Derek Greenberg

Derek Greenberg, an Equity Research Associate at Maxim Group, inquired about Zedge's Data Seeds revenue recognition, including the specific line item and timing of revenue recognition for orders. He also asked about the sales process and conversion visibility for Data Seeds opportunities, the strategic connection between GuruShots and Data Seeds, and the operating loss for the GuruShots segment. Additionally, Greenberg sought clarification on the anticipated declines and potential stabilization of Emojipedia, the quantification of remaining restructuring costs and plans for reinvestment, and the remaining amount in the share buyback program.

Answer

Zedge's CFO, Yi Tsai, explained that Data Seeds revenue is recognized upon product delivery and acceptance, currently grouped under 'digital goods and services.' CEO Jonathan Reich noted it's too early to provide specific conversion timeframes for Data Seeds due to varying factors but highlighted a robust pipeline. Reich detailed GuruShots' role in Data Seeds, providing content from existing catalogs and specific competitions, while the future direction of GuruShots 2.0 remains under evaluation. Tsai clarified that Data Seeds incurs fixed costs contributing to losses, and the legacy GuruShots business is stabilizing with approximately $150,000 in monthly losses. Reich stated that Emojipedia's future stabilization depends on Google's actions and industry compensation mechanisms, requiring another quarter for assessment. Regarding restructuring costs, Reich outlined plans to reinvest savings into high-potential initiatives like Data Seeds and innovation, emphasizing a disciplined, KPI-driven approach. Tsai quantified the Q1 FY26 free cash flow impact from restructuring-related tax payments at approximately $330,000. Finally, Tsai confirmed $600,000 remains in the current share buyback authorization.

Derek Greenberg asked about the revenue recognition process for DataSeeds, including its line item and timing, as well as the sales cycle and conversion visibility for DataSeeds opportunities. He also inquired about the strategic connection between GuruShots and DataSeeds, GuruShots' current operating profitability, and the future outlook for Emojipedia's revenue declines. Finally, he sought quantification of the remaining restructuring costs impacting free cash flow and details on the company's reinvestment strategy for those savings, along with the remaining amount in the share buyback program.

Answer

CFO Yi Tsai clarified that DataSeeds revenue is recognized upon delivery and acceptance, currently grouped under "digital goods and services." CEO Jonathan Reich noted it's too early to provide specific DataSeeds sales cycle details but confirmed GuruShots content is leveraged for DataSeeds, with future strategic direction for GuruShots 2.0 still under evaluation. Yi Tsai added that GuruShots is operating at a monthly loss of approximately $150,000, partly due to DataSeeds' fixed costs. Jonathan Reich stated that Emojipedia's future declines depend on Google's actions and industry compensation mechanisms, while also detailing the measured reinvestment of restructuring savings into high-potential initiatives like DataSeeds and innovation. Yi Tsai quantified the Q1 FY26 free cash flow impact from restructuring-related tax payments at around $330,000 and confirmed $600,000 remains in the share buyback program.

Derek Greenberg asked for an update on GuruShots' key performance indicators, the growth drivers for Zedge Marketplace's GTV and subscription numbers, and trends in advertising revenue. He also inquired about the new AI audio offering, the Wishcraft beta app, and the outlook for Emojipedia following its recent redesign.

Answer

CEO Jonathan Reich explained that GuruShots' focus is on new user acquisition and engagement, with positive early signs in conversion. He attributed Zedge Marketplace's GTV growth to premium artist content and AI, while subscription growth is driven by extensive A/B testing on pricing, messaging, and value-adds. Reich noted that new products like the AI audio generator and the Wishcraft app are logical extensions of their creator-focused strategy. He also confirmed that earlier performance issues with the Emojipedia redesign have been remedied, with future plans focused on ad optimization and a more comprehensive redesign.

Derek Greenberg asked for details on Nvni Group Limited's AI implementation strategy and its impact on the company's operations and financial performance.

Answer

Gustavo Usero, COO, detailed AI applications in customer support, sales, software development, and financial workflows, emphasizing their role in digital transformation and increasing free cash flow, noting a 40% average productivity increase with Claude Code.

Derek Greenberg inquired about Nvni Group Limited's strategies for implementing AI and the resulting impact on the company's operations.

Answer

Gustavo Usero, COO, explained that AI is being implemented across customer support, sales, software development, and financial workflows to drive digital transformation and enhance free cash flow.

Derek Greenberg asked for details on the recent partnership with LibKey and its opportunities. He also sought statistics on the cross-sell penetration between Scite and Article Galaxy, specifically the percentage of Article Galaxy customers also using Scite. Finally, he questioned the outlook for EBITDA margin expansion in fiscal year 2026 relative to the significant improvements seen in FY2025 and the expected growth of operating expenses.

