INVESTMENT ANALYSIS FOR ACCREDITED INVESTORS
December 7th, 2023 – Client Delays Impact Revenue; Sector Outlook Remains Strong
Sector/Industry: Ad Tech
In Q3, revenue dropped 20% YoY, falling 18% below our estimate due to clients delaying ad campaigns. We were disappointed with the revenue decline, especially considering the upward trend in global digital ad spending. Major digital ad platforms, YouTube (NASDAQ: GOOGL), and Meta (NASDAQ: META), reported revenue growth of 12% YoY and 24% YoY, respectively.
August 25th, 2023 – Outpacing Digital Ad Titans
Sector/Industry: Ad Tech
Q2 was in line with our expectations. Revenue was up 12% YoY. In comparison, major digital ad platforms YouTube (NASDAQ: GOOGL) and Meta (NASDAQ: ETA) reported revenue growth of 4% YoY and 11% YoY, respectively.
June 1st, 2023 – Predicting a Recovery in Ad Spending in H2-2023
Sector/Industry: Ad Tech
Q1 revenue was down 27% YoY, and 15% below our estimate, amid lower-than-expected ad spending. The revenue of major digital ad platforms, such as YouTube (NASDAQ: GOOGL) and Meta (NASDAQ: META), had declined in Q1 as well. We are expecting a recovery in global ad spending in the second half of the year, driven by cooling inflation, lower interest rates, and an uptick in global GDP growth. eMarketer estimates global digital ad spending will grow by 10.5% this year, up from 8.6% in 2022.
May 26th, 2023 – Kidoz Q123: Programmatic Ad Revenue Stable Amidst Seasonal & Market Challenges
Sector/Industry: Ad Tech
Kidoz faced some challenges in Q1/23, with muted results primarily attributed to seasonal factors and weaker demand in the ad-tech and content revenue segments. However, amidst these clouds, there was a silver lining: the programmatic ad revenue segment continued to grow, indicating its importance in driving long-term growth for the company.
April 26th, 2023 – Expanding Target Market Through a New Platform for Adult Gamers
Sector/Industry: Ad Tech
2022 revenue was up 21% YoY, but 7% below our estimate. KIDZ’s revenue growth was significantly higher than global digital ad spending growth of 8.6% (Source: eMarketer), and in line with the growth of global digital ad spending to children of 22% (Source: Statista). For comparison, we note that YouTube’s (NASDAQ: GOOGL) ad revenue was up 2%, and Meta’s (NASDAQ: META) ad revenue was down 1% in 2022.
March 6, 2023 – 10 Ad-Tech Companies Outpacing Google in 3-Year Revenue Growth
Sector/Industry: Ad Tech
The advertising technology, or adtech, industry has undergone a significant transformation in the past decade, and its impact cannot be underestimated. Programmatic advertising has emerged as the dominant method of buying and selling online advertising, allowing advertisers to target specific audiences in real-time. With the help of big data, analytics, and AI, advertisers can gain a deeper understanding of their audiences and create more effective ad campaigns.
February 23, 2023 – Kidoz Q4/22 Unaudited Financials Broadly in Line, Validating Bullish View
Sector/Industry: Ad Tech
We view Kidoz’s unaudited Q4/22 financials as broadly in line with our positive view on the company. Our bullish outlook on Kidoz is underpinned by its focus on inapp advertising, programmatic ad sourcing, regulatory tailwinds, strong brand value, and partnerships with high-profile brands.
November 22, 2022 – Growing Faster Than YouTube & Meta
Sector/Industry: Ad Tech
Q3 revenue was up 25% YoY (Q2 – up 15% YoY), but 5% below our estimate due to weaker global ad spending, amid a softening global economy, and a stronger US$. Most ad-based tech companies reported pullbacks in ad spending. For example, YouTube’s (NASDAQ: GOOGL) ad revenue was down 2% YoY in Q3. Meta’s (NASDAQ: META) ad revenue was down 4% YoY.
November 15, 2022 – Broadly Inline Q3/22| Positive Operating Cash Flow Generation
Sector/Industry: Ad Tech
Our positive investment thesis is being validated by Kidoz’s Q3/22 results. The revenue continued to grow driven by a strong demand for kid safe contextual advertising. We are encouraged by Kidoz’s generation of a minor amount of positive operating cash flow instead of burning cash. We have a BUY rating on the stock with a TP of $1.00/sh.
October 3, 2022 – Research Capital Initial Coverage Report
Sector/Industry: Ad Tech
We are initiating the coverage of Kidoz with a Buy rating and Target price of $1.00/sh.
