Zedge Inc. (NYSEARCA:ZDGE) Surpasses Q1 FY2026 Estimates with Strong Revenue and Earnings Beat

Zedge Inc. (NYSEARCA:ZDGE), a digital marketplace and content platform, reported its financial results for the first quarter of fiscal year 2026, ended October 31, 2025. The company's earnings and revenue surpassed analyst expectations, a development that appears to be positively reflected in early market trading.

Earnings and Revenue: A Beat on Both Fronts

For the quarter, Zedge reported total revenue of $7.6 million, marking a 5.8% increase year-over-year and a return to topline growth. This figure notably exceeded the analyst consensus estimate of $6.9 million. The company's profitability metrics also came in ahead of forecasts.

• Reported Non-GAAP EPS: $0.07
• Analyst Estimate for Non-GAAP EPS: $0.0204
• Reported Revenue: $7.6 million
• Analyst Estimate for Revenue: $6.9 million

The earnings per share beat was substantial, coming in at more than triple the consensus estimate. On a GAAP basis, the company reported net income of $0.8 million, or $0.06 per share, a significant improvement from a net loss of $0.3 million in the prior-year period.

Market Reaction and Price Action

Following the earnings release, Zedge's stock is indicating a strong positive reaction in pre-market trading. This initial price action suggests investors are rewarding the company for its better-than-expected quarterly performance and improved profitability. The stock had been under pressure over the past month, declining approximately 14.7%, making the post-earnings rebound more pronounced.

Key Operational Highlights from the Quarter

Beyond the headline financial beats, Zedge's press release highlighted several important operational trends that underpin its performance:

• Subscription Momentum: Active subscriptions reached a record 1.1 million, a 54% increase year-over-year. Subscription revenue grew 29% to $1.5 million, becoming an increasingly significant part of the revenue mix.
• Improved Monetization: Average Revenue Per Monthly Active User (ARPMAU) grew 29% to $0.099, indicating the company is generating more value from its user base even as Monthly Active Users (MAU) declined 11% to 22.2 million.
• Strategic Investments: CEO Jonathan Reich emphasized traction in the company's DataSeeds initiative, a service providing ethically sourced training data for AI models. He noted a second order from an existing AI customer that was roughly 25 times larger than the first, describing a pipeline of "many six-figure revenue opportunities."
• Capital Return: The company repurchased approximately 240,000 shares during the quarter and paid its first quarterly dividend.

Looking Ahead: Estimates vs. Momentum

While the press release did not provide specific quantitative financial guidance, management expressed entering the seasonally stronger second quarter with "a leaner operating structure, a stronger business engine and a growing portfolio of innovation bets." The company's commentary suggests confidence in its core operations and strategic investments like DataSeeds.

Analysts currently estimate revenue of $7.86 million and EPS of $0.05 for the upcoming second quarter of fiscal 2026. For the full fiscal year 2026, the consensus estimates project revenue of $30.1 million and EPS of $0.16. Zedge's Q1 beat and strong operational metrics, particularly in subscriptions and ARPMAU, may lead to revisions in these estimates if the company can maintain its momentum.

For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can review the data here.

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