Freenet Ag Unsp/Adr

Good morning, everyone, and welcome to our Q3 earnings call. I'm very pleased with the development of our last quarter and with the opportunities ahead of us both in mobile and with Weibo TV. In mobile, we see strong opportunities for efficient customer growth through optimized marketing mix, through optimized webshops, through a reduction in churn and through the acquisition of mobile zone. And with Whitewood TV, we also believe that there is huge potential for further customer growth and even more profitability. I'm very excited about the final sprint of the year and an initiative reached 26. which will mark our transformation into an AI first cycle. There's a lot to do and we are on it and looking forward to it. I would like to thank our entire team for their hard work and their courage to discover new paths. I'm truly enjoying this and we're just getting started. I also want to thank our CFO, Ingo Arnold. Working with him is a real pleasure. We have rolled up our sleeves, and he has been a tremendous support. Let's dive into the presentation and our key messages. We can confirm our 25 guidance. We are on track. We can show strong key financials. Our most important postpaid and TV service revenues are growing. And our adjusted EBTA grew nicely, 1.6% for the first nine months and for the last quarter, even 4%. Byfuse Default ATV has been a driver in our EBTA, contributes nicely. It's a fantastic product, not only growing in terms of customers, but also getting more and more profitable. Free cash flow in the first nine months is growing nicely with 2.8%. And yeah, so we are on track in Q3, impacted by the communicated tax one off, but fully on track. We are also very pleased with our customer growth. Post-pandemic has even exceeded our expectations. Baipu TV grows and recovers, and we are here on a strong path and we will continue. FreeNet TV is declining, but this was also expected. We are focusing on WIPO TV by continuing to monetize our user base at FreeNet TV. We can confirm our 25 guidance. And when you look into our strategic initiatives in the mobile segment for our organic growth, we are focusing on three pillars. It's optimization of our marketing mix and optimization of our webshops and reducing churn. In terms of marketing mix, we are shifting budgets. We look at the return on ad spend. We don't do just fuel brand marketing. We always connect it with direct performance impact, clear messages. And yeah, so we... improved the transparency of our campaigns. We improved the reporting. We really put the money where we see in direct impact. Conversion rates, I mentioned it last time. The conversion rates on our webshops, they are not there yet where we want to have them. They are not great yet, but we are getting better and better, and we see strong improvements in the last quarter. The page speed improved drastically. We have a better user experience. We create kind of urgencies on our website. All of this helps, and there's still a lot of stuff to do, but we can already see that it's working. And the third pillar is that we are working on churn reduction. If you look at the top two reasons why users change their the mobile provider is either they get a better offer somewhere or because they are not happy about the network connection. And so this does not make sense when you look at pre-net because we are really offering great deals. We are able to match the most aggressive offers and we provide all networks. So there's obviously no real reason for users to leave us. And so therefore, We are working on it. We see huge potential in reducing our churn. We have created more than or developed more than 50 initiatives to reduce the churn, to bring it down, and we are working on it. And yeah, so this is, I think, one of our drivers, success drivers also for next year. When we look into our customer value management, we also try to use AI wherever we can use it. So whether you look at the customer service, if you look at key list sales, if you look at smart pricing, so we try to apply it everywhere to smart health, don't do crazy things, but we believe there's huge potential and we are on it. And besides all of these three pillars, of course, we are also constantly trying to improve our other channels. We are very happy about our stable retail business and with our almost 500 stores, our strong online and offline partners, and we are optimizing this as well. In September, we started our first performance-based brand marketing campaign with Clarmobile. So, we produced a new TV spot, we changed the website, improved the UX, and there was a clear message. When you look at the TV spot, you can see that there was a clear branding, but also a clear messaging, a clear offer. And this was reflected in the successful numbers. We could increase the visits significantly and also the conversions and sales. This was a very successful campaign. We have the next campaign in October. We see and also the team see that it's working. It's driving sales. On one hand, and on the other hand, it will also create more brand awareness. And Clarmobile is one of our top brands. Together with Freenet, it's important that we increase the unaided brand awareness and performance-based marketing campaigns will help to reach its goals. We are very happy about the mobile subscriber growth in the first nine months and also the last quarter. Within the first nine months, we could increase our customer base, 190,000 postpaid customers. If you look at our historic data numbers, you can see that this is quite a lot. Also the last quarter, very successful. Also when you compare it to last year. So we can see that the initiatives, the things that we change, that they are working. We also are very happy about the renewal of our, about the five-year renewal of our strong partnership with EAMark.org, an important channel for us. And, yeah, next steps. So, we will keep doing what we have started in the last quarter. Looks promising. And besides this, there's also one big thing that's coming at the moment when you look at our, I mean, the strongest brand that we have is Freenet. And we do advertising with Freenet. So there you can see our strongest products, mobile phones, mobile plans. But at the moment, it's on the domain freenet-mobilephone.de. And if you, for example, go to freenet.de, you can find the news and email portal. And this is not ideal. So you cannot do marketing efficiently with Freenet if people or if users