Good morning, and welcome to the Zedge investor conference call and webcast. All participants will be in a listen-only mode during the management's prepared remarks. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star then one on your touchtone phone. To withdraw your question, please press one. I will now turn it over to Brian Siegel, Senior Managing Director at Hayden IR. Thank you, and good morning, everyone. With me on today's call is Jonathan Reich, Zedge's Chief Executive Officer, who will discuss today's exciting news, the transformational acquisition of GuruShots, the world's greatest photography game. There's also a slideshow available with the webcast, which will be posted after the call on the IR portion of Zedge's website at https://investor.zedge.net. There, you can also find the press release for today's announcement, which was filed on Form 8-K with the SEC as well. Any forward-looking statements made during this conference call, either in the prepared remarks or in the question and answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause the actual results to differ materially from those which the company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in the reports that Zedge files periodically with the U.S. Securities and Exchange Commission. Zedge assumes no obligation either to update any forward-looking statements they have made or may make or update the factors that may cause the actual results to differ materially from those they forecast. I would now like to turn the conference over to Jonathan. Thank you, Brian, and thank you all for joining us today. Good morning. I'm Jonathan Reich, CEO of Zedge. Welcome to our call highlighting today's announced acquisition of GuruShots, the world's greatest photography game. In short, this is a transformational deal for Zedge. We believe that prior to this transaction that we were undervalued, and we see even greater potential to create truly meaningful incremental shareholder value with the addition of GuruShots. The promise for the combined company aligns with the major strategic themes that we believe will accelerate revenue growth over the next few years. Notably, embracing the creator economy and NFTs, adding new content verticals, establishing category leadership, and providing attractive user engagement. Importantly, GuruShots adds another element that we are incredibly excited about. Namely, gamification. For those of you who are new to the Zedge story or who haven't followed us in a while, we own a portfolio of leading digital consumer brands that served 44 million users globally in January of 2022. Our portfolio consists of Zedge Ringtones and Wallpapers, otherwise referred to as the Zedge app, the leading mobile app for mobile phone personalization, social content, and fandom art. The Zedge app also includes Zedge Premium, our marketplace for artists, celebrities, and emerging creators to market their digital content, including NFTs, to Zedge's users. The portfolio also includes Emojipedia, the leading website dedicated to all things emoji, as well as an extensive pipeline of apps and services that our innovation team is working on, all in various stages of development. It's important to underscore that these are experimental and may not evolve into full-blown commercial offerings. Let me now turn to today's exciting news, mainly our acquisition of GuruShots, a category killer that fuses photography with mobile gaming. GuruShots, based in Israel, offered a platform spanning iOS, Android, and the web that gamifies photography by providing a fun, educational, and structured way for amateur photographers, essentially anyone with a mobile phone, to compete in a wide variety of contests showcasing their photos. The game mechanics include competitions that become progressively more difficult, with successful players mastering their skills and then continuing to the next level until ultimately achieving the coveted title of Guru. Players can compete individually or together with a team. Product features include community features, leaderboards, and chat functionality, which create a sense of belonging, inspiration, and competition. On a monthly basis, GuruShots' Live Ops team creates more than 300 unique photo competitions to which competitors submit more than 1 million high-quality user-generated photos. The tightly knit GuruShots community of players casts their votes, totaling around 5 billion per month, to rank the images in real time, ultimately determining the winners of each competition. Think about this measure of engagement, 5 billion votes monthly. That is outstanding. Aside from these impressive monthly numbers, GuruShots has amassed more than 140 million high-quality photos. GuruShots is a freemium game that monetizes through in-app purchases of extra abilities that increase a photo's exposure, helping players progress through the competitions. This model has led to an average revenue per monthly active user or ARPMAU of approximately $3.50 compared to the $0.06 that Zedge reported in our Q2. Additionally, the average paying player spends well over $50 per month on the game, an amount that has grown at an 18% CAGR over the past