Good afternoon everyone and welcome to Zedge’s Third Quarter Fiscal Year 2017 Earnings Conference Call. During management’s prepared remarks, all participants will be in a listen-only mode. [Operator Instructions] And after today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] In today’s presentation, Tom Arnoy, Zedge’s Co-Founder and Chief Executive Officer, and Jonathan Reich, Zedge’s Chief Financial Officer and Chief Operating Officer will discuss Zedge’s financial and operational results for the three months period ended April 30, 2017. Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the Company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in the reports that Zedge files periodically with the U.S. Securities & Exchange Commission. Zedge assumes no obligation either to update any forward-looking statements that they have made, or may make, or to update the factors that cause these actual results to differ materially from those that they forecast. Please note that Zedge earnings release is available on the Investor Relations page of Zedge’s website and the earnings release has also been filed on Form 8-K with the SEC. And I would now like to turn the conference over to Mr. Arnoy. Please go ahead.

Thank you, operator. And thank you all for joining us today. I’m Tom Arnoy, co-founder and CEO of Zedge. Welcome to Zedge’s third quarter 2017 earnings conference call, recapping three months ended April 30 2017. Joining me today is Jonathan Reich, our Chief Financial and Chief Operating Officer who will provide insight into the numbers that we reported earlier today. June 1st marked our first anniversary as an independent public company. During our initial conference call, I committed to you, our investors that I would be forthright about the business and express our expectations and challenges. This afternoon, I’d like to share some trends facing our business and discuss what we are doing about them. From a macro perspective on a year over year basis, both our revenues and monthly active user base or MAU have remained fairly flat. Peeling back the onion, we’ve experienced solid MAU growth in emerging markets while contracting in well developed economies. At the same time, our average revenue per monthly active user from apps or ARPMAU has improved across both, well-developed economies and emerging markets. This growth is impressive, considering that we’ve been able to expand the revenue per user, even when facing a decline in users in more valuable geographies. Furthermore, considering our competitive position in the personalization space, we believe that we are well-positioned for continued growth. I should also add that Android users account for the bulk of these results as we continue to recover on iOS after Apple removed us from the iTunes App Store in early 2016. We have taken stock of these trends and have narrowed our focus to concentrate on projects that will put MAU back on a growth trajectory in the most valuable markets, so that we can monetize more effectively. If we can deliver on…

Thank you, Tom. My remarks today will focus on our key operational and financial results for the third quarter of our fiscal year 2017. For a comprehensive and detailed discussion of our results, please read our earnings release issued earlier today and our Form 10-Q, which we expect to file with the SEC by June 14, 2017. Following my comments, we will open the call to any questions you may have. Throughout my remarks the third quarter refers to February through April 2017, and the second quarter refers to November 2016 through January 2017. Monthly active users or MAU, that is the number of unique users that opened our app during the last 30 days of the quarter increased by 0.1% to 31.7 million during April 2017 from 31.6 million in the corresponding period a year-ago. On a sequential basis, MAU was impacted by seasonality and as expected declined 5.1%. The year-over-year MAU increase reflects strong growth in emerging markets, partially offset by an 11% decline in users from well-developed countries. As Tom mentioned, we do not downplay the import of this trend and are highly focused on streamlining operations and executing our projects that we expect will drive user growth in the high-value geographies in order to increase our revenues. Total revenue in the third quarter declined $1.7% compared to the year-ago quarter, and 1.6% from the prior year quarter to $2.5 million. The year-over-year revenue decline was due to a combination of factors including but not limited to the removal of our app from the iTunes stores in early 2016, reduced investments in the game channel where we monetized on a cost per install basis, decline in revenues from our desktop and mobile websites which became less relevant with the adoption of our smartphone apps, and a drop…

Thank you, sir. We will begin the question and answer session. [Operator Instructions] And our first question of today is going to be John Rolfe with Argand Capital. Please go ahead you’re your question.

You provided some color on the year to year increase in SG&A as a function of the increased headcount. Can you just talk a little bit about the sequential decline in SG&, was that related to some of this refocusing of resources or what sort of was behind the decline quarter to quarter?

Sure, John. Thanks for asking the question. This is Jonathan. And that relates to initiatives such as content creation, where we began hearing back. But overall that is related to making sure that we’re hyper focused on the things that will move the lever in terms of growing monthly active users.

