CRWG – CrowdGather Trims Sites, Edges Toward Breakeven (CRWG)

By Ken Nagy, CFA

On September 10, 2012, the Woodland Hills, California based CrowdGather, Inc. (CRWG), with its networks of forum communities on the Internet, reported financial results for its fiscal 2013 first quarter, ended July 31, 2012.

A strong first quarter performance resulted in a 77 percent year over year jump in revenues and a nearly 2 percent sequential increase, with revenues increasing to $591,202 during the three months ended July 31, 2012.

The year over year advance in revenue was primarily due to strategic acquisitions as well as the Company’s adding of properties to its proprietary forum ad server which management expects will move toward full deployment before the end of this current fiscal quarter.

Recent acquisitions included Pbnation.com and Yuku.com, the Company’s largest network platform.

Gross profit for the first quarter of fiscal 2013 increased 154 percent year over year to $572,655, from the $225,296 reported for the same period in fiscal 2012.

This resulted in gross margin jumping to 96.9 percent for the first quarter ended July 31, 2012 compared to 67.5 percent for comparable quarter of fiscal 2012.

Net loss improved by $194,207 year over year, to a net loss of $677,028 for the three months ended July 31, 2012. This compares to a net loss of $871,235 for the first quarter of fiscal 2012.

The decrease in net loss for the first quarter of fiscal 2013 was primarily due to the jump in year over year revenue.

For the period ended July 31, 2012, CrowdGather reported cash of $1.8 million with no long term debt.

Similarly, management anticipates it will use its current cash reserves for operations.

Still, it’s important to note that 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.

Furthermore, it should be mentioned that during July 2012, the Company reached over 220 million monthly page views across all properties, a nearly 47 percent year over year increase, compared to 150 million monthly page views during July 2011.

Likewise, monthly unique visitors jumped more than 13 percent year over year to over 17 million compared to 15 million monthly unique visitors a year earlier.

As of July 31, 2012, nearly 26 million users were registered on CrowdGather network sites with over 674 million total discussions and nearly 1.3 billion individual replies.

Likewise, management reaffirmed its previous page view traffic guidance for fiscal 2013 of approximately 180 to 190 million monthly page views network wide as the Company removes non-monetizeable content that also conflicts with its terms of service.

Similarly, the Company continues to not expect any significant impact on revenues from the reduction.

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