Content providers are paid their portion of revenue which is a 70% share of the gross revenue calculated. Intangible Assets-Net We test the recoverability of our intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
Financing Activities On October 28, 2022, we entered into an Amended Loan Agreement with Western Alliance Bank. Pursuant to the Amended Loan Agreement, Western Alliance Bank agreed to provide the Company with a new term loan facility in the maximum principal amount of $7,000,000 for a four-year term and a $4,000,000 revolving credit facility for a two-year term.
Financing Activities On October 28, 2022, we entered into an Amended Loan Agreement with Western Alliance Bank. Pursuant to the Amended Loan Agreement, Western Alliance Bank agreed to provide the Company with a new term loan facility in the maximum principal amount of $7 million for a four-year term and a $4 million revolving credit facility for a two-year term.
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report. Overview Zedge, Inc. (“Zedge”) builds digital marketplaces and friendly competitive games around content that people use to express themselves.
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report. Overview Zedge builds digital marketplaces and friendly competitive games around content that people use to express themselves.
While we use gross revenue (net of the 30% fee retained by Google Play or App Store when a user purchases Zedge Credits) as a performance metric, we record net revenue from Zedge Premium which consists of a 30% platform fee, in-app purchases profit and breakage.
While we use gross revenue (net of the 30% fee retained by Google Play or the App Store when a user purchases Zedge Credits) as a performance metric, we record revenue on a net basis from Zedge Premium which consists of a 30% platform fee, in-app purchases profit and breakage.
Stock-Based Compensation We account for our share-based compensation arrangements in accordance with ASC 718, “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values on the grant date.
Stock-Based Compensation We account for our share-based compensation arrangements in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”) which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values on the grant date.
Zedge Premium : Zedge Premium is our marketplace where artists and brands can market, distribute and sell their digital content to Zedge’s users. The content owner sets the price and the end user can purchase the content by paying for it with Zedge Credits, our closed virtual currency.
Zedge Premium : Zedge Premium is our marketplace where artists and brands can market, distribute and sell their digital content to our users. The content owner sets the price and end users can purchase the content by paying for it with Zedge Credits, our closed virtual currency.
Key Performance Indicators Our results of operations discussion includes disclosure of four key performance indicators - Monthly Active Users (MAU) and Average Revenue Per Monthly Active User (ARPMAU) for our Zedge App and Monthly Active Payers (MAP) and Average Revenue Per Monthly Active Payer (ARMAP) for GuruShots.
Key Performance Indicators Our results of operations discussion includes disclosure of four key performance indicators - Monthly Active Users (MAU) and Average Revenue Per Monthly Active User (ARPMAU) for our Zedge App and Monthly Active Payers (MAP) and Average Revenue Per Monthly Active Payer (ARPMAP) for GuruShots.
The payment terms for subscriptions sold through Google Play is net 30 days after month-end. The payment terms for subscriptions sold through App Store is net 45 days after month-end. We recognize subscription revenue ratably over the subscription periods which range from weekly, monthly, yearly and lifetime with an estimated lifespan of 30 months.
The payment terms for subscriptions sold through Google Play is net 30 days after month-end. The payment terms for subscriptions sold through the App Store is net 45 days after month-end. We recognize subscription revenue ratably over the subscription periods which range from weekly, monthly, yearly and lifetime with lifetime subscriptions deemed to have an estimated lifespan of 30 months.
This is due to the duration of the enhanced gaming experience that is provided being, in substantially all of the cases, and applying the portfolio approach (as GuruShots reasonably expects that the effects on the financial statements of applying ASC 606 guidance to the portfolio would not differ materially from applying ASC 606 guidance to the individual contracts), a very short time frame ranging from a few hours to less than two weeks.
This is due to the duration of the enhanced gaming experience that is provided being, in substantially all of the cases, and applying the portfolio approach (as GuruShots reasonably expects that the effects on the financial statements of applying Accounting Standards Codification (“ASC”) 606 guidance to the portfolio would not differ materially from applying ASC 606 guidance to the individual contracts), a very short time frame ranging from a few hours to less than two weeks.
When a user purchases Zedge Premium content using Zedge credits or watching a rewarded video, the artist or brand receives 70% of the actual revenue after the Google Play or iTunes fee (“Royalty Payment”) and we receive the remaining 30%, which is recognized as revenue.
When a user purchases Zedge Premium content using Zedge credits or watching a rewarded video, the artist or brand receives 70% of the actual revenue after the Google Play or App Store fee (“Royalty Payment”) and we receive the remaining 30%, which is recognized as revenue.
