United Internet

Good day and thank you for standing by. Welcome to the United Internet Quarterly Statement Q1 2026 webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Dominik Korsman. Please go ahead.

Thank you, operator. Hello and good morning, everyone. I would like to welcome you to our Q1 2026 analyst and investor call. Thank you for joining us today. My name is Dominik Korsman. I am responsible for investor relations at United Internet. Here with me today, I have our CFO, Carsten Seuber. Briefly about today's call. Carsten will first take you through our presentation with the business development in the first quarter and will also give an outlook for the remainder of the year. Afterwards, we will be happy to answer your questions. So far to our agenda, I would now like to hand over to Carsten. Carsten, please go ahead, the floor is yours.

Thank you, Dominik, and also a warm welcome from my side to our webcast on our three-month figures 2026. Before diving into our figures, I would like to present the new reporting structure that we have adopted since the beginning of the new fiscal year 2026. Going forward, United Internet will only have the following three segments based on the names of the respective subgroups, 1&1, IONOS and Malen Media. This streamlined reporting structure further reflects the changes due to the sale of 1&1 Versatil to 1&1, as the former segments Consumer Access and Business Access will be only reported on a consolidated basis, the 1-on-1 AG. In addition, the former segments Business Applications and Consumer Applications are renamed to IONOS and MailMedia, respectively, which allows for streamlined reporting with reduced complexity. Moving on to the financial performance on the quarter, let us take a glance at our major KPIs for the group. Starting with the customer figures, we are happy to show that our customer contracts increased by 380,000 to over 30 million to 30.1 million in the first months of 2026. The strong momentum is especially driven by Mail and Media and IONOS, with more details to come once we go through our respective segments' performance. Our revenue subsequently improved by 2.5% to more than 1.55 billion euros. Group EBITDA grew by 2.4% to 331.9 million euros. Our EBIT increased by more than 15%, which is driven by a significant decrease in PPA depreciation. Nevertheless, our amortization of intangible assets and depreciation of property, plants and equipment continue to increase as we continue to make investments in the rollout of the fiber optic network and the rollout of the 1-1 mobile network. As a result of the improved EBIT and lower taxes, we managed to increase EPS to 36 cents per share, an increase of 44%. Over the following slides, we will do a deep dive into our segment development, starting with 1&1. Overall, the number of customer contracts remains stable at 16.32 million customer contracts in the first quarter of 2026. Both the number of mobile contracts and broadband connections remain unchanged, at 12.48 million and 3.84 million, respectively. On the broadband side, there is a positive development against the backdrop of the slight decrease over the last quarters. We are happy to see that our latest campaign that promotes the easy switch to 1.1 has been paying off, and we were able to put a stop to the churn. While the competition in the mobile market remained intense, In the first quarter, and we expect this environment to continue in the second quarter of this year, the performance is in line with our expectations. That means in terms of revenue, 101 generated around 1.1 billion euros, which is an increase of 1.1% compared to the first three months of the prior year. Service revenues have slightly decreased year over year in line with the business plan to almost 900 million. Hardware sales grew almost 11% to €246.3 million. If we turn our attention to EBITDA on the next slide, we can observe that the segment EBITDA is stable at €192.4 million. EBITDA in Q1 was impacted by an increase in wholesale costs. Due to the capacity-based model underlying the national roaming agreement, the slower than planned growth of Vodafone's own network usage resulted in higher costs for one-on-one. In addition, as a consequence of the switch of the national roaming provider from Telefonica to Vodafone in 2025, the costs of certain network components are directly recognized in FPTA, whereas previously under the Telefonica national roaming agreement, they were activated and depreciated. While both effects were fully reflected in Q1 2026, they were only partially effective in Q1 2025. In contrast, savings on external mobile network wholesale services had an offsetting effect in Q1 2026 as an increasing of wholesale services is being produced within the company's own mobile network. The ABDR margin is thus largely unchanged and in line with our expectations. Next up, let's proceed with the performance of IONOS. IONOS increased their contracts portfolio by 300,000 contracts to 10.35 million. This surge is true in both by winning customers domestically as well as abroad, with our operations abroad performing even stronger. Revenues in this segment increased by 5.7% to almost 350 million euros as a result of aforementioned strong customer growth and up and cross-selling. Excluding foreign exchange impacts, the revenues growth is even higher with 7.6%. We have invested in higher marketing expenses compared to previous year. Despite that, ABDA increased by 5.5% to 112.2 million, and the operating ABDA margin remains strong above 32%. To conclude the segment deep dive, this brings us to the performance of the mail and media segment. The number of pay accounts rose by 80,000 to 3.43 million in the first quarter of 2026. By contrast, due to seasonal effects as well as the successful ongoing conversion to pay accounts, ad-finance free accounts were down by 220,000 or 0.6% compared to year-end 2025. The mail-in idea achieves a revenue growth of 7.6% to 79.3 million Euro driven primarily by growth in pay contracts as well as a positive development on the advertising side of the business. There was also further growth in EBITDA with operating EBITDA increasing by 17.3% to almost 30 million Euro and corresponding improvement in our operating EBITDA margin by more than 3 percentage points year-over-year to 37.6%. Besides the underlying operative business performance contributing to the growth in APTA, the increase really all starts from the acquisition of the server infrastructure used in IONOS Group's data centers, which was previously leased from IONOS. Following the acquisition effective January 1st, 2026, The prior incurred lease costs fully expensed through EBITDA as OPEX has been shifted. The acquired infrastructure is now recognized as capital expenditure on the balance sheet and depreciated on a scheduled basis, impacting EBIT. So much for the segments. Here we have summarized additional KPIs for the group. At around €118 million, our capex was down year over year from €122 million. This confirms that we are on track to finish the year below the elevated levels on the past two years. Our free cash flow improved significantly year over year, turning positive to the first three months of the year with more details in the next slide. The net bank liabilities increased by 4.3% to around €3.3 billion as our net bank liabilities reached their peak ahead of planned repayment, while our equity ratio rose slightly by 0.4% points to 44%. And this slide shows you the bridge of our EBITDA to free cash flow. One of the main contributors to our outflows this period is CapEx, totaling $115.2 million. This reflects ongoing investment in our infrastructure across 5.6 mobile networks and data centers, which highly contributes to the digital serenity of Germany and Europe. After accounting for taxes and changes in working capital, our free cash flow before leasing stands at 47.5 million Euro. A significant improvement year over year, And therefore, our free cash flow after leasing amounts to 3.7 million Euro. And finally, a brief word on the outlook. So far, we are right on track and looking ahead, we fully confirm our guidance for fiscal year 2026. As broadly discussed, we are planning with a backend loaded CapEx development like in the previous year, so it's a bit too early to specify the range we've indicated. So much from our side, and we are now available for any questions you may have.