Crowd Media’s strategic turnaround bears fruit as the company eyes profits in 2021
Special Report: In an important address to shareholders, chairman Steven Schapera said the company remains on track to meet its strategic objectives.
For social commerce business Crowd Media (ASX:CM8), 2020 has been an important year of strategic realignment as the company builds out a strong client base for its advanced marketing platform.
And heading towards the middle of the year, chairman Steven Schapera said the company remains on track to execute on the strategic vision first laid out by the board last November.
As a result of that renewed focus on quality revenue streams and cost efficiencies, Crowd now expects to meet its stated target of a breakeven core earnings position for the 2020 financial year.
The projected outcome is even more impressive in light of the COVID-19 pandemic, which has caused significant disruption across CM8’s global client base.
Addressing the company’s stable of quality clients, Schapera said Crowd had found promising early results with its multi-channel marketing strategy for three core brands — I Am Kamu, London Labs, and KINN Living.
He also provided an update on Crowd’s influencer marketing campaigns, and area where it steadily been increasing investment spend since May. Executing on that strategy requires a process of calibration in terms of product matching and message delivery, followed by a dedicated testing phase.
Test sales for I am Kamu and London Labs are “both in line with expectations, and although we have only launched KINN very recently it is performing slightly better than we had anticipated”, Schapera said.
In addition “before the end of this month we will also test-launch both London Labs and KINN on our recently built Amazon ecommerce platform” – a channel which has the potential to broaden Crowd’s revenue-generating potential.
Schapera added that the company has stayed nimble in the wake of the pandemic disruption, as it builds a client base of strong brands providing essential products and services to the millennial demographic.
As a result, Crowd has pivoted from its initial focus on beauty and skincare providers to health and hygiene products, as evidenced with the successful onboarding of UK-based VITAL health group.
On the capital management side, Schapera told investors that Crowd has taken a more disciplined approach to debt reduction, having recently reduced its Billfront funding facility by $500,000 to a “more comfortable” level around $1.65m.
The company also took advantage of the high level of liquidity in Australia’s equity capital markets, moving quickly to complete a $1.5m capital raise last week that was heavily oversubscribed.
“This was a strategic move, aimed not just at reducing debt and increasing working capital, but also improving our shareholder register and drawing more attention to the stock,” Schapera said.
The result of all that hard work means Crowd investors are now seeing positive change in the most important aspect of the business – the profit line.
“After two years of substantial losses, underlying EBITDA is now positive and steadily improving,” Schapera said.
Crowd is now well positioned heading into the start of a new financial year, as a nimble business serving a global client base and a senior management team that has the capability to execute on the board’s strategic vision.