Pursuant to the Amended Loan Agreement, $2,000,000 was advanced in a single-cash advance on the closing date on October 28, 2022. At our request, the maximum principal amount of the term loan was reduced to $2 million as of May 11, 2023.
Pursuant to the Amended Loan Agreement, $2 million was advanced in a single-cash advance on the closing date on October 28, 2022. At our request, the maximum principal amount of the term loan was reduced from $7 million to $2 million as of May 11, 2023.
Every month, GuruShots stages more than 300 competitions that result in players uploading in excess of 670,000 photographs and casting close to 3.2 billion “perceived votes,” which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related to that user.
Every month, GuruShots stages more than 300 competitions that result in players uploading in excess of 550,000 photographs and casting close to 2.8 billion “perceived votes,” which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related to that user.
We recognized a Mark to Market loss of $51,000 and a Mark to Market gain of $19,000 from NOK and EUR hedging activities, respectively, as of July 31, 2024 and July 31, 2023, as more fully described in Note 4, Derivative Instruments, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
We recognized a mark-to-market gain of $18,000 and a mark-to-market loss of $51,000 from NOK and EUR hedging activities, respectively, as of July 31, 2025 and July 31, 2024, as more fully described in Note 4, Derivative Instruments, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
On October 28, 2024, the revolving credit facility was renewed for another four year term, please see Note 18, Subsequent Events , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
On October 28, 2024, the revolving credit facility was renewed for another four years term, please see Note 16, Revolving Credit Facility , to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
The following table shows our MAP and ARPMAP for the three months ended July 31, 2024 as compared to the same period a year ago: Three Months Ended July 31, 2024 2023 % Change Monthly Active Payers 4,521 6,444 -29.8 % Average Revenue per Monthly Active Payer $ 52.5 $ 50.3 4.4 % 55 The following charts present the MAP and ARPMAP – GuruShots for the consecutive eight quarters ended July 31, 2024: Our KPIs related to GuruShots are not based on any standardized industry methodology and are not necessarily calculated in the same manner that other companies or third parties may use to calculate these or similarly titled measures.
The following table shows our MAP and ARPMAP for the three months ended July 31, 2025 as compared to the same period a year ago: Three Months Ended July 31, 2025 2024 % Change Monthly Active Payers 3,326 4,521 -26.4 % Average Revenue per Monthly Active Payer $ 43.5 $ 52.5 -17.1 % The following charts present the MAP and ARPMAP – GuruShots for the consecutive eight quarters ended July 31, 2025: Our KPIs related to GuruShots are not based on any standardized industry methodology and are not necessarily calculated in the same manner that other companies or third parties may use to calculate these or similarly titled measures.
To the extent we act as the agent, revenue is reported on a net basis. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we control the good or service prior to transfer to the customer.
The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we control the good or service prior to transfer to the customer.
In July 2024, Emojipedia received approximately 37.6 million monthly page views and has approximately 9.6 million monthly active users as of July 31, 2024 of which approximately 46.7% are located in well-developed markets. It is the top resource for all things emoji, offering insights into data and cultural trends.
In July 2025, Emojipedia received approximately 48.4 million monthly page views and has approximately 8.9 million monthly active users as of July 31, 2025 of which approximately 46.2% are located in well-developed markets. It is the top resource for all things emoji, offering insights into data and cultural trends.
Reportable Segments Our business consists of two reportable segments. Recent Accounting Pronouncements See Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report, for discussion of new accounting pronouncements. 63
Recent Accounting Pronouncements See Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report, for discussion of new accounting pronouncements. 68
Revenue Recognition We generate revenue from the following sources: (1) Advertising; (2) Paid Subscriptions; (3) Other revenues (primarily from Zedge Premium) from the sale of premium content (i.e., for purchase), and (4) Digital Goods and Services. The substantial majority of our revenue is generated from selling our advertising inventory (“Advertising Revenue”) to advertising networks and advertising exchanges.
Revenue Recognition We generate revenue from the following sources: (1) Advertising; (2) Paid Subscription; (3) Other revenues including primarily Zedge Premium (the section of our marketplace where we offer premium content for purchase), and (4) Digital Goods and Services. The substantial majority of our revenue is generated from selling our advertising inventory (“Advertising Revenue”) to advertising networks and advertising exchanges.
Therefore, the result of recognizing the related revenues at the point in time which user first consumes the respective resource would yield a result that is not substantially different then ratable recognition over the period of benefit.
