Zedge (NYSEAMERICAN:ZDGE) reported higher revenue, improved profitability and stronger free cash flow for the fourth quarter and fiscal year 2026, while outlining plans to expand its DataSeeds enterprise data business through additional hiring, technology development and sales efforts.
Fourth-quarter revenue rose 4% year over year to $7.8 million. For the full fiscal year, revenue increased 7.6% to $31.6 million. The company said subscription growth and improved monetization at its Zedge Marketplace business helped offset continued weakness at Emojipedia and declining monthly active users.
Subscription Growth Supported Marketplace Results
For the full year, subscription revenue grew 29.5% to $6.6 million, and advertising revenue increased 4.1% to $21.2 million despite Emojipedia’s decline.
At Zedge Marketplace, active subscriptions rose 35.3% year over year to roughly 1.3 million in the fourth quarter. Average revenue per monthly active user increased 30.5% to $0.121. Those improvements more than offset a 17% decline in monthly active users, President and Chief Operating Officer Jonathan Reich said.
Reich said reversing the decline in monthly active users remains a priority. The company is pursuing product enhancements while expanding paid user-acquisition channels that can generate positive return on advertising spend, or ROAS. Management expects to calibrate paid acquisition spending more tightly to ROAS, which could result in a more measured pace of Marketplace growth.
Zedge has added features including alarms, task-based rewards, watch faces, dynamic wallpapers and battery-charge screens to support engagement and retention. Reich said the Marketplace remains the company’s main source of profitability and cash flow, as well as a contributor of creator-community and operational capabilities that can support DataSeeds.
Profitability and Cash Flow Improved
Zedge generated fourth-quarter GAAP operating income of $0.3 million, compared with a $0.7 million operating loss a year earlier. GAAP net income was $0.4 million, or $0.03 per diluted share, compared with a net loss of $0.6 million, or $0.04 per share, in the prior-year quarter.
Non-GAAP net income for the quarter was $0.5 million, or $0.04 per diluted share, compared with $0.1 million in the previous year. Adjusted EBITDA rose 75.6% to $0.5 million.
For fiscal 2026, Zedge’s GAAP operating loss narrowed to $0.6 million from $3.2 million in fiscal 2025, while its GAAP net loss narrowed to $0.1 million from $2.4 million. Non-GAAP net income increased to $3.1 million, or $0.24 per diluted share, from $0.7 million, or $0.05 per diluted share. Adjusted EBITDA increased 134.2% to $4.1 million.
Full-year operating cash flow rose to $4.6 million from $3.4 million, and free cash flow increased 46.6% to $4.2 million. Zedge ended the fiscal year with $20.3 million in cash and cash equivalents and no debt.
During fiscal 2026, the company repurchased about 686,000 shares and returned about $2.7 million to shareholders through dividends and repurchases. Tsai said Zedge subsequently completed an approximately $7.7 million insider-led financing, putting its pro forma cash balance at around $28 million. The company suspended share repurchases in connection with the financing but expects to continue its quarterly dividend.
DataSeeds Emerges as Primary Growth Initiative
Management identified DataSeeds as Zedge’s principal long-term growth initiative. The business produces specialized, rights-cleared data for artificial intelligence developers, including image, audio and video datasets, along with annotation, enrichment and model-evaluation services.
Reich said DataSeeds recorded commercial progress during fiscal 2026, including repeat orders, its first six-figure engagement and an expansion into model evaluation. Revenue from digital goods and services, which combines DataSeeds and GuruShots, declined about 2% in the fourth quarter to $0.4 million as lower traditional GuruShots gaming revenue was largely offset by DataSeeds revenue. Full-year digital goods and services revenue was $2 million, down from $2.2 million.
The company said DataSeeds revenue could remain uneven in fiscal 2027 because assignments differ in size and timing. However, management said its pipeline has continued to grow and includes established technology and AI companies as well as venture-funded entrants. Reich said some prospects are discussing engagements worth six figures or more.
DataSeeds has also begun delivering work in robotics-related data collection. Reich said robotics customers require dedicated datasets that generally cannot be scraped from the web, including video of people performing tasks alongside sensor information such as depth, gyroscope and motion data. Zedge has developed an egocentric data-capture application designed to collect video and related sensor data for such use cases.
The company also cited its first commercial model-evaluation engagement with Bria, which used GuruShots photographers to assess nuanced quality differences in AI-generated images. Zedge said multiple evaluators reviewed content independently under a process tailored to the customer’s requirements.
Investment Plans and Other Business Updates
Newly appointed Chief Executive Officer Morris Berger said Zedge’s established cash-generating operations, creator communities, digital-platform experience and infrastructure provide a foundation for DataSeeds. Berger previously founded Zedge in Norway and formerly served as its CEO.
Reich said the capital raised in the insider-led financing will support sales, marketing and engineering investments for DataSeeds. Planned hires include account executives and sales development representatives with industry relationships, as well as marketing and technical personnel. The company intends to preserve a cash cushion of roughly $20 million and deploy the new funds over multiple quarters rather than spend them immediately.
Management said GuruShots and DataSeeds are now being managed as a single business, with GuruShots providing a photography community, image catalog and experienced contributors. One of Zedge’s innovation teams will focus on products and capabilities that can support DataSeeds, while another will continue developing consumer products.
Regarding other operations, Reich said Emojipedia continues to generate high margins because it has limited costs, though revenue has declined. Zedge plans to manage the business for cash generation while evaluating ways to slow its decline without significant investment.
The company also said it continues to invest in Tapedeck, using the reggae music segment as a proof of concept for a broader direct-to-consumer and business-to-business offering for music labels. Reich said management expects greater clarity on Tapedeck’s prospects during the first half of fiscal 2027.
About Zedge (NYSEAMERICAN:ZDGE)
Zedge, Inc (NYSE American: ZDGE) operates a mobile-first digital content platform that enables users to discover, customize and share content for smartphones and other personal devices. Its principal consumer product is the Zedge app, which offers wallpapers, video wallpapers, ringtones, notification sounds, stickers and other personalization content.
The company provides both free and premium content, with offerings from independent creators as well as technology-assisted and user-generated content.
