ZDGE - AMEX

Good afternoon. Welcome to

Thank you, operator. In today’s presentation, Jonathan Reich,

Thank you, Brian. And thank you all for joining us today. I will start by briefly reviewing our third quarter results, which continued to show the positive impact of our investments in FY ’23 to set

Thank you, Jonathan. Total revenue in the third quarter was $7.7 million, up 14% from last year. This growth comes despite decreases in MAU, which came in at $27.7 million for the month of April. Digital goods and services, which encompasses revenue from GuruShots, came in at $0.9 million, down 20% from last year. GuruShots’ revenue continues to be negatively impacted by Apple’s ATT framework, macroeconomic issues, and geopolitical unrest. Subscription revenue was up 35% versus last year. This metric was up sequentially for the fourth straight quarter as our net active subscriber trends continued to improve, and our higher value iOS subscriptions and value-added

[Operator Instructions] The first question comes from Allen Klee with Maxim Group. Please proceed.

Yes, good afternoon. For GuruShots, could you -- I'm not sure if I caught -- what was the revenue for GuruShots in the quarter?

Sorry, Allen. It's $0.9 million.

That's what I thought I heard. And that shows up in the digital goods and services, right?

Correct.

Okay, so within GuruShots, I mean, you're doing really well pretty much everywhere else. I'm trying to understand a little, like new features that you said could cause a 10% to 30% jump in revenue, What is the plan for adding these new features?

Great question, Allen. So during the earlier part of the call, I had mentioned, we've got essentially three major areas that we are working on. First is onboarding, and that is the experience that a new user will have when they download the app for the first time and start planning. We've rolled out a new onboarding experience in beta to 25% of our Android audience. And what we're seeing is that deeper funnel events are generating more revenue for us. Deeper funnel events meaning a user that downloads the app, joins a competition, and then continues to second, third, fourth, and fifth competition by way of example. That onboarding process is one which we will optimize. And if we are successful in that endeavor, we believe that we will accomplish two goals. One is that we will attract more users to actively begin playing the game on a recurring basis. And number two is that we will retain those users, thus generating more revenue, as I described a couple of minutes ago. Secondary of changes with respect to our economy. Today the economy is a resource-based economy which is fueled by a user making in-app purchase for a specific game resource. We expect that later this month we are going to begin, or not begin, but we will turn on a brand new economy, which will be a coin-based economy that has multiple currencies. That opens up the door for many different possibilities. But by way of example, you have a new user, they begin playing the game, they haven't done super well because they're really trying to acclimate themselves and assimilate all the information that's being thrown before them. Nonetheless, we have the ability of rewarding them with different currencies in order to keep them motivated and ultimately allow for them to spend those currencies on game resources. The more that they spend on game resources, then the likelihood is that they will want to replenish their currency and make more purchases. And that, like I said, is expected to be rolled out this month. And then the third area of focus, which will take place after we've tuned the economy and the onboarding process, will be around progression dynamic. So today we have users that get stuck. They get stuck at a certain level and they can be stuck there for very, very long, even though they are active players. Progression analysis is the, or progression mechanics is really the focus that we will have in order to help those users progress to the next level based upon where they are struggling. So you can imagine that we have a set of users that get stuck at a certain level, and in a certain sense, they don't know how to progress to the next level. We can then create competitions around that segment of users that will ultimately translate into those users being able to graduate and continue moving up the totem pole, if you will. So that progression mechanic piece or mechanics piece will begin to be focused on after we've completed the full rollout of onboarding coupled with game economy optimization. And with respect to onboarding and game economy, like I said, we've got 25% of the onboarding available to our Android user base today. And the game economy will be rolled out -- the new game economy will be rolled out weeks back during the month of June. A lot of detail there. I hope that I was clear in that. If you have any further questions, would love to hear them.

Are there any new features that you'll be adding in the next three months?

Well, onboarding is -- I don't know what you mean by feature, but onboarding is, we're viewing that as being a feature-driven experience. If a new user downloads the app today and is not in the new onboarding experience, they are faced with a very, very complex user interface which they need to master. There's a steep learning curve there. The notion of onboarding is to incrementally add complexity to the gameplay with the goal of initially getting the user into a competition with access to fewer of the bells and whistles that they eventually will gain access to as they master the gameplay. So we are describing that as a feature enhancement as opposed to some, let's call it new feature like a new in-game resource or something like that.

Okay, great. Thank you. And you mentioned that SG&A, incremental SG&A is going into some paid marketing. Could you talk a little about where that paid marketing, what the focus is of the areas that you're trying to gain customers from?

Sure, so the paid marketing is for the meantime primarily focused on user acquisition for both

Okay, that makes sense. And then advertise, so you probably can't add this, but your monthly active users, thinking about like getting that number to stabilize, any thoughts on where you think that these actions will get that to kind of stabilize and then inflect positively?

Sure, so I can't give you timing on that. I can tell you that specific to

That's great. And advertising has been very strong. Subscriptions are pretty solid. Could you maybe just comment a little on, I guess, advertising rates go up with subscriptions and you have more in the bundle with subscriptions now than you had in the past, so there's more value. And you're also rolling it out to iOS users. Are those the main things? Are there any other things that you should also be thinking about?

So we are not only -- not only have we bulked up on the subscription offer and we continue to look for additional value adds. And I think that over time we will see additional value adds bundled into the subscription. But we are also optimizing with different types of subscription plans. Testing one-week subscription, testing two-week subscriptions, testing one-month subscriptions, testing annual subscriptions, testing lifetime subscriptions, as well as testing subscriptions on a more localized basis. So not only testing pricing on a localized basis, obviously the cost of the subscription in India would be significantly different than what cost of subscription would be in the United States, but also localizing the experience so that the messaging that's used to draw or to convert a user into subscriber is highly, highly localized. So taken in concert with one another, we continue to see that growth. And that is apparent in the numbers that we shared with you today.

That's great. And I know you gave some information on pAInt, with good grading kind of a creator economy. How do we think about like the amount that people are using? Does it seem like the percent of people that are using pAInt that there's still a lot of opportunity for that to grow?

I mean our perspective is that our marketplace is the premium marketplace I should say is a growth opportunity for us. We do have several initiatives underway now that we are investing in in order to unlock incremental growth and see to it that as a part of the overall revenue pie that we have, that premium content is a larger portion of that pie. So there will be continued investments there. And as you mentioned, GTV had grown nicely due to several initiatives that we had delivered on in this past quarter.

Okay. And for Emojipedia, you mentioned there was a little bit of a step back on a website we designed. Do you view that as kind of a temporary thing, or how are you thinking about that?

We do view that as a temporary thing. And the approach that we had taken, we had tested and I guess at scale things did not ultimately reflect what our testing had indicated. So when we saw that the numbers were diverging, we pulled back. And in terms of new initiatives for Emojipedia, there are a whole set of initiatives around rolling out new product features, capabilities, and so on and so forth that will begin to come off the assembly [line] (ph) between now and the end of the calendar year.

Okay, great. Well that's it for me. Thank you so much.

Thank you.