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.
Price and Volume (1-year)
* 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. All figures are in US$, except share price, fair value, and MCAP data, which are in C$.
Company Overview
Two offerings on the same underlying platform, serving different audience segments across the full demographic spectrum
KIDOZ is a child-safe network that delivers ads through a platform integrated into mobile games, and apps
Launched in 2023, Prado adapts Kidoz’s core technology, and extends it to serve a broader, non-child mobile audience
Reaches 500M+ gamers every month across 40k+ games
Source: Company / FRC
Used by major brands such as Disney (NYSE: DIS), Lego, Mattel (NASDAQ: MAT), McDonald’s (NYSE: MCD), and others, reflecting trust from leading global advertisers
Three straight years of revenue growth
Source: FRC
The digital ad ecosystem is moving toward privacy-safe and child-compliant environments; directly aligning with Kidoz’s core positioning
Source: FRC / Various
Since our last report, consensus digital ad spending growth for 2026 has been revised up from 8% to 9%
Historically, we estimate that KDOZ's revenue growth outpaced global digital ad spending growth by 1.9x on average
Financials
Q2 revenue ↑ 37% YoY to a record $3.33M, ↑ 8% above our estimate
Source: FRC / Company
Reported robust growth across both key regions: North America and Western Europe
Gross margins fell 5.3 pp YoY to 42.5%, 1.5 pp below our forecast, due to a shift toward higher-volume, lower-margin revenue. We are lowering our near and long-term margin forecasts accordingly. For context, the advertising industry’s average gross margin is ~38% vs. ~40–60% for digital ad companies, keeping Kidoz within the broader industry range.
Gross margins compressed 5 pp YoY, and was 2 pp lower than expected
Operating expenses ↑ 27% YoY, ↑ 12% above our estimate, mainly due to higher staffing and infrastructure costs to support growth
Higher revenue was more than offset by higher costs, resulting in EPS ↓ YoY from ($0.009) to ($0.012), vs. our ($0.004) forecast
Cash position declined, but the balance sheet remains relatively healthy, with zero debt. We see no need for financing or potential share dilution
Source: FRC/Company
FRC Projections and Valuation
We are raising our revenue forecasts, but lowering our EPS forecasts, due to higher-than-expected operating expenses
Source: FRC
As a result, our DCF valuation declined from $0.72 to $0.67/share
Digital AdTech Companies
KDOZ trades at 0.57x forward EV/Revenue (previously 0.87x) vs. 2.79x for peers (previously 2.82x), a 79% discount, making KDOZ one of the most undervalued names on our list
Source: S&P Capital IQ / FRC
Despite an above-average 2026 revenue growth outlook, KDOZ is ↓ 63% YoY vs. ↓ 1% for peers, suggesting the market is overlooking its growth potential
Our comparables valuation increased to $0.70/share (from $0.65), driven by our higher revenue forecast
We are reiterating our BUY rating, and maintaining our fair value estimate at $0.68/share (the average of our DCF and comparables valuations). KDOZ delivered stronger than expected Q2 revenue growth, while the improving digital advertising outlook supports our revenue growth assumptions. Despite higher OPEX, KDOZ remains debt-free, and trades at a significant discount to peers, providing substantial upside to our fair value estimate.
Risks
We believe the company is exposed to the following key risks:
Maintaining our risk rating of 4 (Speculative)
APPENDIX
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