Revenue

6 Months Ended

Jan. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Note 2—Revenue

Revenue Recognition

The Company generates revenue from three sources: (1) advertising; (2) subscriptions and Zedge Premium; and (3) in prior periods, service. Approximately 85% of the Company's revenue is generated from selling its advertising inventory ("Advertising Revenue") to advertising networks, advertising exchanges, and direct arrangements with advertisers. The remaining revenue is a combination of subscriptions and Zedge Premium ("Other Revenue") which were launched in January 2019 and March 2018 respectively. Prior to May 31, 2019, the Company generated service revenue by managing and optimizing the advertising inventory of a third-party mobile application publisher, as well as overseeing the billing, collections and reporting related to advertising for this publisher ("Service Revenue"). The contract with this publisher was terminated effective May 31, 2019.

The Company's current subscription offering allows users to pay a monthly or annual fee to remove unsolicited advertisements from the Zedge app. The Company is exploring adding additional features to its subscription offering. On the Zedge Premium platform, the Company retains 30% as fee revenue when users purchase licensed content using Zedge Credits or unlock licensed content by watching a video. Additionally, the Company also earns revenue from breakage related to expired Zedge Credits.

The following table summarizes revenue by type of service for the periods presented:

	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Advertising revenue	$	2,260	$	2,374	$	3,927	$	4,572
Subscriptions and Zedge Premium revenue		384		21		750		33
Service revenue		-		178		-		349
Total Revenue	$	2,644	$	2,573	$	4,677	$	4,954

Contract Balances

Deferred revenues

The Company records deferred revenues when users purchase or earn Zedge Credits. Unused Zedge Credits represent the value of the Company's 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 upon six months of account inactivity. As of January 31, 2020, and July 31, 2019, the Company's deferred revenue balance related to Zedge Premium was approximately $186,000 and $155,000, respectively. In the six months ended January 31, 2020, the Company recognized $62,000 in revenue from breakage upon expiration of Zedge Credits.

The Company also records deferred revenues related to the unsatisfied performance obligations with respect to subscription revenue. As of January 31, 2020, the Company's deferred revenue balance related to subscriptions was approximately $670,000, representing approximately 300,000 active subscribers. As of July 31, 2019, the Company's deferred revenue balance related to paid subscriptions was approximately $362,000, representing approximately 129,000 active subscribers. The amount of revenue recognized in the six months ended January 31, 2020 that was included in the deferred balance at July 31, 2019 was $245,000.

Practical Expedients

The Company generally expenses the fees retained by Google Play related to subscription revenue when incurred because the duration of the contracts for which the Company pay commissions are less than one year. These costs are included in the selling, general and administrative expenses of the Consolidated Statements of Comprehensive Income (Loss).