Revenue from talking head proof-of-concept exceeds Crowd Media’s expectations

Social commerce company Crowd Media (ASX: CM8) is accelerating development of its talking head technology with all milestones to date achieved on time and team expansion supporting scaled commercialisation.

In its June quarterly report, the company said it had received positive results from research and development for new versions of the platform and related software including extended device support, improved voice recognition and stability features.

Revenue from early-stage proof-of-concept work hit $26,000 in June and is reported to have exceeded Crowd’s expectations.

In May, a commercial media search agreement was signed with Israeli company SourceFlare for the delivery of a prototype talking head product to integrate conversational artificial intelligence into internet search engines.

Positive growth

Crowd Media chief executive officer Idan Schmorak said the company experienced positive growth during the quarter.

“We continued to develop our technology while pushing commercialisation ahead of schedule and adapting features to target markets which can open up new revenue channels,” he said.

“We keep right-sizing our teams to support upscaling while maintaining a responsible cash flow regime an exceptional situation for a company in the growth stages.”

Integrating the platform

During the period, Crowd Media soft-launched a talking head product with its mobile subscriptions division as a way of integrating the platform internally and opening the door for future developments.

The company said a full talking head subscription product line will follow, to be sold using channels including business-to-consumer (B2C, from the subscription division directly to end-users) and business-to-business (B2B, licensing the technology to non-competing mobile-app companies).

Average revenue for Crowd’s mobile subscriptions business increased 3% per user during the three months to end June, for the second quarter in a row.

The company reported continued profits from the division and said optimisation measures were being implemented on an ongoing basis across staff, sales and marketing functions.

Mobile network approvals

In July, Crowd secured mobile network approvals for talking head entertainment applications in the Netherlands (via T-Mobile and KPN), Portugal (Vodafone) and the United Arab Emirates (Etisalat).

The first products to integrate the technology will be browser-based apps Bedtime Stories and Astrology VIP.

Bedtime Stories will launch in Portugal and the UAE in the coming weeks with stories currently being localised into Portuguese and Arabic, while Astrology VIP is undergoing localisation into Dutch to be launched in the Netherlands.

Revenue will be generated by Crowd’s subscription division as users access the apps from $3.60 per week.

Crowd has also entered into revenue-sharing agreements with each mobile network which will allow it to retain up to 80% of proceeds generated from subscriptions.

Financial update

At the end of the period, Crowd Media had $2.23 million cash at hand, representing an increase of $940,000 on the previous quarter.

The company recorded a net cash loss of $400,000 from operating activities and net trading receipts of $8,000.

Net cash flow from the quarter’s investing activities for the period was $250,000 which was used for further investment in intellectual property.

Net cash flow from financing activities was $1.29 million.

Crowd raised $1.32 million from a share placement in June and is set to raise a further $600,000 via a second placement subject to shareholder approval at an extraordinary general meeting this month.