ZDGE - AMEX

Good day and welcome to the

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

Thank you all for joining us today. We wrapped up fiscal 2024 with strong momentum, posting 14% year-over-year revenue growth in the fourth quarter, driven by continued expansion in the

Thank you, Jonathan. Total revenue in the fourth quarter was $7.6 million, up 14% from last year. For the year, revenue grew 11% to a record $30.1 million. The continuous work we do on optimizing our ad stack bore fruit this year, with advertising revenue up 13% for the quarter and 15% for the year. Subscription revenue was up 31% for the quarter and 25% for the year versus last year. Our net active subscriber trends continued to improve and was up sequentially for the fifth straight quarter, and our higher value iOS subscriptions and value-added

We will now begin the question-and-answer session. [Operator Instructions] Your first question is coming from Derek Greenberg with Maxim Group. Please pose your question. Your line is live.

Hi. Thanks for taking my question. In terms of GuruShots, I was wondering if there's any metrics you can provide, whether it be like the number of users, how that's changing, as well as just retention and engagement rates associated with that app?

Derek, it's Jonathan. Thanks for the question. And at this point in time, the KPIs that we've included in the release are the ones that you should be looking at. Directionally, as I said during my call, during my comments, the focus for GuruShots is really geared towards new users and having them come into the funnel, convert into players, and then having them engage to a point where they are generating revenue by purchasing coins that they can use to accomplish certain goals within the gameplay. And generally speaking, what we have seen is that engagement from these new users is increased. They are consuming coins. They are converting. And as those numbers hopefully continue to grow, that will also translate into driving revenue for us. And we will consider going forward, if there are additional KPIs that we can provide, which will provide -- which will yield greater detail with respect to how performance unfolds.

Okay. Got it. In terms of the

Sure. So, in terms of GTV, gross transactional value, for our premium artists, we are doing many things in the app in order to promote content as well as making

Yes, definitely. That's helpful. Thank you. And then, in terms of the advertising revenue of that business. Can you just talk about how that's trending and how you've been able to respond to some of the industry changes in terms of the data you're able to access?

I'm sorry, I didn't hear the last part of your question.

Just how you've been able to respond to like changes in how you're able to access data and target customers, following changes on different platforms?

Okay. Well, remember, we're -- when you say advertising, do you mean our advertising revenue or do you mean how are we spending marketing dollars and advertising to customers to come to

I guess, we could touch on both, but primarily was, the advertising revenue side of the business.

Okay. So from an advertising revenue perspective, we are using third-party for mediation, and it's really a function of being in the programmatic offering that, that third-party has. So it's less around our -- having specific customer segments that we are selling. So let's say, I don't know, auto lovers or cigar, aficionados and stuff like that. However, we are beginning to focus on collecting both zero-party and first-party data, obviously, being very sensitive to compliance with any regulations, whether those be legal regulations or they be platform-specific regulations. And as we begin to amass enough information there, we may be able to go out and offer cohorts of users that have an attraction to a particular type of demographic message or the like. From a marketing perspective, we are hard at work in terms of understanding what are the triggers that prospective

Okay. Got it. In terms of new products and features, I saw in the press release that there was plans for an AI audio offering. And then on the call and in the press release, you'd mentioned the WishCraft beta app. I was wondering if you could just give some commentary around both?

Sure. So, as you know, with pAInt 2.0, we've taken our initial foray into the world of Gen AI creation, which was launched, give or take, around a year ago and that was a text-to-image experience that would render a really great mobile phone wallpaper. pAInt 2.0 just elevates this experience. First of all, it is no longer text-to-image alone. It can be image-to-image. It can even be you click a phone, you click a photo from your phone, and you can then use pAInt 2.0 to accomplish all sorts of different things, whether it be make an avatar, do photo editing, render that picture, that image in many different styles, and so on and so forth. And it's no longer limited to simply a wallpaper. You can determine the size of it, so it can be really any size that you would like. And we feel that based upon the fact that we are known in the world of personalization for not only wallpapers, but also ringtones, believe it or not, there is a tremendous amount of demand from our consumers to consume wallpapers, engage with, to consume ringtones, engage with the audio that we have. And that audio spans all sorts of different genres, to music, to humor, to funny sounds, and so on and so forth. And we feel that the next iteration of pAInt needs to be something specific to audio. We've actually found that when marketing

Yes, that makes sense. I have one more question, and then that will be it for me. But for Emojipedia, I was just wondering your outlook for that in '25, as well as just how that performed compared to the third quarter. And I believe, there was, I think, a redesign that impacted performance in that quarter. I was just wondering if this has been remedied and the business has turned to normal during the quarter?

Great question. So, yes, you're correct. In Q3, we had launched a redesign, and that redesign did not perform as was anticipated. We made the changes, that has been remedied, and Emojipedia has been humming along nicely. For fiscal year 2025, we, I think, are focused on three areas. One is never-ending ad optimization and the ad stack and so on and so forth. That is a part of our standard operating procedures. Number two is testing and introducing some new content verticals. So we've talked about emoji stickers or, let's call them, bespoke emojis that a user can create with AI. So that's a second area of focus. And third area of focus is a more comprehensive redesign of the Emojipedia property to add a little bit more, what shall I say, luster and excitement to it. Today, it is almost very much like a, as it sounds, Emojipedia, a Wikipedia type of experience. But we believe that there is more opportunity in terms of driving engagement and encouraging retention and the like with a design overhaul. And one of the things, which is, I think, an obvious question would be, well, who is to say that you don't experience the same thing that happened in Q3, where we rolled something out and then we found out that it did not perform as was anticipated. Well, when we remedied the Q3 issue from '24, we also had upgraded some of the technology, which will -- which essentially has positioned us in an area where we have a lot more data that we now have access to than we had in the past. And I don't expect that, that will be a problem that recurs again, based upon the investments that we've made with respect to data capture and the technology around that accordingly.

Okay. Got it. All right. Well, thanks for taking my questions. I appreciate it.

Sure. Thank you.

Your next question is coming from Allen Klee with Maxim Group. Please pose your question. Your line is live.

Yes, hi. Two quick questions. One, how do you feel about the returns that you're getting from paid advertising? And second, how do you feel about how you might manage your operating expense growth relative to revenue growth in the next fiscal year? Thank you.

Hi, Allen. Thanks so much for the question. So, one of the accomplishments that we had undertaken in fiscal year 2024 was a commitment to building a world-class marketing team. And that not only includes the ability to create great ads and lots of great ads, but also the ability to closely monitor how those ads are performing and dialing up when we have a winner and dialing back when an ad does not perform well. And then, how do we spend our test budgets so that we're very, very specific and precise in terms of utilizing that money to the best of our ability without having a lot of wastage. And the marketing team is a very, very analytical team. So everything from attribution to creative a funnel, to conversions, to monetization is being looked at. And we have actually seen, just by way of focusing on the

Thank you.