1&1 (1U1) Q3 2024 earnings summary

Executive summary

• Customer contracts reached 16.35 million by September 2024, with mobile growth and a slight broadband decline; net increase of 90,000 contracts in the first nine months.

• Revenue for the first nine months was €3,017.2 million, down 0.5% year-over-year; service revenue rose 2.5% to €2,478.7 million, while hardware/device revenue fell 12.1%.

• EBITDA in the Access segment increased 7.7% to €630.1 million, but total EBITDA fell 9.4% to €463.0 million due to negative 1&1 Mobile Network segment results and start-up costs.

• Net income for the period was €196.3 million, down 22.4% year-over-year; EPS was €1.11, or €1.28 excluding PPA write-offs.

• Major network outage in May 2024 led to extraordinary cancellations, delayed migration, and operational disruptions, impacting earnings and subscriber growth.

Financial highlights

• Service revenue for the first nine months was €2,478.7 million (+2.5% year-over-year); hardware revenue was €538.5 million (-12.1%).

• Access segment EBITDA rose to €630.1 million (+7.7%); 1&1 Mobile Network segment EBITDA was -€167.1 million, reflecting rollout and start-up costs.

• Gross profit dropped to €826 million due to higher network rollout costs; gross margin was 27.4%.

• Free cash flow for the first nine months was €63.0 million, down from €79.2 million the previous year.

• Shareholders' equity increased to €6,077.0 million, with an equity ratio of 75.6%.

Outlook and guidance

• Service revenue for 2024 expected at approximately €3.31 billion, up from €3.243 billion in 2023.

• Access segment EBITDA guidance is €860 million (+9%), with total EBITDA expected at €686 million; 1&1 Mobile Network start-up costs projected at -€174 million.

• Cash CapEx for 2024 guided at €460 million, mainly for mobile network expansion.

• Free cash flow expected to improve in 2025 due to lower CapEx and reduced payments to Deutsche Telekom.

• Net contract customer growth for 2024 revised to 100,000–200,000, down from 200,000–300,000.