ATB launches coverage of Zoomd Technologies with an “Outperform” rating

ATB Capital Markets analyst Martin Toner initiated coverage of Zoomd Technologies (Zoomd Technologies Stock Quote, Chart, News, Analysts, Financials TSX:ZOMD) on Oct. 20 with an “Outperform” rating and a C$4.00 one-year target, saying the company is well-positioned to capture the expanding “Open Internet” ad market through its performance-based user acquisition platform.

“Despite the pervasiveness of ‘walled garden’ social media, the Open Internet remains a growing source of marketing and advertising spend,” Toner said. “ZOMD’s platform identifies the most valuable inventory for pay-for-performance advertising and delivers high-return users to its clients.”

Zoomd’s technology aggregates and optimizes ad inventory across the open web, using proprietary algorithms to target high-value users in categories such as entertainment, e-commerce, gaming, crypto, and fintech. The company’s client roster includes major global brands such as Shein and the NBA, reflecting what Toner described as “a growing list of high-profile brands with vast marketing budgets in attractive verticals with strong unit economics.”

“In-app consumer spending is ~$200bn annually, and acquiring new users is the lifeblood of these businesses,” he said. “New users for entertainment, e-commerce, and online gambling are high-value. These clients are willing to pay attractive rates per user.”

He said the company is a source-agnostic platform for mobile user acquisition on the Open Internet.

“Clients pay for new user acquisition and other high-value KPIs,” he said. “This results in high ROI, alongside advertising/marketing performance that is directly tied to client revenue and has identifiable return.”

Zoomd’s fundamentals have “transformed over the last three years,” according to Toner, with a revenue CAGR of roughly 50% since Q2 2023.

“The key to fundamental momentum is consistently delivering strong results against client KPIs and clients observing the lifetime value of those results aging well,” he said. “As the evidence mounts, clients increase spend with ZOMD.”

He said that insider ownership stands at 27%, giving management ample ‘skin in the game.’ While he highlighted risks from customer concentration and the company’s focus on a single product line, Toner said the leadership team is “strong and capable of taking the company to the next level.”

Toner said Zoomd should generate $19.4-million in Adjusted EBITDA on $77.3-million of revenue in fiscal 2025, improving to $21.8-million on $95.2-million in fiscal 2026.

“Our price target is based on a DCF using a weighted average cost of capital of 17.0% and a terminal growth rate of 3.0%,” he said. “Our DCF model implies a terminal EV/EBITDA multiple of 4.9× in 2033 and an EV/2026 EBITDA of 12.5×.”

Founded in 2012 and headquartered in Vancouver with operations in Tel Aviv, Zoomd provides AI-powered, performance-based marketing tools designed to optimize user acquisition and return on investment. The company serves clients across more than 80 countries in North America, Latin America, Europe, and Asia.

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