Game On: CrowdGather Revenue Jumps 74% as Insiders Accumulate

CrowdGather Inc. (OTCQB: CRWG) recently announced revenue that jumped 74%, gross profit that rose 84%, and a narrowed net loss during its fiscal first quarter 2016. At the same time, Chairman & CEO Sanjay Sabnani purchased a substantial number of shares in the open market in early- to mid-June, in a sign that management is confident in the company’s future. These dynamics sent the stock more than 50% higher following the news release.

Since acquiring Plaor back in May of 2014, the diversified technology company has realized significant top-line revenue growth while bringing its bottom line close to breakeven. The company’s subsequent move into the canna-tech and crowdfunding industries a year later represents an additional market to grow and diversify its revenue base, while still maintaining its focus on reaching a breakeven point and generating long-term shareholder value.

Mega Fame Casino

Mega Fame Casino & Slots, a multi-platform social casino acquired through Plaor featuring slot machines and poker, has been a key growth driver for CrowdGather over the past year.

“On an operating basis, there is no question that the growth in revenues from our Mega Fame Casino has helped improve our performance significantly since last year,” said CrowdGather Chairman and CEO Sanjay Sabnani in the financial results news release.

Figure 1 – Revenue Breakdown – Source: 10-Q SEC Filing

With nearly 20,000 daily active users, the social casino platform generated over 80% of revenue and helped offset a drop in revenue from forum advertising (see Figure 1). These metrics should continue to improve given the 68% increase in average booking per user from $0.19 to $0.32, as well as a 24% increase in average daily bookings to $5,681 from $4,579 (see Figure 2). While active users fell, it reflects an effort to reduce ad spending and targeting higher value users.

Figure 2 – User Breakdown – Source: 10-Q SEC Filing

Moving forward, management plans to transition its focus from growing average bookings per user (e.g. profitability) to increasing its average number of users (e.g. revenue) after reaching a sufficient level of monetization and retention where that can support expansion of player counts. These efforts should help further drive higher margin revenue growth and ultimately lead the company to reach a breakeven point sooner rather than later.

Cannabis & Crowdfunding

CrowdGather acquired WeedTracker.com and several other cannabis-related digital assets in April of 2015, marking its entry into the multi-billion dollar cannabis industry. In addition to extending WeedTracker into a mobile locator app franchise, the company revealed plans to develop WeedInHollywood.com into its first cannabis-themed gaming title and ultimately merge its social gaming business into the burgeoning cannabis space.

In a May 2015 corporate update, the company also announced plans to enter into the digital start-ups space with a crowdfunding portal. CrowdGather.com will be re-launched in 2016 – under new SEC guidelines for start-up issuers – as a resource designed to help cannabis and digital start-ups raise funding from a large network of investors.

The company’s long-term goal is to drive revenue and earnings from its digital assets – sites, games, and apps – and use crowdfunding as a way to build a digital business ecosystem for the future. In many ways, the company combines the best parts of publicly-traded companies like Zynga Inc. (NASDAQ: ZNGA), IAC/InterActiveCorp. (NASDAQ: IACI), and private crowdfunding companies like FundingCircle or IndieGoGo, among others.

For investors, this translates in an opportunity to participate in a number of high-growth verticals in the digital arena, including the only publicly-traded crowdfunding firm, alongside a resourceful management team that has survived two economic cycles and continues to build long-term shareholder value.

Buying into the Future

CrowdGather stands at a unique point in its corporate history, with growing revenues, narrowing losses, and significant blue-sky potential. At the same time, Chairman & CEO Sanjay Sabnani has been a big buyer of the stock, picking up 168,352 shares in June alone, according to a series of Form 4 SEC filings. These open market purchases demonstrate management’s confidence in the future they’re building for the company in 2016.

Investors in the gaming, online media, or cannabis industries may want to take a closer look given its strong performance and future potential. With a market capitalization of just $7 million, the company trades at a fraction of the valuation seen by many peers in the space. MassRoots Inc. (OTCQB: MSRT) – a cannabis app provider – trades with a market capitalization of $88 million, by comparison, suggesting significant room for upside ahead.

For more information, visit the company’s website at www.crowdgather.com.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Richard Battle

Mr. Battle has over a decade of experience in the financial markets as both a private investor and financial journalist.

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