Therefore, the result of recognizing the related revenues at the point in time which user first consumes the respective resource would yield a result that is not substantially different then ratable recognition over the period of benefit. Accordingly, revenue is recognized once the virtual goods are sold.
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Depreciation and amortization $ 2,454 $ 3,269 -24.9 % As a percentage of revenues 8.2 % 12.0 % Depreciation and amortization expense in fiscal 2024 decreased by $0.8 million, or 24.9%, compared to fiscal 2023, primarily due to the $11.9 million impairment charge of intangible assets recorded in Q2 of fiscal 2024 discussed below.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Depreciation and amortization $ 1,149 $ 2,454 $ (1,305 ) -53.2 % As a percentage of revenues 3.9 % 8.2 % Depreciation and amortization expense in fiscal 2025 decreased by $1.3 million, or 53.2%, compared to fiscal 2024, primarily due to the $11.9 million impairment charge of intangible assets recorded in Q2 of fiscal 2024 discussed below.
Accordingly, revenue is recognized once the virtual goods are sold. 50 Gross Versus Net Revenue Recognition We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction. To the extent we act as the principal, revenue is reported on a gross basis.
Gross Versus Net Revenue Recognition We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction. To the extent we act as the principal, revenue is reported on a gross basis. To the extent we act as the agent, revenue is reported on a net basis.
The advertiser may compensate us on a cost-per-impression, cost-per-click, cost-per-action basis. 49 Paid Subscription Revenue: Beginning in January 2019 and April 2023, we started offering paid subscription services sold through Google Play and App Store, respectively. When a customer subscribes, they execute a clickthrough agreement with Zedge outlining the terms and conditions between Zedge and the subscriber.
Paid Subscription Revenue: Beginning in January 2019 and April 2023, we started offering paid subscription services sold through Google Play and the App Store, respectively. When a customer subscribes, they execute a clickthrough agreement with Zedge outlining the terms and conditions between Zedge and the subscriber.
For in-app display ads, in-app offers, engagement advertisements and other advertisements, our performance obligations are satisfied over the life of the relevant contract (i.e., over time), with revenue being recognized as advertising units are delivered, which is Zedge’s performance obligation.
For in-app display ads, in-app offers, engagement advertisements and other advertisements, our performance obligations are satisfied over the life of the relevant contract (i.e., over time), with revenue being recognized as advertising units are delivered, which is Zedge’s performance obligation. The advertiser may compensate us on a cost-per-impression, cost-per-click, cost-per-action basis.
LIQUIDITY AND CAPITAL RESOURCES General At July 31, 2024, we had cash and cash equivalents of approximately $20.0 million and working capital (current assets less current liabilities) of $17.7 million.
LIQUIDITY AND CAPITAL RESOURCES General At July 31, 2025, we had cash and cash equivalents of $18.6 million and working capital (current assets less current liabilities) of $14.7 million, compared to $20.0 million and $17.7 million, respectively, at July 31, 2024.
Amortization, which is generally over three years, begins for each project when the code is ready for use, whether or not it is actually placed in service at that time (an exception being if the project’s functionality completely depends on the completion of another project, in which case, amortization begins when that other project is ready for use).
Amortization, which is generally over three years, begins for each project when the code is ready for use, whether or not it is actually placed in service at that time (an exception being if the project’s functionality completely depends on the completion of another project, in which case, amortization begins when that other project is ready for use). 56 During the Post-Implementation/Operating Stage, we expense training costs and maintenance costs as incurred.
ARPMAU is valuable because it provides insight into how well we monetize our users and the changes and trends in ARPMAU are indications of how effective our monetization investments are. As of July 31, 2024 MAU declined 15.5% year over year primarily due to attrition in both developed markets and emerging markets.
ARPMAU is valuable because it provides insight into how well we monetize our users and the changes and trends in ARPMAU are indications of how effective our monetization investments are. As of July 31, 2025 MAU declined 11.1% year over year primarily due to attrition in emerging markets, particular in Latin America and South Asia.
During fiscal 2024 we had a pretax loss of about $11.4 million in respect of which we accrued $2.2 million in income tax benefit, an effective tax rate of 19.3% which is lower than the statutory rate primarily due to the addition of $185,000 in valuation allowances related to certain stock-based compensation and the inclusion for U.S. tax purposes, of foreign earnings partially offset by state taxes and foreign tax differential. 60 During fiscal 2023, we had a pretax loss of about $6.6 million in respect of which we accrued $0.5 million in income tax benefit, an effective tax rate of 7.0% which is lower than the statutory rate primarily due to the $8.7 million goodwill impairment charge which had an associated $2.8 million in tax basis and the $1.9 million change in fair value of contingent consideration which had no tax basis.