six years. These are all impressive metrics and compare favorably to the Zedge app. On its own, this acquisition has several strategic benefits. It makes us relevant to a new and sizable audience. It diversifies our portfolio with a mobile game category killer. It adds gamification expertise to our knowledge base and drives revenue expansion with the existing in-app purchases. Now, let me delve into some of these benefits in more detail. GuruShots materially expands our TAM. We estimate that every month there are 30-40 million photo enthusiasts who regularly use their smartphones to take and publicly share high-quality photos, who would be interested in participating in photo contests. Given the combination of a large TAM together with low penetration rates, we see an opportunity to significantly increase the participation of this audience. To win this market, we will focus on marketing strategies including paid and organic user acquisition, search engine optimization, app store optimization, and user conversion and retention. Zedge already boasts expertise in these areas and brings an impressive team that will assist GuruShots in deepening its market prowess. GuruShots will also diversify Zedge's portfolio by entering the world of mobile gaming and squarely giving us a leadership position in the evolving world of peer-based photo competitions. Furthermore, it brings several core areas of competency that we lack, namely gamification and Live Ops, that we believe can be powerful drivers in growing Zedge's monthly active users, particularly in well-developed economies. Today, GuruShots is only available in English and solely generates revenue from in-app purchases. In the medium term, we expect to capitalize on our deep understanding of both ad-supported monetization and paid subscriptions to diversify further and expand GuruShots' revenue base. In addition, we expect to localize the app by adding multi-language support, which can both drive user growth and globalize the customer base. Of course, I would be remiss if I didn't discuss how access to GuruShots' user base can materially advance our progress with Zedge Premium as a part of the burgeoning creator economy. To scale Zedge Premium and NFTs Made Easy, we need to rapidly expand our community of talented artists and creators. As with any marketplace, one needs a healthy balance of buyers and sellers. Today, we have around 36 million potential buyers from across the world using our Zedge app. Yet, our community of premium artists is only approaching 2,000. Considering that GuruShots amasses over 1 million high-quality photo submissions monthly speaks volumes to the potential these artists can bring to Zedge Premium and NFTs Made Easy. Let's put it like this. Today, many of these photographers are paying GuruShots to compete. With Zedge Premium being a part of the picture, they can now start earning money. That's a win-win and one whose potential is particularly exciting. I hope that by now you can begin to appreciate the potential value this asset brings to Zedge. Over the mid to long- term, there are additional opportunities that we are going to consider, including gamifying the Zedge app and potentially launching new gamified verticals. As such, we have decided to reallocate resources that were previously focused on Shorts to help us accelerate some of the GuruShots priorities. Shorts has been a valuable learning experience for us, and we now have a vetted team that can hit the ground running, focusing on making GuruShots' new initiatives a reality. Finally, to the deal terms. We paid $18 million to existing GuruShots investors at closing. In addition, the deal includes an aggressive performance-driven earn-out of up to $16.8 million payable in cash and/or stock at Zedge's discretion to these investors over the next two years. The qualification thresholds are revenue-based. In connection with these thresholds, we have agreed to invest in paid user acquisition of up to $5 million over the next 12 months and up to $8.5 million in the second year, contingent on GuruShots surpassing specific return on ad spend or ROAS targets. We did our best to ensure this deal incentivizes growth tied to performance. If GuruShots meets or exceeds these milestones, it's a win for us because of both the extremely attractive revenue growth it brings with it and the commensurate EBITDA contribution. In addition, with scale, we believe their business model has potential for material operating leverage. In the event that GuruShots falls short of meeting these milestones, Zedge is protected from being required to fund the entire user acquisition budget and may only have to pay out a ratable portion of the earn-out. At the same time, we would still benefit from the diversification of our portfolio with a mobile gaming asset that brings significant optionality. We like assets that provide a wealth of possibilities, both on a standalone and synergistic basis. Although not a part of the purchase price, we established a retention bonus pool of $8 million for employees to incentivize their performance. The pool is payable over three years, half in cash and half in stock, and is tied to continued