Because 5i looks favourably on ZDC I've looked into it with an eye to investing some of my hard earned money. Based on my review I wonder if you could elaborate on the reasons for your favourable analysis. I went to its website expecting to see a highly sophisticated and somewhat difficult to duplicate mobile security technology and found instead that ZDC basically provides little camera towers that it'll wheel out to a jobsite to provide mobile surveillance. Which really doesn't seem like much to me, but does really look like something that almost anyone with a mind to could replicate without much trouble.
I understand that it's a nice little business, but is ZDCs really a serious candidate for investment?
(I know this sounds very skeptical, but I was stunned by what a one trick pony ZDC appears to be, and not a very sophisticated pony at that. But it's a Calgary company and I'm a Calgary boy I would like to invest in it - if there's really any reason to think that reasonably soon - 1 or 2 years - it might be worth $11 or $12 instead of its current $5 and change, to justify taking the risk.)
Thanks 5i - I look forward to your thoughts.
Peter
The hardware itself is not highly proprietary, and the product seems easily replicable when it's framed as just security cameras attached to a tower on wheels, but the real value lies in its business model. ZDC owns and deploys its surveillance towers and generates recurring monitoring revenue. The barriers to entry may not be huge, but replicating what ZDC has done still requires manufacturing scale, operational exeuction, and relationships across these different indutries (construction, retail, etc.).
The real advantage that ZDC has is it has the infrastructure built to manufacture and deploy a lot of these towers (2,700 towers deployed at the end of 2025), and they offer a full-stack service (they provide the tower, installation, 24/7 live monitoring, and incident response), while competitors mostly sell their towers or equipment or provide security guards.
It is still a small company ($568M market cap), it trades at a very expensive valuation (137X forward earnings), and there is the potential for a new entrant to take some market share, but ZDC is building a strong network, and this is important for potential and existing customers. It is growing fast (80% sales growth and faster earnings growth), but the valuation reflects this. We would be comfortable with establishing a small position here, while acknowledging its volatility, small-cap size, and risks of potential disruption by a new market entrant.