InternetQ,a leading provider of mobile marketing and digital entertainment solutions for mobile network operators and brands,is pleased to report its preliminary results for the year ended 31 December 2011.

·     Revenue up by 34%, to €50.1 million (2010: €37.3 million)

·     Operating profit up by 16% to €4 million (2010: €3.5 million)

·     Adjusted EBITDA up 32.4%, to €7.4 million (2010: €5.6 million)

·     Adjusted operating profit up by 42.1%, to€4.9 million (2010: €3.5 million)

·     AdjustedProfit after tax up 42.2%, to €3.3 million (2010: €2.3 million)

·     AdjustedEarnings Per Share (basic) of €0.12

·     Capital Expenditure, including investments of €5.5 million  

·     Cash and cash equivalents on 31st of December 2011 of €10.6 million, including restricted cash of €0.9 million

Above numbers are adjusted for share based compensation (€394,369) and one-off acquisition costs (€499,774) incurred during the year. A reconciliation  with the respective figures included in the Annual Report and Accounts is presented in Note 9.

·     Expanded our client base significantly to include over 160 corporate clients worldwide;

·     More than doubled our connectivity agreements with Tier 1 & Tier 2 mobile network operators, granting access to 2.4 billion consumers;

·     Initiated a technology infrastructure overhaul to quadruple our processing and storage capacity and install new failsafe systems to our data traffic and content management platforms;

·     Expanded operations into Southeast Asia (through acquisition) and Africa (via local partners);

·     Launched AKAZOO 2.0, a radically improved version of our social music service and rolled-out the service in 10 new countries (total of 14 countries by the end of 2011)  

Konstantinos Korletis, Chief Executive Officer of InternetQ, commented:

"At InternetQ we are involved in the most widespread and rapidly evolving technology of the planet! Mobile device connections have reached approximately 5.2 billion at the end of 2011. Based on an analysis presented by Google this translates to some 3.7 billion unique users. To compare, there are just 1.2 billion PCs in use worldwide, including desktops, laptops and tablets. There are also 1.1 billion fixed landline phones, approximately 1.6 TV sets and just 2 billion people with a banking account. Mobile utterly dwarfs them all!

Within this exciting and rapidly evolving ecosystem, we have managed to increase our annual revenues by 34% (exceeded € 50 million sales in 2011), while in the second half of the year we accelerated our growth to approximately 55%, as compared to the relevant period of 2010. Most importantly, we are now better situated to take advantage of new opportunities in all markets of interest, we have minimized our exposure to any one particular country or territory and have a strong and visible pipeline of projects lined up for 2012. In addition, we hold a good level of cash to fund future growth, whether organic or inorganic."

For further details:

Chairman's Statement

2011 has been another excellent year for InternetQ, driven by a strong financial performance in our core business of mobile marketing and marked by further strategic progress on a number of key fronts. 

The Group generated total revenues of €50.1 million, a growth of 34 % over the prior year. The Mobile Marketing segment delivered a record performance with revenue of €41.2 million, an increase of 37%. Our proprietary mobile music platform, AKAZOO, also demonstrated significant growth in both revenue and subscribers. It now has more than 2 million registered users and approximately 0.5 million paying subscribers; and produced revenues of €6 million in 2011, an increase of 73% over the prior year.

The year 2011 has also been one year of operational progress for the Group, demonstrated by our commercial presence in more than 50 countries, and our cooperation with more than 145 mobile network operators. We also embarked on a significant investment phase designed to support our growth and maintain our market leading positions. In 2011 we accelerated the pace of investments on our technological infrastructure and on innovation across the Group, enabling our teams to deliver an enriched service offering throughout the customer base. This investment has underpinned our growth. In addition to the progress made in the technological performance delivered by our Mobile Marketing platform, the teams have also launched the latest version of our social music network AKAZOO 2.0.

Our strategic focus continues to be organic growth in existing markets, targeted exploration of developing markets and consistent management of costs, resources and risks. Where appropriate, we will continue to further consider tactical bolt-on acquisitions opportunities.

Despite challenging market conditions and widespread economic uncertainty, our clear strategic focus, exciting growth and considerable geographical expansion provide a solid base for future growth. We remain on track to becoming a global leader of mobile marketing and digital entertainment solutions; we look forward to exploiting the opportunities that we encounter in 2012.

President & Founder's Statement

2011 was another strong year for InternetQ.  We successfully expanded geographically into Southeast Asia, Russia, Africa and the Middle East. We also advanced our AKAZOO social music platform into ten new markets, mostly in Central and Eastern Europe. Our core business of mobile marketing continues to underpin our success, as we seek to continue to capitalise on the rapid rise of mobile engagement and m-commerce.

InternetQ is now very well placed to benefit from the rapidly evolving marketplace, with next generation mobile technology becoming prevalent in mature markets and more relevant in developing markets. We find ourselves in the epicentre of a mobile revolution, supporting network operators and corporate brands alike.

