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Strong Quarter at CrowdGather - Analyst Blog

Strong Quarter at CrowdGather

Ken Nagy, CFA

On December 14, 2011, CrowdGather, Inc. (CRWG) , with its networks of forum communities on the Internet, reported financial results for its fiscal 2012 second quarter and six months, ended October 31, 2011.

The strong second quarter performance resulted in a 1.2 percent year over year increase in revenue and 40% sequential increase in revenue with revenues increasing to a record $468,296 during the three months ended October 31, 2011.

However, net loss came in weaker, increasing 6.5 percent year over year to a net loss $757,733. This compares to a net loss of $711,272 for the comparable quarter of fiscal 2011.

The increase in net loss for the three months ended October 31, 2011 was mainly due to a $231,995 or 23.3% year over year increase in total operating expenses in the second quarter of Fiscal 2012.

Still, it should be noted that gross profit was strong, jumping 64 percent year over year and 108 percent sequentially to $468,296.

Furthermore, during the quarter ended October 31, 2011, CrowdGather's monthly page views across all properties increased year over year from 80 to 90 million to approximately 230 to 235 million while monthly unique visitors jumped year over year from 4 to 4.5 million to 17 to 19 million monthly unique visitors.

Similarly, based upon current statistics from Google Analytics, the Company's network of forums is generating approximately 220 to 225 million monthly page views and 16 to 18 million monthly unique visitors.

Based on a weighted average number of basic and fully diluted common shares of 58.735 million, basic and diluted net loss per share resulted in a net loss of $0.01 per share for the second quarter of fiscal 2012. This compared to a basic and diluted net loss per share of $0.02 based on a weighted average number of basic and fully diluted shares of 43.540 million during the three months ended October 31, 2010.

For the six months ended October 31, 2011, year over year revenues improved to $802,332 from $793,004 for the comparable six months of 2010.

Still, net loss for the six months increased year over year by $301,799 to a net loss of $1.628 million for the six months ended October 31, 2011. This compares to a net loss of $1.327 million for the comparable six months of 2010.

Here again, the increase in net loss for the six months was primarily due to an increase in total operating expenses.

However, it should be noted gross margin increased to 86.5 percent for the six months ended October 31, 2011 compared to 58.8 percent for the comparable six months of fiscal 2011.

Based on a weighted average number of basic and fully diluted common shares of 58.484 million, basic and diluted net loss per share resulted in a $0.03 loss per share for the six months ended October 31, 2011. This compared to a basic and diluted net loss per share of $0.03 based on a weighted average number of basic and fully diluted shares of 43.446 million during the six months ended October 31, 2010.

Total assets jumped to $17.331 million as of October 31, 2011, compared to total assets of $17.306 million on October 31, 2010.

Along the same lines, the Company had cash of $3.120 million, was debt free and had working capital of $3.218 million as of October 31, 2011.

It should be noted that CrowdGather has recently restructured its efforts into pursuing revenue mainly from its forum network and expects to deploy its ad server technology across its hosted forums in an effort to capture higher margin revenues.

The Company expects to see improved monetization of the forum revenue stream from the increased premium ad inventory and from the utilization of its integrated ad server which the Company anticipates will begin beta testing on in January, and to roll out commercially around year-end fiscal 2012.

Additionally, in an effort to expand its reach and prominence as a leading network for forum members, owners and advertisers, CrowdGather acquired the additional properties pbnation.com, writers.net and yuku.com during the first six months of fiscal 2012.

CrowdGather intends to continue to seek other opportunities to acquire strategic properties that are expected to contribute to increased traffic growth for the Company.

Please email scr@zacks.com with CRWG as the subject to request a free copy of the full research report.To view our most recent research reports and subscribe to our daily morning email alert, visit http://scr.zacks.com/ .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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