Zedge Inc.

Company Overview

Business Model: Zedge, Inc. builds digital marketplaces and friendly competitive games centered on content for self-expression. Its core products include the Zedge App (Zedge Ringtones and Wallpapers), pAInt (a generative AI wallpaper and ringtone maker), GuruShots (a skill-based photo challenge game), and Emojipedia (a leading source for emoji information). The company's vision is to connect creators with consumers through friendly competitions and marketplaces to drive commerce. Monetization for the Zedge Marketplace primarily comes from advertising revenue, in-app sales of Zedge Credits (virtual currency for Zedge Premium content), and paid subscriptions offering an ad-free experience. GuruShots operates on a 'Free-to-Play' model, generating revenue through in-app purchases of virtual currency. Zedge, Inc. also launched DataSeeds.AI in fiscal 2025, a business-to-business marketplace providing access to a catalog of over 30 million rights-cleared images for AI training, e-commerce, and stock photos.

Market Position: Zedge, Inc. operates within the 'Creator Economy,' estimated to be between $191 billion and $250 billion globally in 2025, with forecasts reaching $848 billion by 2032. The Zedge App maintains a significant user base, with 23.3 million monthly active users (MAU) as of July 31, 2025. Emojipedia is recognized as the #1 trusted source for emoji-related content, with approximately 8.9 million MAU as of July 31, 2025. GuruShots targets an estimated 30-40 million amateur photographers monthly. Competitive advantages include a large, global customer base, leadership in mobile personalization, expertise in gaming, a diverse content catalog, and scalable technology infrastructure leveraging generative AI and machine learning.

Recent Strategic Developments:

• Fiscal 2023: Introduced pAInt, a generative AI creation suite within the Zedge App, offering text-to-image, image-to-image, and text-to-audio capabilities. Upgraded Zedge+, its paid subscription offering, by bundling an ad-free experience with additional value.
• Fiscal 2024: Revamped GuruShots’ customer onboarding experience and transitioned to a coin-based in-game economy with multiple currencies to enhance engagement and monetization for new players.
• Fiscal 2025: Launched DataSeeds.AI, a business-to-business marketplace leveraging its global creator network and GuruShots' photography library to provide custom, rights-cleared visual content for AI training and other commercial applications. Implemented a corporate restructuring in January 2025, reducing the global workforce by 22%, with projected annual compensation-related cost savings of approximately $2.6 million and total annual savings of $3.9 million to $4.1 million. Google updated its Search Engine Results Page (SERP) in late September 2025, allowing direct emoji copying, which is expected to reduce Emojipedia's traffic and revenue. Operations in Israel were interrupted in June 2025 due to the ’12-Day War’ between Israel and Iran.

Geographic Footprint: Zedge, Inc. operates virtually in the United States, with its corporate staff working remotely. It maintains leased development centers in Vilnius, Lithuania, and Tel Aviv, Israel, housing product, design, monetization, marketing, and technology teams. A Trondheim, Norway office was closed as part of the recent restructuring. The company utilizes cloud-based resources and leased data centers in various geographic locations in the United States. The Zedge App's user base is global, with 76.7% of MAU in emerging markets as of July 31, 2025, and India comprising 32.5% of its MAU. Approximately 46.2% of Emojipedia's MAU are located in well-developed markets.

Financial Performance

Revenue Analysis

Profitability Metrics (Fiscal Year Ended July 31, 2025):

• Gross Margin: 93.7% (Calculated as (Total Revenue - Direct Cost of Revenues) / Total Revenue)
• Operating Margin: -11.0% (Calculated as Operating Income (Loss) / Total Revenue)
• Net Margin: -8.1% (Calculated as Net Income (Loss) / Total Revenue)

Investment in Growth (Fiscal Year Ended July 31, 2025):

• R&D Expenditure: $466 thousand (Capitalized software and technology development costs)
• Capital Expenditures: $83 thousand (Purchase of property and equipment)
• Strategic Investments: No new material strategic investments with disclosed amounts were made in fiscal 2025.