The strong growth experienced in 2011 positions us well for the year ahead, with partnerships developed around the world and additional plans to expand our footprint either organically or through acquisitions.

I am delighted to report another strong performance from the Group in 2011. Despite volatile global markets and the anemic economic activity of most developed economies, we have maintained a high growth momentum and, at the same, reinforced our position in key territories like Southeast Asia, Eastern Europe and Turkey.

More specifically, in 2011 we managed to increase our revenues by nearly 34% (€50.1 million revenues), while in the second half of the year we accelerated our growth to 55%, as compared to the relevant period of the previous year. At the same time, we expanded our business in new markets of Southeast Asia, Russia, Africa and the Middle East, which in turn reduced our reliance on Poland, our most important market until recently. Indicatively, in 2010 circa 69% of our turnover was attributed to activities in Poland, while in 2011 the dependency was reduced to 28%. Moreover, our revenue exposure to the weak Greek economy has been further reduced, from 13% in 2010 to just 7% in 2011.

Most importantly, despite rolling out mobile marketing campaigns and mobile entertainment services in many new markets our operating margins were sustained at satisfactory levels. EBITDA, as adjusted for share based compensation amounting to €394,369 and one-off acquisition costs amounting to €499,774 , stood at 14.7% of revenue compared to 14.9% in the previous year, reaching €7.4 million. It is worthwhile considering that this performance has been negatively affected by foreign exchange differences and the costs of rolling out the AKAZOO service in new markets, which are fully expensed.

At the same time, we have undertaken substantial investments across the Group which we believe further positions InternetQ for continuous growth. In particular, we completed the following key initiatives:

·     The acquisition of I-POP Networks Pte Ltd, a leading mobile data traffic aggregator in Southeast Asia, which maintains direct connectivity with almost all Tier 1 and Tier 2 mobile carriers in Indonesia, Thailand, Malaysia, Philippines, Singapore and Vietnam, as well as smaller markets of the South Pacific rim.

·     Investments of more than €3.5 million to transform our digital entertainment offering into AKAZOO, a powerful, mobile driven, social music network.

·     Investments of more than €1.6 million to upgrade our technology infrastructure, data storage and processing capabilities, a prerequisite to seamlessly handle much bigger volumes of data traffic, whether mobile marketing or entertainment related.

Industry Dynamics

Mobile device connections have exceeded the five billion mark in 2011, reaching approximately 5.2 billion subscriptions at the end of last year. Based on an analysis performed by Google this translates to some 3.7 billion unique users. To compare, there are just 1.2 billion PCs in use worldwide, including desktops, laptops and tablets. There are also 1.1 billion fixed landline phones, approximately 1.6 billion TV sets and just 2 billion people with a banking account. Mobile utterly dwarfs them all!

Mobile phones have become sophisticated devices that are replacing watches, alarm clocks, MP3 players, cameras and calendars and also possess greater processing capabilities. Most recently, mobile subscriptions have become a central gateway to effect remote payment transactions, particularly of micro size and they are also widely used to channel valuable data between consumers of businesses. Mobile subscribers are increasingly using their connectivity to keep at speed with developments, to socially interact, to entertain themselves and to engage with their favorite brands. They use them to manage their everyday lives.

Given these ground-breaking developments, mass media marketing techniques have also begun changing. For most of the recent past, TV broadcast (terrestrial, cable or satellite) prevailed as the best option for mass marketing. However, this medium suffers from the disadvantage of being costly and not targeted enough. With internet coming to maturity, new methods of mass marketing have been developed to overcome many of these shortcomings. Most recently, the global proliferation of mobile technology together with the increasing functionality and affordability of mobile devices has helped to deliver targeted marketing, even in populations that no other medium was able to reach before. This new model, termed 'mobile marketing', allows businesses to engage with consumer subscribers who are open to direct communication; hence the marketer has the added benefit of choosing the timing of transmission as well as the profile of the recipient.

Apart from the dynamic growth of mobile marketing, high speed mobile internet allows for the entertainment of and the social interaction among consumer subscribers. Social networks like Facebook are increasingly focusing on the mobile channel. Well-established internet companies like Google are looking into ways to exploit the tremendous mobile marketing and advertising opportunities. Game publishers like Zynga and Active Blizzard are also trying to develop machine-to-machine concepts that position the mobile user at the center of their targeting. Traditional media companies are heavily investing to develop mobile applications and cooperate with enablers (like us) for their mobile content management and the development of alternative revenue streams. Virtually everyone around the world is looking on how to monetize from the growing volumes of m-commerce.

Our Business

Offering mobile marketing and digital entertainment solutions is and will remain the core of our business activities. Through Mobi-Dialogue and AKAZOO (both proprietary platforms) InternetQ offers a wide range of marketing applications that are designed to facilitate mobile carriers and media companies to design and implement targeted, interactive and measurable campaigns by engaging with and entertaining consumers.