then search on Google and end up on Freenet.de where they don't find the offers that you do advertising for. So this is something that we changed. We made the decision to change it. And this will be in place beginning of next year. And then we will do advertising for mobile phones and mobile plans on Freenet DE. And then we will also start marketing campaigns, performance-based marketing campaigns for Freenet DE. So this will increase the conversion. This will be much more efficient than in the past. And so then we believe that this will be a nice potential for the next year to really increase and numbers for Freenet and increase the unaided brand events for Freenet as well. And besides this, one big thing is, you heard about it, we already disclosed it. We bought a mobile zone. This is a strategic acquisition mobile zone. It's a really strong company. It's a sales machine. So they, every year, they generate over, they close over 1 million contracts. It's one of our strongest competitors. They are very successful, have many nice brands like Spa Handy, Dine Handy. And, yeah, so we acquired them. Yesterday, there was also news that the antitrust approved the acquisition. So, we are in the process of closing the deal. And this will bring, this will give us much more, even more sales power. So, consolidation in the market, I think it's healthy, makes a lot of sense if you look at allocating resources about the offerings. Yeah, so it makes us even stronger. And I think it's also good for the entire industry, for our partners. We have really had relationships to Vodafone, Telefonica, Telecom, also to 1&1. And we believe that this makes us even stronger and that it will enable us to further support them. WiproTV, I mentioned it. We believe it's a fantastic company. We could show in Q3 subscriber growth again, and also nice profitability. It's important that we have a company that's not only growing, but also getting more and more profitable. I think we proved both of this with Waipu TV. Were we happy about it? It's It's developing as expected. And so, and we also believe that Q4 we will see even stronger growth and that we are on track to reach our guidance for 25 years. Baipu TV has started, has just started a new campaign, which is promising. is they offer a startup package with a TV stick and a no fritz product for just not so much money. It's an entry product and which will help to for people to experience IPTV and this great product. And so afterwards, we believe that there will be upselling opportunities. And besides this, we also started to do marketing with bundles, where we bundle mobile plans together with the Y group. And all of this, we believe, is really... will make a lot of sense and will bring us or lead us into the right direction. Yeah, with this, I hand over to Ingo.

Yeah, thank you, Robin. So I start as normal with the group financials. I think we are, and Robin already commented, I think from my side, There's nothing to add. We are really, really happy with what we generated during the first nine months of the year 2025. We are totally on track to reach our guidance. So in terms of revenues, you see in the quarter a slight decrease of revenues. I think main reason, and I think you will hear the name of the company, The Cloud, more often than in the years when we owned the company today. But I think it is important to show the deviations that we do have on the group level, but also on the mobile level. I think what we lost here in revenues with the sale of the cloud is something like 10 million euros. So without it, also in Q3, there would be a small increase of revenues. So all in, it's a confirmation of the guidance where we promised moderate growth for the gross profit. much more positive than the revenue development. We see an increase of the gross profit in the quarter by even 7% on a nine year base, 4.3%. It is definitely driven by the IPTV. I think we are so happy that this is the first year where we do not only generate growth in the base of Baipu TV, but where it is also possible to make the business much, much more profitable. And you see the effects here even on a group level. Moving to the adjusted EBITDA. strong quarter, nearly 138 million euros, which brings us to 395 million up to the end of September. And I think I did the calculation in August. I do the calculation again, what is necessary to reach the four-year guidance. I think it is relatively clear that from 395, you need a quarter and you need an EBITDA of something between 125 and 145 million to reach the guidance. And compared to the performance in the third quarter, I think this looks totally doable. And I'm even more convinced now than I was in August to reach it. So moving to the mobile business, I think, yes, definitely the revenue looks a little bit disappointing, but on the one hand, again, here, there's the reason from the missing revenues of the cloud in the full quarter. And if you would add the 10.3 million, the difference would be much smaller. On the other hand, And this is something what we already commented in after Q2. We had some no frills, some prepaid revenues where we could not generate any profit. And to make administration easier, we cut some and we terminated some of these contracts. This makes a lot of sense from our side. It has a few negative effects on revenue. But as you see, moving to gross profit, this does not have any profit effects. The gross profit in 2003, slightly decreasing. Also here, it was something like 3.5 million, which was missing from the cloud, if you would add it. I would say it is something like a stable development Q3 and the Q3 24 was a strong one. So all in, there is an increase in gross profit. to 500 and nearly 27 million. Moving to the adjusted EBITDA, also here we are near to what we had last year. It's a stable development and making the same math what I did on the group level. What we can see here is that we need an EBITDA of something like between 100 to 120 million in the fourth quarter. and then we would reach the guidance. Maybe a small comment to marketing spendings because we discussed it intensively after the second quarter. And the good news is that even with all the campaigns what Robin was talking about and all the action and the big growth in the customer base, it was possible to decrease the marketing spendings So I think in the first half of the year, we spent something like 6 million more in 25 than in 24. But in Q3, we spent less than last