During fiscal 2024 we had a pretax loss of about $11.4 million in respect of which we accrued $2.2 million in income tax benefit, an effective tax rate of 19.3% which is lower than the statutory rate primarily due to the addition of $185,000 in valuation allowances related to certain stock-based compensation and the inclusion for U.S. tax purposes, of foreign earnings partially offset by state taxes and foreign tax differential.
While the customer can cancel at any time, he or she will not receive any refund but will remain entitled to receive the ad free service until the end of the subscription period. The duration of these contracts is daily, and revenue for these contracts is recognized on a daily ratable basis.
While customers can cancel at any time, they will not receive any refund, and will continue to receive the service until the end of the subscription period. The duration of these contracts is daily, and revenue for these contracts is recognized on a daily ratable basis.
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Interest and other income, net $ 626 $ 311 101.3 % As a percentage of revenues 2.1 % 1.1 % The increase in interest and other income, net in fiscal 2024 when compared to fiscal 2023 was due primarily to higher interest income earned on our cash and cash equivalents and lower interest expense resulting from the $2 million prepayment of term loan in November 2023, offset by a $50,000 impairment charge related to our investment in a privately held company of which the carrying value was reduced to $0 as of October 30, 2023.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Interest and other income, net $ 666 $ 626 $ 40 6.4 % As a percentage of revenues 2.3 % 2.1 % The increase in interest and other income, net in fiscal 2025 when compared to fiscal 2024 was primarily due to lower interest yield we received on our cash in fiscal 2025, which was partially offset by $65,000 in interest expense related to the $2 million term loan which was repaid in November 2023 and the $50,000 impairment charge related to our investment in a privately held company of which the carrying value was reduced to $0 as of October 30, 2023. 64 Net loss resulting from foreign exchange transactions .
Google and Meta, and we terminate our services with smaller customers immediately upon balances becoming past due. Since these smaller customers rely on us to derive their own revenue, they generally pay their outstanding balances on a timely basis. In the fiscal year ended July 31, 2024, two customers represented 31% and 9% of our revenue.
Google and Meta, and we terminate our services with smaller customers immediately upon balances becoming past due. Since these smaller customers rely on us to derive their own revenue, they generally pay their outstanding balances on a timely basis. We routinely assess the financial strength of our customers.
The increase in fiscal 2024 was primarily due to Zedge Premium net revenue growth which increased $0.4 million, or 44.8%, compared to fiscal 2023. Zedge Premium gross margin was 56% in fiscal 2024 compared to 53% in fiscal 2023.
The increase in fiscal 2025 was primarily due to Zedge Premium net revenue growth which increased $0.6 million, or 48.7%, compared to fiscal 2024. Zedge Premium gross margin was 68% in fiscal 2025 compared to 56% in fiscal 2024.
In the fiscal year ended July 31, 2023, two customers represented 26% and 16% of our revenue. At July 31, 2024, three customers represented 37%, 15% and 10% of our accounts receivable balance and at July 31, 2023, two customers represented 36% and 18% of our accounts receivable balance.
In the fiscal year ended July 31, 2024, two largest customers represented 31% and 9% of our revenue. At July 31, 2025, two largest customers represented 48% and 13% of our accounts receivable balance and at July 31, 2024, three largest customers represented 37%, 15% and 10% of our accounts receivable balance.
We made the final payment of about $1.0 million on August 1, 2022. Cash used in investing activities in the fiscal years ended July 31, 2024 and 2023 also consisted of capitalized software and technology development costs related to various projects that we invested in specific to the various platforms on which we operate our service.
Our cash collections in fiscal 2025 and fiscal 2024 were $30.0 million and $29.2 million, respectively. Investing Activities Cash used in investing activities in the fiscal years ended July 31, 2025 and 2024 consisted of capitalized software and technology development costs related to various projects that we invested in specific to the various platforms on which we operate our service.
On November 15, 2023, the Company voluntarily prepaid the entire principal amount of $2 million in accordance with the terms of the Amended Loan Agreement without incurring any prepayment penalty. As of July 31, 2024 and 2023, there were no availability under the term loan facility.
On November 15, 2023, the Company voluntarily prepaid the entire principal amount of $2 million in accordance with the terms of the Amended Loan Agreement without incurring any prepayment penalty.
The $1.4 million increase in deferred revenue for the 12-month period ended July 31, 2024 was primarily attributable to the life-time subscription offering we introduced in fiscal 2024.
