Digital Ad Spend Diversification And Global Sporting Events Will Drive Long Term Upside Potential

Catalysts

About Zoomd Technologies

Zoomd Technologies provides data driven, mobile first digital performance marketing solutions that help advertisers optimize user acquisition across fragmented media channels.

What are the underlying business or industry changes driving this perspective?

• Growing digital ad spend outside the major platforms is increasing demand for partners that can orchestrate performance campaigns across many channels. This may support sustained revenue growth and higher gross profit as budgets shift toward more diversified media mixes.
• Rising complexity in attribution and user acquisition models is pushing advertisers toward transparent, ROI focused providers, positioning Zoomd’s direct client relationships and 360 degree command and control platform to potentially capture larger wallet share and expand net margins.
• Global expansion of iGaming, sports betting and e commerce, combined with the 2026 World Cup and similar large events, may drive higher volumes through the E2 partnership and other alliances, supporting potential increases in revenue and adjusted EBITDA.
• Ongoing diversification of the customer base beyond the top 10 accounts reduces concentration risk and creates a broader foundation for upselling and cross selling, which may help smooth revenue volatility and support more durable earnings.
• Disciplined cost control, automation and operational efficiencies achieved while scaling revenues can create operating leverage, so incremental growth from partnerships, new clients and major sporting events could translate disproportionately into net income and free cash generation.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Zoomd Technologies's revenue will grow by 17.3% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 25.7% today to 11.4% in 3 years time.
• Analysts expect earnings to reach $12.6 million (and earnings per share of $0.12) by about December 2028, down from $17.7 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 26.5x on those 2028 earnings, up from 5.3x today. This future PE is lower than the current PE for the CA Software industry at 50.1x.
• Analysts expect the number of shares outstanding to grow by 1.64% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.5%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Heavy reliance on large sporting events such as the Euro Cup and the 2026 World Cup to drive spikes in activity creates a cyclical revenue profile. A weaker tournament cycle, regulatory changes in betting, or reduced ad budgets around these events could lead to lower long-term revenue and earnings growth rather than a steady upward trajectory in the share price, ultimately pressuring net income.
• Despite efforts to diversify, over 70 percent of revenues still coming from the top five customers leaves the company exposed to shifts in those clients’ acquisition models, KPIs, and budgets. Prolonged or repeated changes in measurement and goals could dampen campaign volumes and reduce both revenue and net margins over time.
• The broader digital advertising industry is facing continued macroeconomic volatility and shifting ad budgets. If these headwinds intensify or persist longer than management expects, the company may have to prioritize maintaining profitability through cost cutting instead of growth investments, which could cap long-term revenue expansion and constrain earnings growth.
• The strategy depends on scaling through partnerships and potential acquisitions such as the global agreement with E2. Delays in integrations, underperforming partners, or overpaying for acquisitions could result in lower than anticipated contribution from these growth pillars, weakening future revenue growth and diluting net income.
• The company positions itself in a fragmented landscape outside the major walled gardens. However, long-term secular trends in privacy, attribution, and platform control could further concentrate power among large platforms or squeeze performance marketers’ margins, undermining the value of its multichannel model and reducing gross profit and overall earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of CA$3.51 for Zoomd Technologies based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $111.1 million, earnings will come to $12.6 million, and it would be trading on a PE ratio of 26.5x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of CA$1.27, the analyst price target of CA$3.51 is 63.8% higher. Despite analysts expecting the underlying business to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.