Tom Arnoy - Co-Founder and Chief Executive Officer Jonathan Reich - Chief Financial Officer and Chief Operating Officer

Good afternoon and welcome to Zedge’s Third Quarter Fiscal 2018 Earnings Conference Call. During management’s prepared remarks, all participants will be in listen-only mode. [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 3-month period ended April 30, 2018. Any forward-looking statements made during the conference call either in the prepared remarks or in the question-and-answer 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 and Exchange Commission. Zedge assumes no obligation either to update any forward-looking statements that have been made or may make or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that the Zedge earnings release is available on the Investor Relations page of the Zedge website. The earnings release has also been filed on a Form 8-K with the SEC. I would now like to turn the conference over to Mr. Arnoy.

Thank you, operator and thank you all for joining us today. I am Tom Arnoy, Co-Founder and CEO of Zedge. Welcome to Zedge’s third quarter of fiscal 2018 earnings conference call recapping the three months ended April 30, 2018. Joining me today is Jonathan Reich, our Chief Financial and Chief Operating Officer, who will provide additional insight into the numbers that we reported earlier this afternoon. Q3 was both an eventful and challenging quarter for us. On the upside, we completed the first phase of the global rollout of Zedge Premium, our marketplace for artists and the initial key performance indicators are encouraging. Zedge Premium continues being a top priority for us and we believe that with time and investment, it will help drive the company’s growth. Conversely, while we saw a year-over-year growth, we experienced a setback in MAU and revenue when compared to last quarter. Historically, growing our user base in our fiscal Q3 has been challenging due to the post-holiday slowdown and this year was no exception. In addition, global smartphone sales growth has been stagnant and this also puts downward pressure on our results. On the positive side, on a year-over-year basis, we have witnessed exceptional user growth in emerging markets, where new device sales are still robust. We continued investing in our back-end infrastructure to improve operations and lower our costs. As part of this, we have implemented a new open source technology that will enable us to improve content search and discoverability at the faster pace, with a lower price point. Finally, we adopted a set of measures to ensure that we are compliant with the European Union’s new data protection and regulations, General Data Protection Regulation, or GDPR, which took effect in late May. Let me provide more details on some of the…

Thank you, Tom. My remarks today will focus on our key financial results for the third quarter of our fiscal year 2018. For a comprehensive and detailed discussion of our results as well as operational developments, please read our earnings release issued earlier today and our Form 10-Q, which we expect to file with the SEC by June 14, 2018. 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 2018. 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 7.9% to 34.2 million during April 2018 from 31.7 million in the corresponding period a year ago and decreased 3.7% from 35.5 million in the sequential quarter. Year-over-year growth in emerging markets was 24.5% offset by a decline of 7.6% in well-developed markets. On a quarter-over-quarter basis, a combination of seasonality where fewer users opened the app after the end-of-year holiday season and flat smartphone sales globally resulted in a decline in well-developed markets of 6.2% and of 1.1% in emerging markets. As Tom discussed, we are working on initiatives targeted to drive MAU growth. Total revenue in the third quarter increased 0.8% compared to the year ago quarter and decreased 16.2% from the previous quarter to $2.6 million. Revenue was impacted by the decline in MAU in well-developed economics, which command higher advertising rates when compared to those offered in emerging markets. Additionally, seasonality impacted sequential quarterly performance negatively due to lower advertising rates typical in the first 3 months of the calendar year when advertising rates fall, coupled with negative growth rates in new smartphone sales. Average revenue per monthly active user generated from our apps, or…