Monstermob, the provider of ringtones and games for mobile phones, reported a more than four-fold increase in first-half profit, following a series of acquisitions and growing consumer enthusiasm for downloading songs.
Pre-tax profit was £3.52m in the six months to the end of June, compared with £793,000 for the same period last year. The Lancaster-based company has made four large acquisitions since August last year, including the purchase of 9 Squared in the US and a deal last month to buy ATOP Century in China.
These purchases helped lift six-month turnover from £8.7m to £21.7m but Martin Higginson, chief executive, said Monstermob was also seeing uplift from new services, including its real-music ringtones. In the US, real-music ringtones – snippets of songs, mainly from music chart hits – have turned into a bestseller for the company since their launch last November and make up about 65 per cent of material downloaded by its US users.
At the end of this year, the company plans to take the idea further by launching a service that will allow whole songs to be downloaded onto handsets, in much the same way Napster or iTunes allow songs to be downloaded onto portable music players.
Sales of mobile ringtones have already outstripped those of CD singles and have their own music chart.
With full-song downloads, Mr Higginson said mobile phones were set to take over from MP3 players as the dominant portable music player. In Japan’s highly advanced mobile phone market, music downloads to mobile phones already outnumbered downloads to MP3 players by a large margin, he said.
Earnings per share at Monstermob nearly doubled from 3.41p to 6.13p.
The shares, which have increased nearly six-fold in the past year, rose a further 10p yesterday to 431p.
■ Monstermob shares have had an incredible run this year and now trade at nearly 26 times this year’s earnings forecasts – a premium to the price at which iTouch, Monstermob’s nearest rival, was recently bought. However, given the strong profit performance, this may be justified. The US acquisition has worked out particularly well, while the push into music downloads appears a good opportunity and Monstermob would certainly be foolish not to be moving in this direction. It is worth bearing in mind though that competition will be fierce as the Napsters and iTunes of the world move to defend their territory.