Mobile Streams (LON:MOS) doubled in value this morning after the group revealed its diversification strategy was progressing well.
The company is about to launch in India and, in the past financial year, it managed to turn a profit despite a large drop in revenue.
Investors appear to have latched onto what could be a positive recovery story, which in trading terms may be more compelling as the shares are tightly held.
The AIM share, which has a free float of only about 35%, gained 5.62p or 118% this morning to trade at 10.38p.
Simon Buckingham, Mobile Streams chief executive (founder and largest shareholder with 27.97%), said the company is now well placed, amid an ongoing diversification into India and Nigeria.
The software group had previously relied on Argentina, and it had been affected by the devaluation of the Argentinean Peso – the impact of which reflects Mobile Stream’s fall from around 70p in January 2014 – but more recently it has looked to expand into two key markets outside of Latin America, such as India and Nigeria.
In India, the company is in the process of setting up a new subsidiary and deals have already been agreed with two of the country’s three largest local mobile operators (which have about 350mln mobile customers).
Mobile Streams says once final contracts are in place it expects to launch subscription services.
Meanwhile, in Nigeria it has launched mobile billing with one of the country’s four largest local mobile operators.
Across the business the company has also launched new advertising funded mobile services, including its mobile-based social network and an entirely ad-supported mobile games store - which allows customers to play in return for viewing adverts.
Mobile Streams today said the necessary diversification efforts require investment through the second half of the year, and it cautioned that this will have a short-term impact upon profitability.
Nevertheless, the financial results released today show a certain robustness during what appears to have been a testing time.
In the twelve months, to June 30, Mobile Streams had revenues of £29.1mln and earnings (EBITDA) of £1.1mln compared with £48.6mln and £0.7mln respectively in the preceding year.
And it reported a net profit of £0.19mln for 2015, versus a £0.5mln loss for 2014.
Closer inspection of the figures reveal the benefit of positive adjustments to prior tax provisions in Argentina and Europe, as well as a near £7mln reduction in marketing and admin expenses.
The company ended the financial year with £2.9mln of cash, and had no debt.
Broker N+1 Singer in a note described the financial results as “better than expected”.
Buckingham, in the statement, said: "We feel that the company is now well placed from a product and market perspective to embrace and extend its longstanding expertise in mobile internet services.
“We are therefore confident about the company's future prospects."