| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
Abbvie Inc
NYSE:ABBV
|
Biotechnology
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Realty Income Corp
NYSE:O
|
Real Estate
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
This note will be permanently deleted.
United Internet AG
United Internet AG
XETRA:UTDI
You don't have any saved screeners yet
Hello, and good morning, everybody. I'd like to welcome you to our Q1 2024 Analyst Investor Call. My name is Dominic Grossman. I'm responsible for Investor Relations at United Internet. And here with me today, I have our CFO, Ralf Hartings. Briefly about today's program, Ralf will first take you through our presentation, the business revenue 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, Dominic, and also a warm welcome to our webcast on our 3 months figures 2024. Let's get into our numbers. On Slide 2, we have summarized our major KPIs for you. Our customer contracts increased by 200,000 to 28.65 million in the first 3 months of 2024. Our revenue increased by 2.2% to EUR 1.565 billion. EBITDA increased by 7.3% to EUR 342 million. However, it is important to note here that we have already invested more than EUR 42 million in our rollout of our 5G mobile network in the first quarter. Our EBIT declined by 0.8% to around EUR 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 Versatel 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 EUR 0.43 to EUR 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 3. 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 contracts 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 EUR 1.024 billion. This growth was attributable to the increase in service revenues, which rose by 4.2% to EUR 821.9 million. Hardware sales were slightly weaker, which is due to a strong prior year quarter with some spillover effects from Q4 2022 were a major factor. The access subsegment increased its EBITDA by 11.6% to around EUR 225 million, while costs for the rollout of the mobile network, 1&1 mobile network subsegment rose by more than EUR 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 EUR 142 million. EBITDA in the segment increased by 1.4% (sic) [ 1.7% ] to EUR 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 Versatel. At a comparable EBITDA, taking the start-up 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 on 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 the segment. We increased sales there by 13.4% to EUR 71 million in the first 3 months, mainly driven by our paid users as well as a positive development in the advertising market. These figures do not include Energy and De-Mail, which you'll also find on this slide.
Our EBITDA increased by 20.2% to EUR 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 Applications segment, we increased our contract portfolio by 100,000 contracts to 9.49 million. The increase came mainly from our operations abroad.
Revenues in this segment increased by 5.4% to EUR 373 million. The increase resulted from strong on-web presence and productivity and cloud solutions. In Q1, Sedo's low-margin Aftermarket business seems a bit weak, but this is just a phasing effect due to underlying product change. Excluding the Aftermarket business, revenue growth has amounted to 12.8%. EBITDA in the Business Applications segment on the other hand increased by 24.3% compared to the previous year to EUR 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 and EBITDA. Our CapEx amounted to EUR 140 million after EUR 145 million in the previous year from the investments in our fiber optic network and 1&1 Versatel and the rollout of the 1&1 mobile network. As you can see, we have a slight phasing in Q1 due to unpaid invoices, which totaled EUR 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 EUR 142.9 million, primarily driven by our investments, previous year, EUR 4.1 million, including a phasing effect from 2023 of EUR 104.3 million. Our net liabilities to bank increased slightly by 7.3% to now EUR 2.615 billion. Our equity ratio was broadly stable.
Slide 18 shows you a bridge from our EBITDA to free cash flow. The largest items here is our CapEx of EUR 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 EUR 100 million plus additional VAT payments of EUR 53 million, including working capital of EUR 46 million (sic) [ EUR 43.7 million ] , this results in free cash flow of minus EUR 102.9 million, respectively, negative EUR 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 EUR 6.5 billion. Prior year, EUR 6.213 billion. Operating EBITDA is expected to be approximately EUR 1.42 billion. CapEx, excluding any M&A transaction, is expected to increase by 10% to 20% above the previous year's 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.
[Operator Instructions] Your first question comes from the line of Polo Tang from UBS.
First one is just really about spectrum and your mobile network build. So if you don't get access to any low-band spectrum, would your mobile network build plans change in any way? Or would they continue as normal? I actually asked this question on the 1&1 call earlier, but it sounds if nothing would change even if 1&1 would not get any low-band spectrum. So I just wanted to clarify this point.