- Structural Changes in the Industry and Positive Regulatory Amendments to Increase Kidoz’s Adoption
- Competitive Advantage Driven by Kidoz’s Brand Value with a Niche Focus on Kids
- Compelling Valuation and Attractive Acquisition Target
August 18th, 2022 – Expecting EBITDA To Turn Positive When Ad Spending Rebounds in Q4
Sector/Industry: Ad Tech
For Q2-2022, Kidoz reported record revenue of $2.5M, up 15% YoY, but 10% lower than our forecast due to weaker than expected ad spending. Most ad-based tech companies, including Alphabet (NASDAQ: GOOGL), reported slower revenue growth in Q2. For example, YouTube’s ad revenue was up just 5% YoY in Q2- 2022 vs 84% in Q2-2021.
May 26, 2022 – Expecting Record Revenue Despite Potential Weakness in Global Ad Spending
Sector/Industry: Ad Tech
In Q1-2022, Kidoz reported record revenue of $2.3M, up 47% YoY, but 4% lower than our forecast. The company did not disclose performance metrics, but revenue growth continues to come from expanded product offerings from kids under the age of 13, to teens (13-19) and parents, and the implementation of programmatic advertising last year, which allows advertisers to acquire ad space through auctions/bidding.
April 7th, 2022 – Benefitting From Rising Smartphone Adoption and Digital Ad Spending
Sector/Industry: Ad Tech
Kidoz reported record revenue in 2021, up 75% YoY to $12.5M, beating our estimate by 9%. Revenue growth came from increased ads, monetized impressions, and enhanced product offerings. In Q4, monetized impressions rose 88% QoQ, and ads increased 97% QoQ.
November 18th, 2021 – Beat Q3 Revenue Estimate / Preparing for a Strong 2022
Sector/Industry: Ad Tech
Generated record revenue in Q3, up 47% YoY, and 29% QoQ. We are raising our 2021 revenue forecast by 4% to $11.5M. In Q3, monetized impressions grew 35% QoQ to 345M. Ads increased 70% to 170M.
August 19th, 2021 – Ad Revenue up 196% YoY / Entering China
Sector/Industry: Mobile Games
Q1-2021 revenue was $1.6M, up 58% YoY, but below our expectations. Q1-2021 revenue is 14% of our revised 2021 (fullyear) revenue estimate, and in line with last year’s results
May 19th, 2021 – Kidoz Inc. (TSXV: KIDZ) – Introducing a Programmatic Ad Platform This Quarter
Sector/Industry: Mobile Games
Q1-2021 revenue was $1.6M, up 58% YoY, but below our expectations. Q1-2021 revenue is 14% of our revised 2021 (fullyear) revenue estimate, and in line with last year’s results
April 14th, 2021 – Kidoz Inc. (TSXV: KIDZ) – Blows Past Our Estimates / Raising Fair Value
Sector/Industry: Mobile Games
2020 revenue was $7.15M, up 58% YoY, beating our estimates by 20%. KIDZ also outperformed our EBITDA and net income estimates by 417% and 120%, respectively.
November 25th, 2020 – Kidoz Inc. (TSXV: KIDZ) – Q3 Revenue up 161% QoQ and Beats Expectations
Sector/Industry: Mobile Games
Q3 revenue was $1.9M, up 161% QoQ, and 51% YoY. We were pleasantly surprised by the spike in revenue as the outlook for ad spending this year had been weak due to the pandemic.
August 14th, 2020 – Kidoz Inc. (TSXV: KIDZ) – Q2 Revenue Impacted Impacted by COVID-19; Long-Term Fundamentals Remain Intact
Sector/Industry: Mobile Games
Kidoz Ltd. (“Kidoz”, “KIDZ”, the “company”) reported financial results, with Q2-2020 revenue declining 10% year-over-year and 25% quarterover-quarter. The deterioration in revenue was expected, given the adverse impact of COVID-19 on digital ad spend. With a number of major economies reopened, we expect revenue in subsequent quarters to rebound.
June 4th, 2020 – Kidoz Inc. (TSXV: KIDZ) – Q1-2020 Inline – Userbase Continues to Grow
Sector/Industry: Mobile Games
Kidoz Inc. (“Kidoz”, the “company”) reported financials results, with Q1-2020 revenue increasing 222% year-over-year. Our 2020 and 2021 revenue forecasts of $5.30 million and $12.35 million, respectively, remain
unchanged.