Business Segment Analysis

Zedge Marketplace

Financial Performance (Fiscal Year Ended July 31, 2025 vs. 2024):

• Revenue: $27,213 thousand (+2.2% YoY)
• Operating Income: $2,338 thousand (-58.7% YoY)
• Key Growth Drivers: Advertising revenue decreased by 3.3% to $20,338 thousand, primarily due to a decrease in ad inventory, partially offset by higher prices per advertising impression. Paid subscription revenue increased by 17.1% to $5,093 thousand, driven by growth in lifetime subscriptions. Subscription billings increased by 29.0% to $7,360 thousand. Other revenues, primarily from Zedge Premium, increased by 45.5% to $1,782 thousand, with Zedge Premium net revenue growing 48.7% to $1,778 thousand. The gross margin for Zedge Premium was 68% in fiscal 2025, up from 56% in fiscal 2024, partly due to generative AI features where Zedge, Inc. retains 100% of the associated revenue. Monthly Active Users (MAU) for the Zedge App declined 11.1% year-over-year to 23.3 million, primarily due to attrition in emerging markets. Average Revenue Per Monthly Active User (ARPMAU) for the Zedge App increased 16.9% to $0.0925 for the three months ended July 31, 2025.

Product Portfolio: The Zedge Marketplace includes the Zedge App, offering mobile phone wallpapers, video wallpapers, ringtones, and notification sounds. It also features pAInt, a generative AI wallpaper and ringtone maker, and Zedge Premium, a section for purchasing premium digital content using Zedge Credits or through video ad gates. Zedge+ is a paid subscription offering an ad-free experience.

Market Dynamics: The Zedge App's user base is heavily weighted towards the Android operating system, accounting for approximately 95% of its MAU (excluding Emojipedia). As of July 31, 2025, 76.7% of Zedge App users were located in emerging markets, a shift that has negatively impacted revenues due to materially lower advertising rates compared to well-developed markets.

GuruShots

Financial Performance (Fiscal Year Ended July 31, 2025 vs. 2024):

• Revenue: $2,185 thousand (-37.1% YoY)
• Operating Loss: $(5,570) thousand (+68.1% YoY, reflecting a smaller loss)
• Key Growth Drivers: Digital goods and services revenue decreased by 37.1% to $2,185 thousand, primarily due to a 27.0% decrease in Monthly Active Payers (MAP). MAP declined to 3,326, and Average Revenue Per Monthly Active Payer (ARPMAP) decreased by 17.1% to $43.5 for the three months ended July 31, 2025. The improved operating loss compared to the prior year was primarily due to the $11.9 million impairment charge of intangible assets recorded in fiscal 2024. GuruShots has faced challenges in growth and profitability, leading to cost cuts and a material scaling back of paid user acquisition (PUA) for the unit.

Product Portfolio: GuruShots is a gamified photography platform available on iOS, Android, and the web. It engages a global community of photographers through daily challenges, real-time feedback, and competitive experiences. Revenue is generated through in-app purchases of virtual currency, which players use to unlock competitions or gain advantages.

Market Dynamics: The total addressable market of amateur photographers using smartphones to share artistic photos is estimated at 30-40 million people per month. Zedge, Inc. is developing "GuruShots 2.0" to revamp the offering, attract new users, and convert them into recurring paying players. The extensive library of photographs generated by GuruShots players is being utilized as a valuable dataset for the emerging DataSeeds.AI offering.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In fiscal year 2025, Zedge, Inc. repurchased 219,573 shares of its Class B common stock for approximately $0.8 million under the 2021 Share Repurchase Plan (completed August 28, 2024). Additionally, 1,104,142 shares were repurchased for approximately $3.6 million under the 2024 Share Repurchase Plan. Total share repurchases in fiscal 2025 amounted to approximately $4.4 million.
• Dividend Payments: On October 14, 2025, the Board of Directors declared a quarterly cash dividend of $0.016 per share, payable on or about November 7, 2025. The company intends to pay a regular quarterly dividend going forward, subject to prevailing conditions.
• Future Capital Return Commitments: As of July 31, 2025, approximately $1.4 million remained authorized for future share repurchases under the 2024 Share Repurchase Plan.

Balance Sheet Position (as of July 31, 2025):

• Cash and Equivalents: $18,609 thousand
• Total Debt: $- (The $2 million term loan was fully prepaid on November 15, 2023, and the revolving credit facility had no outstanding balance, only a reserve for foreign exchange contracts).
• Net Cash Position: $18,609 thousand
• Debt Maturity Profile: A $4 million revolving credit facility with Western Alliance Bank was renewed through October 28, 2028.

