Zoomd Technologies: Momentum
Continues?
Disclaimer: I’m not an investment advisor. Nothing I have written in this article should be taken as investment advice. Everything I have written here could be inaccurate. Trust nothing you just read. I’m part of the Seeking Alpha Affiliate program, which means I have a financial relationship with Seeking Alpha. This article is for entertainment purposes.
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Zoomd is a Canadian-listed international adtech business that operates a user acquisition platform. They are also a performance-based marketing company. Simply put, Zoomd delivers paying customers to its clients through whatever means necessary within the bounds of legality and the digital world that confines them. Most adtech businesses are compensated based on clicks or impressions; Zoomd is compensated based on delivering paying customers. Multibillion-dollar brands, such as Kentucky Fried Chicken, are using Zoomd for this purpose.
Source: Zoomd Q1 investor deck
“I say once more our only duty is to get paying clients for those logos that you see here. We don't do for them branding, we don't do for them awareness. Some of those brands are just huge, but in the end of the day each one of the names here needs for their earnings, quarterly earnings to say how many new clients they got in how many new clients left.” ‘
Quote by Chairman and Founder of Zoomd, Amit Bohensky.
Source: Zoomd Technologies Company Webcast Lytham Partners Spring 2025 Investor Conference
From their growth, we can deduce that they excel at their only duty. High insider ownership of 35%. Their revenue growth translates to higher and higher net income due to their high operating leverage. Operating costs do not increase in proportion to increased revenue.
This is when I got involved with Zoomd.
Source: AlmostMongolian
This was on May 9th. It did put Illumin to shame at the time. The stock I was just pounding the table on. 55m USD market cap 44.5m EV Q1 revenue up 100% y-o-y, net income 4,5m annualized 18m, record revenue during the weakest seasonal quarter in Adtech. These preliminary results got me to take a position.
I didn’t expect it to move so fast for almost no reason. Meaning no additional good news. Of course the stock was cheap which can be a reason in itself.
Source: Google
Now the situation is basically the same, but the market cap is 105m USD and the EV is 94.5m USD.
The only catalyst for the 84,62% move that I can see is that the Q1 official results were slightly better than the Q1 preliminary results. In the official results, net income was 300k higher, Revenue was 200k higher, adjusted EBITDA was 200k higher, and cash from operations was 300k lower. Not a huge difference. It showed that the preliminary results were never fully priced in, despite causing a 53% move before the official results were released, which highlights the difficulty of determining what is priced in and what is not.
The earnings call also didn’t have anything substantial that they hadn’t said in earlier interviews.
Now that the stock has gone up. I’m hearing people saying they missed it. And I get worried because if they missed it and they are right, it means I should sell. But if they are wrong and haven’t missed it, but are actively missing it, I should either hold or buy more. I need to figure out what all of this means. I have to put the pieces together.
Now we looked at the data. We looked at the data, and what we found surprised us.
If this company continues to grow at its current rate, the stock price is unlikely to remain at this level. Even after rising significantly, it still has a low valuation based on recent financials. So, the market clearly has doubts about the sustainability of their growth rate or even their ability to remain at Q1 level of earnings. This is because it’s still a turnaround story. Starting its turnaround in 2024.
Source: Seeking Alpha Premium
This company has high operating leverage. Q3 2023 was the low point of revenue of 7.1m. And the Operating costs were 2.9m. Q1 2025 had 18.2m of revenue and operating costs of 3.1m. 13,8% increase in operating costs while revenue went up 155% and gross profit went up 186%. Due to this operating leverage, nearly all revenue growth goes straight to the bottom line.
From Q3 2023 to Q1 2024, the gross margin improved from 39,4% to 43.9%. GM is not expected to change much from now on.
Source: Seeking Alpha Premium
Now the cash is piling up q-o-q. They went from unprofitable, declining revenue, and low on cash business to highly profitable, growing revenue, and high on cash business. When they had their weak period in 2023, the stock fell to a very low level, and after they turned the business around, the stock has gone up by 23x from the lows.
Source: Google
With stocks that have moved up a lot recently, investors may think they have missed the boat, but you should not be focusing on the price. It’s a common psychological trap investors fall into. In this situation, it would be called “anchoring effect”. Fixating on some historical price of the stock as a reference point. It’s irrelevant.
The stock will rise more than you think, and it will fall more than you think. Investors should focus on the current valuation and try to predict the company's situation in the future. If Zoomd continues growing the stock will go higher.
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Turnaround
The turnaround happened. How did it happen? And how does the way the turnaround happened set up Zoomd for continuous growth going forward? …