Zoomd Technologies (ZOMD.V) posts 40% revenue growth Q2 2025, trades at 11x free cash flow, no debt

In the landscape of Canadian microcap stocks, few opportunities blend rapid revenue expansion with prudent financial management quite like those emerging in the software-as-a-service (SaaS) sector. Zoomd Technologies Ltd., a player in the marketing technology arena, exemplifies this trend with its recent performance metrics that highlight a compelling valuation case amid broader market volatility. As of 20 August 2025, the company’s shares trade at levels that suggest a potential mismatch between its operational achievements and market pricing, particularly when viewed through the lens of free cash flow multiples and debt-free operations.

Robust Revenue Growth in a Competitive MarTech Space

Zoomd Technologies, listed on the TSX Venture Exchange under the symbol ZOMD.V, has demonstrated impressive top-line momentum. For the second quarter of 2025, the company reported revenues of US$19.6 million, marking a 40% increase year-over-year. This surge underscores the effectiveness of its proprietary platform, which aids in user acquisition and engagement for digital marketers. Such growth rates are noteworthy in the SaaS domain, where scaling efficiently often separates sustainable businesses from fleeting ventures.

Analysts attribute this expansion to Zoomd’s focus on artificial intelligence-driven solutions, including tools like Albert.ai and integrations with networks such as Skipper. These innovations have enabled the company to capture a larger share of the global MarTech market, projected to reach US$500 billion by 2028 according to industry estimates from firms like Grand View Research. Unlike many peers burdened by heavy R&D expenditures, Zoomd has maintained profitability, posting a net income of US$6.1 million for the quarter—a US$3.9 million improvement from the prior year. This profitability streak, now extending to nine consecutive quarters, positions the company as a resilient operator in an industry prone to cash burn.

Balance Sheet Strength: No Debt and Minimal Dilution

One of the standout features of Zoomd’s financial profile is its debt-free status. As of the end of Q2 2025, the company held US$16.5 million in cash reserves, bolstered by US$5.2 million in operating cash flow generated during the period. This liquidity provides ample runway for organic growth without resorting to external financing, a rarity among microcaps where leverage often amplifies risks. Furthermore, the absence of significant share dilution—evidenced by a stable share count of approximately 99.17 million outstanding—preserves shareholder value and signals management’s confidence in internal cash generation.

In comparison to broader Canadian SaaS trends, where many firms grapple with high-interest debt amid rising rates, Zoomd’s clean balance sheet offers a buffer against economic headwinds. Historical data from the past five years shows that debt-laden microcaps in the tech sector have underperformed during downturns, with average returns lagging the S&P/TSX Composite Index by 15–20% in volatile periods, per analysis from Morningstar.

Valuation Metrics: Trading at a Discount to Peers

At a market capitalisation of approximately C$210 million as of 20 August 2025, Zoomd appears undervalued relative to its cash flow generation. Trailing twelve-month figures indicate a free cash flow multiple around 11 times, a metric that compares favourably to the SaaS industry average of 20–30 times for growth-oriented firms, according to data compiled by S&P Global Market Intelligence. This discrepancy arises partly from the microcap discount, where smaller companies often trade at lower multiples due to limited liquidity and analyst coverage.

To contextualise, Zoomd’s price-to-book ratio stands at 7.36, with a book value per share of C$0.29. While this might seem elevated at first glance, it reflects the intangible asset-heavy nature of SaaS businesses, where intellectual property drives value. Forward-looking models from independent analysts suggest that if revenue growth sustains at 30–40% annually—a plausible scenario given the company’s Q2 trajectory—earnings per share could reach US$0.25 by year-end 2026. Applying a conservative 15x multiple yields a potential share price target of C$3.50–4.00, implying upside from the current C$2.12 level.

These figures, drawn from the company’s latest filings, highlight a business firing on all cylinders. Yet, market sentiment remains cautious, with shares trading within a 52-week range of C$0.15 to C$2.24, reflecting a 107,777.77% change from the low—though this percentage is inflated by the low base. The 50-day moving average of C$1.38 and 200-day average of C$0.90 indicate a recent uptrend, with a 53.97% gain over the past 50 days and 134.55% over 200 days.

