WHITEFISH, MT / ACCESSWIRE / December 22, 2014 / CrowdGather Inc. (OTC: CRWG) has always been involved in the social media industry, but lately, management has shifted its focus from online communities to the social gaming industry. While acquiring Plaor - maker of Mega Fame Casino - earlier this year, the company divested some of its larger forum properties in a move that could pay big down the road as management pivots into a new space.
In this article, we'll take a look at how the pivot into the social gaming industry could add value to shareholders over the coming quarters.
Improved Financials
CrowdGather's revenue fell 8% to $393,734, during the quarter ended October 31, 2014, but investors may want to look deeper for the real story. After selling off certain forum properties during the fourth quarter of 2014, the company lost about $248,000 in advertising revenue, which was only partially offset by an increase of $217,000 in revenue related to the social gaming property.
The good news is that the social gaming revenue is growing much more quickly than the forum business. After acquiring Plaor in May 2014, management anticipates generating unaudited pro-forma revenue of over $2 million per year before organic growth and synergies. These growth rates are driven by a market that's expanding at a 16.2% CAGR to reach $17.4 billion by 2019.
Earlier this month, the company announced approximately $700,000 in social gaming and forum bookings that is set to eclipse the lost revenue from its recent asset sales over the near-term. The average booking per user ("ABPU") amounted to about $0.24, which represents a 26% increase over last quarter, while the number of daily active users ("DAUs") increased 2% over the same timeframe.
Upcoming Catalysts
CrowdGather has a number of upcoming catalysts that could further boost its value, aside from its improving financial performance. Over the past couple of quarters, the company has steadily introduced new games for its Mega Fame Casino franchise that should help drive growth. Management plans to continue launching these games throughout the New Year in order to drive users growth and engagement.
Management also plans to increase Mega Fame Casino's exposure throughout its remaining forum network in order to drive synergies between the two segments. With two leading forum hosting platforms - Yuku.com and Freeforums.org, the company believes it is able to leverage a significant user base at very little cost compared to traditional forms of mobile and online advertising.
Finally, the company remains committed to unlocking the value of its traditional forum business. With its new advertising platform launched earlier this year, the company has made it possible for advertisers to reach niche forum visitors much more easily. Research suggests that these forum visitors are more likely than the general Internet public to do things like recommend purchases or share products.
Compelling Value
CrowdGather trades at a compelling valuation, despite its recent growth and upcoming catalysts. With a market capitalization of around $9 million, the stock trades near its book value of $0.072 per share. The market capitalization is also significantly lower than the company's enterprise value that stands at around $12.53 million.
These dynamics make the stock an interesting alternative to companies like mobile game developer Glu Mobile Inc. (NASDAQ: GLUU) or online game developers like NCSoft Corp. (OTC: NCSCF), THQ Inc. (OTC: THQIQ), or Activision Blizzard Inc. (NASDAQ: ATVI). While these companies are focused on more traditional segments of the gaming industry, CrowdGather's focus on social gaming could pay off.
As smartphones and other mobile devices continue to gain traction, investors may want to take a closer look at CrowdGather and its new focus within the social gaming industry. The company's growing user base, improving financials, and numerous upcoming catalysts could make it a compelling alternative for investors interested in the gaming industry.
Get More Information on CrowdGather here:
http://www.tdmfinancial.com/emailassets/crwg/crwg_landing.php
More Information
Legal Disclaimer:
Except for the historical information presented herein, matters discussed in this release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC may from time to time have a position in the securities mentioned herein and may increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice. Emerging Growth LLC may be compensated for its services in the form of cash-based compensation or equity securities in the companies it writes about, or a combination of the two. For full disclosure please visit: http://secfilings.com/Disclaimer.aspx.
SOURCE: Emerging Growth LLC