1&1 (1U1) Q2 2024 earnings summary

Executive summary

• Achieved 16.35 million customer contracts as of June 30, 2024, with growth in mobile internet and a slight decline in broadband lines.

• Service revenue and customer contracts increased in H1 2024, but overall growth was below expectations due to a temporary mobile network outage and delayed customer migration.

• Continued rollout of Europe's first fully virtualized Open RAN mobile network, targeting 50% German household coverage by 2030.

• The Access segment showed strong EBITDA growth, while the 1&1 Mobile Network segment faced higher start-up costs and out-of-period expenses.

• The company remains optimistic about future growth, supported by ongoing network expansion and a stable business model.

Financial highlights

• H1 2024 revenue reached €2,015.9m, up 1.1% year-over-year; service revenue grew 3.8% to €1,644.9m, while hardware revenue declined 9.2%.

• Group EBITDA fell 7.2% to €326.6m; EBIT dropped 22.8% to €196.1m; EPS declined 24.5% to €0.77.

• Gross profit from turnover fell 7.8% to €557.2m, with consolidated net income down 24.2% to €136.4m compared to H1 2023.

• Free cash flow was -€58.5m, nearly flat year-over-year.

• Cash capex was €34.0m in H1 2024, down from €81.0m.

Outlook and guidance

• 2024 service revenue expected to rise ~3% to €3.33bn; EBITDA forecasted to increase ~5% to €686m, including €14.3m out-of-period expenses.

• Access segment EBITDA projected to grow ~9% to €860m; Mobile Network segment to post a loss of ~€174m due to start-up costs.

• Capex guidance raised to ~€460m, mainly for mobile network expansion and inventory build-up.

• Group EBITDA guidance lowered from previous outlook.