Crowd Media reports growing revenues amid successful multi-year horizon strategy

Crowd Media ASX CM8 September 2020 quarter
Crowd Media’s new consumer-facing division Crowd Direct has driven revenue growth, improving 136% over the quarter.

Social commerce company Crowd Media (ASX: CM8) declared in its quarterly update the group generated $3.8 million in revenue in the third quarter this year, while its Crowd Direct division achieved a 136% improvement on a quarter-on-quarter basis.

The past three months have seen a flurry of activity at Crowd Media with a slew of acquisitions and new product launches to support the company’s three-year strategy as outlined by the McKinsey-inspired Horizon model.

As part of a “three-horizon” growth strategy and an intention to diversify its revenue channels, Crowd Media said it is actively pivoting towards a more scalable business model, including the creation of a new consumer-facing division, Crowd Direct, a distribution business that directs various consumer goods to online customers.

In a statement to the market, Crowd Media said it is “well on track” with the implementation of its strategy, first communicated to shareholders by its chairman Steven Schapera at its 2019 annual general meeting.

Meeting milestones

As milestones on its multi-year strategy, Crowd Media pointed to recent acquisitions of online e-commerce brand I AM KAMU and obtaining an 8% strategic stake in Forever Holdings as indicators of its strategy paying off.

The KAMU brand was acquired by Invincible Brands in 2016 and specialises in designer watches and other fashion accessories.

As part of an internal restructuring, the brand was made available for sale with Crowd Media agreeing on a purchase price with Invincible Brands for a nominal cash consideration and an annual 5% net profit royalty.

Crowd Media said it has been actively engaged in promoting the KAMU brand since the start of 2020 as part of a marketing partnership and now expects the acquisition to leverage its core strengths to drive web sales of KAMU products across Europe.

More specifically, Crowd Media intends to utilise digital social media, influencer marketing and “conversational commerce” to market a range of premium products to high-spending consumer groups such as millennials.

“This deal marks another milestone in the execution of the company’s strategic vision to sell exemplary products integral to the lives of European-based millennials on a direct-to-consumer model,” the company said.

“Crowd has deep experience in digital marketing to millennials and Gen Z in most European countries, across 12 different languages, and will be using influencer and performance marketing strategies to drive KAMU sales.”

The social commerce company recently launched its brand across web and mobile with Buy Now Pay Later (BNPL) functionality provided by European company Klarna, alongside other product launches via Amazon in Europe.

Moreover, Crowd Media launched the Teadora brand via the Amazon e-commerce marketplace as well as a timely launch of a COVID-19 testing website, in partnership with Vital Innovations.

Operationally, Crowd Media said its Amazon channel has shown “improved sales”, albeit from a low base given the novelty of its deal with the US giant.

Chatbot technology

Meanwhile, its question and answer (Q&A) artificial intelligence (AI) chatbot venture is now handling approximately 65% of enquiries without human intervention.

Crowd Media said it is continuing to work on acquiring fintech and “insuretech” regulatory licences, required to launch various products next year, to fulfil the second aspect of its overarching horizon strategy.

To further improve its performance and operations, the company plans to accelerate its research and development into AI-driven “talking head” technology for the influencer and educational markets, as a result of the work done to further its Q&A chatbot technology.

Given the improved metrics it has generated over the past three months, Crowd Media said it expects its Crowd Direct division to set a new record in the 2020 fourth quarter.

On a slightly sour note, the company cited it was facing “strong regulatory and market headwinds” as reasons why revenue for its legacy Mobile division was down 9% compared to the prior quarter.

According to the company, this division is currently being restructured to optimise the cost base and improve profitability.

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