The $2.3 million and $1.4 million increase in deferred revenue for the fiscal years ended July 31, 2025 and 2024, respectively, were primarily attributable to the life-time subscription offering we introduced in fiscal 2024.
The upgrade was designed to enhance the gaming experience for new players by increasing their potential for winning and providing immediate gratification. The new onboarding has shown improvements in engagement, retention, and revenue from new users.
In fiscal 2024, we revamped GuruShots’ customer onboarding experience by guiding new players through simplified photo competitions of limited size and duration. The upgrade was designed to enhance the gaming experience for new players by increasing their potential for winning and providing immediate gratification. The new onboarding has shown improvements in engagement, retention, and revenue from new users.
ARPMAU increased 43.3% for the three months ended July 31, 2023 when compared to the same period a year ago, primarily due to higher advertising rate and higher subscription revenue. 54 The following tables present the MAU – Zedge App and ARPMAU – Zedge App for the three months ended July 31, 2024 as compared to the same period a year ago: Three Months Ended July 31, (in millions, except percentages and ARPMAU - Zedge App) 2024 2023 % Change MAU- Zedge App 26.1 30.9 -15.5 % Developed Markets MAU - Zedge App 5.5 6.8 -19.1 % Emerging Markets MAU - Zedge App 20.6 24.1 -14.5 % Emerging Markets MAU - Zedge App/Total MAU - Zedge App 78.9 % 78.0 % 1.2 % ARPMAU - Zedge App $ 0.0791 $ 0.0552 43.3 % The following charts present the MAU – Zedge App and ARPMAU – Zedge App for the consecutive eight fiscal quarters ended July 31, 2024: GuruShots-MAPs and ARPMAP Monthly Active Payers (“MAPs”).
The following tables present the MAU – Zedge App and ARPMAU – Zedge App for the three months ended July 31, 2025 as compared to the same period a year ago: Three Months Ended July 31, (in millions, except ARPMAU - Zedge App) 2025 2024 % Change MAU - Zedge App 23.3 26.1 -11.1 % Developed Markets MAU - Zedge App 5.4 5.5 -1.8 % Emerging Markets MAU - Zedge App 17.8 20.6 -13.6 % Emerging Markets MAU - Zedge App/Total MAU - Zedge App 76.7 % 78.9 % -2.8 % ARPMAU - Zedge App $ 0.0925 $ 0.0791 16.9 % 59 The following charts present the MAU – Zedge App and ARPMAU – Zedge App for the consecutive eight fiscal quarters ended July 31, 2025: GuruShots-MAPs and ARPMAP Monthly Active Payers (“MAPs”).
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Stock-based compensation expense $ 2,141 $ 2,519 -15.0 % Stock-based compensation expense in fiscal 2024 decreased by $0.4 million, or 15.0%, compared to fiscal 2023.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Stock-based compensation expense $ 1,445 $ 2,141 $ (696 ) -32.5 % Stock-based compensation expense in fiscal 2025 decreased by $0.7 million, or 32.5%, compared to fiscal 2024.
In fiscal 2024 and fiscal 2023, we purchased 6,328 shares and 6,310 shares respectively of Class B Stock from certain employees for $13,000 and $17,000 respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock and DSUs.
In fiscal 2024, we received proceeds of $2,975 from the exercise of stock options in respect of which we issued 2,500 shares of Class B common stock. 67 In fiscal 2025 and fiscal 2024, we purchased 6,903 shares and 6,328 shares respectively of Class B Stock from certain employees for $22,000 and $13,000 respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock and DSUs.
We often refer to our freemium ringtones and wallpapers, our subscription offering, the functionality for creators to market their products and ancillary offering and features both in our Zedge App and website, as our Zedge Marketplace.
In addition, we upgraded Zedge+, our paid subscription offering by bundling together an ad-free experience with value adds making the offering more compelling. We often refer to our freemium ringtones and wallpapers, our subscription offering, the functionality for creators to market their products and ancillary offerings and features both in our Zedge App and website, as our Zedge Marketplace.
Additionally, we consider income tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss, if applicable. We performed an interim impairment test during the third quarter of fiscal 2023 and concluded that the carrying value of the GuruShots reporting unit exceeded its fair value.
Additionally, we consider income tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss, if applicable.
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Subscription Revenue $ 4,349 $ 3,488 24.7 % Changes in subscription deferred revenue 1,356 16 nm Subscription Billings (Non-GAAP) $ 5,705 $ 3,504 62.8 % nm-not meaningful 57 The following table summarizes Zedge Premium gross and net revenue for the fiscal years ended July 31, 2024 and 2023.
