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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KIDZ Price and Volume (1-year)
Financials
2024 revenue was up 5% YoY (2024-9M was down 10% YoY), driven by a strong rebound in Q4. Gross margins increased 17 pp YoY to 54%, driven by higher direct vs reseller sales, and streamlined campaign execution
G&A and other expenses were up 1 pp YoY to 48% of revenue. As a result of higher revenue, and gross margins, EPS turned positive, increasing from -$0.02 to $0.003
Cash from operations and free cash flows turned positive as well. Healthy balance sheet, with no debt. Can raise up to C$1M from in-the-money options
Sector Outlook
Kidoz’s ad platform ensures that all ads are child-appropriate; a key requirement for advertisers and app developers looking to build trust with parents, and meet regulatory standards. According to the American Academy of Child and Adolescent Psychiatry, children aged eight–12 in the U.S. spend an average of four–six hours per day on screens, while teens spend up to nine hours.
Digital now makes up 73% of global ad spend, up from 54% in 2019. Global digital ad spending grew from US$392B in 2019, to US$790B in 2024, reflecting a CAGR of 15
Mobile devices now account for 65% of all ads, up from 53% in 2019
Global digital ad spending grew by 10% in 2024, with 2025 growth forecasted at 8% amid economic uncertainties, and stronger data privacy regulations. We anticipate AI-driven personalization and programmatic advertising to be the primary drivers of growth in this sector. Additionally, we believe that mobile advertising, along with video and social media platforms, will remain the preferred ad channels.
It is estimated that global digital ad spending will grow at a CAGR of 9.5% from 2025 to 20234 (Source: Precedence Research). During this period, North America is expected to lead with the highest market share of 37%
FRC Projections and Valuation
Historically, we estimate that KIDZ's revenue growth outpaced global digital ad spending growth by 1.6x on average
Source: S&P Capital IQ / FRC
In light of the robust revenue growth reported by major ad companies in Q1-2025, we are now modeling 13% revenue growth (previously 7%) for KIDZ in 2025. As a result, our DCF valuation increased from C$0.79 to C$0.87/share
KIDZ is trading at 1.7x forward EV/Revenue (previously 1.3x), well below the sector average of 2.4x (previously 2.9x). As a result of a lower sector EV/Revenue, partially offset by our higher 2025 revenue forecast, our comparables valuation decreased from C$0.50 to C$0.43/share
We are reiterating our BUY rating, and raising our fair value estimate from C$0.64 to C$0.65/share (the average of our DCF and comparables valuations). KIDZ concluded 2024 with strong revenue growth, and a significant improvement in profitability, signaling a positive turning point for the company. We believe the combination of KIDZ's specialization in kid-friendly advertising, and its discounted valuation, suggests a unique circumstance, particularly with anticipated record revenue and EPS this year.
Risks
Maintaining our risk rating of 4 (Speculative)
We believe the company is exposed to the following key risks:
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