The online advertising space is growing at a very rapid rate as evidenced by recent figures from the Interactive Advertising Bureau (IAB), which demonstrated that companies surveyed by IAB and Pricewaterhouse Coopers grossed $8.4 billion in sales in the first quarter of 2012, representing the best Q1 on record and a 15 percent rise over the 2011 quarter. The trend shift from legacy advertising mediums to online platforms has helped translate to CrowdGather Inc.’s (OTCBB: CRWG) record revenue and meeting guidance for fiscal 2012. CrowdGather, a leading network owner of forum communities and developer of innovative advertising techniques to monetize them, operates alongside other Internet companies such as Linkedin Corporation (NASDAQ: LNKD) to IAC Interactive Corp (NASDAQ: IACI).
After yesterday’s closing bell, Crowdgather reported revenues of $580,716 for the fourth quarter of fiscal 2012, an increase of 42% from the $407,741 reported for the fourth quarter of fiscal 2011. For the fiscal year ended April 30, 2012, the company reported revenues of $1,932,798, an increase of 22% from the $1,580,957 reported for fiscal 2011. CrowdGather had earlier issued guidance of $1.9 million in revenue for the year. The 22 percent rise in Crowdgather’s revenues for fiscal 2012 from its revenues fiscal 2011 outstrips the average gains of companies surveyed by IAB and Pricewaterhouse Coopers.
Revenue improved for the year for many reasons, including a number of acquisitions that included Pbnation.com and the Company’s largest network platform, Yuku.com, a popular free forum website, as well as increased focused on monetization of the company’s existing advertising inventory.
Gross profit for the fiscal year ended April 30, 2012, was $1,811,464, an increase of 125% from the $805,443 reported for fiscal 2011. Net loss for the 2012 fiscal year was $3,106,723 or $.05 per share, versus a net loss of $2,812,228 or $.06 per share for the prior fiscal year. As of April 30, 2012, the Company had $2.3 million in cash, and management anticipates that the Company will achieve breakeven without raising additional capital. The Company believes it has stabilized operating expenses related to additional staff hiring that raised costs during fiscal 2012, and additional cost-cutting measures (that subsequently increase efficiency in operations as well) are being implemented. For example, the company is migrating its third-party hosted sites to its own network operating center in Los Angeles, California. This should help result in savings of $12,000 to $25,000 a month upon completion of the migration.
“During 2012, we experienced a significant increase in revenue and gross profit due in part to strategic acquisitions, but also because we exclusively focused on monetizing our own forum ad inventory,” said Sanjay Sabnani, CrowdGather’s Chairman and CEO. “We expect to carry this positive momentum into fiscal year 2013 as we are working toward completing a number of initiatives that should help add to high margin revenue growth.”
In a move that will maintain its high gross margins while expanding revenues, CrowdGather will be deploying its proprietary ad server in Q2 fiscal 2013. Taking optimized advertising and making it more conducive to target active participants of forums, CrowdGather’s customized, forum-specific ad server can be leveraged by advertisers seeking scale and reach into specific vertical interest categories they would not otherwise have access to, and by publishers or forum owners who will be able to avail themselves of higher revenue per thousand impressions (RPM) because of their participation in aggregated categories.
CrowdGather has indicated that it anticipates the new ad server will offer similar functionality available on the Google or Facebook platforms in that advertisers can access a self-service web portal to upload creatives and launch campaigns, but the audience will be much more focused, with each enthusiast-filled forum categorized for optimal ad targeting. Larger brand advertisers and their agencies will still have concierge service and direct engagement from the CrowdGather sales team. In addition to traditional display advertising, the company will also offer content marketing in the form of sponsored posts.
CrowdGather has thousands of forum moderators and administrators pruning non-monetizeable and irrelevant content that conflicts with the company’s terms of service. These initiatives improve the quality of the network and should further improve its RPM during fiscal 2013.
In the month of April 2012, CrowdGather’s properties reached more than 220 million pageviews, an increase of more than 50 percent from the 140 million pageveiws in April 2011. As of May 3, 2012, approximately 26.1 million users are registered on company network sites, with 70.1 million total discussions and nearly 1.2 billion individual replies.
“We closed 2012 with record quarterly and annual revenues,” Sabnani continued, “and to our knowledge, in fiscal 2013 we will be the first forum company to deploy a customized ad server dedicated to creating a forum-centric ad network. We believe the ad server will help create a marketplace that will benefit advertisers and third party publishers, as well as help increase RPM for our own inventory.”
Experts are calling for internet advertising sales to remain robust as more and more media is consumed and advertisers continue to devote more resources to online marketing. CrowdGather is in a prime position to capitalize on this trend shift. As CrowdGather is recording gross profit margins in excess of 90 percent of revenues and in the midst of strategies that will cut costs and boost topline growth, the Company is showing significant promise in the fast growing online advertising industry.
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