United Internet

Hello and good morning everybody. I'd like to welcome you to our Q1 2024 analyst investor call. My name is Dominik Grossmann. I'm responsible for investor relations at United Internet and here with me today I have our thief or Ralph Hartings. Briefly about today's program. Ralph will first take you through our presentation with the business development in Q1 and will also give an outlook for the rest of the year. Afterwards, we will be happy to answer your questions. So far from my side, Ralf, please go ahead. The floor is yours.

Thank you, Dominik, and also a warm welcome to our webcast on our three-month figures 2024. Let's get into our numbers. On slide two, we have summarized our major KPIs for you. Our customer contracts increased by 200,000 to 28.65 million in the first three months of 2024. Our revenue increased by 2.2%, to 1.565 billion euros. EBITDA increased by 7.3% to 342 million. However, it is important to note here that we have already invested more than 42 million in our rollout of our 5G mobile network in the first quarter. Our EBIT declined by 0.8% to around 187 million. In addition to the explained negative effects on earnings, this was due to higher depreciation and amortization as a result of investments in the rollout of our fiber optic network at 1&1 Versatil and the rollout of the 1&1 mobile network. This increase in depreciation and amortization is to be offset by gradually increasing cost savings from this year onwards. EPS decreased from 0.43 euros to 0.35. This was due to a reduced EBIT and a lower equity result from our minorities, as well as the increase in interest rates in general. I will continue now on page three. Let's now turn to our segments, starting with consumer access. In this segment, we increased our contract portfolio by a total of 40,000 contracts to 16.3 million year-to-date. Mobile internet contacts increased by 40,000 to 12.29 million, while broadband lines remained stable at just over 4 million. Page 5, revenue in the consumer access segment increased by 0.3%. to 10.024 billion. This growth was attributable to the increase in service revenues, which rose by 4.2% to 821.9 million. Hardware sales were slightly weaker, which is due to a strong prior year quarter, where some spillover effects from Q4 2022 were a major factor. The access sub-segment increased its EBITDA by 11.6% to around 225 million, while costs for the rollout of the mobile network sub-segment rose by more than 23 million in absolute terms. On page 8, let's take a look at the business access segment. where we were able to increase sales by 4.1% to around 142 million. EBITDA in the segment increased by 1.4% to 35 million. The high-quality expansion of our own fiber optics had a positive effect on EBITDA development as expected, despite the startup losses from the new 5G business area at 1&1 Versatil. At a comparable EBITDA taking the startup losses like for like to EBITDA growth amounted to 5.7% despite higher investments in Q1 2024. Our EBITDA margin remains almost stable at 25%. Let us now turn to consumer applications. On page 11, accounts in the consumer applications segment decreased by 670,000 from December 31, 2023 to 42.06 million due to seasonal factors. The decline resulted from a 730,000 decrease in free accounts, while pay accounts, i.e. paid contracts, increased by 60,000 contracts to 2.86 million. On page 12, we are looking at revenues in this segment. We increased sales here by 13.4% to 71 million in the first three months, mainly driven by our paid users, as well as a positive development in the advertising market. These figures do not include energy and the email, which you will also find on this slide. Our EBITDA increased by 20.2% to 23.8 million, both the price increase in pay mail as well as the increased number of paid subscribers delivering a 20.2 year-over-year growth rate in Q1. For the full year, we expect to see good revenue growth, increasing profitability. However, we intend to invest into future growth of existing and new data-driven business models. On page 14, in the business application segment, we increased our contract portfolio by 100,000 contracts to 9.49 million. The increase came mainly from our operations abroad. Revenue in the segment increased by 5.4% to 373 million. The increase resulted from strong on web presence and productivity and cloud solutions. In Q1, CEDAW's low-margin aftermarket business seems a bit weak, but this is just a phasing effect due to an underlying product change. Excluding the aftermarket business, revenue growth is amounted to 12.8%. EBITDA and the business application segment on the other end increased by 24.3% compared to the previous year to 101 million. The operating EBITDA margin rose accordingly from 23 to 27.2%. Right, let's go to page 17. So much for the segments. Here we have summarized the most important KPIs for the group once again and added a few more. We've already covered revenue in EBITDA. Our capex amounted to 140 million after 145 million the previous year from the investments in our fiber optic network and one-on-one versatile and rollout of the one-on-one mobile network. As you can see, we have slight phasing in Q1 due to unpaid invoices, which totaled 60 million. We are therefore maintaining our capex forecast for the full year. Our free cash flow, more on this later, amounted to a negative 142.9 million, primarily driven by our investments. Previous year, 4.1 million, including a phasing effect from 2023 of 104.3 million. Our net liabilities to bank increased slightly by 7.3% to now 2.615 billion. Our equity ratio was broadly stable. Slide 18 shows you a bridge from our EBITDA to free cash flow. The largest item here is our capex of $140 million as a result of investments in the network rollout. Furthermore, we have a phasing effect from Q4 2023 and taxes of each roughly $100 million plus additional VAT payments of $53 million. including working capital of 46 million. This results in free cash flow of minus 102.9 million, respectively negative 143 million after leasing. Finally, a brief word on the outlook. We confirm our guidance for the fiscal year and continue to expect an increase in revenue to approximately six and a half billion. prior year, $6.213 billion. Operating EBITDA is expected to approximately $101.42 billion. CAPEX, excluding any M&A transactions, is expected to increase by 10% to 20% above the previous levels, in particular as a result of the network rollout and the extension of our fiber optic network and additional expansion areas and for connecting mobile antennas. Given that we have issued the guidance quite some time ago, I currently would expect our CAPEX guidance more at the lower end of the provided range. So much from our side and we are now available for any questions you may have.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. We will take our first question. Your first question comes from the line of Paulo Tang from UBS. Please go ahead. Your line is open.