Shares of Zedge, a micro-cap company that created an emoji encyclopedia and sells ringtones and wallpapers for cell phones, plummeted more than 24% yesterday, October 28. Investors reacted to the company’s fourth-quarter and fiscal-full-year earnings, with declines across all key financial indicators. The selloff was not tempered by promises about 2026 as "a year of innovation focused on unlocking growth."
Details
Zedge dropped 24.3% to $2.87 per share yesterday, which its market value cut in half to $39.1 million.
Before the opening bell, the company reported results for fiscal 2025, ended July 31. Revenue fell 2.3% to $29.4 million, while earnings per share plunged almost 62% to $0.05.
Drivers of the earnings
Zedge owns a mobile personalization app under the same name, runs the online emoji encyclopedia Emojipedia, and operates GuruShots, a photo-challenge platform. The business is monetized through advertising, digital goods and services, and subscriptions.
One driver of the revenue decline was uncertainty surrounding TikTok’s U.S. business, CEO Jonathan Reich said. TikTok had been a leading advertiser on specialized platforms in 2024, but sharply cut ad spending amid the risk of a U.S. ban, according to previous comments by Reich. In late September, Trump signed an executive order intended to keep TikTok operating in the U.S.; Trump has since said a TikTok deal could be finalized at his meeting with China’s Xi tomorrow, October 30.
The earnings were also dragged on by cost-cutting, including a 22% headcount reduction, the shutdown of a subsidiary in Norway, and consolidation of operations in Lithuania and Israel. Zedge also incurred a contingent payment tied to its 2022 acquisition of GuruShots. Both items are nonrecurring, Reich said. He argued the measures reposition the company to improve profitability and free cash flow in fiscal 2026.
Zedge's plan going forward
Reich called fiscal 2026 “a year of innovation focused on unlocking growth.” Zedge has now built a team, he said, "focused on rapidly testing and developing new product concepts and leveraging AI, vibe coding, and automations to deliver more 'shots on goal' with fewer resources." Each initiative will be judged against defined metrics to determine whether to scale or terminate, a model intended to keep costs tightly managed.
Management is also betting on Tapedeck, a music platform where creators set their own prices, to open new monetization lines through advertising, subscriptions, and premium features.
A second growth lever, Reich said, is DataSeeds.AI, a data-verification platform for business clients. Zedge signed its first contract in fiscal 2025 and is in talks with additional potential clients, whose names were not disclosed. Reich said these moves are meant to enhance long-term shareholder value.
Stock performance
Zedge shares are up 6.7% year to date, but have fallen roughly 30% over the last three months. Only one Wall Street analyst covers the stock, MarketWatch data shows. The rating is “buy” with a target price of $5 per share, implying upside of about 74% from the last close.
The AI translation of this story was reviewed by a human editor.