Okay, great. And I did notice, I mean you guys have sort of spoken a couple of times on the call about the need or the desire or the initiatives to get that monthly average users growing again. So, on the one hand, you’ve kind of acknowledged that; on the other hand, you said I believe that the sequential decline was expected given seasonal factors. And it does look like you had a similar decline in the year ago quarter, on a sequential basis. How should we be thinking about the trajectory of that MAU seasonally from quarter to quarter and were you guys disappointed with the decline or was it expected?

So, just to provide a little bit more color, overall, we did see that sequential decline. But, when you begin to take a look under the hood, as we’d indicated, the well-developed market that command higher ad rates, were the ones where we saw decline; and on the flip side, emerging markets, we actually saw the user base continue to grow. And I guess when we think about this on an ongoing basis, we do feel that the first quarter of the calendar year will typically be one where we see a fallback on user growth; the fourth quarter of the calendar year will actually be one where we see that user growth improve. And that is the seasonal effect having nothing to do with -- or having little to do per se with the activities in which we’re investing to overall drive growth in the well-developed economies.

I mean what is it? I understand the seasonality in terms of the average revenue and the fact that there is more robust ad budgets over the holiday quarter at the end of the calendar year. But what is the seasonal impact that’s driving better growth in the calendar fourth quarter and then the drop off of in the calendar first quarter?

Sure. So, there are several factors but one very obvious factor, in holiday present giving, people get a new phone, they’ll download an app, they’ll try it out, they’ll say hey great and then with time, they will say, you know what this isn’t really what I was looking for and that begins to tail off in the calendar first quarter.

[Operator Instructions] And it looks like our next questioner today is going to be Andrew Walker with Rangeley Capital, please go ahead with your question.

Hey, guys. Sorry, if I missed it; I got disconnected for a second. But, you launched a premium iPhone app at the end of the quarter. Can you give us a little color on how that kind of launch works in the quarter and what you’re seeing there, heading into this month?

Hi Andrew, this is Tom. Are you referring to the last release, the premium ringtone apps, the remixes app?

Yes. That’s exactly what I’m talking about.

Okay. So, we have launched app. So, if you go and look at the approximately, it’s an app we are really proud of. It looks really good. It’s in our opinion, state of the art. We can still add more content to it, like it has somewhat limited content still but we’re working on that. However, the content is of great quality. A lot of remixed songs of famous artists and like really well known songs there. For us now, it’s all about scaling number of users and of course increasing the monetization per user or the -- but this is a process that takes time. We’re not going to spend material amounts of money on user acquisition where we really invest in getting organic growth in this app. And that is going to take some time but we had like a really good start. And does that answer your question?

Kind of. I guess, two questions on it. So, on the content, right now it’s all Marimba Remixes; why don’t you kind of get normal songs and normal sounds on there? And the second question with you know, how much revenue is kind of generating at this point?

So, the last question first. We don’t want to provide that number yet; it’s still early. Regarding the first question, yes, people want all sorts of different content and we are exploring that too. We chose now to go down a themed path with Marimba Remixes. There’s a lot of demand for that content now. This has to do with how we position the app, how you communicate the value proposition, how you also catch like keywords et cetera, like in the App Store. We have many reasons why we chose this path. But of course we will, there are many possible paths from here, and it’s a learning, it’s a journey for us. And currently, if we succeed with this, then we can go down many other -- we can launch many different themes.

Andrew, just to set expectations, this is not -- this is still very early phase and revenue contribution is de minimis at this point. As Tom has said, in quarter four revenues increase; we’ve got to bring in users, then convert by making a purchase and selling it so forth.

Okay. I would just say, having [indiscernible] I mean the obvious thing to get this more popular is adding more content. But if you think the Marimba Remixes are popular, I guess that’s one thing. Just kind of moving on, I think you guys get a lot of consumer data, I think you mentioned -- was it over 100 million searches per month? Have you explored any ways to modify that outside of advertising for the users to kind of selling that data?

Yes, we have explored ways in which we can monetize that. And as you can well appreciate, we need to be very, very careful there in order to make sure that we do not do something that will hurt our user base. We have seen a lot of activity in the data space overall. But there are whole host of purchases out there, some of them are very outstanding and some of them are little bit more sketchy. And we are beginning to generate a small amount of revenue from data but on a non-PII basis, making sure that we are limiting it until we have a comfort level that we can really scale that without ultimately hurting our core business. We don’t want to have a situation where we have a quick win with some data and users then begin to push back saying hey, what are doing with my data. And again just to reiterate, anything that we do in the data space is on a very anonymized basis so that we do not embrace that relationship that we have with users in terms of securing and maintaining their privacy.

