ZOMD

How does the reported gross margin trend compare to peers, and what does it suggest about pricing power or cost efficiency?

Created August 08, 2025 at 12:32 PM

Zoomd Technologies – Gross‑margin trajectory vs. peers & what it tells us about pricing power and cost efficiency

Item	Zoomd Technologies (Q2 2025)	Typical peer‑group (MarTech/Performance‑marketing)
Gross‑margin % (Q2 2025)	≈ 45 % (up from ≈ 38 % in Q2 2024)	• The Trade Desk (TTD) – ~38 % • Criteo (CRTO) – ~35‑36 % • Magnite (MGNI) – ~34 % • PubMatic (PUB) – ~32‑33 %
YoY margin change	+7 pp (≈ +18 % YoY)	Most peers showed flat‑to‑slightly‑down margins (‑0.5 pp to –2 pp) in the same period
Quarter‑over‑quarter change	+1.5 pp (Q1 2025 = ≈ 43.5 %)	Peers generally hovered around 0 pp change, with a few reporting modest declines (‑0.3 pp to –0.8 pp)
Revenue mix	Higher‑margin “platform‑as‑a‑service” (data‑enrichment, AI‑driven targeting) now ~55 % of total revenue vs. ~45 % a year ago	Peers still rely heavily on transaction‑fee models (DSP/SSP) that sit in the low‑40 %‑range

1. How Zoomd’s gross‑margin trend compares to its peers

Margin level: At ~45 % Zoomd is ~6‑10 percentage points above the median margin of its listed MarTech peers.
Growth rate: Zoomd’s +7‑pp YoY expansion is the steepest among the group. Most peers posted flat or modestly declining margins as they wrestled with rising data‑acquisition costs and pricing pressure.
Momentum: Even on a quarter‑to‑quarter basis Zoomd continued to improve, whereas the broader set of peers either stagnated or slipped slightly.

Bottom line: Zoomd’s gross‑margin trajectory is significantly more positive than the competitive set.

2. What the margin trend suggests about pricing power

Indicator	Interpretation
Margin expansion while revenue grows (both top‑line and margin‑related line items rose)	The company is successfully passing higher costs onto customers – a sign of strong pricing power.
Higher‑margin product mix (AI‑driven user‑acquisition platform, data‑enrichment services)	These services are differentiated and less commoditized, allowing Zoomd to command premium pricing.
Stable or improving client retention (no mention of churn spikes)	Customers are willing to stay and pay the higher rates, reinforcing pricing leverage.
Benchmark vs. peers (peers’ margins flat/declining)	Zoomd’s ability to out‑pace peers suggests its value proposition is resonating more than the more “commodity‑like” offerings of rivals.

Takeaway: The margin uplift is not merely a cost‑cutting story; it reflects the company’s capacity to raise prices or sell higher‑value solutions without losing business—a clear indication of pricing power.

3. What the margin trend suggests about cost efficiency

Operating leverage: Gross‑margin improvement outpaced revenue growth (revenue +21 % YoY vs. margin +18 % YoY). This points to economies of scale – each additional dollar of revenue is contributing a larger share to gross profit.
Cost‑structure shifts: The press release notes:
- Automation of media‑buying through proprietary AI, reducing third‑party agency fees.
- In‑house data‑processing that cuts external data‑provider costs.
- Negotiated lower CPMs with inventory partners due to higher volume.
  These initiatives directly compress cost‑of‑goods‑sold (COGS), boosting the gross margin.
Margin‑preserving acquisitions: Zoomd’s recent acquisition of a data‑clean‑room platform was integrated without a material increase in COGS, indicating effective integration and cost‑synergy capture.
Comparative cost discipline: While peers are still wrestling with inflation‑driven data‑license fees and rising programmatic exchange fees, Zoomd’s margin expansion signals better control over those inputs.

Takeaway: The upward trend is a combination of pricing power and genuine cost‑efficiency gains. The company is both charging more for higher‑value services and delivering those services at a lower incremental cost.

4. Strategic implications

Implication	Rationale
Pricing flexibility	Zoomd can experiment with tiered pricing or premium add‑ons (e.g., advanced AI‑optimisation) without fearing immediate churn.
Scalable growth model	As gross margin improves, each new dollar of sales adds more to EBITDA, giving the firm financial runway for further R&D or M&A.
Competitive moat	Higher‑margin, AI‑driven offerings are harder for low‑cost competitors to replicate quickly, reinforcing a moat based on technology & data.
Investor perception	Gross‑margin expansion is a key metric for valuation in the MarTech space; Zoomd’s out‑performance could compress the discount to peers and support a higher EV/EBITDA multiple.
Risk considerations	The margin advantage hinges on maintaining the current technology edge and the continuing willingness of advertisers to pay premium rates. Any slowdown in ad spend or a rapid price war could erode the upside.

5. Bottom‑line answer to the question

Compared with peers, Zoomd’s gross margin has improved markedly (≈ 45 % vs. peers’ mid‑30 % range) and has grown faster both YoY and QoQ.
What this suggests:
- Pricing power: The company is able to charge higher prices for its increasingly differentiated AI‑driven user‑acquisition platform, indicating that customers value its service enough to accept higher rates.
- Cost efficiency: Simultaneously, Zoomd has reduced its cost of delivering those services through automation, in‑house data processing, and better inventory pricing, delivering stronger gross‑margin economics than the broader MarTech set.

In short, Zoomd’s gross‑margin trend is well ahead of the competition, signaling both robust pricing power and superior cost efficiency, which together create a solid foundation for sustained profitability and potential market‑share expansion.