Zedge Posts Quarterly Revenue of $7.8 Million as Subscriptions Rise and Company Turns Profitable
Key Facts
Zedge reported fourth-quarter and fiscal-year 2026 results on October 26 for the periods ended July 31, posting quarterly revenue of $7.8 million, up 4.0% from the year-earlier period. The results showed the company turning profitable under accounting standards, alongside subscription growth and improved free cash flow. For the full fiscal year, revenue rose 7.6% to $31.6 million from $29.4 million the prior year. The composition of that growth is significant given declining advertising revenue and a shrinking monthly active user base. The figures in the company’s statement also do not support a comparison of quarterly revenue with analyst estimates that appeared in the earlier draft.
Non-GAAP diluted earnings per share were $0.04 in the fourth quarter, compared with $0.00 in the year-earlier period. Under GAAP, the company reported diluted earnings of $0.03 per share, after a loss of $0.04 per share a year earlier. GAAP net income rose to $0.4 million from a net loss of $0.6 million. The company also reported operating income of $0.3 million, compared with an operating loss of $0.7 million. For the full fiscal year, the GAAP net loss narrowed to $0.1 million from $2.4 million.
Fourth-quarter growth came from subscriptions, which generated revenue of $1.8 million, up 25.6% from $1.4 million in the year-earlier period. Advertising revenue, by contrast, fell 1.9% to $5.1 million from $5.2 million. Subscription momentum continued through the fiscal year, with revenue rising 29.5% to $6.6 million. The company’s president and chief operating officer said improved monetization supported revenue growth, particularly subscriptions. He added that a sharp decline at Emojipedia reduced consolidated revenue growth by about 300 basis points, even as total revenue grew about 8% during the fiscal year.
Revenue and profitability improved as monthly active users in Zedge’s marketplace fell to 19.3 million in the fourth quarter from 23.2 million a year earlier, a decline of 16.8%. The decrease sets subscription performance against a shrinking user base, while advertising revenue remained below the year-earlier level. On liquidity, free cash flow rose 220.3% to $1.6 million from $0.5 million. Fiscal-year free cash flow was $4.2 million, up 46.6% from $2.9 million the prior year. The results point to improved cash conversion alongside a shift in revenue mix, without reversing the declines in user and advertising metrics.
Alongside its core business, the company cited repeat orders from new and existing DataSeeds.AI customers, including its first six-figure order, and the start of an initial engagement to evaluate models. In September, Howard Jonas led a $7.7 million inside investment in Zedge to accelerate business growth. The company also said it completed a private placement on September 30 with gross proceeds of $7.675 million, and that the capital would be used to accelerate DataSeeds.AI growth and expand its capabilities. The company cautioned, however, that the timing, scope and size of projects in this business could make its revenue volatile in coming quarters. These initiatives position DataSeeds as part of the expansion plans the company presented alongside its annual results.
ZDGE shares closed at $2.71 on October 23, before the results announcement. The available data do not include the session high or low. The company was scheduled to hold a conference call to discuss results, outlook and strategy on October 26 at 4:30 p.m. Eastern Time, followed by a question-and-answer session. The call follows the fourth-quarter and fiscal-year results announcement, with a stated focus on outlook and strategy. Among the growth avenues presented by the company is the expansion of DataSeeds.AI, while it acknowledged that project timing and size could lead to variation in revenue between quarters.