Good day, and welcome to Zedge's Earnings Conference Call for the Fourth Quarter and End of Year Fiscal 2025 results. [Operator Instructions] I will now turn the call over to Brian Siegel.

Thank you, operator. During today's call, Jonathan Reich, Zedge's Chief Executive Officer; and Yi Tsai, Zedge's Chief Financial Officer, will discuss Zedge's financial and operational results that were reported today. Any forward-looking statements made during this conference call during 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 in the future to differ materially from those discussed on today's call. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in Zedge's periodic SEC filings. Zedge assumes no obligation to update any forward-looking statements or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that our earnings release is available on the Investor Relations page of the Zedge website and has also been filed on Form 8-K with the SEC. Finally, on this call, we will use non-GAAP measures. Examples include non-GAAP EPS, non-GAAP net income and adjusted EBITDA. Please see our earnings release for an explanation of our use of these non-GAAP measures. Now I'd like to turn the call over to Jonathan.

Thank you, Brian, and good afternoon, everyone. Fiscal 2025 was a year of transition in which we reshaped Zedge to be more efficient, financially disciplined and positioned it for scalable and sustainable innovation. During the year, we completed a major restructuring aimed at positioning Zedge for sustainable, profitable growth. This included closing operations in Norway and a targeted rightsizing of GuruShots. These actions, when combined with the completion of the GuruShots retention program that was implemented at the time of the acquisition in 2022 are expected to reduce our gross annualized expenses by about $4 million. We also incurred approximately $1.5 million in cash restructuring costs and $1 million in noncash charges, which Yi will discuss in more detail shortly. Fortunately, as we enter fiscal year '26, the vast majority of these charges and cash expenditures are behind us, providing greater operating flexibility. This leaner cost base enables us to reinvest selectively in initiatives that offer the highest return potential, focusing on accelerating growth, improving margins and enhancing free cash flow generation. Operationally, business performance was mixed in Q4. Our Zedge Marketplace, which includes Zedge Premium, subscriptions and advertising performed well, while GuruShots appears to be plateauing. Separately, subscription revenue increased 21% year-over-year, and we ended the year at record levels with nearly 1 million active subscribers, an increase of 47% compared with Q4 of fiscal '24. We also saw continued growth in Zedge Premiums GTV. Fourth quarter Zedge Marketplace ad revenue grew year-over-year, but total ad revenue for the company was softer than expected due to a decline at Emojipedia from the competitive impact of AI search. Going into Q1, Google introduced a change to its search engine results page, whereby users can now directly copy and paste emojis from the search page. Although Emojipedia still ranks first or…

Total revenue for the fourth quarter was $7.5 million, down 1.5% from last year. There were a couple of items to note here. First, Zedge Marketplace revenue was up mid-single digits for the quarter and would have performed even better if it were not for a onetime $144,000 benefit related to Zedge Premium in the year ago quarter. Also offsetting growth at Zedge Marketplace was an 11% decline at Emojipedia, consistent with Jonathan's earlier comments and the expected 39% year-over-year drop at GuruShots. Although sequentially, the business was down less than $25,000, showing stabilization. Advertising revenue was up slightly for the quarter as growth in the Zedge Marketplace was offset by lower ad revenue at Emojipedia. Zedge Plus subscription revenue increased 21% year-over-year, and our net active subscriber base grew 47%, reaching nearly 1 million subscribers. We continue to optimize our subscription plans and are seeing the benefits of those changes. Deferred revenue, which primarily represents subscription-related revenue, reached $5.4 million, up 10% sequentially and 73% year-over-year. This is an important metric as it reflects future revenue that carries essentially 100% gross margin. Zedge Premium GTV grew 7% from the year ago quarter and ARP MAU increased 17%, continuing the shift toward higher-value users and improved monetization efficiency. As noted earlier, GuruShots, which is reported under digital goods and services revenue remained a challenge, down 39% year-over-year. As part of our cost optimization initiatives, we significantly reduced user acquisition spending for GuruShots while we evaluate the best path forward. These revenue declines were expected and encouragingly, the year-over-year rate of decline improved by 600 basis points. We expect to begin lapping some of these weaker comparisons in fiscal 2026. Cost of revenue was 6.4%, roughly flat year-over-year in absolute dollars. SG&A increased about 1% to $6.9 million for the quarter.…

[Operator Instructions] Your first question for today is from Allen Klee with Maxim Group.

If you could touch a little more on tapedeck and DataSeeds.AI in terms of the actions you're looking to take going forward and how you might think about what the opportunity is in both of these offerings?

Allen, thanks for asking the question. So I think that there are really sort of three buckets here. We've got tapedeck, which has been an initiative that we have built to address a portion of the world of music, mainly in the artists that are underserved today in terms of revenue generation. As you know, Tim Quirk, our SVP of Product, comes from that world. And the goal of this product is to provide a transparent platform where fans of indie artists can support their fans and do so in a fashion that allows for these Indie artists to make a good living from their artwork. The product has been built with many of the hooks needed in order to facilitate that outcome. And we've launched with 500,000 tracks. The need for additional music is there. And based upon performance and KPIs, we will make a decision in calendar year 2026 as to whether to continue this initiative or to really put it on the back burner. Moving to DataSeeds, similar notion of really managing the business towards KPIs. DataSeeds, as I've described, is a B2B offering, our first B2B offering, which is focused on providing foundational AI companies with data sets that they are in need of in order to meet their development goals. And we are hard at work at taking content that we have access to through GuruShots, content that we can create with the -- with collaboration with our creator community, whether that be GuruShots players or Zedge premium artists or even creating very, very bespoke content with professionals that extend beyond our existing user base. We have signed two contracts in fiscal Q4. One of the partners that we signed, and these are well-known global brands and so on and so forth. One of those…

That was great. One of the encouraging things I saw in your results was a sequential improvement in monthly active users, which maybe suggests that there's a possibility of some stability or potential growth eventually. What would you point to of the steps you've been taking to get those results?