Cash Flow Generation (Fiscal Year Ended July 31, 2025):

• Operating Cash Flow: $3,422 thousand
• Free Cash Flow: $2,873 thousand (Calculated as Operating Cash Flow of $3,422 thousand minus Capitalized software and technology development costs of $466 thousand and Purchase of property and equipment of $83 thousand).
• Cash Conversion Metrics: Deferred revenues increased by $2,263 thousand in fiscal 2025, primarily driven by the lifetime subscription offering introduced in fiscal 2024.

Operational Excellence

Production & Service Model: Zedge, Inc.'s operational backbone is a scalable, distributed platform integrating open-source and proprietary technologies. This platform supports content management, content discovery, web and mobile application development, data science and analytics, device compatibility, advertising and marketing technology, and reporting. Generative AI and large language models (LLMs) are embedded across the technology stack, automating content creation (e.g., pAInt for wallpapers and ringtones), content enrichment, and facilitating content translation. Data pipelines continuously train and fine-tune machine learning models using user engagement signals to optimize recommender systems and ranking algorithms. GuruShots employs a unique technology stack with advanced ranking algorithms and a real-time voting and ranking engine designed for millions of concurrent interactions. AI-driven recommendation systems curate personalized competition suggestions, and AI bots maintain gameplay liquidity.

Supply Chain Architecture: Key Suppliers & Partners:

• Hosting & Infrastructure: Third-party providers for internet hosting, content serving and filtering, and data analytic tools. Utilizes cloud-based resources.
• Advertising Networks: Major programmatic advertising networks and exchanges, including Google, Liftoff, and AppLovin, are critical for monetizing advertising inventory.
• Distribution Platforms: Relies heavily on third-party mobile app stores, primarily Google Play and Apple App Store, for app distribution, payment processing, and revenue collection.
• Technology Partners: Leverages Google, Meta, and TikTok for paid user acquisition campaigns, though investment in GuruShots PUA has been scaled back.

Facility Network:

• Manufacturing: Not applicable, as the company primarily deals with digital content and services.
• Research & Development: Operates development centers in Vilnius, Lithuania, and Tel Aviv, Israel.
• Distribution: Utilizes leased data centers in various geographic locations in the United States and cloud-based resources.

Operational Metrics:

• Zedge App Monthly Active Users (MAU): 23.3 million as of July 31, 2025 (-11.1% YoY).
• Zedge App Average Revenue Per Monthly Active User (ARPMAU): $0.0925 for the three months ended July 31, 2025 (+16.9% YoY).
• GuruShots Monthly Active Payers (MAP): 3,326 for the three months ended July 31, 2025 (-26.4% YoY).
• GuruShots Average Revenue Per Monthly Active Payer (ARPMAP): $43.5 for the three months ended July 31, 2025 (-17.1% YoY).
• Active Subscribers: Approximately 984,000 as of July 31, 2025 (+47.1% YoY), including approximately 693,000 lifetime subscriptions.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Utilizes its Zedge App and zedge.net website for direct customer engagement and sales, particularly for Zedge Premium content and subscriptions.
• Channel Partners: Relies on major mobile platforms, primarily Google Play and the Apple App Store, for the distribution of its applications and processing of in-app purchases and subscriptions.
• Digital Platforms: Engages with advertising networks and exchanges (e.g., Google, Liftoff, AppLovin) to monetize its advertising inventory. Also uses platforms like Google, Meta, and TikTok for paid user acquisition campaigns.

Customer Portfolio: Enterprise Customers:

• Strategic Partnerships: The newly launched DataSeeds.AI business-to-business marketplace targets enterprises, including technology companies, stock photo sites, and e-commerce vendors, for AI training data and custom visual content.
• Customer Concentration: In fiscal year 2025, two largest customers accounted for 37% and 6% of total revenue. As of July 31, 2025, two largest customers represented 48% and 13% of accounts receivable. These significant customers are advertising exchanges operated by leading companies.