Fiscal Year Ended July 31, 2025 2024 $ Change % Changes (in thousands, except percentages) Subscription Revenue $ 5,093 $ 4,349 $ 744 17.1 % Changes in subscription deferred revenue 2,267 1,356 911 67.2 % Subscription Billings (Non-GAAP) $ 7,360 $ 5,705 $ 1,655 29.0 % The following table summarizes Zedge Premium gross and net revenue for the fiscal years ended July 31, 2025 and 2024.
We currently expect that our cash and cash equivalents on hand, and our cash flow from operations will be sufficient to meet our anticipated cash requirements for the twelve months following filing of this annual report on Form 10-K. 61 The following table presents selected cash flow information for the periods indicated: Fiscal Year Ended July 31, (in thousands) 2024 2023 $ Changes Cash flows provided by (used in): Operating activities $ 5,850 $ 3,162 $ 2,688 Investing activities (1,194 ) (2,422 ) 1,228 Financing activities (2,643 ) 387 (3,030 ) Effect of exchange rate changes on cash and cash equivalents (140 ) (87 ) (53 ) Increase in cash and cash equivalents $ 1,873 $ 1,040 $ 833 Operating Activities Our cash flow from operating activities varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
The following table presents selected cash flow information for the periods indicated: Fiscal Year Ended July 31, (in thousands) 2025 2024 $ Changes Cash flows provided by (used in): Operating activities $ 3,422 $ 5,850 $ (2,428 ) Investing activities (549 ) (1,194 ) 645 Financing activities (4,371 ) (2,643 ) (1,728 ) Effect of exchange rate changes on cash and cash equivalents 109 (140 ) 249 (Decrease) increase in cash and cash equivalents $ (1,389 ) $ 1,873 $ (3,262 ) Operating Activities Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
Both initiatives contributed to the $2.2 million increase in subscription billings for the twelve months ended July 31, 2024, or 62.8%, from the prior year period. For the twelve months ended July 31, 2024, our other revenue increased by $0.4 million, or 47.1%, from the prior year period.
Subscription billings increased by $1.7 million, or 29.0%, to $7.4 million in fiscal 2025 from $5.7 million in fiscal 2024. For the fiscal year ended July 31, 2025, our other revenue increased by $0.6 million, or 45.5%, from the prior year period.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.
In light of these developments, we will evaluate potential mitigation strategies and determine whether such measures warrant investment given the associated costs and expected benefits. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.
The Israel-Hamas War Given our operations in Israel, the impact of economic, political, geopolitical, and military conditions in the region directly affects us, including conflicts involving missile strikes, infiltrations, and terrorism. Notably, on October 7, 2023, Hamas launched attacks in southern Israel, resulting in casualties and military engagement.
The Israel-Hamas and Israel-Hezbollah Conflicts Given our operations in Israel, the impact of economic, political, geopolitical, and military conditions in the region directly affects us, including conflicts involving missile strikes, infiltrations, and terrorism. Notably, on October 7, 2023, Hamas, a designated terrorist organization, launched a savage terror attack in Israel, along with launching thousands of rockets into Israeli sovereign territory.
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Direct cost of revenues $ 1,859 $ 2,242 -17.1 % As a percentage of revenues 6.2 % 8.2 % Direct cost of revenues in fiscal 2024 decreased by $0.4 million, or 17.1%, compared to fiscal 2023 primarily due to the revamping of our backend infrastructure as part of the cost reduction initiatives implemented during Q3 fiscal 2023.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Direct cost of revenues $ 1,841 $ 1,859 $ (18 ) -1.0 % As a percentage of revenues 6.3 % 6.2 % Direct cost of revenues in fiscal 2025 decreased by $18,000, or 1.0%, compared to fiscal 2024 primarily due to the savings from continuing optimizing of our backend infrastructure.
An advertising network is a third-party relationship where buyers of advertising inventory go to purchase either specific targeted inventory or a large scale of inventory at a set price. Advertising Networks serve as an indirect source of advertising fill to a variety of branded ad campaigns and performance-based ad campaigns. ● Advertising Exchanges.
Advertising Revenue : We generate the bulk of our revenue from selling the Zedge Marketplace’s advertising inventory to advertising networks and advertising exchanges. ● Advertising Networks. An advertising network is a third-party relationship where buyers of advertising inventory go to purchase either specific targeted inventory or a large scale of inventory at a set price.