Market Trends and Risks in Canadian Microcap SaaS

The broader Canadian microcap SaaS market has seen renewed interest in 2025, driven by a rebound in tech valuations post-2024 corrections. According to a report from BMO Capital Markets, SaaS firms with positive free cash flow have outperformed the sector by 25% year-to-date, as investors prioritise profitability over speculative growth. Zoomd fits this mould, yet it faces risks inherent to microcaps, including liquidity constraints—with average daily volume at 281,837 shares over three months—and exposure to advertising budget cycles in the MarTech space.

Sentiment from credible sources, such as analyst notes on Investing.com, labels Zoomd’s Q2 results as a “record profitability milestone,” with some viewing it as undervalued amid AI-driven ad tech trends. However, geopolitical tensions and potential recessions could temper ad spending, impacting revenue. A diversified client base across segments mitigates this, but investors should monitor upcoming quarters for sustained momentum.

Investment Implications and Outlook

For discerning investors, Zoomd Technologies represents a microcap gem in the Canadian SaaS ecosystem: high growth without the baggage of debt or dilution. Its trajectory aligns with successful precedents like Shopify in its early days, where efficient scaling led to multi-bagger returns. While not without risks, the combination of 40% revenue growth, strong cash flows, and a sub-200 million market cap (in CAD terms) suggests room for re-rating.

Analyst-led forecasts, incorporating Monte Carlo simulations from platforms like PitchBook, project a compound annual growth rate of 25–35% for Zoomd through 2027, assuming stable MarTech demand. This could elevate the market cap to C$400–500 million, provided execution remains sharp. In a market where value is often overshadowed by hype, such profiles warrant attention—though, as always, due diligence is paramount.

References

• PitchBook. (2025). Zoomd Technologies Ltd. profile. https://pitchbook.com/profiles/company/109063-09
• Investing.com. (2025). Zoomd Technologies Q2 2025 slides reveal record profitability, 40% revenue growth. https://www.investing.com/news/company-news/zoomd-technologies-q2-2025-slides-reveal-record-profitability-40-revenue-growth-93CH-4192218
• Zoomd Technologies. (2025). Investor relations. https://zoomd.com/investors/
• Investing.com. (2025). Earnings call transcript: Zoomd Technologies Q2 2025. https://in.investing.com/news/transcripts/earnings-call-transcript-zoomd-technologies-sees-40-revenue-growth-in-q2-2025-93CH-4965609
• AI Journal. (2025). Zoomd Technologies reports strong second quarter 2025 results. https://aijourn.com/zoomd-technologies-reports-strong-second-quarter-2025-results-led-by-40-revenue-growth/
• Yahoo Finance. (2025). Zoomd Technologies posts record-setting Q2 2025 financial performance. https://finance.yahoo.com/news/zoomd-technologies-reports-strong-second-123000699.html
• TipRanks. (2025). Zoomd Technologies achieves 40% revenue growth in Q2 2025. https://www.tipranks.com/news/company-announcements/zoomd-technologies-achieves-40-revenue-growth-in-q2-2025
• AInvest. (2025). Zoomd Technologies: High-conviction play in AI-driven mobile advertising. https://www.ainvest.com/news/zoomd-technologies-high-conviction-play-ai-driven-mobile-advertising-revolution-2508/
• StockTitan. (2025). Zoomd Technologies Q2 2025 results overview. https://www.stocktitan.net/news/ZMDTF/zoomd-technologies-reports-strong-second-quarter-2025-results-led-by-szvyt2lhduw6.html
• TipRanks. (2025). Zoomd Technologies: Upcoming Q2 2025 financial results announcement. https://www.tipranks.com/news/company-announcements/zoomd-technologies-to-announce-q2-2025-financial-results
• Various industry commentary (2024–2025), social media contributors: @GrowthInvestingMastery, @GoingToADollar, @AlmostMongolian, @LateStageCap, @thedave2006, @MMoney642