year. I think we have some long running contract with some brand marketing partners, which does not make that much sense. But I think it is not easy to terminate these contracts. Some of them are still running. So I think there will be a full saving effect from stopping these contracts in 2026. But also in Q3 and in Q4, we will see something comparable. Marketing spendings are down. And I think the results are still effected from the negative first half spendings, what we saw. Moving to some KPIs in the mobile business. Yeah, Robin already commented. I'm really surprised how strong we are in terms of post-paid net ads. I think we discussed during the year to reach something like 200,000 net ads for the full year time. I think definitely it will be far above 200,000 what we will reach. I think it is still a surprising quarter as ever, the fourth quarter, because of Black Week and so on. But I think we are more than on track here to grow the post-paid customer base. Well, we are not that good on track, but I think this is a market problem. What the whole market does have is still that the RPU is decreasing. So what we see at the moment with the growth, what we generate, it is possible to overcompensate the RPU effect. positive and optimistic that this will also continue in the next quarter. But I think it is, yeah, it is a pity and it is market driven. I think we discussed it already in the other quarters. It's not a free net problem. The market is slightly aggressive still. We hope we can come back to a more rational behavior in the mobile market here. So we are not that unhappy that there will be a CEO change at Telefonica because we saw them very aggressive in the last quarter. So I think this could help to repair the market here. So we are basically optimistic for the following quarters, and this is clearly shown on this chart here. At the moment, the negative trend for the RPU is continuing, but clear message, service revenues are slightly increasing, so it's possible for us to compensate it. Digital lifestyle revenues, the last picture here on this chart, I think you all know that we were behind plans at the beginning of the year. We could close the gap now, so we are totally on track compared to last year. And yeah, I'm even positive for the fourth quarter to see a slight increase here. Moving to the successful TV business. revenues and all financials are mainly driven by the positive WIPO developments. What we do see in revenues is in the quarter and even an increase by 10% for the full year, an increase by 7.5%. I think the fourth quarter was, yeah, a little bit influenced by a media barter deal. What is a media barter deal? It is that we have these deals, these contracts with the private channels and therefore we get, at the end of the day, we get some marketing plays, some channel plays there for free. But we have to show it in our figures. So on the one hand, you see it on the revenue. But on the other hand, you see it on the marketing cost. So at the end of the day, these marketing campaigns are for free. But you show it on every level here. And so therefore, we made it clear or we tried to make it clear and we wanted to make it clear because especially the development in revenues and in gross profit is slightly exaggerated from these deals. And we want to have positive figures, but we want to have honest figures. And therefore, we mentioned it here that there's an effect of 5 million even in revenues and in gross profit. On the adjusted EBITDA level, you see that we, We have an increase compared to last year. WIPO EBITDA year-to-date is something like 25 million. So it's a perfect confirmation that the business can not only grow, but that the business can also generate EBITDA. I think we discussed it earlier times that we expect something between 30 and 35 million of EBITDA from the business. Yeah, and I think we are totally on track here. We have lower marketing spending. This is something what we discussed earlier together. This definitely helps in the fourth quarter. Yeah, I think we need some marketing campaigns. We need and we want to generate some growth in the fourth quarter. But I think we are also on a EBITDR level. We are very optimistic to reach the goal with what we do have. Last page from my side is the free cash flow bridge. Most of you should not be surprised that we have the negative tax effect. I think we, to be honest, we expected for years and now we really got it. So we had to pay something like 20 million for the period 2015 to 2018. I think we are not at the end of the road here because we also took legal action. Because I think we built the provision years ago, but we took legal action now. But the legal proceedings will take years to find an end. But we paid the 20 million now because we have high interest rates to pay here in the meantime. And I think there are good chances to win the case. But for now, we paid the 20 million. And I think let's wait and see. I think I do not expect a decision as long as I am here CFO, so be quite open. But there's a good chance to get the money back. But for now, the tax expenses are higher as expected. On the other hand, change in networking capital, It is a negative of 32 million. I think those of you who are familiar with our working capital figures know that 26 million out of it is a liability or a reduction of a liability where we have to pay a monthly fee to MediaSaturan. So out of it, it is more or less stable. then the capex figure 26.8 it's near to what we saw last year lease payments it's easy to calculate 45 million now so no surprises and interest payments 15 million so so i'm quite quite fine here. I'm also fine with the free cash flow for the guidance for the full year, because what do I expect from change in networking capital? Maybe some more investments in the fourth quarter into the business. So I expect something like 45 million for the full year. I expect 60 million for taxes, 35 million for capex. lease is easy to calculate something like 60 million and the interest payment nearly 220. So this is also in the sum is the same what we what we expected or what we forecasted at the beginning of the year. And so I think at the end of the day, no surprises for all of us. And therefore I think the guidance could be could be reached. So therefore, the the overview from my side for the financials, so I would hand over to the operator again to start the Q&A session.

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