April 29th, 2020 – Kidoz Inc. (TSXV: KIDZ) – 2019 Revenue Exceeded Expectations by 16%
Sector/Industry: Mobile Games
Kidoz reported revenue of $4.52 million in 2019 – a YoY improvement of 4,123%. Revenue in Q4-2019 was $2.12 million – a QoQ improvement of 67%. 85% of the revenue in 2019 came from ad revenue, with the remaining 15% coming from content revenue (such as subscriptions of Rooplay, in-app purchases on social bingo sites and Rooplay Originals). The following shows revenue by quarter.
November 29th, 2019 – Kidoz Inc. (TSXV: KIDZ) – Q3 Revenues up 55% QoQ, and 3,004% YoY
Sector/Industry: Mobile Games
Q3-2019 revenues were up 55% QoQ, and 3,004% YoY, to $1.27 million. Revenues in the first nine months of 2019 were $2.40 million, up from just $90k in the first nine months of 2018, as a result of the Kidoz Ltd. acquisition in Q1-2019. Approximately 92% of the revenues in Q3-2019 came from ad revenues (71% in Q2-2019). The remaining 8% came from content revenues, primarily including subscriptions of Rooplay, in-app purchases on social bingo sites, and Rooplay Originals
August 21, 2019 – Kidoz Inc. (TSXV: KIDZ) – Well Positioned to Capture a Piece of the Growing Kids’ Digital Ad Market
Sector/Industry: Mobile Games
As a result of the acquisition completed in Q1-2019, Kidoz generated revenues of $0.82 million in Q2-2019, up from just $24k in Q2-2018. Approximately 71% of revenues in Q2-2019 came from ads. We believe the company has a significant early mover advantage in the kids’ digital ad market, considering that it has over 1,500 kids’ gaming / learning apps, and videos on its network, that are also compliant with U.S. and European digital privacy laws for kids. Its network has 50 million monthly users, and hundreds of brands advertise on the network.
May 30, 2019 – Kidoz Inc. (TSXV: KIDZ) – Q1-2019 Revenues up 18x QoQ Post-Acquisition
Sector/Industry: Mobile Games
Israel-based Kidoz Ltd.’s acquisition, which was completed on March 4, 2019, resulted in the issuance of approximately 52.45 million shares, at $0.40 per share, for $20.60 million. As shown below, Kidoz had net assets of $0.70 million. The company applied the remaining amount of $19.90 million (acquisition price minus net assets) as goodwill, on the balance sheet ended March 31, 2019, presented later in this report. We were pleased to see that Kidoz had positive net assets (with no significant debt) as Kidoz’ revenues, earnings or capital structure were not disclosed at the time of acquisition.
March 4, 2019, – Shoal Games Ltd. Completes Significant Acquisition
Sector/Industry: Mobile Games
On March 4, 2019, Shoal completed the acquisition of Kidoz Ltd. – a privately held Israeli company focused on kid-safe platforms / solutions for digital content distribution and monetization. The company, founded in 2009 by Gai Havkin and Eldad Ben Tora, started out with a platform that allows kids to operate smartphones / tablets in a protected environment that complied with the U.S. Child Online Privacy Protection Act (“COPPA”). As shown in the chart below, regulators have been increasing pressure on advertisers to be compliant. Several companies, including Disney (NYSE: DIS) and Viacom (Nasdaq: VIAB), have faced class-action lawsuits for non-compliance.
November 28, 2018, – Shoal Games Ltd. announces 600,000+ Downloads on Rooplay and Pursuing an $8 Million Financing
Sector/Industry: Mobile Games
Since our previous update report in March 2018, Rooplay’s downloads are up 140% to 600,000. The platform currently has over 40 proprietary games, over 300 games in total, and seven international brands under license.
Rooplay currently has more than 40 exclusive games (Rooplay Originals), and over 300 games in total. The company has seven international brands under license. Shoal continues to execute its strategy to gain mass adoption by licensing popular intellectual property rights for use in their apps. Games associated with popular brands /characters are likely to instantly appeal and capture attention, allowing Shoal to attract a much larger user-base at significantly low acquisition costs.
February 7, 2018, – Shoal Games Announces Financing
Sector/Industry: Mobile Games
Shoal Games Ltd. (TSXV: SGW) announced its intent to pursue a private placement of up to US$2.50 million by issuing common shares at US$0.35 per share. Shares are trading today at US$0.41. On January 19, 2018, Shoal had announced that Rooplay had surpassed 250,000 downloads from the Google Play Store (NASDAG: GOOG) since its launch in May. This is up from over 220,000 downloads since our update report in December 2017.