Geographic Revenue Distribution:

• Well-developed economies: Accounted for approximately 81% of total revenues in fiscal 2025.
• Growth Markets: The Zedge App's user base is increasingly weighted towards emerging markets, which comprised 76.7% of its MAU as of July 31, 2025. This shift has negatively impacted revenues due to lower advertising rates in these regions. India alone accounted for 32.5% of the Zedge App's MAU.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The industry for digital content and AI-based offerings, including mobile personalization, emoji content, and photo competition platforms, is intensely competitive with low barriers to entry. The 'Creator Economy,' which Zedge, Inc. is part of, is estimated to be worth between $191 billion and $250 billion globally in 2025, with forecasts suggesting growth to $848 billion by 2032. Key competitive factors include the quality, relevance, and breadth of content; the effectiveness of AI technologies; pricing strategies; ease of access; and brand reputation.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Zedge, Inc. faces competition from large media companies, established online marketplaces, emerging startups, and generative AI providers offering content creation, licensing, and personalization tools. Specific competitors in advertising include Applovin, Meta, and Google. In AI content generation and search, platforms like ChatGPT and Claude pose competitive threats. Other competitors include stock content suppliers, providers of free or low-cost imagery and music, and social media platforms.

Emerging Competitive Threats: New entrants and disruptive technologies, particularly in generative AI, pose significant threats. AI platforms (e.g., ChatGPT, Claude) now directly return emoji results, and Google's updated Search Engine Results Page (SERP) allows users to copy emojis directly, potentially reducing traffic to Emojipedia. Major platforms may integrate AI-driven wallpaper or personalization features directly into their services, reducing organic traffic and increasing customer acquisition costs for Zedge, Inc.

Competitive Response Strategy: Zedge, Inc.'s strategy focuses on investing in user base growth, improving monetization, continuous product and technology innovation (especially in AI), better utilization of data for user acquisition and engagement, increasing marketing efforts, diversifying its revenue stack (e.g., DataSeeds.AI, subscriptions), and selectively pursuing strategic investments and partnerships. The company is also revamping GuruShots with its "GuruShots 2.0" plan to attract new users and improve monetization.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Rapid technological changes in the internet, smartphone, and artificial intelligence (AI) industries, including the emergence of AI platforms (e.g., ChatGPT, Claude) that may reduce traffic to Emojipedia. Market demand and acceptance of AI-driven offerings like pAInt and Zedge Premium remain uncertain.
• Technology Disruption: Risks associated with AI systems failing, producing unintended outcomes (biased, harmful content), or being outpaced by competitors with greater resources. Platform providers (Google, Apple) may incorporate AI-driven features directly, reduce referral traffic, or alter algorithms/terms for AI content.
• Customer Concentration: Heavy reliance on the Android operating system (approximately 95% of MAU excluding Emojipedia). A material amount of revenue (81% in FY25) is generated from well-developed economies, and 72% of advertising revenue comes from three advertising demand partners (Google, Liftoff, AppLovin). A shift in the Zedge App's user base towards emerging markets (76.7% of MAU in FY25) negatively impacts advertising rates.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Dependence on third-party platforms (Google Play, Apple App Store) for app distribution, payment processing, and revenue collection. Reliance on third-party data center and cloud infrastructure providers.
• Geographic Concentration: Significant operations and employees in Lithuania and Israel expose the company to political, economic, and military instability. This includes the ongoing Israel-Hamas and Israel-Iran conflicts, and Lithuania's proximity to the Russia-Ukraine war, which can disrupt operations, impact workforce productivity, and increase costs.
• Capacity Constraints: While not explicitly detailed as current constraints, failure to adapt and effectively scale technological infrastructure could compromise product performance and reliability.
• Other Operational Risks: Challenges in effectively managing growth, attracting and retaining highly qualified employees (especially AI professionals), potential for product errors/flaws, marketing efforts not being effective or cost-efficient, dependence on search engine traffic (Google algorithm changes, AI overviews), and risks from fraudulent activities on its platform.

Financial & Regulatory Risks

• Market & Financial Risks: Limited operating history, particularly for Emojipedia and GuruShots. Potential for future net losses and negative cash flow, and challenges in obtaining additional capital on favorable terms. Business is sensitive to consumer spending and economic conditions, as well as advertising spend, which can decline during economic downturns.
• Regulatory & Compliance Risks: Subject to numerous and evolving U.S. and foreign laws and regulations concerning data privacy (GDPR, UK GDPR, CCPA, CPRA, state privacy laws), AI (EU AI Act, California/Colorado AI laws, proposed frameworks in Canada, Brazil, APAC), content regulation (DMCA, CDA, EU DSM Directive Article 17, UK Online Safety Act 2023), and trade/export controls (e.g., Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA) regarding TikTok). Non-compliance could result in significant fines, legal actions, reputational damage, and increased operational costs.
• Credit & Liquidity: While historically managing credit risk well with large, credit-worthy customers, any significant change in advertising demand partners' spend could impact revenues and profitability.