SG&A expense also included stock-based compensation expense including equity grants to employees and consultants, as well as stock issuances to pay for board compensations and 401(k) matching contributions.
The reduction in our headcount can be attributed to the corporate restructuring implemented in January 2025. The majority of our employees are based in Lithuania and Israel. SG&A expense also includes stock-based compensation expense including equity grants to employees and consultants, as well as stock issuances to pay for board compensations and 401(k) matching contributions.
All of these significant customers are advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers.
All of these significant customers are advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers. Reportable Segments Our business consists of two reportable segments: Zedge Marketplace and GuruShots, as further discussed in Note 15, Segment and Geographic Information .
During fiscal 2024, we repurchased 211,495 shares of our Class B Common Stock outstanding for approximately $633,000 pursuant to the 2021 Share Repurchase Plan. During fiscal 2023 we repurchased 752,687 shares of our Class B Common Stock outstanding for approximately $1,579,000 pursuant to the 2021 Share Repurchase Plan.
As of July 31, 2025, the Company had remaining authorization of approximately $1.4 million for future share repurchases under the 2024 Repurchase Plan. During fiscal 2024, we repurchased 211,495 shares of our Class B Common Stock outstanding for approximately $0.6 million pursuant to the 2021 Share Repurchase Plan.
We introduced certain AI generative features in our Zedge App in fiscal 2024 which contributed in part to the higher gross margin in fiscal 2024 as we keep 100% of the associated revenue, i.e. no royalty payment owed to the content creators.
We introduced certain generative AI features in our Zedge App in fiscal 2024 which contributed in part to the higher gross margin in fiscal 2025 as we keep 100% of the associated revenue, i.e. no royalty payment owed to the content creators. 62 For the fiscal year ended July 31, 2025, digital goods and services revenue decreased by $1.3 million, or 37.1%, from the prior year period primarily due to the 27.0% decrease in GuruShots’ MAP year over year.
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Net (loss) income resulting from foreign exchange transactions $ (190 ) $ 36 nm As a percentage of revenues -0.6 % 0.1 % nm-not meaningful In fiscal 2024 and 2023, we incurred loss of $245,000 and gain of $14,000, respectively, from NOK and EUR hedging activities.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Net loss resulting from foreign exchange transactions $ (151 ) $ (190 ) $ 39 20.5 % As a percentage of revenues -0.5 % -0.6 % nm-not meaningful In fiscal 2025 and 2024, net loss resulting from foreign exchange transactions decreased by $39,000 to $151,000 in fiscal 2025 from $190,000 in fiscal 2024 primarily due to unfavorable FX movement related to our NOK and EUR hedging activities in both periods.
Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Income tax benefit $ (2,198 ) $ (462 ) 375.8 % As a percentage of revenues -7.3 % -1.7 % Comparison of our Segment Results of Operations The following table presents the results for our Zedge Marketplace and GuruShots segment income (loss) from operations for the period indicated: Fiscal Year Ended July 31, Change 2024 2023 $ % (in thousands, except percentages) Segment income (loss) from operations: Zedge Marketplace $ 5,667 $ 6,352 (685 ) -10.8 % GuruShots (17,472 ) (13,263 ) (4,209 ) 31.7 % Total loss from operations $ (11,805 ) $ (6,911 ) (4,894 ) 70.8 % For the twelve months ended July 31, 2024, our income from operations related to Zedge Marketplace decreased by $0.7 million, or 10.8%, from the prior year period.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Income taxes benefit $ (325 ) $ (2,198 ) $ 1,873 85.2 % As a percentage of revenues -1.1 % -7.3 % Comparison of our Segment Results of Operations The following table presents the results for our Zedge Marketplace and GuruShots segment income (loss) from operations for the period indicated: Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Segment income (loss) from operations: Zedge Marketplace: $ 2,338 $ 5,667 $ (3,329 ) -58.7 % GuruShots: (5,570 ) (17,472 ) 11,902 68.1 % Total $ (3,232 ) $ (11,805 ) $ 8,573 72.6 % 65 In fiscal 2025, our income from operations related to the Zedge Marketplace decreased 58.7% to $2.3 million from $5.7 million in fiscal 2024, primarily due to higher users acquisition costs and higher other expenses incurred in the current period.
Digital Goods and Services : GuruShots generates substantially all of its revenues by selling virtual goods (ex. power-ups), in-game resources to its users. GuruShots distributes its game to the end customer through mobile platforms such as Apple’s App Store and Google Play, as well as via the web.
