ZDGE - AMEX

Good day and welcome to

Thank you, operator. During today's call Jonathan Reich,

Thank you, Brian. Good afternoon, everyone, and thank you for joining us today to discuss

Thank you, Jonathan. Total revenue in the second quarter was $7 million, down 10% from last year, mainly due to the advertising headwinds the industry faced in the quarter that Jonathan mentioned, and the continued challenges at GuruShots. Second quarter subscription revenue was up 13% from last year and our net active subscriber growth trend continued to improve and was up 22% year over year, and sequentially for the seventh straight quarter. Our higher value iOS subscriptions and value-added

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today is coming from Allen Klee from Maxim group. Allen, your line is live.

Yes. Hi. Good afternoon. Could you -- I missed when you said, what you expected the restructuring charges to be in your third and fourth fiscal quarters. Could you repeat that, please?

Hi Allen, because of the accounting rule, we can't really accrue certain severance and termination benefit, until it's been communicated to the impacted employee. So that occurred in February, which falls in Q3. Additionally, we are looking to certain impairment related to our office space, in Shanghai. Those costs will be recorded in either Q3 or Q4, as we look for sub-tenant and how we negotiate with our current landlord. I hope that answers your question. Allen.

Yeah. So you're targeting around $3.9 million to $4.1 million, annualized cost savings. That's compared to the prior 12 -- what does that compare to of the base? And then second, when -- do you have a sense of how much of that shows up in -- that's annualized, but how much of the amount you might see in fiscal third quarter and how much in fiscal fourth quarter?

I mean, the cost savings annualized, so approximately about $1 million per quarter Allen.

But will it be fully at that run rate for the third quarter? Or will it be at that run rate in the fourth quarter or sometime next year? When will it -- do you think it will be at that $1 million savings?

Yeah. From third quarter, we should start seeing that $1 million run rate per quarter in savings, before you factor in additional restructuring charges.

So will you see the full $1 million, do you think in the third quarter? Or do you think you won't quite be there yet in the third quarter?

We will see that full $1 million in the third quarter, because current impacted employee, they're still on the payroll, but they will be offset against the restructuring charges, which is not part of the normalized SG&A expense, if you will.

Okay. Thank you. And then just in terms of the business, just when you were talking about TikTok, how -- you said you have some sense that it's starting to improve. How -- maybe I wanted to ask your average revenue per -- I don't even know if I'm going to say it right, for monthly active user, that metric looked like it held up for the quarter. But is that because of things like subscriptions and marketplace spending getting blended into it? Or why -- I'm talking about sequentially, but or what's the -- why is that?

Yes. So we have decline in advertising revenue, but it was partially offset by the growth in subscription revenue and also from

Okay. For GuruShots, what -- help me understand again, right now, you've, I guess, allocated a good amount of the cost cutting related to it. How do you think -- are you still trying to do some initiatives to increase the top of the funnel and the engagement and usage of new usage users? Or what's the status with that?

AI audio is -- we are expecting to add an AI audio feature to the

Yes. So I think that there are a couple of pieces in motion there. One is continued product innovation and resilience in terms of how we invest in the product and how we get users to engage with new features and the like. And then another feature of this relates to subscriptions, whereby we monetize better with subscriptions and subscribers, there is a funnel there in terms of what happens second year, third year and lifetime. And as you know, we've discussed about the growth that we've had with Lifetime subscriptions and so on and so forth. So holistically, our perspective is try to continue to build with new features and monetize those features well, optimize the segment of prospective subscribers and try to get lifetime subscribers and for those users that don't subscribe, optimize our ad inventory to generate the greatest ROI. And that's in the

That's a great question. Remember, we have a very, very large set of users that are coming into