Zedge Increases Cost Reduction Efforts to a Targeted $4 Million Annually
Rhea-AI Summary
Zedge (ZDGE) announced extensive restructuring initiatives aimed at reducing annual costs by $3.9-$4.1 million. The plan includes closing Norwegian operations and previous workforce reductions at GuruShots, resulting in a 22% total workforce reduction. The company expects annualized compensation-related savings of $2.6 million, plus $0.1-$0.3 million in non-employee cost reductions.
Additional savings of $1.2 million will come from completing scheduled GuruShots acquisition-related retention bonus payments. The company reported generating $30 million in revenue and $4.7 million in free cash flow in FY24. The restructuring charges will be reflected in Q2 and Q3 fiscal results ending January and April 2025. Operations will be consolidated in Lithuania and Israel, with implementation of cost-saving measures beginning in Q3 and Q4.
Positive
- Generated $30M revenue and $4.7M free cash flow in FY24
- Expected annual cost savings of $3.9-$4.1M ($0.30 per share pre-tax)
- Operational consolidation in Lithuania and Israel to improve efficiency
Negative
- 22% workforce reduction across global operations
- Closure of Norwegian subsidiary
- Scaling back GuruShots paid player acquisition initiatives
- Restructuring charges impacting Q2 and Q3 fiscal results
News Market Reaction
On the day this news was published, ZDGE gained 10.73%, reflecting a significant positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Estimated total global restructuring and other cost reductions to save
Total global restructuring efforts to date include a
Other annual cost reductions of
NEW YORK, NY / ACCESS Newswire / February 5, 2025 / Zedge, Inc. (NYSE AMERICAN:ZDGE), $ZDGE, a leader in digital marketplaces and interactive games that foster creativity, self-expression and community engagement, today announced additional restructuring initiatives, mainly the closure of its Norway operations. Combined with the previously announced headcount and compensation expense reductions at GuruShots and other initiatives, these actions mark a key milestone in the Company's strategy to streamline operations and enhance profitability while positioning for growth and revamped focus.
Jonathan Reich, CEO of Zedge, commented:
"Today's announcement, including the closure of our Norwegian subsidiary, marks an end to our aggressive restructuring efforts. Combined with the actions announced on January 21, 2025, and some additional reductions, we expect to lower our annualized expense run rate by roughly
"Beyond cost savings, these measures will consolidate our workforce in Lithuania and Israel, streamlining operations, driving efficiency and reducing expenses beyond compensation. These changes are designed to position us for sustainable growth and support our strategic objectives."
Estimated Change in Expense (vs Q1 FY25) | ||
in $M |
| Annualized Reductions |
Restructuring: |
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Compensation-Related Expense |
| ( |
Non-employee |
| ( |
Other: |
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Expiration of GS Retention Bonus |
| ( |
Total |
| ( |
Cost-saving benefits in the above table are expected to begin taking effect in Zedge's third and fourth fiscal quarters.
Highlights of Zedge's Restructuring Initiatives
Announced February 5, 2025:
Closure of Norwegian Subsidiary -
Zedge is ceasing operations in Norway while consolidating its activities in Lithuania and Israel. The Company expects this move to enhance operational efficiency and reduce expenses.
Announced January 21, 2025:
Rightsizing the GuruShots Workforce -
As part of the restructuring, the GuruShots team underwent a significant reorganization. These changes aim to bring GuruShots closer to breakeven while supporting the development of the GuruShots 2.0 product strategy.
Non-employee expense reduction targets -
Zedge is also targeting non-employee expense reductions related to its restructuring initiatives, including scaling back GuruShots paid player acquisition initiatives for the remainder of fiscal 2025.
Reimagining GuruShots Gameplay and Monetization
The GuruShots team is conducting a comprehensive review of the game via the GuruShots 2.0 initiative, reimagining gameplay, progression dynamics, monetization strategies, and technology infrastructure. Once the GuruShots 2.0 strategy and roadmap are finalized, Zedge plans to re-invest strategically based on achieving key milestones.
Additional Cost Savings
Zedge also expects to benefit from the completion (in April 2025) of GuruShots employee retention bonuses (that were committed to as part of the 2022 acquisition), which will further reduce GuruShots (and Zedge's) annualized expense run-rate by approximately
Restructuring Charges
Zedge anticipates accounting charges related to its restructuring efforts will primarily be reflected in the Company's second and third fiscal quarter results, covering periods ending January 31 and April 30, 2025, respectively.
By completing these restructuring efforts, Zedge is positioning itself for sustainable growth while improving operational focus and cost efficiency.
*Free cash flow is a non-GAAP metric defined as cash flow from operations (
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
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