With over 500 games on the platform, we believe that Shoal has a significant first mover advantage in the growing EdTech space focused on games for kids. Shoal intends to gain traction through direct marketing to consumers and through partnerships with mobile handset manufacturers, cable companies, in-flight entertainment, and mobile telecommunications operators through a revenue share model. Management is in discussions with a number of mobile operators worldwide. Even a single distribution deal, we estimate, will allow Rooplay to reach significant audience levels at a very low cost. We have a BUY rating and a fair value estimate of $1.63 per share on Shoal’s shares.
December 5, 2017, – Rooplay at 220,000+ Downloads
Sector/Industry: Mobile Games
- Rooplay has had over 220,000 downloads, up from over 120,000 at the time of our previous report in August 2017. Rooplay was launched on the Android platform in May
2017. - The platform currently offers over 500 titles, and isavailable in 27 different languages in 135 countries.
- According to Metaari (market research firm), educational games for early childhood will almost triple by 2022.
August 25, 2017, – RAMPING UP MARKETING FOR ROOPLAY
Sector/Industry: Mobile Games
- Rooplay was launched on the Android platform in May 2017. Rooplay is a game / educational platform primarily targeting kids aged 2 to 10 years. The platform currently offers over 500 titles.
- Ambient Research estimates the game based learning market will grow from $2.7 billion in 2016, to $7.3 billion by 2021, reflecting a 22% p.a. growth rate.
May 8, 2017, – LAUNCHES NEW APP WITH AN AGGRESSIVE DISTRIBUTION STRATEGY
Sector/Industry: Mobile Games
- Shoal Games Ltd. (“Shoal”, “company”) launched its latest app, Rooplay, worldwide on Android in April 2017. The platform currently offers over 500 games / educational titles for children. The vision for Rooplay is to be the Netflix of Games for kids.
- Game based learning has been gaining traction across the globe at a rapid rate. For example, sources suggest that 48% of teachers currently use games in their classrooms in 2015, up from 30% in 2012. Ambient Research estimates that the game based learning market will grow from $2.7 billion in 2016, to $7.3 billion by 2021, reflecting a 22% p.a. growth rate.
March 1, 2016, INITIATING COVERAGE – A UNIQUE OPPORTUNITY IN THE MOBILE GAMES BUSINESS
Sector/Industry: Mobile Games
- Shoal Games Ltd. (“company”, “Shoal”, “SGW”) owns and operates Trophy Bingo – a free to play mobile bingo game launched worldwide in the third quarter of 2015. The company generates revenues through in-app purchases and advertising.
- Trophy Bingo has been downloaded over 325,000 times, and currently has 18,000+ Daily Active Users (“DAU”) and 92,000+ Monthly Active Users (“MAU”).
May 12, 2016, Q1 STRONG / TROPHY BINGO GAINING TRACTION
Sector/Industry: Mobile Games
- Shoal Games Ltd. (“company”, “Shoal”, “SGW”) reported strong results in Q1-2016 (quarter ended March 31, 2016) this Monday.
- In Q1-2016, revenues grew by 34% QOQ to $110,559, up from $82,540 in Q4-2015. The full launch of Trophy Bingo was in Q3- 2015.
August 19, 2016, PREPARING TO LAUNCH GARFIELD BINGO IN Q4
Sector/Industry: Mobile Games
- The social gaming industry continues to witness major M&A activities. On July 31, 2016, a consortium of Chinese companies announced their intent to acquire Caesars Interactive Entertainment Inc.’s (Nasdaq: CZR) social and mobile gaming business, Playtika, for $4.4 billion. One of Playtika’s key assets is Bingo Blitz, which is one of the two established and dominant social bingo games.
- In Q2-2016, Shoal Games (“company”, “Shoal”) made a decision to divert most of their near-term focus and resources to the development of their new Garfield Bingo game, which is expected to be launched later this year
December 1, 2016, PREPARING FOR TWO MAJOR PRODUCT LAUNCHES
Sector/Industry: Mobile Games
- Shoal Games Ltd. (“Shoal”, “company”) is currently preparing for two major product launches.
- The first one, Garfield Bingo, was launched on November 30, 2016. We expect Garfield’s brand name and its global following to enable the company to attract a large user-base at significantly lower costs. Shoal’s first bingo app, Trophy Bingo, has had over 0.60 million downloads, and has generated over $0.50 million in revenues to date.