For CrowdGather More Page Views Equate to More Revenue - Analyst Blog

Ken Nagy, CFA

For CrowdGather More Page Views Equate to More Revenue

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 April 18th before the market opened CrowdGather announced that it has acquired the assets of free forum hosting pioneer, Forumer.com. Forumer, which serves 35 million monthly page views across 200,000 active forums, joins CrowdGather’s existing free forum hosting platforms FreeForums.org and Lefora.com in providing a wide range of alternatives to individuals seeking to build communities online. With this purchase, CrowdGather’s network traffic has increased 50% this year to 135 million monthly pageviews and 13 million monthly unique visitors. This is up from 100 million monthly pageviews just prior to the transaction and 90 million monthly pageviews at the beginning of calendar 2007. In the simplest terms more page hits equates to more revenue. According to the 8K the purchase price of the website was $400,000 of which $300,000 was paid in cash and 100,000 shares of CrowdGather common stock.

On March 3rd the firm closed a private placement transaction previously announced on February 28, 2011. Under the terms of the transaction CrowdGather sold an aggregate of approximately 7,136,364 million shares of its common stock at $1.10 per share and warrants to purchase up to approximately 5,352,273 million additional shares of its common stock. The warrants to purchase additional shares will be exercisable at an exercise price of $1.50 per share and are exercisable for 5 years commencing six months and one day following their issue date.

Looking Closer at Dilution over the Past Eighteen Months
With the acquisition of Adisn and Lefora the firm essentially leveraged $6.5 million in equity in exchange for an increase in revenues and page views. That stake was not dilutive given the cancellation of 5 million shares of CEO, Sanjay Sabnani’s beneficial holdings in Crowd Gather. Investors that bought the stock at the time essentially got a firm that is debt free, growing page views at 750% (12 million to 90 million), revenues at over 400%, and did not suffer dilution.

Market Share of Social Media