Geopolitical & External Risks

• Geographic Dependencies: Operations in Israel are directly affected by regional instability, including the October 7, 2023 Hamas attack, the ongoing war in Gaza, the June 2025 ’12-Day War’ between Israel and Iran, and related hostilities. This impacts personnel, facilities, and service continuity. Operations in Lithuania are at higher risk due to its border with the Russian exclave of Kaliningrad and Belarus.
• Trade Relations: U.S. regulatory actions, such as the TikTok ban, have demonstrated an immediate impact on advertiser behavior and revenue, posing risks for future similar restrictions.
• Sanctions & Export Controls: Compliance with U.S. export control laws and regulations, and potential impacts from trade restrictions.
• Other External Risks: Broader macroeconomic conditions, global political climate, cyber-attacks, and natural disasters can adversely affect business operations and financial performance.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Zedge, Inc. focuses on generative AI and large language models (LLMs) embedded throughout its technology stack. This includes pAInt for text-to-image, image-to-image, and text-to-audio creation, as well as LLM-driven systems for content translation, search, and discovery. The company also invests in data pipelines to train and fine-tune machine learning models for recommender systems and ranking algorithms. GuruShots utilizes advanced ranking algorithms, a real-time voting and ranking engine, and AI-driven recommendation systems for personalized competition suggestions. Innovation Pipeline: Key initiatives include the continued development of pAInt, the establishment of DataSeeds.AI as a business-to-business marketplace for AI training data, and the "GuruShots 2.0" plan to revamp the gamified photography platform. Emojipedia has also introduced an AI-powered emoji sticker generator tool and an extensive emoji sticker library.

Intellectual Property Portfolio:

• Patent Strategy: Relies on proprietary technologies and know-how, but specific patent strategy details are not extensively disclosed.
• Trademarks: Holds trademark protection for "Zedge" (in the United States, European Union, United Kingdom, India, and Canada), "We Make Phones Personal," "Zedge, Everything You," "Tattoo Your Phone," "Shortz – Chat Stories By Zedge," and "NFTs Made Easy" (in the United States). Also holds trademarks for a stylized "D" logo (in the European Union, United Kingdom, the United States, and Canada, with an application in India), "Emojipedia" (in the United States, European Union, United Kingdom, and Australia), "World Emoji Day" (in the United States and United Kingdom), and "GuruShots" (in the United States, Canada, European Union, and the United Kingdom, with an application in India).
• Copyrights: Has obtained copyright registrations for its flagship app, Zedge, and for the GuruShots mobile and web-based applications.
• Domain Names: Registered domain names include www.zedge.net, www.zedge.com, www.emojipedia.com, www.emojipedia.org, and GuruShots.com.

Technology Partnerships: While not explicitly named as formal partnerships, Zedge, Inc. relies on the technology and platforms of major players like Google (Google Play, advertising networks) and Apple (App Store) for distribution, monetization, and certain operational aspects.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors includes Michael Jonas (Chairman), Howard Jonas (Vice Chairman), Mark Ghermezian, Elliot Gibber, Paul Packer, and Gregory Suess. Michael Jonas is the controlling stockholder, with voting power over approximately 61% of the combined voting power of outstanding capital stock as of October 24, 2025.

Human Capital Strategy

Workforce Composition:

• Total Employees: 82 as of July 31, 2025, a reduction from 99 in fiscal 2024 due to a 22% global workforce reduction implemented in January 2025.
• Geographic Distribution: The majority of employees are based in Lithuania and Israel.
• Skill Mix: Not explicitly detailed, but the company emphasizes attracting and retaining qualified personnel, particularly product managers, designers, and engineers, with a growing focus on skilled AI professionals.

