iTouch Q1 revenues up 49pc

18 May 2004

ITouch, the content provider for mobile devices that is 50pc owned by Independent News & Media, has reported its first quarterly pre-tax profit. The company reported that revenues increased 49pc to £16.9m sterling and a profit of £1.7m sterling.

The revenue increase of £5.6m sterling on the same period last year was driven primarily by the company’s acquisition of Movilisto in June last year as well as the company’s launch of a direct channel in the UK, South Africa and Ireland.

The company said it plans to roll the direct sales model to other new territories where market conditions are favourable. The company warned that EBITDA (earnings before interest, taxes, depreciation, and amortization) growth in the short term would be impacted by the necessary investment in launching the direct sales model in new markets.

Europe continued to be the company’s strongest market with revenues increasing 49pc to £12.9m sterling and the quarter was marked by the launch of iTouch’s direct model under the shortcode 8181 last June. Research in January by Adwatch indicated that the 8181 television advertisements were the 16th most widely recognised in the UK.

In its outlook for the second quarter the company said that it will continue to seek acquisition opportunities that will help strengthen the company’s market position.

iTouch’s chairman Ivan Fallon commented: “These Q1 results demonstrate that we are making good financial progress with our scalable business model, having launched the direct channel model in South Africa and Ireland in December. iTouch continues to be at the heart of the rapidly developing mobile data market and is well placed to take advantage of the enormous opportunities presented by this fast growing market.”

Fallon continued: “iTouch operates in a young yet fast growing, dynamic mobile data market. The strong financial progress achieved this quarter is proof that we are able to build a profitable business by delivering content and services that appeal to mobile users. Our scalable business model is a powerful platform on which to continue the successful development of the group.

“The 2004 financial year has started well and I am delighted to report another quarter of strong EBITDA (before exceptionals) growth and the first quarter of pre-tax profit. Revenues increased by 49pc to £16.9m sterling in the first quarter from £11.3m sterling for the same period last year. The gross margin has also increased from 37pc to 57pc as high margin data revenues replace lower margin voice revenues.

“Recent developments in the mobile data industry, including the sale of multi-media handsets, SMS shortcodes and Premium SMS billing, offer highly favourable conditions for iTouch to continue to roll out its direct channel model and seek earnings enhancing acquisition opportunities to extend our distribution into new territories,” Fallon concluded.

By John Kennedy