So as Yi had indicated in his comments, we are being very discerning about our marketing spend and ensuring that we are focusing on bringing on high-value customers that can generate an attractive ROAS profile. And our spend is linked to what's happening in the market in real time. Specific to the Zedge Marketplace, we need to see ROAS return in a very short period of time because the Zedge marketplace is not an app that people will come back to on a daily basis like they would with a social network or communications app or [ human game ]. And therefore, we are able to react quickly. And we're able to ratchet our marketing spend based upon what is happening in the market at any particular point in time. We have had our data scientists develop a model that we are using in order to make investment decisions in paid UA. And I think that, that lends itself to some of the improvement that you're seeing. Clearly, our product evolution is something that contributes to that as well. And then there are just market dynamics where certain things are going on, let's just say, the holidays, people get new phones, they want to personalize their phone, they will then come to Zedge and download accordingly. So some of those are within our control and others are seasonal. But the ones that were in our control, we are really being very discerning about how we allocate our paid user acquisition spend in order to yield a good return. And that, I think, is a critical part of answering your question.

That's very helpful. So I heard you say that you took some of the restructuring savings and reinvested it back in maybe paid user acquisition spend or some other things. Could you just kind of go into kind of where that was focused? And is that something as far as you can tell now that you would continue to prioritize those areas?

Generally speaking, we've had a couple of cash expenditures around marketing. We've talked about the share repurchase and Yi said that we've got around $600,000 less than the share repurchase program, which totaled with a $5 million share repurchase program underway. And now with the initiation of the dividend, that will also consume some cash. Our goal is to fund all of these with our existing cash flow, not to have to dip into reserves ultimately. And if and when we see a tremendous growth opportunity that is backed up by numbers, we may spend more on marketing in order to seize that opportunity. I mentioned earlier, even with respect to DataSeeds, there is product that is being developed in order to meet enterprise client needs, but we are aligning that development with signed contracts and revenue in order to align expense and revenue as opposed to taking a perspective of build and then they will come. Yi, do you have anything that you want to add to that? I'm sorry Yi, do you have anything that you want to add to that? We may have lost, I don't know where he is.

Okay. That's fine. Your comments on Emojipedia, could you just explain again what kind of what Google changed and what actions you're taking to try to remediate that and how you're thinking about the timing of how you're hoping that those actions might kick in the results?

Sure. So there are really two different things that are going on with Emojipedia. One is an industry-wide phenomenon relating to the advent of AI search. And that can be ChatGPT, Perplexity, Anthropic's Claude, whatever the case may be, whereby user just goes in and types, let's say, Smile emoji. And ChatGPT will respond by posting a Smile emoji. User will then copy that emoji and put it into their e-mail or into their text message, whatever the case may be. That is independent of Google. Of course, Gemini provides the same sort of experience. Separately, Google consistent -- regularly and consistently updates the algorithm and the results for their search engine results page. And what they had rolled out as being brand new, has not ever happened in the past is at least for a limited number of emojis, if someone were to go in and search Smiley emoji, on the search results page, there would be a Smile emoji with a little copy or cut or paste button underneath it. And then immediately following that, you would find the link to Emojipedia. We are still ranked #1 or #2 in terms of overall search results, but the functionality of the search results page now allows for a user to immediately acquire the content that they are looking for. In the case of Emojipedia, Emojipedia is much more than just copy paste, but clearly, we have copy paste users. And let me explain other users in the world of Emojipedia. We have a lot of digital agencies. We have news outlets. We have researchers that need to have detailed information behind each individual emoji that they are using in a digital campaign writing about or the like. And that information is available only in Emojipedia or primarily in Emojipedia. And the copy paste users are the ones that are, so to speak, being affected because they no longer would go to Emojipedia for a straight copy paste type of experience. I hope that answers your question.

Yes. I had a question on deferred revenue, which you highlighted how that's been growing and how that can provide future revenue at close to 100% margin. How do we think about the amount of deferred revenue, the timing of how it gets recognized?

Can you hear me, Allen?

Yes.

Sorry about that, something wrong with my headphone. I talked, but you guys couldn't hear me. Yes. So the way deferred revenue work is that as we sell the lifetime subscription, we take the cash, but we amortize the revenue over 30 months. So whatever we not recognize as a revenue, we put it under deferred, which we will recognize over the next 30 months. So would that mean that we will just recognize those deferred revenue over time. And as long as we keep the subscriber pool steady, we would level out the revenue based on what we sell, not what we recognize. I hope I answered your question now.

Yes, that's great. So one other question. Your SG&A was roughly flat year-over-year, but up sequentially. And you highlighted a few things that was spent on. Is it reasonable to think that this quarter is kind of a decent run rate for what SG&A might be going forward?

This quarter, SG&A, as Jonathan mentioned, we -- the savings from the restructuring was used to pay for the ramp-up in PUA and pay for some consulting fee related to new initiatives. So yes, going forward, the SG&A will probably decline a little bit because we're not spending the same amount in PUA and consulting for the new project as we did in Q4 of '25.

This concludes our question-and-answer session and conference call. Thank you for attending today's presentation. You may now disconnect.