Answer

Roy W. Olivier, CEO and President, and Josh Nicholson, Chief Strategy Officer, explained that the LibKey partnership expands Research Solutions' reach into the academic library market, which has over 10,000 potential customers, by facilitating efficient access to content. Regarding cross-sells, Roy W. Olivier and William Nurthen, CFO, stated that the vast majority of Scite sales in FY2025 were to new customers, with cross-sell penetration into the Article Galaxy base remaining in the low to mid-single digits. William Nurthen projected continued EBITDA margin expansion in FY2026, aiming for a 10-15% range, driven by investments in sales, marketing, and technology, while reducing general and administrative expenses. He also noted expected transaction revenue declines in the first half of FY2026.

Derek Greenberg asked for details on the recent partnership with LibKey and its market opportunity. He also sought an update on the cross-sell penetration of Scite among Article Galaxy customers, recalling a previous target of reaching double-digit penetration from single digits. Finally, he questioned the expected margin expansion for FY2026 relative to FY2025 and the anticipated growth of operating expenses compared to revenue.

Answer

Roy Olivier, CEO and President, explained that the LibKey partnership with Third Iron expands Research Solutions' academic business by leveraging LibKey's link resolver product to access over 10,000 libraries, a new segment for the company. William Nurthen, CFO, stated that Scite's penetration among Article Galaxy customers remains in the low to mid-single digits, with most Scite sales being to new customers. For FY2026 margins, William Nurthen expects continued EBITDA margin expansion above 10%, likely in the 10%-15% range, balancing investment in sales & marketing and technology with G&A reductions, and anticipates gross margin to exceed 50%.

Derek Greenberg asked for more details on the recent partnership with LibKey and its market opportunity. He also inquired about the cross-sell penetration rate between SITE and Article Galaxy customers, specifically the percentage of Article Galaxy customers also using SITE. Finally, he sought expectations for margin expansion in FY2026 relative to FY2025 and the projected growth of operating expenses compared to revenue.

Answer

Roy Olivier, President, CEO & Director, and Josh Nicholson, Chief Strategy Officer, explained that the LibKey partnership, with Third Iron, expands Research Solutions' reach into the academic library segment, a new and growing market with over 10,000 potential customers. William Nurthen, CFO, stated that cross-sell penetration of SITE into the Article Galaxy customer base remains in the low to mid-single digits, with most SITE sales being to new customers. For FY2026, William Nurthen expects adjusted EBITDA margins to remain above 10%, potentially in the 10-15% range, with continued investment in sales, marketing, and technology, while aiming to reduce general and administrative expenses. Gross margin is expected to exceed 50% for the year.

Asked about the expected cadence for adjusted EBITDA margins through the fiscal year, requested an update on the sales cycle length, and inquired about the performance and outlook for the Resolute AI business.

Answer

Management expects Q3 adjusted EBITDA to improve upon Q1, following a typical seasonal dip in Q2. While not providing a specific days-to-sale metric, they noted that customer acquisition cost has improved, suggesting a slightly shorter cycle. They acknowledged that Resolute AI is underperforming in new sales and the strategic focus has shifted to integrating its technology with the more successful Scite and Article Galaxy platforms.

Derek Greenberg asked a series of questions regarding Cheche's NEV market share goals, the impact of the business mix shift on net revenue, the rollout of new AI products, reductions in operating expenses, and initiatives related to autonomous driving.

Answer

Founder, CEO & Chairman Lei Zhang and CFO Wenting Ji responded. They stated the current NEV market share is around 10% of new car deliveries, with confidence in reaching 30-40% in 3-5 years due to a 140% CAGR, far outpacing the industry. Ji explained that while the growing NEV mix (now 22.5%) has a lower take rate, impacting net revenue, it carries a much higher gross margin, improving profitability. The decline in operating expenses was attributed to headcount control and lower share-based compensation. For new products, the company is working with partners in China and globally (Thailand, Australia). For autonomous driving, they are collaborating with Huawei and Xpeng.

Derek Greenberg of Maxim Group asked for clarification on the economics of the new fractional equity product, its potential volume at scale, the primary growth drivers for 2026 excluding rate cuts, and whether the company had a sensitivity analysis for how rate cuts might impact loan volumes.

Answer

CEO Nick Liuzza stated the equity product will have higher margins and ~33% more revenue per file than mortgages. CFO Chris Moe added that marketing costs are minimal as a partner drives business. For 2026 growth, Liuzza ranked the drivers as 1) the new equity product, 2) the core mortgage business, and 3) the title business. While declining to provide a specific sensitivity analysis, Liuzza noted a 25-basis-point cut would have a 'significant impact' on their digital lending model, a sentiment echoed by Moe who described a 'dam effect' of pent-up demand.

Derek Greenberg from Maxim Group asked about the company's capital allocation strategy given its significant cash balance, particularly after the convertible debt is paid, and inquired if there was further room for margin improvement from automation.

