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App campaigns boost InternetQ

The mobile specialist cashed in on strong demand for in-app advertising and music streaming
October 9, 2015

Many advertising groups have suffered from the decline of desktop advertising, but exclusively mobile marketer InternetQ (INTQ) isn't among them. Soaring demand for in-app campaigns, new clients including Samsung and Gumtree and overseas expansion drove the group's first-half adjusted cash profits up 34 per cent to €13.1m (£9.7m).

IC TIP: Buy at 214p

InternetQ improved and added self-service features to its Minimob platform, which allows mobile carriers, brands and advertisers to conduct targeted, performance-based ad campaigns on smartphones and tablets. That contributed to a five-fold rise in revenues from smartphone-focused ad campaigns to €35m. Management also struck partnerships with overseas mobile operators; sales in Latin America rose 46 per cent to about €18m.

Rising demand for paid music-streaming service Akazoo helped InternetQ's digital entertainment division to narrow its operating loss to £0.2m. Akazoo recently received a €17m investment from private equity groups Toscafund and Penta Capital in a deal that validated the service, provided a war chest for expansion and valued InternetQ's majority stake at €72m. The downside is that management expects restructuring costs and further investment to weigh on Akazoo's cash profits this year.

Broker Canaccord Genuity reduced its forecasts and now expects pre-tax profits of €16.3m this year, giving EPS of 36¢ (FY2014: €14.5m and 32¢).

INTERNETQ (INTQ)
ORD PRICE:214pMARKET VALUE:£85m
TOUCH:214-223p12-MONTH HIGH:373pLOW: 212p
DIVIDEND YIELD:nilPE RATIO:11
NET ASSET VALUE:244¢*NET DEBT:4%†

Half-year to 30 JunTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (p)
201465.73.58.0nil
201572.05.312.0nil
% change+10+51+50-

*Includes intangible assets of €71.1m, or 179¢ a share

£1=€1.36

†Excludes restricted cash of €0.6m