MIDAS SHARE TIPS: Fast-growing mobile firm InternetQ which allows apps to carry adverts is a racy but enticing prospect

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A Greek company, developing mobile advertising technology and internet music libraries, and quoted on AIM – if ever a business sounded slightly racy, InternetQ is it.

Yet the company is profitable, expanding at a rate of knots and is expected to double in size over the next couple of years. It is also at the centre of some of the fastest-growing industries in the world.  At 254.5p, the shares are well worth a punt, particularly for adventurous investors. 

According to the latest research, there are 1.2billion smartphones in the world today and by 2017, more people will be accessing the internet from mobiles and tablets than from computers.

Sound strategy: Panagiotis Dimitropoulos has created a big demand for his music business, Akazoo

The lure of these devices is well known. Incredibly, most owners spend more than two hours a day on them, checking emails, messages and other snippets of information. 

For many of these device obsessives, apps are the major draw, giving users access to anything from games to special offers on travel and information on the latest films. 

Apps are often free, but the developers behind them are understandably keen to make money from them, either by persuading users to upgrade to ‘premium’ versions or by selling advertising on them. This is where InternetQ enters the frame.

Run by Athens-based financier turned entrepreneur Panagiotis Dimitropoulos, the company started out in 2000 devising software enabling customers to send text messages advertising their wares. Most consumers find these rather annoying, especially as they rarely chime with recipients’ own circumstances. 

Dimitropoulos and his colleagues calculated that new forms of advertising would emerge and created Minimob, a way of advertising on smartphone apps or mobile internet pages. Digital advertising across all devices is expected to reach more than £60billion worldwide in the next three years, so the sector is huge. 

The key, however, is placing adverts in the right place so they appeal rather than irritate phone users. InternetQ seems to be doing this rather well.

Music streaming: Akazoo is similar to Spotify

The company developed relationships with mobile giants like Vodafone, Orange, Samsung and Sony because many of them used its software for advertising via texts to inform customers about new phones and upgrades. Now these mobile groups are signing up for Minimob and so are thousands of app developers. 

Minimob went live last year and it has already been installed on mobiles more than 270million times. Once it is installed, the app creators can either advertise their own services or those of third parties. 

InternetQ’s big idea was to install Minimob for free so it only makes money once external parties start to advertise on the apps. The strategy is working.

Not only are installations growing by between one and two million a day, but revenues are increasing rapidly too. Once the software is installed, InternetQ gains access to all sorts of data – how many times an app is used, when it is used, what elements are most popular and such like. This may sound intrusive, but the information can be used to make sure that adverts are targeted more appropriately.

InternetQ also has a music streaming business, Akazoo. This is similar to Spotify, which allows consumers to listen to music on the internet without owning it. 

Effectively web-based music libraries, these are free, but if customers go for a premium option, they are able to listen to more music and download it to their phones.

InternetQ has focused Akazoo on regions such as Central Europe, Latin America, South-East Asia and the Middle East and it includes plenty of local music in its library. 

As such, it has managed to convert 26 per cent of users to paying customers, the highest conversion rate of any music streaming business. And, as more and more people install Minimob on their phones, InternetQ has the means to advertise Akazoo directly to them. 

Last month, Dimitropoulos unveiled a 53 per cent increase in half-year revenues to €65.7 million (£52 million) and an 88 per cent rise in underlying profits to €9.8 million. Analysts expect full-year profits to increase 30 per cent to €21million, rising to more than €26 million in 2015. 

Midas verdict: Mobile internet usage is exploding and InternetQ is at the heart of it. Most fast-growing technology companies spend so much money investing in the future that they are loss-making for years. InternetQ is already profitable, which is deeply reassuring. Prospects look exciting. Buy.