Ken Nagy, CFA
CrowdGather Racks up a Big Year on the Top-Line
CrowdGather, Inc. (CRWG) is an Internet company that specializes in the development and hosting of forum based Web sites. The firm endeavors to monetize a network of online forums and message boards. Forums remain a much undervalued part of the internet pie with $4.5 billion and CrowdGather is the only public company dedicated to monetizing this area. More page results equate to more revenue as page views have jumped from 12 million to 135 million through several mergers. CRWG is now in acquisition mode.
On July 28, CrowdGather reported earnings for its fiscal year ended April 2011. The Company’s rapid transition into a significant publisher network, comprised entirely of forums, allowed for an increase in 2011 revenues of $1.271 million or 410% over fiscal 2010 sales and a $617,466 decrease in its year over year net loss to a net loss of $2.812 million for fiscal 2011. The increase in revenue was primarily due to increased advertising revenue from CrowdGather’s branded and hosted forum properties plus revenue generated from the Company’s Adisn’s display and per-action advertising campaigns.
Although CrowdGather expects general and administrative expenses to remain stable during fiscal 2012, the increase in revenues was partially offset by a $1.286 million year-over-year increase in G&A during fiscal 2011.During the past fiscal year CrowdGather completed seven acquisitions to expand its reach and prominence as a leading network for forum members, owners and advertisers. Much of the transactions paid for with Equity.
The June 2010 acquisition of Adisn, Inc. was significant as its ad server technology should enable the efficient delivery of vertically targeted ads to all of the Company’s forum properties and should help generate key analytics and tracking measures.
This in turn is expected to enhance future ad revenue by enabling higher value advertising campaigns.
Although the Adisn technology is expected to go live for external use by the end of January 2012, the Adisn advertising campaign contributed significantly to 2011 revenues. Along the same lines, it should be noted that CrowdGather restructured its efforts into pursuing revenue mainly from its forum network and Adisn’s display ad server technology. As a result, the Company discontinued buying ad inventory from third parties which in turn may lead to a flatter revenue ramp in the near term.
Still, CrowdGather intends to leverage the higher value features of the Adisn technology, which is anticipated to lead to higher margin opportunities which the Company has experienced from its branded and host forum properties.
The Company provided guidance for fiscal 2012 revenues, anticipating baseline 2012 advertising revenue of at least $1.9 million driven by current monthly page views and unique visitors. During April 2011, CrowdGather monthly page views across all properties increased roughly 79% year over year to 140 million while monthly unique visitors grew approximately 114% to 15 million over the past year. CrowdGather had approximately 15.5 million users registered on the Company network sites as of April 30, 2011.
CrowdGather further stated that it believes it may have 2 to 6 potential acquisition opportunities worth $25 to $30 million for fiscal 2012.The Company anticipates that it would use the majority of its current cash reserves and additional leverage of equity to allocate towards any acquisition.
The Company’s above mentioned guidance is exclusive of any possible contribution from potential acquisitions and investors should be aware that short or medium-term pressure on the shares may exist as several deals were paid for with equity. This can cause increased selling as lock up periods expire and the third party is allowed to sell shares.
For a free copy of the full research report, please email scr@zacks.com with CRWG as the subject.
Follow Zacks Small Cap Research on Twitter at Twitter.com/ZacksSmallCap
CROWDGATHER INC (CRWG): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment