Zedge Inc

Zedge maintains a strong liquidity position with $18.61 million in cash and equivalents, representing 52.2% of total assets, and a current ratio of 2.89, indicating robust short-term financial health. The company has no long-term debt, and its debt-to-equity ratio is 0.0, reflecting a conservative capital structure. However, free cash flow is negative at -$1.79 million, driven by capital expenditures of -$549,000 and operating cash flow of $3.42 million.

Profitability metrics show significant underperformance relative to industry norms. The company reported a net loss of $2.39 million and an operating loss of $3.23 million, with a return on equity of -9.24% and return on assets of -6.71%. Gross profit of $27.56 million represents 93.8% of revenue, but this is insufficient to offset operating expenses. These results suggest a need for cost optimization or revenue diversification to improve margins.

Zedge's revenue is concentrated in a single business segment, with no disclosed geographic breakdown. This lack of diversification increases exposure to market-specific risks and limits visibility into regional performance. The absence of segment or geographic data also complicates the assessment of growth opportunities or risk concentrations.

Outlook data indicates a modest revenue growth trajectory, though specific numeric deltas are not provided. Analysts have assigned a mean price target of $6.00, suggesting a potential 87% upside from the current market price of $3.21. However, the company's negative net income and operating income raise concerns about its ability to sustain growth without external capital or operational improvements.

Risk factors include the company's negative net income and operating income, which could pressure liquidity if cash burn accelerates. The dilution risk is currently low, with no immediate filing-based flags detected, and shares outstanding remain unchanged between basic and diluted counts. However, the absence of long-term debt does not eliminate the need for monitoring capital structure changes in response to growth initiatives.

Recent filings and transcripts do not provide additional insights into strategic direction or operational performance. The company's financial snapshot and valuation metrics suggest a focus on maintaining liquidity while addressing profitability challenges.

Net income improved 73.9% year-over-year to a loss of $2.4 million, signaling significant operational recovery.

Free cash flow surged 77.3% year-over-year to a loss of $1.8 million, indicating improving cash generation.

The company maintains a debt-to-equity ratio of 0.38, reflecting a low leverage band and financial stability.

Revenue grew at a 10.7% compound annual growth rate over the last four years, demonstrating top-line expansion.

The company carries a high credit risk flag, suggesting potential difficulties in meeting financial obligations or securing capital.

Cash conversion ratio of -1.43 is in the bottom quartile, highlighting severe inefficiency in converting earnings to cash.

Revenue $8.3M, +18,3% YoY; Operating income −30,3% YoY.

• ▍Revenue $8.3M, +18,3% YoY
• ▍Operating income −30,3% YoY
• ▍Net income −36,3% YoY
• ▍Free cash flow −47,8% YoY
• ▍Net margin -27.7%

Revenue $7.6M, +5,8% YoY; Operating income +300,0% YoY.

• ▍Revenue $7.6M, +5,8% YoY
• ▍Operating income +300,0% YoY
• ▍Net income +332,4% YoY
• ▍Free cash flow +812,2% YoY
• ▍Net margin 10.4%

Revenue $7.5M, −1,5% YoY; Operating income −1 000,0% YoY.

• ▍Revenue $7.5M, −1,5% YoY
• ▍Operating income −1 000,0% YoY
• ▍Net income −1 333,3% YoY
• ▍Free cash flow −491,5% YoY
• ▍Net margin -7.5%

Revenue $7.8M, +1,3% YoY; Operating income +221,2% YoY.

• ▍Revenue $7.8M, +1,3% YoY
• ▍Operating income +221,2% YoY
• ▍Net income +63,7% YoY
• ▍Free cash flow −36,1% YoY
• ▍Net margin 2.4%

Revenue $7.0M; Operating income -$2.2M.

• ▍Revenue $7.0M
• ▍Operating income -$2.2M
• ▍Net margin -24.1%

Revenue $7.2M; Operating income -$457.0k.

• ▍Revenue $7.2M
• ▍Operating income -$457.0k
• ▍Net margin -4.7%

Revenue $7.6M; Operating income -$65.0k.

• ▍Revenue $7.6M
• ▍Operating income -$65.0k
• ▍Net margin -0.5%

Revenue $7.7M; Operating income -$132.0k.

• ▍Revenue $7.7M
• ▍Operating income -$132.0k
• ▍Net margin 1.5%

Revenue $29.4M, −2,3% YoY; Operating income +72,6% YoY.

• ▍Revenue $29.4M, −2,3% YoY
• ▍Operating income +72,6% YoY
• ▍Net income +73,9% YoY
• ▍Free cash flow +77,3% YoY
• ▍Net margin -8.1%

Revenue $30.1M, +10,5% YoY; Operating income −70,8% YoY.

• ▍Revenue $30.1M, +10,5% YoY
• ▍Operating income −70,8% YoY
• ▍Net income −50,3% YoY
• ▍Free cash flow −50,5% YoY
• ▍Net margin -30.5%

Revenue $27.2M, +2,6% YoY; Operating income −158,4% YoY.

• ▍Revenue $27.2M, +2,6% YoY
• ▍Operating income −158,4% YoY
• ▍Net income −162,8% YoY
• ▍Free cash flow −151,8% YoY
• ▍Net margin -22.4%

Revenue $26.5M, +35,6% YoY; Operating income +47,6% YoY.

• ▍Revenue $26.5M, +35,6% YoY
• ▍Operating income +47,6% YoY
• ▍Net income +17,8% YoY
• ▍Free cash flow +14,6% YoY
• ▍Net margin 36.6%