employment with Zedge. Before opening the floor to questions, I'd like to comment on the financial discipline we imposed while making this acquisition. The market for mobile gaming remains a hot one, driving premium valuations with a forecasted TAM of $272 billion by 2030, implying a CAGR of 11%. There has and continues to be significant investment in this sector, with M&A unfolding at a frenetic pace. For example, in August 2021, Playtika, a leading mobile gaming company, acquired Reworks, maker of the hit design entertainment app Redecor, for a trailing twelve-month revenue multiple of 13.3x at closing and a multiple of 20x revenue when accounting for all future earn-outs. Additionally, when we analyzed the top 15 mobile game deals of 2021, 11 of which had multiples publicly available, we paid the second-lowest upfront multiple. This is especially impressive because GuruShots attracted strong interest from several significantly larger and better-capitalized companies. We believe that GuruShots chose Zedge because of the shared vision that we crafted together and the strong working relationship we developed during the due diligence process. We are thrilled to welcome them to the family. In calendar 2021, GuruShots generated approximately $8 million in revenue and had a loss of approximately $1 million. Please note that these numbers are, as of yet, unaudited. We believe that with the right support from our team, GuruShots will be on track to contributing positive EBITDA in around 2 years' time. I want to provide one other update before completing my prepared remarks. As I mentioned during our last earnings call, we were compelled to migrate away from MoPub's ad mediation platform following their acquisition by AppLovin because MoPub's platform was being deprecated at the end of March. After stress testing various alternatives, we opted to migrate to AppLovin's MAX platform. AppLovin, in recognition of our business and valuable customer base, paid us a one-time integration fee of $2 million earlier this month. With the migration behind us, our team resumed the development of social and community features for the Zedge app, which we hope to start rolling out over the summer, if not sooner. In summary, we believe the acquisition of GuruShots will be a game changer for Zedge and, even before accounting for potential synergistic upside, has the potential to accelerate our growth meaningfully. When thinking about the wealth of synergistic opportunities available between our combined businesses, including Zedge Premium, NFTs Made Easy, gamification, localization, Live Ops, and operational efficiencies, our excitement is palpable. We are also excited by GuruShots being an Israeli company, as this gives us a presence in a leading global market for mobile, gaming, and tech, which we view as a benefit. We look forward to sharing our progress in the upcoming quarters and expect to file consolidated pro forma financial statements with the SEC when required. In addition, we are looking forward to presenting at the Sidoti Investors Conference on May 11th and 12th, 2022. Before handing back to the operator for Q&A, I want to take this opportunity to formally welcome GuruShots to the Zedge family, as well as thank the Zedge team for the incredible work that they have done, especially during the due diligence process. We look forward to growing together as one team. As the Hebrew saying goes, "Bruchim haba'im," which means a warm welcome. Operator, back to you for Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press one. At this time, we will pause momentarily to assemble our roster. Our first question is coming from Allen Klee from Maxim Group. Your line is live. Hi, Jonathan. Congratulations. Just to make sure I caught a couple of things. I thought I heard you say, and maybe I missed it, that the GuruShots is currently only available in England and the revenue is coming from. Did I hear advertising? Is that true, or could you explain that? Thinking about it seems like that could get significantly expanded. Thanks. Hey, Allen, thank you so much. The congratulations really goes to both the GuruShots and the teams for doing such a fabulous job together. What I said was that GuruShots is only available in the English language today. Oh, sorry. One of the things which Zedge has a lot of experience with, considering our global footprint and the fact that our app has been localized in around 15 different languages, is multi-language support. GuruShots' business model today is made up of in-app purchases, where users buy extra abilities in order to get more visibility of their content, so that users will cast votes in favor of their content in those specific competitions. We envision that over time, we will introduce advertising as well as subscriptions as being part of the monetization scheme, so that there will be a portfolio of different revenue drivers that can contribute to the ongoing growth of this business. Got it. Thank you so much for clarifying that. In terms of how should we think about kind of the integration and how what your plan is of the time to get this all together? It's a good question, and that some of those details are