Zedge, Inc.

Zedge, Inc. Annual Report Breakdown
Let’s break down Zedge’s year like we’re chatting over coffee…

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The Money Talk

Subscription Growth:

• 17% revenue jump in subscriptions ($0.7M increase)
• Billings surged 29% to $7.4M (like selling 29% more Netflix memberships)
• Zedge Premium crushed it: Revenue up 49% with 68% profit margins (kept 68¢ of every dollar vs. 56¢ last year)

But…

• GuruShots (their photo competition app) tanked: Revenue dropped 37% as users moved on

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Wins vs. Oops Moments

Wins:

• AI tools boosted profits: New sticker generators cut costs by avoiding artist royalties
• Tech efficiency: Saved $18K in backend costs while scaling

Oops:

• GuruShots’ user spending fell 27% – like a game losing its top players
• Costs crept up: Hiring (+3 engineers) and legal fees pushed operating expenses up 8.3%

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Behind the Scenes

• AI = cash machine: Features now directly profit without paying creator royalties
• Zedge Premium is the star: Accounts for nearly half of "other revenue"
• Cost balancing act: Saved on tech but spent $0.5M more on lawyers/engineers
• One-person control: Executive Chairman Michael Jonas holds 61% voting power – he alone can approve mergers, leadership changes, or major deals.

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What Keeps Them Up at Night?

Red Flags:

• Geopolitical risks: Teams in Israel/Lithuania face conflict exposure. GuruShots already lost Ukrainian contractors due to the war.
• Analyst dependency: Only 1 firm (Maxim Group) covers their stock. If they bail, the stock could freefall.
• Seasonal swings: Revenue spikes in Q4 (holiday ads) but slumps in Q1 – inconsistent cash flow.
• Hybrid work friction: Lithuania’s dev team resents office mandates – could hurt morale in a tight tech job market.
• GuruShots on life support: 37% revenue drop suggests it’s circling the drain.
• AI legal risks: New privacy laws in Europe/California (and Colorado’s 2026 AI rules) could mean fines or costly audits.

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The Bottom Line for Investors

✅ Reasons to Cheer:

• Subscriptions and AI are thriving (17% and 49% growth)
• Zedge Premium is a high-margin gem
• AI tools cut costs and boost profits

❌ Reasons to Pause:

• GuruShots is collapsing, costs are rising, and geopolitical risks loom
• Heavy reliance on one analyst for stock coverage
• Single leader control = fast decisions but less accountability

⚠️ Wildcards:

• Seasonal revenue swings could spook short-term investors
• Employee friction in Lithuania might impact innovation
• New AI laws could eat into profits

Final Take: Zedge is a mixed bag. The subscription/AI growth story is compelling, but risks like leadership concentration, dying products, and geopolitical exposure require careful consideration. If you’re bullish on AI and can stomach volatility, it’s worth watching. If stability is your priority, tread lightly.

This isn’t financial advice – just a clear-eyed look at the year! 😊