freenet successfully starts 2024 - very dynamic growth in IPTV customers

freenet successfully starts 2024 - very dynamic growth in IPTV customers

• Service revenues increase noticeably compared to the previous year
• Subscriber base exceeds 9.6 million on record quarter for waipu.tv (+138.6 thousand net new subscribers)
• EBITDA of EUR 124.2 million down 3.0% yoy as expected due to growth investments
• Free cash flow of EUR 71.3 million nevertheless up 10.3% yoy
• Executive Board confirms guidance for 2024 financial year

Büdelsdorf, 15 May 2024 - freenet AG [ISIN DE000A0Z2ZZ5] today published its results for the first quarter of 2024 after close of trading (Xetra).

Group: Approaching 10 million subscribers

The results for the first quarter of 2024 reflect the expectations of the 2024 guidance for the "year of transition" formulated at the beginning of the year. The number of subscribers increased by 136.8 thousand to 9,629.5 thousand (previous year-end: 9,492.7 thousand), mainly driven by record growth at waipu.tv (+138.6 thousand net new subscribers) and is thus approaching the 10 million mark. At EUR 638.9 million, Group revenues remained at the previous year's level (EUR 637.8 million) due to a continued decline in low-margin hardware revenues. Group EBITDA of EUR 124.2 million was below the previous year's result (EUR 128.1 million) due to the announced increase in brand investments in waipu.tv and the expected rise in personnel expenses. Nevertheless, free cash flow increased significantly by 10.3% to EUR 71.3 million (previous year: EUR 64.6 million). The increase is mainly due to lower net CapEx in the first quarter of 2024.

Table 1: Key figures of freenet AG

Non-financial key figures   Unit   31.03.2024   31.12.2023   abs. change rel. change Subscribers¹   In '000s   9,629.5 9,492.7   136.8 1.4%                   Financial key figures   Unit   Q1/2024 Q1/2023   abs. change rel. change Revenues   EUR million 638.9 637.8   1.1 0.2% EBITDA   EUR million 124.2 128.1   -3.9 -3.0% Free cash flow   EUR million 71.3 64.6   6.7 10.3%

 

Executive Board confirms guidance for 2024 financial year

Gravis was acquired by freenet in 2013 and was until recently one of the largest Apple resellers in Germany. Due to Apple's increasingly predatory pricing policy, the decision was made at the end of March 2024 to cease operations at Gravis. All 37 Gravis stores and the online shop will now be largely closed by 15 June 2024. From the time of the complete closure of the business, all effects will no longer have an impact on freenet's key financial performance indicators, but will be reported separately due to the classification as a discontinued operation in accordance with IFRS 5.

Against this backdrop, the Executive Board confirms the guidance for the 2024 financial year, which relates to continuing operations (including Gravis at that time). EBITDA of between EUR 495 million and EUR 515 million and free cash flow of between EUR 260 million and EUR 280 million are still expected.

Mobile Communications: Rising service revenues levelled out at EBITDA level

In the Mobile Communications segment, the number of postpaid customers has grown by 19.2 thousand to 7,437.6 thousand since the end of the previous year (7,418.3 thousand). At 122.3 thousand, the number of users of app-based tariffs (freenet FUNK and FLEX) remained unchanged compared to the end of 2023 (121.3 thousand). Overall, freenet benefited from the ongoing trend of customers moving from prepaid tariffs to flexible postpaid contracts and customers' desire for independent advice. At EUR 17.7, postpaid ARPU remained stable compared to the previous year (EUR 17.7). As a result, service revenues increased by 2.0% to EUR 424.6 million (previous year: EUR 416.5 million), partially offsetting the decline in low-margin hardware revenues. Overall, revenues in the Mobile Communications segment fell by EUR 14.4 million to EUR 542.9 million (previous year: EUR 557.3 million).

