Emoji encyclopedia creator Zedge gains amid cost reductions
Shares of Zedge, a micro-cap company that offers an emoji encyclopedia, ringtones, and wallpapers for mobile phones, surged almost 11% yesterday, Wednesday, February 5, after the company announced new restructuring steps aimed at saving up to $4 million annually.
Details
Yesterday, Zedge advanced almost 11% on the New York Stock Exchange to $2.89 per share, the highest closing price in nearly two weeks, before sliding more than 4% in after-hours trading. It is up 7.5% for the year to date but still down 24% over the last 12 months.
The catalyst for yesterday’s gain was Zedge’s announcement of plans to shut down its Norwegian subsidiary and consolidate its operations in Lithuania and Israel. The company expects this move to enhance operating efficiency and reduce costs. The decision is part of a restructuring, under which Zedge implemented a workforce reduction of approximately 22% in January for the same purposes.
Additionally, the company plans to «reimagine monetization strategies and technology infrastructure» for GuruShots, its online photography competition platform for photography enthusiasts, to «bring it closer to breakeven.»
Zedge expects the total savings to be between $3.9 million and $4.1 million annually. That would approach its entire free cash flow for the fiscal year 2024 (ended July 31), which came in at $4.7 million.
«These changes are designed to position us for sustainable growth and support our strategic objectives,» Zedge CEO Jonathan Reich was quoted as saying in the press release.
About Zedge
Zedge is the creator of a namesake app that offers phone personalization. Its products include wallpapers, ringtones, and notification sounds, all available for purchase on Zedge Marketplace. The company also develops games and owns Emojipedia, an online emoji encyclopedia.
Zedge generates revenue from three main areas: ads, digital goods and services, and subscriptions. Users can purchase premium content either with Zedge’s NFTs or after viewing ads.
For the fiscal-2024 full year, the company reported 10.5% year-over-year growth in revenue to $30.1 million. In the new fiscal year, Zedge has outlined plans to invest in growth and scaling. It added that it would continue integrating generative AI to transform users from content consumers into creators while also introducing new features to Emojipedia.
Zedge has identified its primary goal for GuruShots as «reversing losses and resuming growth.» To accomplish this, the company has decided to prioritize new user acquisition instead of focusing on retaining existing players. To enhance engagement, it has adopted a coin-based in-game economy and launched missions. In January, Zedge also announced a 14% workforce reduction at GuruShots.
According to MarketWatch, the lone analyst who covers Zedge has a «buy» recommendation, with a target price of $4.00 per share, implying upside of more than 38% versus the last closing price.
