Crowd Media reports revenue growth and series of talking head investments

Crowd Media CM8 ASX revenue growth Talking Head investments December 2020
Crowd Media invests US$250,000 apiece in AFR Assets and UneeQ to tap conversational commerce niche.

Social commerce business Crowd Media (ASX: CM8) has posted better than expected performance figures for Q4 2020 and declared that it is now in a strong position to compete with NASDAQ-listed e-commerce company LivePerson, as part of its bid to “revolutionise conversational commerce”.

The IoT-focused media company reported a 15% improvement in cash receipts to $4 million and a 20% boost in sales revenue to $379,000 in the last quarter of 2020.

The company also extinguished its BillFront debt facility of $1.7 million thereby saving around $200,000 in annual interest and administration costs.

In a note to shareholders, Crowd Media chairman Steven Schapera explained that in line with the company’s strategy outlined at its AGM in November 2019, Crowd Media will be building and commercialising a technology platform based on its Q&A chatbot.

The software is currently being integrated with artificial intelligence, AR, machine learning and voice cloning capabilities with a view of completing a fully developed prototype before the end of 2022. Mr Schapera described Crowd’s development so far as being “ahead of our internal schedule”.

“This ambitious goal, if successfully executed, has the potential to propel the company toward significant valuation multiples,” Mr Schapera added.

Crowd’s chairman also confirmed that Kamu and KINN were its best-performing brands and had the strongest potential to deliver commercial outperformance in 2021.

“We are seeing retail marketing dollars moving away from bricks and mortar to aggressive online deployment. Accordingly, we have restructured this business segment in a positive way, to focus on our best-performing brands: Kamu and KINN – which we see as having the strongest potential,” he said.

With respects to its Mobile business division, Crowd Media said the unit was “collectively delivering ongoing profits to Crowd notwithstanding regulatory and other headwinds in the sector”.

Crowd went so far as to declare it is “not expecting any growth within this segment” and as such, confirmed it was in the process of optimising its Mobile division cost base to maximise short term profits and cashflow.

Talking heads

In terms of commercial partnerships, just this week Crowd signed a binding heads of agreement with Aflorithmic Labs to procure a voice-cloning engine, as well as an integrated core artificial intelligence (AI) engine that will dovetail together to drive Crowd’s Talking Head platform.

The strategic investment follows on from Crowd’s equal joint-venture with Israeli-based VFR Assets and Holdings to co-develop a technical platform enabling the scalable creation of “Talking Head” digital assets for use in conversational commerce.

Crowd has agreed to invest US$250,000 in the JV to create a visual talking head and also completed a further US$250,000 deal with UneeQ to secure access to “AI digital human technology”.

According to the terms of the deal with Aflorithmic Labs, the company has agreed to assemble a dedicated four-member engineering team to work exclusively on Crowd’s talking head project while Crowd has agreed to pay back employment costs – fully absorbed and without margin – on a cost-recovery basis.

Mr Schapera confirmed the deal included a special provision for Aflorithmic to assist Crowd in managing its existing technical partnerships and securing IP from all its partners to integrate them on one central platform.

“It is expected that this arrangement will deliver a working product materially ahead of schedule, at lower cost, and with lower technical risk,” he said.

As part of this engagement, Crowd has committed to buy a 10% stake in Aflorithmic for around £1 million (A$1.77 million), made up of a combination of cash and shares.

In total, Crowd has now made four strategic investments into companies directly involved with delivering the necessary components of its Talking Head product: Forever Holdings, UneeQ, VFR, and now, Aflorithmic Labs.

The signed agreements, backed by equity participation, were executed to ensure Crowd had a “seat at the table as the shift to conversational commerce accelerates”, said Mr Schapera.

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