10-K: Zedge Reports FY26 Results, Navigates AI Data Growth

Zedge, Inc. filed its Form 10-K for the fiscal year ended July 31, 2026, reporting revenue growth driven by subscriptions, but also detailing a significant impairment charge for Emojipedia and a continued decline in Zedge App MAU.

Summary

• Zedge, Inc. reported total revenues of $31.6 million for fiscal year 2026, an increase of 7.6% from fiscal year 2025.
• The Zedge Marketplace segment saw revenue grow by 9.0% to $29.7 million, primarily driven by a 29.6% increase in paid subscription revenue.
• GuruShots digital goods and services revenue decreased by 10.3% to $2.0 million.
• A significant impairment charge of $3.7 million was recorded for Emojipedia's intangible assets due to changes in search engine results and AI platform responses impacting traffic and revenue.
• Monthly Active Users (MAU) for the Zedge App declined by 16.8% year-over-year to 19.3 million as of July 31, 2026.
• The company ended fiscal year 2026 with $20.3 million in cash and cash equivalents.
• A direct investment of approximately $7.7 million was secured in August 2026 to accelerate the growth of DataSeeds.
• Morris Berger was appointed as the new Chief Executive Officer, effective October 1, 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as cautiously optimistic, with revenue growth offset by significant impairments and ongoing user base challenges.

Positives

• Total revenue increased by 7.6% to $31.6 million in fiscal year 2026.
• Zedge Marketplace revenue grew by 9.0% to $29.7 million.
• Paid subscription revenue within the Zedge Marketplace increased by a strong 29.6%.
• Active subscriptions grew by 35.3% to 1.3 million.
• Average Revenue Per Monthly Active User (ARPMAU) for the Zedge App increased by 30.5%.
• Secured approximately $7.7 million in direct investment to fuel DataSeeds growth.
• Operating loss from GuruShots decreased by 46.8% to $3.0 million.
• Cash flow from operating activities was positive at $4.6 million.

Negatives

• Zedge App MAU declined by 16.8% year-over-year to 19.3 million.
• A significant impairment charge of $3.7 million was recognized for Emojipedia's intangible assets.
• Emojipedia revenue declined by 49.4% in fiscal year 2026.
• GuruShots Monthly Active Payers (MAP) decreased by 28.5%.
• The company reported a net loss of $0.1 million for fiscal year 2026.
• Zedge Premium gross margin decreased to 66% from 68%.

Risks

• Failure to keep up with rapid technological changes in internet, smartphone, and AI industries could adversely affect operations and growth.
• Reliance on third-party platforms like Google Play and Apple App Store for distribution and monetization, with potential for adverse policy changes.
• The digital advertising market is highly competitive and subject to deterioration, impacting revenue.
• Concentration of revenue from a limited number of geographies and advertising demand partners poses a risk.
• The Zedge App user base is heavily weighted towards the Android operating system, making it vulnerable to shifts in Android market demand.
• The success of DataSeeds depends on contributors making content available for AI training, which may not materialize.
• The AI training data market is rapidly evolving, with potential for increased competition and shifting customer requirements.
• Geopolitical instability in Israel and Lithuania could disrupt operations.

Future Outlook

The company intends to use proceeds from a recent investment to accelerate the growth of DataSeeds, focusing on expanding its customer base, moving up the AI data value chain, and investing in technology and operating capabilities. Efforts will also continue to prioritize profitability of the user base and improve monetization within the consumer businesses.

Management Comments

• StockSavvy.ai notes that the company's strategy involves a flywheel effect where consumer products build creator communities, which produce content for AI models, and DataSeeds monetizes this output with enterprise customers.
• Management emphasizes the ability to attract, onboard, engage, and compensate large numbers of creators at low cost as a core competency.
• The company is focused on the value generated per user rather than the absolute size of its user base for its consumer businesses.
• Plans include moving up the AI data value chain, potentially into annotation, labeling, and synthetic data generation.

Industry Context

StockSavvy.ai observes that Zedge operates within the rapidly growing Creator Economy and AI training data markets, which are estimated to be worth hundreds of billions and billions of dollars respectively, presenting significant growth opportunities.

Comparison to Industry Standards

• The Creator Economy is estimated by Coherent Market Insights to be worth approximately $252 billion globally in 2025 and projected to reach approximately $1.3 trillion by 2033.
• The AI training data market is estimated by Grand View Research to reach $3.9 billion in 2026, with image and video representing the largest data modality at 41.9% of the market in 2025.
• Zedge's Zedge App holds a 4.5-star rating on Google Play and GuruShots holds a 4.4-star rating in the App Store, indicating strong user satisfaction with product quality.

Management Changes

Legal Proceedings

• The company may from time to time be subject to claims, demands and legal proceedings that arise in the ordinary course of business. It does not expect these proceedings to have a material adverse effect on its results of operations, cash flows or financial condition.

Related Party Transactions

• Zedge charges IDT for services provided, and IDT charges Zedge for services, pursuant to Services Agreements. In FY2026, Zedge was charged $131,000 by IDT for legal services and charged IDT $89,000 for consulting services.
• A revenue sharing agreement exists with National Retail Services, Inc. (NRS), a subsidiary of IDT, for content display and ad revenue sharing. In FY2026, Zedge generated $17,000 in revenue from this agreement.
• Zedge has a consulting agreement with Activist Artist Management, LLC, a firm in which a Board member and Audit Committee Chairman has a significant minority stake. Zedge paid $60,000 to Activist in FY2026.

Stakeholder Impact

• Shareholders may experience dilution from the issuance of shares and warrants in the recent direct investment.
• Employees in Israel and Lithuania may be impacted by geopolitical instability in the region.
• Advertisers may be affected by changes in data collection and usage policies due to privacy regulations and platform changes.
• Creators and contributors may be impacted by the company's strategy to secure AI training rights for their content.

Next Steps

• Accelerate the growth of DataSeeds using proceeds from the recent investment.
• Continue investing in and supporting existing consumer products (Zedge Marketplace and GuruShots).
• Grow and diversify the DataSeeds customer base and deepen existing customer relationships.
• Expand content supply for DataSeeds while maintaining rigorous rights and consent standards.
• Move up the AI data value chain for DataSeeds, including annotation, labeling, and synthetic data generation.
• Invest in technology and operating capability to power data production at scale for DataSeeds.
• Accelerate new product development through the Product Innovation Team.
• Selectively pursue strategic investments, partnerships, and acquisitions.

Key Dates

Recommendation

While revenue growth and positive operating cash flow are encouraging, the continued decline in Zedge App MAU and the significant impairment charge for Emojipedia highlight ongoing challenges. The strategic pivot towards DataSeeds shows promise but requires substantial investment and faces intense competition. The recent capital raise provides necessary funding, but the path to sustained profitability and significant growth remains uncertain, warranting a hold position.

Keywords

Zedge, Form 10-K, Annual Report, Zedge Marketplace, GuruShots, DataSeeds, AI Training Data, Mobile Personalization