Zedge Announces GuruShots Restructuring to Improve Profitability and Position Itself for Long-term Growth

Rhea-AI Summary

Zedge (NYSE:ZDGE) announced a corporate restructuring focused on improving profitability, primarily affecting its GuruShots division. The restructuring includes a 14% reduction in global workforce, expected to generate approximately $1.7 million in pre-tax annual cost savings.

The company is implementing 'GuruShots 2.0', a comprehensive overhaul of the photography game platform, aimed at enhancing player experience and monetization. Key initiatives include improving the user interface, reassessing gaming technology infrastructure, and reducing player acquisition spending for the remainder of fiscal 2025.

Most restructuring charges will be reported in the second (ending January 31, 2025) and third (ending April 30, 2025) fiscal quarters. The company aims to bring GuruShots closer to breakeven while developing its new strategy, only maintaining marketing spend for campaigns with attractive Return on Ad Spend metrics.

Positive

• Expected $1.7 million annual pre-tax cost savings from restructuring
• Strategic focus on improving GuruShots profitability through operational efficiency
• Development of GuruShots 2.0 with enhanced user experience and monetization potential

Negative

• 14% reduction in global workforce
• Ongoing profitability drag from GuruShots division
• Reduction in marketing spend for player acquisition
• Restructuring charges to impact Q2 and Q3 fiscal quarters

News Market Reaction

+2.23%

1 alert

+2.23% News Effect

On the day this news was published, ZDGE gained 2.23%, reflecting a moderate positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

Initiatives, including an approximate 14% reduction in Zedge's global headcount, mostly impacting GuruShots, are expected to lower costs by approximately $1.7 million (pre-tax) on an annualized basis

Cost reductions expected to enhance profitability and cash flow

Comprehensive overhaul of the GuruShots game underway, targeting much-improved player experience to drive future growth

NEW YORK, NY / ACCESS Newswire / January 21, 2025 / Zedge, Inc. (NYSE AMERICAN:ZDGE), $ZDGE, a leader in digital marketplaces and interactive games that provide content, enable creativity, empower self-expression and facilitate community, today announced a corporate restructuring designed to streamline operations and enhance profitability. The Company expects the restructuring, which includes employees and contractors, will reduce Zedge's global workforce by approximately 14% and generate approximately $1.7 million in pre-tax, annualized cost savings with additional cost benefits from lower discretionary spending related to GuruShots during the remainder of fiscal 2025.

Jonathan Reich, CEO of Zedge, commented:

"Given its ongoing drag on our results, we are rightsizing GuruShots to reduce costs while at the same time reimagining the game and growth plan with our GuruShots 2.0 initiative. We continue to believe that GuruShots can be accretive to Zedge's growth and profitability, and we remain encouraged by the positive response from industry insiders, photo enthusiasts and consumers who find the value proposition, mainly gamifying photography, exciting, captivating and attractive. This feedback gives us the impetus to forge forward and evolve the game by developing a meaningfully better player experience, including a significantly improved user interface. Ultimately, we expect to make GuruShots even more engaging and enjoyable for both new and existing players, as our legacy users remain a loyal and coveted part of our community that deserve ongoing investment and attention.

Reimagining GuruShots Gameplay and Monetization

Zedge is undertaking a comprehensive evaluation of the GuruShots game. As part of the review, the rightsized GuruShots team will prioritize initiatives that improve gameplay for both existing and new players, including conducting a comprehensive assessment of the gaming technology infrastructure best suited for delivering a superior overall player experience. Additionally, the GuruShots team is actively exploring new ways to monetize the game to drive revenue growth. Once the GuruShots 2.0 strategy and product roadmap are solidified, Zedge anticipates re-allocating investment into the game based on meeting select milestones.

Key Cost Savings Initiatives

Rightsizing GuruShots Workforce

As part of the restructuring, the GuruShots organization will undergo significant changes, including rightsizing the workforce, which is expected to enable GuruShots to approach breakeven while developing the GuruShots 2.0 product strategy.

GuruShots Player Acquisition Spend to Decrease for the Remainder of FY25

In addition to headcount reductions, GuruShots will cut back on previously budgeted paid player acquisition for at least the remainder of the fiscal year, only allocating marketing dollars to player acquisition campaigns that deliver attractive Return on Ad Spend (ROAS) metrics.

Financial Impact

The Company expects that most of the restructuring charges associated with today's announced cost-reduction initiatives will be reported in its second (ending January 31, 2025) and third (ending April 30, 2025) fiscal quarters' results.

About Zedge

Zedge empowers tens of millions of consumers and creators each month with its suite of interconnected platforms that enable creativity, self-expression and e-commerce and foster community through fun competitions. Zedge's ecosystem of product offerings includes the Zedge Marketplace, a freemium marketplace offering mobile phone wallpapers, video wallpapers, ringtones, notification sounds, and pAInt, a generative AI image maker; GuruShots, "The World's Greatest Photography Game," a skill-based photo challenge game; and Emojipedia, the #1 trusted source for ‘all things emoji.'

For more information, visit: investor.zedge.net

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Contact:
Brian Siegel, IRC, MBA
Senior Managing Director
Hayden IR
(346) 396-8696
ir@zedge.net

SOURCE: Zedge, Inc.

View the original press release on ACCESS Newswire

FAQ

How much will Zedge (ZDGE) save from its 2025 restructuring plan?

Zedge expects to save approximately $1.7 million in pre-tax costs annually through its restructuring initiatives announced in January 2025.

What percentage of workforce is Zedge (ZDGE) reducing in its 2025 restructuring?

Zedge is reducing its global workforce by approximately 14%, primarily affecting the GuruShots division.

When will Zedge (ZDGE) report the restructuring charges?

Most restructuring charges will be reported in Zedge's second quarter (ending January 31, 2025) and third quarter (ending April 30, 2025) fiscal results.

What changes are planned for GuruShots 2.0?

GuruShots 2.0 will include an improved user interface, enhanced player experience, reassessed gaming technology infrastructure, and new monetization strategies.

How will the restructuring affect GuruShots marketing spending?

GuruShots will reduce previously budgeted paid player acquisition spending for the remainder of fiscal 2025, focusing only on campaigns with attractive Return on Ad Spend metrics.