Financial Analysis

Note 9Commitments and Contingencies Legal Proceedings The Company may from time to time be subject to legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Companys results of operations, cash flows or financial condition. …

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The following table presents revenue disaggregated by segment and type (in thousands): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Zedge Marketplace Advertising revenue $ 5,355 $ 5,579 $ 16,079 $ 15,151 Paid subscription revenue 1,678 1,272 4,832 3,687 Other revenues 451 431 1,425 1,357 Total Zedge Marketplace revenue 7,484 7,282 22,336 20,195 GuruShots Digital goods and services 508 475 1,520 1,735 Total revenue $ 7,992 $ 7,757 $ 23,856 $ 21,930

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Note 7Stock-Based Compensation In November 2025, the Companys Board of Directors amended the Companys 2016 Stock Option and Incentive Plan (as amended to date, the 2016 Incentive Plan) to increase the number of shares of the Companys Class B common stock available for the grant of awards thereunder by an additional 150,000 shares to an aggregate of 2,781,000 shares. This amendment was ratified by the Companys stockholders at the Annual Meeting of Stockholders held on January 14, 2026. At April 30, 2026, there were approximately 283,000 shares of Class B common stock available for awards under the 2016 Incentive Plan. The Company recognizes stock-based compensation for stock-based awards, including stock options, restricted stock and deferred stock units (DSUs) based on the estimated fair value of the awards and recognized over the relevant service period and/or market conditions. The Company estimates the fair value of stock options on the measurement date using the Black-Scholes option valuation model. The Company estimates the fair value of the restricted stock and DSUs with service conditions only using the current market price of the stock. The Company estimates the fair value of the DSUs with both service and market conditions using the Monte Carlo Simulation valuation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yie …

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Note 3Fair Value Measurements The fair value measurement of cash equivalents invested in money market funds is based on quoted market prices in active markets (Level 1). The fair value measurement of foreign exchange forward contracts is based on observable market-based inputs principally derived from or corroborated by observable market data (Level 2 ). The following table presents the balance of assets and liabilities measured at fair value on a recurring basis (in thousands): April 30, 2026 Total Level 1 Level 2 Level 3 Assets: Cash equivalents $ 12,219 $ 12,219 $ - $ - Foreign exchange forward contracts 18 - 18 - Total $ 12,237 $ 12,219 $ 18 $ - July 31, 2025 Total Level 1 Level 2 Level 3 Assets: Cash equivalents $ 13,907 $ 13,907 $ - $ - Foreign exchange forward contracts 18 - 18 - Total $ 13,925 $ 13,907 $ 18 $ - Fair Value of Other Financial Instruments The Companys other financial instruments at April 30, 2026 and July 31, 2025 included trade accounts receivable, prepaid expenses and other current assets, trade accounts payable and accrued expenses and other liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. …

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Note 13Income Taxes The Companys income tax expense (or benefit) has generally been determined using an estimate of its annual effective tax rate (ETR) applied to year-to-date income and records the discrete tax items in the period to which they relate. In each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the tax provision as necessary. During the second quarter of fiscal 2026, we recorded an unusual and infrequent item related to the Emojipedia asset group impairment, which was treated as a discrete item and reduced our ETR from 24.1% to 18.1% for the nine months ended April 30, 2026. The Companys estimated annual effective tax rate for the fiscal year ending July 31, 2026 differs from the U.S. federal statutory tax rate due to certain items primarily related to stock-based compensation expense, jurisdictional mix of earnings, foreign derived intangible income deduction, global intangible low-taxed income and the change in basis differences associated with tax deductible intangible assets and goodwill. As of April 30, 2026, the Company had $6.8 million of deferred tax assets which relate to temporary differences between financial and tax reporting and net operating loss carryforwards. The Company has established a valuation allowance of $1.8 million against its foreign net operating loss carryforwards. The Company is subject to taxation in the United States and certain foreign jurisdictions. Earnings from non-U.S …

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Note 12 Operating Leases The Company has operating leases primarily for office space. Operating lease right-of-use assets recorded and included in other assets were $267,000 and $64,000 at April 30, 2026 and July 31, 2025, respectively. Effective October 1, 2025, the Company commenced a new lease and relocated to a new office in Vilnius, Lithuania. Future minimum lease payments related to this new lease are as follows (in thousands): Years ending July 31, Operating Leases 2026 $ 87 2027 109 2028 114 2029 19 Total future minimum lease payments $ 330 Less imputed interest 32 Total $ 298 There were no other material changes in the Companys operating or finance leases in the nine months ended April 30, 2026, as compared to the disclosure regarding such leases in the 2025 Form 10-K. …