Talent Management: Acquisition & Retention: Zedge, Inc. devotes significant resources to identifying, hiring, training, and retaining employees. Compensation practices, including equity and cash incentive plans, are designed to attract and motivate personnel and align their interests with company goals. The company adopted a "remote-first" work policy in fiscal 2021, which transitioned to a hybrid model in fiscal 2023. Diversity & Development: The company is committed to diversity and inclusion, with a policy of non-discriminatory treatment and respect for human rights for all current and prospective employees.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Revenues from consumer internet and mobile application products and services typically exhibit seasonality. They are generally higher in the fourth quarter of the calendar year due to increased year-end advertising and marketing budgets. Conversely, the company usually experiences lower advertising revenues during the first quarter of the calendar year following the holiday season.
• Economic Sensitivity: The company's revenue is influenced by discretionary consumer spending habits and advertising expenditures. Both tend to decline during economic downturns, periods of economic or geopolitical uncertainty, or when disposable income decreases.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Zedge, Inc. is subject to a wide array of U.S. and foreign laws and regulations covering areas such as user privacy and data protection, security, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, consumer protection, artificial intelligence and machine learning, accessibility, content regulation, quality of services, law enforcement demands, telecommunications, mobile, and intellectual property ownership and infringement. International Compliance: The company navigates complex international regulatory landscapes, including the EU General Data Protection Regulation (GDPR), UK GDPR, the UK Data (Use and Access) Act 2025, and the EU Regulation on Artificial Intelligence (EU AI Act), which entered into force in August 2024 with phased applicability from 2025. Other jurisdictions like California and Colorado have enacted AI laws, and Canada, Brazil, and Asia-Pacific markets are developing their own frameworks. The EU Digital Markets Act (DMA) and related enforcement actions have impacted app store policies, requiring Apple to permit third-party app stores and alternative payment systems in the EU. South Korea and Australia are also considering similar measures. Trade & Export Controls: The company is subject to U.S. export control laws and regulations. The Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA), signed in April 2024, requires ByteDance to divest TikTok's U.S. operations or face a nationwide ban, with the latest compliance deadline extended to December 16, 2025. This poses material risks to advertising and e-commerce revenue tied to TikTok-based promotions.

Legal Proceedings: Zedge, Inc. may be subject to claims, demands, and legal proceedings in the ordinary course of business, including those related to consumer privacy, employee matters, alleged intellectual property violations, and contractual disputes. There are ongoing legal challenges to Section 230 of the Communications Decency Act (CDA), which could alter liability protections for online platforms.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate for fiscal 2025 was 11.9%, compared to 19.3% for fiscal 2024. This rate is lower than the statutory rate primarily due to adjustments related to certain stock-based compensation and the inclusion of foreign earnings for U.S. tax purposes, partially offset by state taxes and foreign tax differential.
• Geographic Tax Planning: The company is subject to taxation in the United States, Norway, and Lithuania. Its existing corporate structure and intercompany arrangements are designed to comply with current tax laws, but are susceptible to changes in tax legislation.
• Tax Reform Impact: The Tax Cuts and Jobs Act of 2017 requires R&D expenses to be capitalized and amortized for U.S. tax purposes. The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, includes provisions for immediate expensing of qualifying domestic R&D, increased deductibility of business interest expense, and 100% bonus depreciation. The Inflation Reduction Act (IRA) of 2022 introduced an alternative corporate minimum tax. The OECD's Pillar Two guidelines, implementing a 15% global minimum tax, began applying in fiscal year 2025 in many countries where Zedge, Inc. operates, though the U.S. has expressed opposition and a "side-by-side" solution is being discussed.
• Other Tax Considerations: As of July 31, 2025, the company had gross U.S. federal net operating loss (NOL) carryforwards of approximately $2.3 million, state NOL carryforwards of $1.3 million (expiring from 2040), and foreign NOLs (Israel) of approximately $8.0 million with no time limit.

Insurance & Risk Transfer

Risk Management Framework: Zedge, Inc. employs a cybersecurity framework based on recognized industry standards, including those from the National Institute of Standards and Technology (NIST), the Center for Internet Security Controls, and the International Organization for Standardization. This framework guides the identification, assessment, and management of cybersecurity risks. Key practices include strong Identity and Access Management (Role Based Access Control, Least Privilege, multi-factor authentication), endpoint detection and response tools, continuous employee training on cybersecurity awareness, and engagement with incident response experts and external counsel. The company continuously monitors vulnerabilities and attack patterns from CISA and NIST, and leverages the ENISA "Threat Landscape" report for strategic intelligence. Risk management extends to third-party service providers through risk and compliance assessments. Insurance Coverage: The company maintains insurance coverage customary for its size and type, including cyber insurance. However, it does not have commercial insurance to cover losses that may arise from events associated with the security situation in Israel. Risk Transfer Mechanisms: Zedge, Inc. utilizes foreign exchange forward contracts to hedge against unfavorable fluctuations in the USD to NOK and USD to EUR exchange rates, although NOK hedging activities are not anticipated following the closure of its Norway operations.