Digital Goods and Services : GuruShots generates the substantial majority of its revenues from the sale of virtual tokens that players can redeem for in-game goods and services (e.g., power-ups, entry fees, or resource bundles). GuruShots distributes its game to users through mobile platforms such as Apple’s App Store and Google Play, as well as via the internet.
An advertising exchange is similar to an advertising network, except that the exchange typically bids in real-time for inventory. Advertisers may utilize an exchange when looking for scale or specific audiences, and accept that the price will vary based on when and how much volume of inventory they wish to buy.
Advertisers may utilize an exchange when looking for scale or specific audiences, and accept that the price will vary based on when and how much volume of inventory they wish to buy. 53 We recognize advertising revenue as advertisements are delivered to users through impressions or ad views (depending on the terms agreed upon with the advertiser).
Prior to this, changes in Israel’s judicial system had already raised concerns about the business environment, compounded by recent events, potentially impacting foreign investment, currency fluctuations, credit ratings, interest rates, and security markets. Furthermore, regional political unrest and threats from extremist groups, notably Iran, pose additional risks.
The extent and duration of this conflict remain uncertain. Israel’s response to Hamas’ unprecedented attack led to the mobilization of IDF reservists, affecting our workforce. Prior to this, changes in Israel’s judicial system had already raised concerns about the business environment, compounded by recent events, potentially impacting foreign investment, currency fluctuations, credit ratings, interest rates, and security markets.
Fiscal Year Ended July 31, 2024 2023 % Changes (in thousands, except percentages) Zedge Premium-gross revenue (“GTV”) $ 2,148 $ 1,544 39.1 % Zedge Premium-net revenue $ 1,196 $ 826 44.8 % Gross margin 56 % 53 % For the twelve months ended July 31, 2024, our advertising revenue increased by $2.8 million, or 15.2%, from the prior 12-month period primarily due to the increase in price per advertising impression paid by the advertisers on our platform which was driven by increased competition for our ad inventory.
Fiscal Year Ended July 31, 2025 2024 $ Changes % Changes (in thousands, except percentages) Zedge Premium-gross revenue (“GTV”) $ 2,617 $ 2,148 $ 469 21.8 % Zedge Premium-net revenue $ 1,778 $ 1,196 $ 582 48.7 % Gross margin 68 % 56 % For the fiscal year ended July 31, 2025, our advertising revenue decreased by $0.7 million, or 3.3%, from the prior year period primarily due to the decrease in our ad inventory.
Our weekly, monthly, yearly and life-time subscriptions allow users to prepay a fixed fee to remove unsolicited advertisements from our Zedge App. In Zedge Premium, we receive 30% as a fee when users purchase licensed content using Zedge Credits or unlock licensed content by watching a video or taking a survey on Zedge Premium.
Our weekly, monthly, yearly and life-time subscriptions allow users to prepay a fixed fee to remove unsolicited advertisements from our Zedge App.
In addition, we migrated to a coin-based economy with multiple currencies in order to enable more players to earn and spend their currency on in-game resources. We market GuruShots to prospective players, primarily via paid user acquisition channels, and utilize a host of creative formats including static and video ads in order to promote the game.
In addition, we migrated to a coin-based economy with multiple currencies in order to enable more players to earn and spend their currency on in-game resources. Since the acquisition, GuruShots has faced challenges in growth and profitability, and its revenue has declined.
Selling, general and administrative expense (“SG&A”) consists mainly of payroll and benefits, user acquisition costs, stock-based compensation expense (as discussed below), third-party payment processing fee relate to in-app purchases, marketing, consulting, professional fees, software licensing fees, recruiting fees, facilities and public company related expenses. 58 Fiscal Year Ended July 31, 2024 2023 % Change (in thousands, except percentages) Selling, general and administrative $ 25,625 $ 21,857 17.2 % As a percentage of revenues 85.2 % 80.2 % SG&A expense in fiscal 2024 increased by $3.8 million, or 17.2%, compared to fiscal 2023.
Selling, general and administrative expense (“SG&A”) consists mainly of personnel related expenses, user acquisition costs, stock-based compensation expense (as discussed below), third-party payment processing fees related to in-app purchases (“platform fees”), marketing, consulting, professional fees, software licensing fees, recruiting fees, facilities and public company related expenses.
Players can use this currency to unlock competitions or gain an edge by purchasing resources and participating in additional gameplay.
Players can use this currency to unlock competitions or gain an edge by purchasing resources and participating in additional gameplay. Over the past eight years, the monthly average paying player spend has increased in excess of 6.2% annually to more than $40.9 per player.

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