Crowd Mobile lays the foundation for a strong first half of FY16 result
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
In a quarterly update released on Wednesday, Crowd Mobile (CM8) advised the market that it had performed well across its businesses in the three months to September 30, 2016, generating year-on-year growth in billed message volumes of 30%.
This drove revenues of $10.6 million from which the company achieved underlying EBITDA of $2.2 million. CM8 continued its record of delivering positive operating cash flow.
While this represented a solid performance in isolation, more importantly it lays a strong foundation for the company to deliver an impressive first half result for the six months to December 31, 2016.
From an operational perspective, management said positive momentum had continued into the second quarter despite this being a traditionally softer period.
CM8 is also looking more financially robust after completing a debt refinancing which has effectively provided additional working capital. The company also conducted an equity raising totalling $3 million.
However, CM8 remains an early-stage speculative stock, so caution is advised.
New partnerships provide gateway to global markets
It has also been a productive period from a strategic perspective with the company having forged a two-year partnership agreement with Viacom International Media Networks (VIMN) which will see the two companies collaborate in a revenue sharing deal to develop new apps leveraging the latter’s popular brands and celebrities to maximise global exposure.
Some market analysts have hailed the deal as a ‘Babe in the woods meets commercial Gorilla for a digital rumble’, with more details keenly expected by tech-market market watchers.
In the coming weeks, it is expected that the two companies will combine to release five new apps incorporating CM8’s flagship question and answer capability within emoji style products.
Chief Executive, Dominic Carosa, believes this initiative has the potential to bring customers closer to their celebrities. In essence though, it is a highly credible endorsement of the group’s technology platform given VIMN’s status as a leading global media company.
Another important development over the last three months was the signing of a Letter of Intent with SmartTrans Holdings (ASX: SMA) and its subsidiary SmartTrans Technology (Beijing) to form a partnership that will give CM8 a strategic entry point in terms of accessing the Chinese market.
Positive outlook statement
As mentioned, CM8 looks well positioned to deliver a solid first half result and on this note Carosa said, “It is expected that the December quarter results will be materially higher than the September quarter”.
The group’s Q&A division continues to exceed expectations, and this along with a stabilisation in the company’s subscription business should provide growth momentum, with the latter positioning the company to release new products including those targeted at the Virtual Reality (VR) space.
CM8’s balance sheet is looking robust with net debt being reduced by $2.3 million to $12.5 million in the last three months.
It should be noted that Crowd Mobile is an early stage tech company, so seek professional financial advice if considering this stock for your portfolio.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.