Mobi-Dialogue includes an array of services that are being constantly refined and tested in demanding market conditions around the globe. Solutions for marketing campaign management, aggregation and payment gateways are at the core of several applications that we activate globally. Through Mobi-Dialogue, we have already powered thousands of marketing initiatives undertaken by mobile carriers, television networks, radio stations, advertising agencies and consumer brands. The platform offers comprehensive web-based management tools, providing secure access to manage and maintain mobile applications all in one unified place. Our mobile marketing services have positioned InternetQ at the core of mobile-supported brand awareness building, by allowing the design of campaigns that combine traditional promotional channels with the high-tech benefits of promoting through mobile channels.

Through AKAZOO, we provide consumers with premium digital content in a branded, highly interactive and socially developed environment. Over and above its content-driven focus, AKAZOO aims to develop thoroughly profiled mobile communities where brands will be able to advertise their products and services.

For the moment, AKAZOO focuses on delivering highly localized music content (full track purchase and streaming capabilities) to its members in different countries. Going forward, we aspire to enrich the offering with games (social, casual and massive multiplayer), applications and even motion clips, all relevant to the entertainment nature of the service. 

Outlook for 2012

Given our enhanced network connectivity in South-east Asia and Eastern Europe and the development of reliable partnerships in Russia and Africa, we expect further growth from our mobile marketing activities and anticipate they will remain the biggest revenue contributor in 2012 as well. Our current pipeline of mobile marketing projects is strong and gaining momentum, while it is more visible than ever before.

In addition, we foresee the successful roll-out of AKAZOO in new countries, in combination with an improved service offering, to further accelerate mobile entertainment revenues at a much faster rate than in previous years. More specifically, by the end of 2011 the service was offered in 14 countries, most of which had been added to our footprint during the last quarter of that year. Already, during the first quarter of 2012 we have added 4 countries (Singapore, Malaysia, Thailand and Kenya) and have imminent plans to launch in several more before the year ends. We aspire to be present in more than 40 countries by the end of 2013, making AKAZOO an international social music network with highly localized content. With the continued demand for digital content like music, games, video clips and the development of more targeted social networking systems, we believe AKAZOO will become a key component to our continued success.

Most importantly, in 2012 we will commence the integration of our social music service into our traditional mobile marketing activities. Loyalty programs for existing mobile subscribers based on limited AKAZOO service features, music content enrichment formats for operator platforms that intend to drive new subscriptions, ARPU enhancing initiatives that substitute for diminishing revenue of voice related services are some examples of such expected benefits.     

Finally, apart from organic growth, we are actively pursuing non-organic growth opportunities in different markets and across various technology fields.

InternetQ entered 2012 having delivered its strongest ever performance in terms of revenues in 2011. We continued to be reassured by our new business pipeline and believe this performance further endorses our multi-territory strategy.  InternetQ is guided by strict principles and prudent decision-making policies when it comes to cash management, cost control, investments, and the Group's overall capital structure. This prudent approach is the basis for the continued long term success of the Group.

Group revenues generated 34% growth in 2011, with two out of five segments delivering substantial sales growth. Revenues from Mobile Marketing activities grew by 37% to €41.2 million (2010: €30 million) while revenues from AKAZOO grew by 73% to €6 million (2010: €3.5 million).

Selling and administration costs increased by 42%, primarily due to one-off costs from the acquisition of I-POP Networks Pte Ltd and the share incentive plan granted to employees. Adjusted EBITDA (after adjustment for share incentive plans amounting to €394,369 and one off acquisition costs amounting to €499,774 grew by 32.4% to €7.4 million (2010: €5.6 million) a margin of 14.7% (2010: 14.9%). The Profit after Income tax for the year reached €2.4 million compared to €2.3 million for 2010.

As we continue to invest to support our expansion plans, we have experienced increased working capital needs, which we expect to persist in the future. Given that most new market penetration came into force during the second half of the year and the last quarter in particular the level of working capital appears inflated on the 31st of December 2011. 

Likewise, given our investments to improve the Mobi-Dialogue and AKAZOO platforms and introduce new consumer profiling and content management systems, capital expenditure was also increased. Total capital expenditure including intangibles for the year ended 31 December 2011 stood at €5.5 million, an increase of 81% from the previous year (2010: €3 million).

The Group ended 2011 with €8.2 million net cash, which consisted of €10.6 million cash and cash equivalents and restricted cash and €2.4 million bank debt. The terms and conditions of the Group's borrowing agreements continue to be relatively favorable. Our €0.4 million term loan matures in March 2014 and another €0.5 million loan arrangement matures in April 2013.

The Group continues to manage all non-essential costs conservatively in the current macroeconomic environment, as well as continuing to invest where we see particularly strong opportunities to advance our positions, such as our investments this year in Southeast Asia. Most importantly, we have managed to reduce our exposure to the weak Greek economy as less than 7% of  2011 revenue was generated in that country, with a diminishing outlook for this year.

With our solid financial position, we have the flexibility to make selective investments into the long-term growth of the Company and continue to deliver shareholder value.

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