Disclosure: Kidoz Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
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Key Financial Data (FYE - Dec 31) |
|
|
|
|
|
(US$) |
|
2023 |
2024E |
2025E |
|
Cash |
|
1,469,224 |
2,096,387 |
2,987,313 |
|
Working Capital |
3,220,646 |
4,023,712 |
5,108,130 |
|
|
Total Assets |
|
11,807,080 |
12,611,600 |
13,729,547 |
|
LT Debt to Capital |
0.0% |
0.0% |
0.0% |
|
|
Revenue |
|
13,326,824 |
15,039,000 |
17,250,000 |
|
Net Income |
|
(2,012,056) |
344,003 |
611,378 |
|
EPS |
|
-0.02 |
0.00 |
0.00 |
*See last page for important disclosures, rating, and risk definitions. All figures in US$ unless otherwise specified.
Q1 revenue was up 7% YoY, missing our forecast by 11%
However, gross margins increased 13 pp YoY to 53%, beating our estimate by 11 pp
G&A expenses were down 5% YoY, falling 8% below our estimate, primarily from slashing consultant fees
EBITDA and EPS remained negative
However, as a result of higher gross margins, and lower G&A expenses, EBITDA and EPS improved significantly, surpassing our estimates
Source: FRC/Company
Healthy balance sheet, with no debt
Source: FRC/Company
No outstanding options are in-the-money
Source: eMarketer
It is estimated that global digital ad spending will grow 13.2% this year, up from 10.7% in 2023, and 9.1% in 2022
Source: FRC/Various
From 2021 to 2023, KIDZ's revenue growth outpaced global digital ad spending growth by 1.3x on average
For conservatism, we anticipate KIDZ’s revenue will grow by 13% in 2024, and 15% in 2025, outpacing global digital ad spending growth forecasts by 1.2x
As Q1 gross margins were higher than expected, we are raising our 2024 and 2025 EPS forecasts
Source: FRC
We now expect EPS to turn positive this year instead of next year
As a result, our DCF valuation increased from C$0.94 to C$0.98/share
Digital AdTech Companies
Source: S&P Capital IQ/FRC
KIDZ’s forward EV/R of 1.6x (previously 1.2x) is significantly lower than the sector average of 3.3x (previously 3.0x)
Our comparables valuation decreased from C$0.54 to C$0.52/share, driven by our lower revenue estimate, partially offset by the higher average sector EV/R
We believe the company is exposed to the following key risks:
• Operates in a highly competitive space
• Unfavorable changes in regulations
• Ability to attract publishers and brands will be key to long-term growth
• FOREX
