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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Price and Volume (1-year)
Financials
Record H1 revenue of $5.17M, up 21% YoY; EPS (excluding R&D costs) up 46% YoY. Q2 revenue was down 2% YoY (Q1: up 53% YoY), missing our estimate by 4%
Revenue base further diversified, with Rest of Europe and Asia contributing 21% (vs. 8% in Q2-2024), reducing reliance on North America and Western Europe
Gross margins increased 4 pp YoY to 55%, driven by higher direct vs reseller sales, and streamlined campaign execution
G&A and other expenses rose 54% YoY, mainly due to one-time employee bonuses tied to record revenue
Higher gross margins were offset by lower revenue and increased G&A, driving down EBITDA and EPS. Balance sheet remains healthy, with zero debt
Can raise up to C$454k from in-the-money options
FRC Projections and Valuation
Per industry consensus, global digital ad spending growth is anticipated to slow to approximately 8% in 2025 vs 10% in 2024. The deceleration reflects the lack of major cyclical events (e.g., elections, global sporting events) that typically drive ad spend, as well as ongoing economic and trade uncertainties, and tighter data privacy regulations.
Historically, we estimate that KIDZ's revenue growth outpaced global digital ad spending growth by 1.6x on average. As Q2 fell short of expectations, we are lowering our revenue and EPS estimates
As a result, our DCF valuation decreased from C$0.91 to $0.87/share
Outlook unchanged since May 2025: sector revenue growth is 11% in 2025 vs 14% in 2024, while average EV/Revenue rose 3% to 2.74x
KIDZ is trading at 1.05x forward EV/Revenue (previously 1.39x), well below the sector average of 2.74 (previously 2.67x
Our comparables valuation declined ($0.54 to $0.53/share) due to our lower revenue estimate, partially offset by a higher sector multiple
We are reiterating our BUY rating, and revising our fair value estimate from C$0.73 to C$0.70/share (the average of our DCF and comparables valuations), reflecting lower revenue estimates. Despite a 2% YoY pullback in Q2 revenue due to tariff uncertainty and softer ad spending, Kidoz’s adjusted EPS remains positive, and H1 revenue grew 21% YoY. We believe clarity on U.S. tariffs and rising demand for privacy-compliant digital advertising support the company’s growth trajectory.
Risks
We believe the company is exposed to the following key risks:
Maintaining our risk rating of 4 (Speculative)
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