And then, just the last thing I would say, I think three quarter ago, the focus was on the set my ringtone app, two quarters ago the focus was on the stories app; now, we are starting to hear stories on the [indiscernible] and they are going back to kind of elementary type things and all that sounds nice, but this is a 10 year old company and as an investor it’s pretty concerning to hear these constant shifts. I would just say -- I don’t know what I am saying, but it’s just very concerning to see revenue flat line and the constant shifts in narrative. It will be nice to see the company just focus on the core app monetization and I guess elementary focus you guys mentioned?

I understand your comments, but we are a tech company. And we -- like things change all the time. We have to focus on the information and data we have at any given time. And remember, I believe we addressed this the last time as well. But set my ring tone was one feature, we highlighted. That we chose, not to pursue because it is -- it takes a lot of investment to get where we believe we need to be with that feature in order to succeed. So, we haven’t dropped it, we haven’t said we are not doing that, but it’s there like maybe we will do it. When it comes to collections or stories collections, we are still investing in that. And previously, we didn’t invest like a big percent of the resources in that product. We just wanted to address we are focusing back on like on a lot of the core stuffs and we are now stopping some development on collections and pursue -- start to get more deals in at this point. But we are not stopping doing it we’re just reducing the investment there, the activity a little bit. But I think it’s truly -- it’s natural for a company like Zedge from quarter-to-quarter move around resources because every day we get new data, new information that can have the influence on our decisions. And I would be surprised if these tests doesn’t happen in other tech companies.

I don’t disagree with you, I’m not saying don’t do it which makes the most sense. But I’m just saying for a company every quarter to kind of shifting growth priorities and see this stalled out revenue growth at this level, stalled out MAUs at this level, it’s pretty concerning as an investor but it might be a conversation better taken offline. So, I will take it there. So thanks for taking the question.

Andrew, it’s Jonathan. I think if I were to do reframe this, I think that where we have not done as good of a job as we can do is actually in highlighting that our core app has and continues to be the investment which -- the asset I should say where we invest the most time in resources. In the previous conference calls, and maybe we are guilty of not articulating that well and maybe we’re also guilty of trying to share a vision of where we think this can go. But, I think that I would reframe your description to want to -- you don’t rightfully want to see that every quarter, hey, we have a new top priority and I agree with that. I think that in our previous conference calls, we have talked about features where we have tested and explored, but it’s not like we’ve taken 80% of the workforce and allocated them on something or invested their resources on something which has not won the favor that our users would like, rather we have a limited amount of resources that are dedicated to trying new things out, so that we can continue to evolve. And what we really have decided this quarter is as opposed to continuing to evolve collections with technical and development resources, we rather apply those technical and development resources for the most part to some of the core areas, which we would like to accelerate a little bit more quickly. But on the sales and marketing side, we are full steam ahead in terms of bringing in more partners, making sure that we are expanding our footprint. In previous quarters, we were only available pretty much in Canada with the studios; this past quarter, we have actually launched collections both in the U.S. and in Europe. And that continues to be their goal and objective ultimately to translate into a revenue producing contributor to our business. But, I think that in summary, we have not done as good of a job in terms of articulating the focus that we have on the core app and we need to do a better job of that going forward.

And our next questioner today is going to be Brian Warner with Performance Capital. Please go ahead with your question.

Hi, guys. Couple of questions. On your efforts to improve and grow your ARPMAU, you sort of mentioned a couple of things. And I’m wondering, if you could just sort to talk in late terms about, which of those things can sort of move the lever the most? And if we’re trying to observe and watch and grade you, when should we begin to see the fruits of those things? And maybe you can marry it to what it might look like a few years out in terms of your vision. I know it’s a little vague, but I’ll leave it there.

Hi. This is Tom. First of all, I think we are already seeing the fruits of this, as we mentioned just now. We have added new ads formats and have different -- and we are constantly testing new things there. Again, the most important for us is focusing on making sure that we continue growth in user base, because that is the strongest driver on revenue. So, we’re balancing how much business is we’re investing and try new advertising formats. However, we are constantly trying new things and we are now exploring some really interesting things. I think, we expect to see results every quarter and then that’s really what the whole family has to work for. But generally, it is formats short-term; more long-term, we have addressed that we are working on collections. Hopefully that will bring like a new revenue stream and for sure also iOS. It’s still early, but we really hope that iOS will be a strong contributor to our revenue and to our average revenue per user moving forward.

[Operator Instructions] There look to be no further questioners. So, this will conclude the question-and-answer session and today’s conference call. Thank you all for attending today’s presentation. And you may now disconnect your lines.