Table 2: Key figures Mobile Communications segment

Non-financial key figures   Unit   31.03.2024   31.12.2023   abs. change rel. change Mobile Communications subscribers   In '000s   7,559.9 7,539.6   20.3 0.3% Thereof postpaid customers   In '000s   7,437.6 7,418.3   19.2 0.3% Thereof app-based tariffs²   In '000s   122.3 121.3   1.0 0.8%                   Financial key figures   Unit   Q1/2024 Q1/2023   abs. change rel. change Revenues   EUR million 542.9 557.3   -14.4 -2.6% Thereof service revenues   EUR million 424.6 416.5   8.1 2.0% EBITDA   EUR million 101.2 103.8   -2.6 -2.5%

 

Segment EBITDA totalled EUR 101.2 million in the first quarter of 2024 (previous year: EUR 103.8 million). The continued positive development of monthly recurring service revenues was offset by salary increases implemented over the course of the past year and one-off lower collection income at EBITDA level. In view of the continued increase in service revenue, an increase in segment EBITDA is nevertheless expected over the course of the year.

TV and Media: brand investments in waipu.tv pay off

In the TV and Media segment, the number of TV subscribers increased to over 2 million. The investments in waipu.tv's brand awareness in light of the abolition of the ancillary cost privilege ('Nebenkostenprivileg') in the cable TV sector in the middle of this year continue to pay off. At 138.6 thousand net new subscribers, waipu.tv's number of subscribers grew faster than ever before in the past quarter. At the end of March 2024, the number of subscribers had risen to 1,507.9 thousand (previous year-end: 1,369.3 thousand). As expected, the number of revenue-generating users (RGU) of freenet TV decreased by 22.1 thousand to 561.7 thousand in Q1 2024 (end of previous year: 583.8 thousand). Due to the continued effects of the price increase at the end of 2022, the revenues generated by freenet TV remained stable compared to the previous year.

Table 3: Key figures for the TV and Media segment

Non-financial key figures   Unit   31.03.2024   31.12.2023   abs. change rel. change TV subscribers   In '000s.   2,069.6 1,953.0   116.5 6.0% Thereof waipu.tv subscribers   In '000s.   1,507.9 1,369.3   138.6 10.1% Thereof freenet TV subscribers (RGU)   In '000s.   561.7 583.8   -22.1 -3.8%                   Financial key figures   Unit   Q1/2024 Q1/2023   abs. change rel. change Revenues   EUR million 93.4 80.8   12.6 15.6% EBITDA   EUR million 27.4 28.8   -1.4 -5.0%

 

The strong growth in waipu.tv subscribers and the associated increase in revenues at Exaring as well as the stable revenue development at Media Broadcast (B2C and B2B) led to an increase in segment revenues of 15.6% to EUR 93.4 million in Q1 2024 (previous year: EUR 80.8 million). As expected, segment EBITDA of EUR 27.4 million was down on the same quarter of the previous year (EUR 28.8 million) due to the temporary increase in investments in waipu.tv's brand awareness.

Conference Call

The conference call on the results for the first quarter of 2024 will take place on Thursday, 16 May 2024 at 10:00 a.m. (CEST). All interested parties can follow the conference call via webcast (listen-only mode). A recording will be made available afterwards.

Further documents for publication

Quarterly statement for the 1st quarter of 2024

Presentation Q1 2024 (in English)

 

¹ Total of Postpaid customers, freenet FUNK, freenet FLEX, waipu.tv subscribers and freenet TV subscribers (RGU)

² freenet FUNK and freenet FLEX customers

 

Note

In the interests of clear and transparent presentation, alternative performance measures (APMs) are used in the financial statements of freenet AG and in ad hoc disclosures in accordance with Art. 17 MAR in addition to the disclosures defined by the International Financial Reporting Standards (IFRS). Information on the use, definition and calculation of APMs can be found in the 2023 Annual report.

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Phone: +49 (0) 40/ 513 06 778

Mail: ir@freenet.ag

Internet: fn.de/investors