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Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03), ASU 2024-03 will require public entities to disaggregate, within the notes to the financial statements, certain expenses presented on the face of the financial statements to enhance transparency and help investors better understand an entitys performance. The amendment will specifically require that an entity disclose the amounts related to purchases of inventory, employee compensation, depreciation and intangible asset amortization. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not be required to adopt ASU 2024-03 until August 1, 2027. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on the Companys financial statement disclosures. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Re …

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Note 15Restructuring, Impairments, and Related Charges In January 2025, we initiated a corporate restructuring aimed to reduce headcount at GuruShots and other operating expenses, and ultimately resulting in the closure of our Norway operations. This restructuring allows us to consolidate our workforce in Lithuania and Israel, streamlining operations, driving efficiency and reducing expenses beyond compensation, and is designed to position us for sustainable growth and support our strategic objectives. In connection with this initiative, the Company instituted moves expected to result in the reduction of its total global headcount by approximately 22% and recognized restructuring charges of $577,000 and $1.1 million, primarily consisting of employee termination benefit, which were recorded in the Companys condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended April 30, 2025, respectively. The Company capitalizes certain costs related to software to be sold, leased, or marketed in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed related to GuruShots. The Company evaluates these long-lived assets for impairment whenever circumstances arise that indicate the carrying amount of an asset may not be recoverable. The Companys strategic reassessment of GuruShots operations in connection with the restructuring initiative resulted in a $0.8 million impairment of capitalized software and technology …

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Note 2Revenue Disaggregation of Revenue The following table presents revenue disaggregated by segment and type (in thousands): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Zedge Marketplace Advertising revenue $ 5,355 $ 5,579 $ 16,079 $ 15,151 Paid subscription revenue 1,678 1,272 4,832 3,687 Other revenues 451 431 1,425 1,357 Total Zedge Marketplace revenue 7,484 7,282 22,336 20,195 GuruShots Digital goods and services 508 475 1,520 1,735 Total revenue $ 7,992 $ 7,757 $ 23,856 $ 21,930 Contract Balances Contract liabilities consist of deferred revenue, which are recorded for payments received in advance of the satisfaction of performance obligations . The Company records deferred revenues related to the unsatisfied performance obligations with respect to subscription revenue. The Companys deferred revenue balance for paid subscriptions was approximately $5.8 million, related to approximately 1.3 million active subscribers, and approximately $5.1 million, related to approximately 1.0 million active subscribers, as of April 30, 2026 and July 31, 2025, respectively The Company also records deferred revenues when users purchase or earn Zedge Credits. Unused Zedge Credits represent the value of the Companys unsatisfied performance obligation to its users. Revenue is recognized when Zedge App users use Zedge Credits to acquire Zedge Premium content or upon expiration of the Zedge Credits which occurs following180 days of account inactivity (Breakage …

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Note 11Segment and Geographic Information Segment Information The Company determines its operating segments based on how its chief operating decision maker (CODM) manages the business, allocates resources, makes operating decisions and evaluates operating performance. The Companys CODM was its Chief Executive Officer as of April 30, 2026. The CODM evaluates the performance of each operating segment using segment income (loss) from operations. The Company defines segment income (loss) from operations as revenue less costs and expenses. Expenses include indirect costs that are allocated to operating segments based on a reasonable allocation methodology, which are generally related to sales and marketing activities and general and administrative overhead. Revenue and expenses exclude transactions between the Companys operating segments. The CODM uses segment income (loss) from operations to allocate resources during the annual budgeting and forecasting process. The CODM considers segment income (loss) from operations when making decisions on operating and capital resource allocation. Additionally, the CODM uses segment income (loss) from operations to evaluate operating strategy and assess segment performance by comparing the results of each segment. The Company has two reportable segments - Zedge Marketplace and GuruShots. The following table provides information about these two reportable segments (in thousands): Three Months Ended April 30, Nine Months Ended April 30, 2026 20 …

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Note 16Subsequent Events On June 4, 2026, our Board of Directors declared a quarterly cash dividend of $0.02 per share of our Class A common stock and Class B common stock, aggregating approximately $262,000. The dividend will be paid on or about June 30, 2026, to stockholders of record as of June 22, 2026. On June 4, 2026, due to the near completion of the previously authorized $5.0 million stock repurchase program, our Board of Directors authorized an additional $2.0 million for the repurchase program with no limitation on the number of shares of our Class B common stock that may be repurchased. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing