CrowdGather Aims at Monetizing its own Forum
Advertising Inventory
Ken Nagy, CFA
On July 9, 2012, the Woodland Hills, California based
CrowdGather, Inc. (
CRWG
),
with its networks of forum communities on the Internet, reported
financial results for its fiscal 2012 fourth quarter and full year,
ended April 30, 2012.
The strong fourth quarter performance resulted in a 42 percent year
over year jump in revenues and nearly 6 percent increase
sequentially, with revenues increasing to a record $580,716 during
the three months ended April 30, 2012.
For the full year ended April 30, 2012, year over year revenues
improved by 22.3 percent to a record $1.932 million from $1.580
million for fiscal 2011.
The year over year advance in revenue was primarily due to
strategic acquisitions as well as the Company's focus on monetizing
its forum ad inventory.
Recent acquisitions included Pbnation.com and Yuku.com, the
Company's largest network platform.
Additionally, the focus on increasing the monetization from
existing advertising inventory improved revenue per thousand
impressions (RPM).
Still, net loss for the twelve months increased by $294,495 year
over year, to a net loss of $3.106 million for the full year ended
April 30, 2012. This compares to a net loss of $2.812 million for
fiscal 2011.
The increase in net loss for fiscal 2012 was primarily due to an
increase in total operating expenses which was offset by improved
gross margin.
Total operating expense increased by 33.5 percent or $1.237 million
year over year, to $4.925 million. The increase was primarily due
to an 89 percent year over year increase in payroll and related
expenses as well as an 11 percent year over year increase in
general and administrative expenses.
Still, it should be noted that management expects total operating
expenses to remain stable during 2013.
Gross margin jumped to 93.7 percent for the full year ended April
30, 2012 compared to 51 percent for fiscal 2011.
The improvement was primarily due to the Company's focus on
monetizing its own forum advertising inventory as well the
termination of the previous Adisn's revenue model, which required
CrowdGather to purchase ad inventory in order to deliver
advertising campaigns on behalf of direct advertisers and their
agencies.
It should further be noted that the Adisn display and per-action
advertising campaigns contributed to over 50% of gross revenues in
fiscal 2011.
Based on a weighted average number of basic and fully diluted
common shares of 58.329 million, basic and diluted net loss per
share resulted in a $0.05 loss per share the fiscal year ended
April 30, 2012. This compared to a basic and diluted net loss
per share of $0.06 based on a weighted average number of basic and
fully diluted shares of 44.904 million during the twelve months
ended April 30, 2011.
The Company reported cash of $2.328 million, no long term debt and
had working capital of $2.413 million as of April 30, 2012. This
compares to $2.680 million of cash and working capital of $2.812
million as of January 31, 2012.
Still, management believes the Company has sufficient working
capital to maintain operations, conduct further acquisitions, and
improve the monetization of existing ad inventory with its ad
server to reach breakeven without additional financing.
Along the same lines, if opportunities become available, management
stated that it may allocate some cash and equity toward
acquisitions, depending on the Company's share price at the time a
transaction is completed.
Management expects a solid Q3 and Q4 as they expect to carry the
Company's positive momentum into fiscal 2013 as they work toward
completing a number of initiatives that should help add to high
margin revenue growth.
The Company re-launched its corporate website in an attempt to
better position itself for advertisers, forum owners, and
prospective investors. The new look and feel features the Company's
ad supported business model and the benefits of its network for
advertisers, forum owners, and general community users.
Additionally, the Company is focused on deploying the redeveloped
ad server obtained during the June 2010 Adisn acquisition in late
Q2 fiscal 2013.
Furthermore, management expects the ad server, coupled with the
improved quality of the network, will further improve its RPM
during fiscal 2013.
During April 2012, the Company reached over 220 million monthly
page views across all properties, a 57 percent year over year
increase, compared to 140 million monthly page views during April
2011.
Likewise, monthly unique visitors jumped 20 percent year over year
to over 18 million compared to 15 million monthly unique visitors a
year earlier.
Similarly, as of May 3, 2012, approximately 26.1 million users are
registered on Company network sites with 70.1 million total
discussions and nearly 1.2 billion individual replies.
Additionally, approximately 24.9 million users are registered on
CrowdGather Network sites to date with 72.0 million total
discussions comprising nearly 1.2 billion individual replies.
Still, CrowdGather estimates that the ongoing removal of
non-monetizable content that also conflicts with its terms of
service may reduce its total monthly page views by 20 to 30
million, to approximately 180 to 190 million monthly page
views network wide.
However, the Company does not expect any significant impact on
revenues from the reduction and anticipates an immediate lift to
RPM.
It should further be noted that the Company is in the process of
migrating its third-party hosted sites, such as Yuku.com, to its
own network operating center, in Los Angeles, California, as part
of the Company's risk mitigation and cost savings strategies.
The relocation is anticipated to improve uptime, speed, and
stability for its sites, and to also result in savings of $12,000
to $25,000 per month due to the difference between the lower cost
equipment lease payments and the higher cost third-party hosting
charges.
Furthermore, the Company is working toward completing a number of
internal initiatives that should impact topline growth, including
the ad server launch, the development of an internal tool for
monitoring and removing non-monetizable content, and general
software development that will improve its communities network
wide.
Likewise, CrowdGather has been working diligently to improve its
brand sites as demonstrated by the re-launches of Digishoptalk.com
and Pocketables.com in May of 2012.
The Company is also conducting ongoing development across all of
its network properties, i.e. Yuku.com, to continue improving the
administrator and user experience in the communities.
Finally, as 8 to 10 percent of all of CrowdGather's aggregate page
views are mobile, management stated it is beginning to look at its
mobile ad inventory and ways to monetize it.
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