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Kahoot: With Huge Growth Comes Huge Risks

Jan. 06, 2021 6:20 PM ETKahoot! ASA (KHOTF)12 Comments


  • Already extremely popular, Kahoot! will benefit from presenters' growing willingness to use technology to engage their audiences.
  • It was cash flow and EBITDA positive in the most recent quarter (Q4 2020), and significant insider ownership is encouraging.
  • However, its valuation seems high as of now, especially considering the significant risks involved.

Kahoot! (OTCPK:KHOTF) should be a familiar name for anyone who has been inside a classroom in the last five years. Over 1.3 billion participants played one of the 100 million user-generated quizzes on the iconic platform in 2019. While we generally believe that Kahoot! will continue its strong growth trajectory, we believe that the risks outweigh the potential rewards at current prices.

Company Overview

Kahoot! is a game-based learning platform headquartered in Oslo, Norway. They have several primary offerings:

  • Kahoot!: An intuitive online quiz platform that purportedly increases audience engagement in lectures and presentations. This is the company's flagship offering and the source of its brand recognition.
  • Poio (acquired in 2019): An app designed to teach kids how to read, headquartered in Scandinavia.
  • Dragonbox (acquired in 2019): A math gaming platform designed for young children.
  • Actimo (acquired in September 2020): A digital internal communication, onboarding, and employee training app for remote, mobile-first workers.
  • Drops (acquired in November 2020): A visual language learning application with support for over 41 languages, promising to teach users how to speak a language in short, 5- minute sessions.

Much of the following analysis will focus on Kahoot!, as the newly acquired products generate less than 15% of revenues as of Q3 2020. We believe that Kahoot! will continue to remain the firm's focal offering and that the acquired products will likely be used as cross-selling opportunities.

The company makes generally makes money through a freemium model, charging for access to extra features and typically targeting large organizations such as schools and corporations. For example, Kahoot!, the iconic quiz platform, has pricing which ranges from free to $6 as of January 5, 2020.

Exhibit I: Kahoot! Pricing Model for Quiz Solution

(Source: Kahoot! Website)

Kahoot! is relatively small but has experienced significant growth in recent years. They

This article was written by

A fundamental, value-driven investor looking for high-quality, undervalued companies with sound margins of safety. Combines deep research of both macro trends and company fundamentals to identify investment opportunities. Former contributor with Ophelia Research.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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