Crowd Media achieves first makeover milestone with $2.7m EBITDA turnaround for FY20

Crowd Media ASX CM8 EBITDA FY20 Steven Schapera Domenic Carosa
Crowd Media is progressing its insuretech and fintech initiatives and aims to commercialise these opportunities in 2021.

Social media commerce business Crowd Media (ASX: CM8) has posted a $2.7 million turnaround in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $100,000 for the 2020 financial year.

The achievement signals the first milestone since the-then challenged company launched its makeover in September following two years of significant restructure.

The decision to change its fortunes was backed by a sizeable investment from a European investment group run by new chairman Steven Schapera and co-director Robert Quandt.

EBITDA has been cited by Mr Schapera as a “key metric” in measuring the company’s success, with full year figures blitzing those for the 12 months to June 2019, which were recorded as a $2.6 million loss.

Similarly, Crowd’s Q&A chatbot technology experienced a $740,000 boost, from a loss of $521,000 in 2019 to an EBITDA profit of $220,000 for the current year, while subscriptions growth figures more than doubled from $1.007 million to $2.2 million EBITDA.

Direct to consumer

Crowd’s direct-to-consumer (D2C) vertical generated $350,000 for the 2020 financial year, with the majority of revenue coming through in the second half.

Payment flexibility was enhanced by adding Buy Now Pay Later provider Klarna (which generated $753 billion in revenues and has a USD$5 billion market cap) to the D2C offering.

Crowd houses brands including London Labs, KINN Living and select names from the Vital Group.

Mr Schapera said the business model is still in its infancy.

“All [of these brands] are currently being piloted – it is an iterative process as we test, tweak, and test again in order to home in on the ‘secret sauce’ required to sell each category or product before we scale up sales and marketing initiatives,” he said.

“We [also] continue to make progress with our insuretech and fintech initiatives, most notably in terms of developing strategic relationships and ensuring compliance within the relevant regulatory framework.”

“We are nicely on track to commercialise these service opportunities next year,” Mr Schapera added.

Media-tech business

In a letter to shareholders, Mr Schapera said he is enjoying the challenge of building a “truly unique media-tech business” in the influencer marketing space.

“My first two goals [when I became chairman] were to get Crowd to an operational breakeven, and to start selling products this year with a view to selling services in 2021 and we have achieved that,” he said.

“My third goal is to build a unique tech business using Crowd’s core competencies, which we believe will lead to potential take out opportunities from 2022.”

Mr Schapera’s investment group originally came to Crowd with an objective for a tech breakthrough, namely conversational social commerce on a virtual audio-visual platform.

“Our vision stemmed from our belief that influencer marketing in the next few years will be experiential, more closely resembling Facetime with a famous person versus looking at a post on Instagram, which is how it is now,” he said.

“We believe this could be executed within three to five years, with the right innovation and partner alliances,” Mr Schapera added.