being worked on, as we, you know, speak. GuruShots is, prior to the acquisition, a standalone company based in Israel, and recognizes its revenue in Israel. We are working with both tax counsel as well as with, you know, our various operational units in order to decide what the best go forward plan is insofar as integration and take advantage of assets that both GuruShots has and that we have with respect to yielding the best possible outcome for GuruShots on a standalone basis, Zedge on a standalone basis, and then the integrated businesses when taken in totality. I'll just close by saying that I think that for the meantime, we will have GuruShots operate independently. As we begin to undertake the synergistic opportunities, there will be more opportunity for convergence. That is, you know, at first blush. Clearly, as we're working on the integration planning, we will be able to better define and answer, you know, that question. Got it. Something else I wanted clarification on. You said that for paid acquisition, you would dedicate $5-ish million this year and $8.5 million the next year. That's just so I understand it, that's in addition to the earn-out? That is in addition to the earn-out. Let me provide a little bit more color. We have an obligation of up to $5 million in paid user acquisition in year one and up to $8.5 million in year two, tied to GuruShots meeting certain return on ad spend thresholds that will be monitored on a regular and consistent basis. In the event that GuruShots falls short of those thresholds, then we can pull back on the ad spend in order to ensure that we are able to yield that you know set of returns. The earn-out is earned on a ratable basis based upon meeting certain revenue thresholds. If those revenue thresholds are not met, then the earn-out, or I should say the entire earn-out or possibly none of the earn-out will be recognized. Clearly, the linkage between return on ad spend and revenue are, you know, highly correlated. In the event that GuruShots does not meet those minimum thresholds on return on ad spend, it is highly likely that they will not meet the revenue thresholds needed in order to qualify for 100% of the earn-out. Interesting. Are you able to provide or maybe you have, there's a lot of stuff we're looking at. The number of monthly active users that they have. We haven't shared that as of yet, and we will give that consideration over time. I also wanna point out that there are really two metrics in that set of key performance indicators. There are monthly active users, and then there are monthly active paying users. As indicated in my comments, on average, a monthly active paying user is generating north of $50 per month. Considering that this is a freemium game, most of the users are just engaging with the game for free. As is common in the freemium gaming business model, only a very small percentage, relatively speaking, of those users convert into paying customers. What we have generally seen is that the number or the percentage of users that convert into paying customers, when compared to benchmarks, we're tracking ahead of the benchmarks. From a revenue perspective, one of the things that we are going to test over time is introducing advertising to the majority of users that are playing GuruShots today, but not generating revenue for us. There is an ad layer in there that we want to begin to test in order to see whether or not we can generate incremental revenue on top of the users that are making in-app purchases without cannibalizing that revenue stream. Got it. The people who are in GuruShots that are putting their photos in, if they were to join Zedge Premium, they could try to sell their photos as an online image, but also, I guess they could also do it as an NFT. How did you think about kind of making that happen? The answer to your question is absolutely. One of the synergistic justifications for this deal, and one of the opportunities that is very exciting to us is the ability for GuruShots to materially help us grow Zedge Premium generally, and more specifically, scale NFTs Made Easy. Today, the GuruShots players are paying money in order to win competitions, insofar as the converted paying users. The general public that is, you know, just using GuruShots or competing in GuruShots for free, well, we're giving both of those audiences an opportunity to generate revenue. Or I should say, we will give those audiences the opportunity to generate revenue by having them market their photos in Zedge Premium and potentially mint those as NFTs. That exercise will be one which will require a lot of marketing prowess and so on and so forth. Considering that GuruShots today is seeing upwards of 1 million photo submissions on a monthly basis and has this user base, which is engaged and casting votes to the tune of 5 billion votes on a monthly basis, we believe that there's a really, really outstanding opportunity to help us in scaling Zedge Premium, NFTs Made Easy, and the like. I mean, it seems clearly just like the winners of the contest, if you highlight them as, you know, potential NFT drops or things like that would be, you know, at a premium maybe could be a potential