Crowd Media signs PJ Masks, Expedia and other brands as it looks to shave costs

Crowd Media ASX CM8 PJ Masks Expedia
Crowd Media has signed PJ Masks, Expedia, N26 and Pasta Garofalo.

Cash strapped media and marketing company Crowd Media (ASX: CM8) has signed up four new international brands including PJ Masks, Expedia and N26 and Pasta Garofalo, as it continues with its strategic review into cutting operational costs.

Crowd Media will provide digital marketing services, including digital influencer marketing for the brands, which comprise popular children’s cartoon series PJ Masks, and leading worldwide travel website Expedia.

According to Crowd Media, the new agreements showcase the company’s ability to service brands in Europe across multiple languages and digital platforms such as Facebook, Instagram, Snapchat and YouTube.

The news sent Crowd Media’s share price soaring almost 53% to $0.026 before mid-day on huge volume.

Cost cutting review

A strategic review across the entire Crowd Media business was initiated in August last year, with a recent cost cutting initiative identifying $1.5 million in additional annual cost savings, which will be implemented before the end of the current financial year.

Additionally, Crowd Media recently completed a debt refinancing with BillFront – giving it an 11.3% annual interest rate for its current debt of €1.3 million (A$2.1 million).

Once the company further deleverages, the loan interest rate will decline to 9% annually.

The restructure was implemented after Crowd Media experiencing a 12.2% fall in revenue to $38.56 million for the 2018 financial year.

This was combined with a massive loss for the year, with the company ending FY 2018 with $26.041 million deeper in the red.

As the company’s restructure advances, the company reported revenue for the first half of the 2019 financial year of $14.01 million – down 33% of the previous corresponding period.

This led to a net after tax loss of $2.8 million for 1H 2019.

Operational transition

As part of the review, Crowd Media is transitioning the business to focus on its social media and influencer marketing division, which it anticipates has the most growth and revenue potential.

“The transitional allows Crowd Media to leverage synergies across all three of its divisions (media, subscription and Q&A) and gives it a clear positioning in a high growth area and diversity its revenue beyond direct carrier billing and premium SMS,” the company explained.

Crowd Media anticipates once the transition is complete, the business will primarily be a digital platform company that uses technology and social media to generate revenue by giving paying advertisers access to is millennial and generation Z audiences.

Directors buy on market

Despite the current lack of profitability, Crowd Media chief executive officer Domenic Carosa took advantage of the company’s low share price in April and May to purchase $35,000-worth of shares on-market.

In mid-April, Mr Carosa purchased $15,000-worth of stock for an average price of $0.015 per share. He followed this with another on-market purchase last week of $20,096 shares at the same price.

Chairman Theo Hnarakis also joined in – scooping up $15,000-worth of stock at $0.015 each in mid-April.

By mid-day, Crowd Media’s share price had sky-rocketed further by 164% to reach $0.045.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.