CrowdGather, Inc. Sees Year over Year Results Improving
By Ken Nagy, CFA
On March 14, 2013, CrowdGather, Inc. (OTC:), with its networks of forum communities on the Internet, reported financial results for its third quarter and nine months, ended January 31, 2013.
The Woodland Hills, California based Company reported mixed results with year over year revenues inching down by $41,061 to $508,689 during the three months ended January 31, 2013 compared to revenues of $549,750 for the comparable quarter of 2012.
The year over year decrease in revenue was in part due to the effective advertising payouts per thousand impressions (an impression is the display of an ad unit on a web page viewed by an online user) which decreased slightly year over year as a result of lower advertising rates.
Still, as the Company’s revenues diversify and grow in the future, management expects the volatility in advertising payouts to diminish and have less of an impact on total revenues.
In addition, while the Company’s forum advertising marketplace, which was deployed at the end of the second quarter of fiscal 2013, has yet to contribute to revenue growth, management anticipates dedicating more resources toward the platform and anticipates a benefit during the 2013 calendar year.
Gross profit for the fiscal 2013 third quarter fell 11.4 percent to $482,937 resulting in gross margin falling to 94.9 percent compared to 99.1 percent for the three months ended January 31, 2012.
Cost of revenue increased slightly due to advertising inventory purchases associated with the fulfillment of specific customer advertising campaigns.
Still, net loss for the quarter improved by $64,787 year over year to a net loss of $682,193 for the three months ended January 31, 2013. This compares to a net loss of $746,980 for the third quarter of fiscal 2012.
The improvement in net loss for the third quarter of fiscal 2013 was primarily due to lower year over year total operating expenses offset by lower revenue and gross profit.
Total operating expenses fell by 10.1 percent or $131,127 year over year to $1.162 million for the three months ended January 31, 2013.
While staying focused on improving revenues, management is committed to reducing costs and is working toward creating automated solutions and efficiencies throughout the business that will allow significantly reduced overhead.
Likewise, by October of 2013, management intends to reduce annualized operating expenses from a $4.0 million run rate to approximately $2.5 million. Management believes it can achieve this without significantly impacting revenues, and therefore move the Company closer to breakeven.
Based on a weighted average number of basic and diluted common shares of 58.343 million shares, basic and diluted net loss per share resulted in a net loss of $0.01 for the three months ended January 31, 2013. This compared to a basic and diluted net loss per share of $0.01 on a weighted average number of basic and diluted shares of 58.139 million shares during the three months ended January 31, 2012.
CrowdGather reported a $171,541 or 12.7 percent jump in year over year revenues for the nine months ended January 31, 2013, with revenues of $1.523 million during the period. This compares to revenues of $1.352 million for the comparable nine months of fiscal 2012.
The year over year increase in revenue for the nine months was in part due to recent acquisitions which include Pbnation.com and Yuku.com, the Company’s largest network platform.
Gross profit for the nine months ended January 31, 2013 increased nearly 20 percent year over year to $1.478 million. This resulted in gross margin improving to 97.1 percent for the first nine months of fiscal 2013 compared to 91.6 percent for comparable nine months of fiscal 2012.
Net loss for the nine months improved by $223,329 year over year to a net loss of $2.152 million for the nine months ended January 31, 2013. This compares to a net loss of $2.375 million for the first nine months of fiscal 2012.
Based on a weighted average number of basic and diluted common shares of 58.308 million shares, basic and diluted net loss per share resulted in a net loss of $0.04 during the nine months ended January 31, 2013. This compared to a basic and diluted net loss per share of $0.04 on a weighted average number of basic and diluted shares of 58.369 million shares during the nine months ended January 31, 2012.
For the period ended January 31, 2012, CrowdGather reported cash of $489,073, working capital of $601,740 and stockholders’ equity of $14.561 million.
During January 2013, the Company reached over 168 million monthly page views across all properties and had over 14 million monthly unique visitors according to Google Analytics.
In addition, the Company experienced approximately 15 percent of its overall monthly traffic from mobile devices.
The Company continues to prune non-montizable content and does not anticipate the pruning of those non-monetizable pages and any resulting reduction in total monthly page views will adversely impact revenues.
As of January 31, 2013, over 20 million users are registered on the Company network sites, with over 75 million total discussions and approximately 1.5 billion individual replies.
During the third quarter fiscal 2013, CrowdGather received a Notice of Allowance from the United States Patent and Trademark Office for a patent application for systems and methods of targeted advertising. The claims underlying this patent relate to a system for generating targeted advertisement recommendations based upon the social momentum between associated keywords.
Finally, management continues to seek avenues to grow the business, whether through improving advertising opportunities on existing ad inventory or developing partnerships with third party publishers to improve monetization. Management is also evaluating strategic options, including potential business combinations as well as debt and equity financing.
Please visit SCR.Zacks.com for additional information on our research and coverage universe, and Subscribe to receive our articles and reports emailed directly to you each morning