Answer

CFO Dave Lyle explained the capital allocation strategy is balanced between investing in the business and returning capital to shareholders, noting the remaining $21 million on the share repurchase authorization. He confirmed the company has a credit facility to provide flexibility in repaying the debt. CEO Ed West emphasized the primary focus is on organic growth. Lyle also confirmed there is still room for margin expansion from automation, highlighting a 200 basis point year-over-year improvement in services gross margin and noting the company is not 'tapped out' on this front.

Derek Greenberg asked about second-half seasonality, sought clarification on the fiscal '26 target for SaaS revenue, inquired about a Department of Homeland Security press release, and asked about the expected mix of organic growth from new business versus cross-selling.

Answer

CFO David Lyle stated that second-half seasonality expectations are unchanged, with Q3 revenue likely to be modestly higher than Q4, and clarified the SaaS revenue goal is a target they have a line of sight to. CEO Edward West explained the DHS press release referred to a blind assessment where Mitek's liveness technology was recognized as a market leader. West concluded that organic growth is a focus across both new logos and expansion with existing clients, driven by new solutions for biometrics and authentication.

Derek Greenberg inquired about the organic growth potential of Healwell's current businesses, the strategy for deeper penetration within existing Master Service Agreements (MSAs), and the expected path to achieving adjusted EBITDA profitability in 2025.

Answer

CFO Anthony Lam provided year-over-year organic growth outlooks for each segment: Healthcare Software at 30-40%, AI and Data Science at 50-60%, and Clinical Research at 20-30%. CEO Dr. Alexander Dobranowski added that the company remains confident in reaching its target of approaching a $100 million revenue run rate through M&A, which is the key to achieving adjusted EBITDA profitability on a full-year basis in 2025.

Derek Greenberg inquired about the organic growth potential of Healwell's current businesses, the strategy for deeper penetration within existing Master Service Agreements (MSAs), and the timeline for achieving adjusted EBITDA profitability in 2025.

Answer

CFO Anthony Lam outlined expected year-over-year organic growth rates: Healthcare Software at 30-40%, AI and Data Science at 50-60%, and Clinical Research at 20-30%. CEO Alexander Dobranowski reiterated that M&A activity is expected to help the company approach a $100 million revenue run rate, which would position it to achieve adjusted EBITDA profitability on a full-year basis in 2025.

Derek Greenberg of Maxim Group asked for more details on the profile of the discontinued events, how the business is tracking against pre-pandemic levels, progress on international expansion, the status of the hurricane-impacted event, and the company's progress in integrating AI.

Answer

CEO Herve Sedky responded to the questions. He described the discontinued events as primarily smaller geo-extensions or brand adjacencies that failed to gain traction, with NBA Con being the largest exception. He stated that pre-pandemic comparisons are less relevant now as the portfolio has changed, though many core brands have surpassed those levels. On international efforts, Sedky noted the new sales agent network is beginning to show results but will take time, while also highlighting potential headwinds from China. He confirmed the hurricane-impacted event was canceled for the year. Regarding AI, he explained it is being tested for internal marketing use to scale personalization and improve conversion rates, with plans to expand successful initiatives.

Asked for an update on the progress and revenue timing of the $10 million Orange County Transportation order, inquired about the company's labor and talent acquisition program, and requested an update on the Wavetronix litigation.

Answer

The Orange County project is on schedule, with revenue being recognized relatively constantly over the 3-year term. The talent acquisition program, particularly sourcing from international markets, has been successful in alleviating labor constraints, though it's about 60-80% to goal. The Wavetronix trial, previously expected in April and then early September, is still expected to occur in September, but a specific date has not yet been set with the court.

Derek Greenberg asked for more color on the decision to unwind the Wyndham partnership, details on the large "other expense" line item, clarification on the non-cash "new partnership considerations," and the nature of the tax add-back in the adjusted EBITDA calculation.

Answer

CEO Shanoop Kothari explained that the Wyndham partnership unwind was a mutual financial decision, noting that certain margin metrics were not met. He attributed the high "other expense" to one-time costs from surrendering properties (labor, relocation, commissions) and expects the metric to normalize. He clarified the partnership consideration was a non-recurring, non-cash accrual and that the tax add-back related to property taxes paid in advance.

Derek Greenberg asked for more details on the decision to unwind the Wyndham partnership, the composition of a large 'other expense' line item, the nature of a 'new partnership considerations' charge, and the specifics of a tax add-back in the adjusted EBITDA calculation.

Answer

Executive Shanoop Kothari explained that the Wyndham partnership unwind was a mutual decision as the financial arrangement was not working for either party. He attributed the high 'other expense' line to one-time costs from property surrenders and the partnership exit, expecting it to normalize. The 'partnership considerations' charge was described as a non-recurring, non-cash accrual. The tax add-back was clarified as prepaid property taxes that are expensed upon payment rather than amortized.