thing. Yeah, I agree with that, but I want to point something out. In order to compete in GuruShots, by definition, users need to have high quality photos. The one thing that I can tell you in my experience in Zedge over the course of the last 10 years has been, you know, there are so many different tastes that people have, and it doesn't have to be limited to the winners of those competitions. In order to compete effectively, the photo has to be of a high-quality nature. My belief is that it's not only the folks that will win those 300-some-odd competitions on a monthly basis that will have the ability for selling their goods, but it's actually an overwhelming majority of the players that potentially will have the ability to join Zedge Premium and generate revenue in the marketplace and mint NFTs and so on and so forth. Recall that we've got an audience of, give or take, 35 million monthly active users. With that sort of broad, deep audience, there are so many different tastes, and as such, we believe many opportunities for this creative GuruShots community to participate, not leaving it strictly to the winners alone of those competitions. That's great. My last question relates to what you said on MoPub and AppLovin. Why were you paid a $2 million integration fee? And then just a comment on if it went smoothly and then the resources back to developing social and community features expected to roll out in summer 2022. If you could just kind of go into kind of how you feel about this platform or just in general what you think about that. Sure. As I had mentioned earlier, we stress tested different platforms. We had conversations with an even larger portfolio of potential ad mediation platforms. Some of those prospective suitors were prepared to pay us an integration fee that is material because of the fact that our user base is coveted. We have built up a reputation in the overall ad tech space and mobile ad tech space of really bringing high-value customers from an ad monetization perspective to the table. AppLovin recognized that. While stress testing their platform, we came to a comfort level that they would be able to meet the needs that we have, not only today, but also on an ongoing basis with some, you know, spectacular dedication, the ability to move quickly, great engineering, and so on and so forth. Not to mention that the return that we were recognizing was on its own merit worthwhile from a selection of which mediation platform to go with. In totality, when we had completed our stress testing and AppLovin was generating incremental revenue for us, that coupled with the integration fee really made a lot of sense to us. I wanna underscore, though, that the mentality that we had taken and adopted going into this process was let us really select the right platform independent of any potential integration fee. We're in this business for the long- term. We wanna make sure that we can continue to scale. In the event that we find that platform and it is performing as we would like it to, not only from a monetization perspective, but also from an operational perspective, and it meets the other requirements that we had, then we would consider you know, the integration fee as a additional incentive. Yeah, it's very impressive. I mean. Does that help answer your question? Yeah. You're getting a new system, and they're paying you for it because of the value that you're bringing them. That's pretty amazing. Okay, that's it for my questions. This seems like a great strategic fit, the acquisition. Thank you. Thank you so much. Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star then one on your phone at this time. Your next question is coming from Howard Rosencrans from Value Advisory. Your line is live. Thank you. You've mentioned that you were targeting positive EBITDA from the acquisition, you know, I guess on a standalone basis in two years. Could you tell us what sort of revenue level you'll need to achieve to produce that? Howard, thanks so much for the question. At this point, we're in the middle of deep analysis that will allow us to answer that question with greater precision. Recall, as I said earlier, you know, there's a sort of multi-variable equation here. You know, it's not simply a question of revenue, it's a question of how much are you spending on ad spend, and what's the return on ad spend accordingly. As we work through that process, we'll be able to provide a more precise answer. Suffice it to say that what we are targeting for right now is, and give or take around two years from now, we expect that this asset will be EBITDA positive. I should say, you know, it will be EBITDA positive. Thank you. I know you're conservative. You know, you spend $1 today on user acquisition, that is a hard marketing expense, that is not amortized over time. You begin earning money from that, and that is, hopefully an annuity that unfolds over the long- term. I certainly understand that. Pardon me? I thought you hadn't finished your thought. I apologize. No, that's okay. What did you say? I recognize there are a lot of variables, and that certainly upfront spend is not. It takes time to fully monetize or to move towards