CrowdGather Inc. (OTCBB: CRWG), a leading network of forum communities on the Internet and developer of innovative advertising technologies to monetize them, has made significant progress on multiple fronts during its current fiscal 2013 which began May 1, 2012.
But despite maintaining higher gross margins as compared to other companies in the Internet and social media space, CrowdGather remains a relatively undervalued opportunity at its current levels.
Ongoing Growth through Acquisitions
In July, CrowdGather acquired PersonalityCafe.com to diversify its demographics and enhance its reach for advertisers. The leading online psychology community features a discussion forum with over 2.6 million posts and a fully featured mobile app, as well as a video sharing section, personality quizzes, and a number of psychology-focused articles and blogs.
The purchase of PersonalityCafe.com is the latest in a string of forum acquisitions by the company as it looks to expand its reach as a leading network of forums, which already include names like RapMusic.com and PBNation.com. By targeting niche online communities, the company offers advertisers unique audiences that can deliver an exceptional ROI.
The company also announced the launch of its mobile app for Yuku.com in July, which enables users to browse more than 100,000 social communities covering many topics. With approximately 10-15% of traffic already coming from mobile devices, the firm aims to improve the user experience and enhance monetization through mobile ads and app purchases.
Increasing Revenues from Prior Year
In September, CrowdGather reported revenues that increased 77% to $591,000 and gross profits that increased 154% to $573,000 during its fiscal first quarter. Meanwhile, the company’s network logged over 200 million monthly page views and now has some 26 million registered users, making it one of the largest networks of online communities in the world.
In its press release, the company also indicated that it expects to move its ad server toward full deployment before the end of this fiscal quarter. By enabling advertisers to buy ads in groups and target specific demographics, the new technology aims to solve a key problem facing forums – the ability to scale to meet minimum purchase levels.
These developments are important to investors for a couple reasons:
1. The company’s growing revenues and 90%+ gross margins suggest that it may be able to rapidly scale and generate significant free cash flow after reaching breakeven.
2. The company’s new ad server gives advertisers seeking scale the ability to reach into specific vertical interest categories, which could enhance the CPM rates paid on its 200 million monthly page views, and unlock significant value in its forum network.
New CFO Could Help Unlock Value
In late September, CrowdGather announced the appointment of Jonathan Weiss as its new Chief Financial Officer. Mr. Weiss is a Certified Public Accountant with approximately 20 years of finance and accounting experience at various early stage companies and a venture capital fund, which makes him an ideal addition during the firm’s new, dynamic phase.
Currently, the company trades with a market capitalization of just $8 million, despite its growing revenues, $16 million in net equity, and clean balance sheet. On a price to book ratio, this is cheaper than many other Internet companies, like Facebook, LinkedIn and Yelp.com, creating a potential opportunity for investors willing to assume a little risk.
For more information, please see the following resources:
Company Profile - http://www.accelerizefinancial.com/emailassets/crwg/crwg_landing6.html
Disclosure: The subject security is a client of Emerging Growth, LLC. For full financial disclosures for all Emerging Growth, LLC clients, please visit secfilings.com/Disclaimer.aspx.
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