maturation. I certainly understand that there are plenty of variables in the context of the return on the ad spend. As you did go there and suggest that it would be EBITDA positive, could you provide us some general range as to what the revenue level is that would take you to EBITDA positive? I mean, obviously your spending along the way will vary, and we get that, but you did throw it out there. If you could just add a little color as to some sort of various range that you think would get there. Just so I understand, you're saying that this is on a. If I'm understanding correctly, is it a function of the business on a standalone basis, or is it a function of getting your 44 million users to really start monetizing GuruShots? No, the standalone basis analysis is what I was describing. You know, as we continue to refine that model, we'll be happy to provide more details with you and the rest of our investors accordingly. When do you envision having your? I guess, I mean, you've given us the. I mean, we could probably do back of the envelope and come pretty darn close based on, I don't have your balance sheet in front of me as to where you exited last quarter. But, or maybe you could just quickly remind me where did you exit last quarter in terms of? If I recall correctly, we exited last quarter with around $33 million of cash on our balance sheet. As I'd mentioned, you know, in this quarter, AppLovin paid us the $2 million one-time integration fee. Give or take, you're talking around $35 million of cash on the balance sheet with a business that, you know, with a legacy business or our flagship business that has been throwing off cash on a regular basis. We will, as I said, share more information about what this looks like on an operational level. You got to give us a little bit more time. I, essentially, you spent all your cash. I mean, that's without going into the ins and outs, you spent all your cash, which is great because. I do not agree with that. Okay. We did not spend all of our cash. Let me remind you that this is a deal which is highly leveraged towards an earn-out. Our obligation insofar as user acquisition spend is tied to GuruShots generating a return on ad spend, a minimum return on ad spend. There is protection. We actually look at it as being a positive insofar as GuruShots being able to meet those numbers and not only achieve, but potentially beat those thresholds because that will have a flywheel effect towards revenue generation and you know profitability over the mid to long- term. I know that you are, you know. I know, I know that you're gonna try to, you know, ask me in multiple different ways to answer the question today, but I think that we should move on to the next question. I wasn't gonna ask you multiple ways. I just wanted to finish the thought. The rest of the thought was, I think it's fantastic that you spent the money. We weren't getting paid for the cash anyway. I think it's huge. I know it's gonna be a huge high class problem if we have to do the payouts. You only got half of the thought there. That was. I look forward to you spending- Seriously, you know, we're working on providing the sort of, you know. We would like to provide you with more detail. I'm just not prepared to do it today. I. It's fantastic. Yeah. We really believe that this, on a standalone basis, has great value associated with it. But when we begin to think about the synergistic opportunities, that is something that can really generate some outstanding opportunity in terms of our positioning in the market, with respect to revenue generation, profitability, and then optionality insofar as gamification. As I think, you know, the overwhelming majority of app revenue today is coming from the gaming space. Gamification overall has taken a tremendous step forward in terms of unlocking value. I talked about the Playtika, Reworks acquisition, but for those of you that are familiar with the space, there's a company by the name of Duolingo which focuses on teaching foreign languages. The way that they have built their business, which is a, you know, market cap multi-billion-dollar business today, has been by gamifying the language learning space or vertical, if you will. When thinking about that, whether it be with respect to the existing Zedge flagship app or potentially new verticals, it really opens up one's mind to where this can go. Then finally, as discussed earlier, where the creator economy and NFT can go with having an almost infinite source of high-quality content that we can crowdsource based upon any number of different social trends that are happening in almost real time. I'll just add one last Congratulations. Our goal is to continue to grow this asset and, you know, on a consolidated basis without the need to go out and raise additional capital. That is what we are targeting. Congratulations, and thank you for all the color. Thank you. Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star then one on your phone at this time. Please hold while we poll for questions. Thank you. This concludes our question and answer session and conference call. Thank you for attending today's presentation. You may now disconnect.