Second question is just given the recent outcome in Spain, what is your view on whether mobile consolidation is possible in the German market? And my third question is really about use of cash and the structure of the group. So if there is no spectrum auction in Germany, how do you think about use of cash and group structure? So would you consider a spinoff of IONOS, and does the minority buyout of 1&1 makes sense?
Polo, thanks a lot for your questions. So first of all, on spectrum. I think Mark has also made it fairly clear as well as Oliver that our default expectation for spectrum is not to not get any access to spectrum in the foreseeable future. And I think you've asked a question whether if we would not get any, which is kind of the worst-case scenario that could possibly be, I think the team confirmed that we still have got our obligations, which we are in the need to fulfill as currently things stand. No, I don't know. I'm not the [indiscernible] gain to us. So I don't know if they are willing to change things or not.
But as we stand here, that's kind of our current view. With regards to consolidation on the German market, well, we don't -- I don't think we plan on consolidating anyone personally. I don't know if any other people do, but I guess you need to ask them then this question. And look, never say never, I think it was a movie once called, I don't know, okay, in all honesty. But I don't see anything pressing happening anyway. So I mean, yes, I can't tell you. And with regards to use of cash also, I mean, look, we've got a lot of money to invest because we are building the most modern network in Europe. And I think that's a pretty good use of our money. And should we have more excess money, well, we'll then decide what's best for our shareholders at any given point in time. But so far, I'd say priority #1 for the entire group is to deliver a successful mobile most modern network for Europe. And that's it. Okay.
Your next question comes from the line of Titus Krahn from Bank of America.
Just 2 topics to touch on maybe, first on the De-Mail and Energy, which you have now kind of consolidated or split out separately. Could you maybe talk a little bit about your change in strategy there? And what are the medium-term plans for the business? That would be very helpful. And then the second topic would be on Versatel, where you, as you mentioned, are investing as well alongside [ IONOS ], the mobile network build, and you spent already EUR 9 million in Q1. First question would be what should we pencil in maybe for the full year as investments as part of this mobile network build at Versatel?
And secondly, there's the contract between Versatel and [ IONOS ], which I think initially envisaged about EUR 170 million investing revenues until the end of 2025 and EUR 100 million per year thereafter. Can I -- do you know -- could we know if you're already receiving those revenues? And has this outlook been affected in any way by a delay in the network rollout?
Titus, thanks a lot for your questions. And I'll answer #1 and 2. And then I think we probably -- the line wasn't super at the time, maybe if you can repeat the third. But let me answer firstly on De and Energy. So as you know, we've got a new CEO in the business. He's had a look at all different lines of business, and we kind of jointly came up with the management team that is probably good to focus on less things but do them really well. And given that Energy and De-Mail have been -- Energy, I mean, has been a success from a revenue point of view, but it's not high-margin business. And De-Mail was the idea to really get e-mail into a, well, I don't know, safe and legally binding medium, which hasn't quite picked up in Germany as much as it was hoped for.
So therefore, we've kind of decided to really focus the team not anymore on these activities, but rather going into more future where we believe we can make higher returns for the company and us. And that clearly is the subscription business as well as the data-driven businesses. One is obviously get advertising yield up and the other one is maybe enabling e-commerce and things. So that's one to focus on. So that's the first. On Versatel, I think it's EUR 9 million. I think that's for the total year EUR 20 million that we want to invest there. And maybe if you could be so kind and just repeat the last question because I didn't quite get it.
Definitely, yes. But just on your contract between Versatel and [ IONOS ], which I think initially was envisaged to provide EUR 170 million in revenues until year-end 2025 and I think EUR 100 million thereafter, are you already receiving anything on this? And has this changed in any way given that IONOS is having a slower network rollout?
Yes. Perfect. Yes. Thank you. I got it now. So no, not massive change. Yes, they're receiving already money. And now, the network, slight delay because of the partners that let us down is not impacting that in a significant way. So I think that's what I'm happy to confirm here, okay?
Your next question comes from the line of Stéphane Beyazian from ODDO BHF.
After the strength we've seen in the shares of IONOS, are we now in, let's say, at a level where you believe that's a level where you can monetize this stake? Or actually, perhaps you could be thinking that the contract with [indiscernible] perhaps might be changing your position on whether IONOS is a non-core asset for the future.
Yes. So thanks for the question. Look, IONOS, we really like IONOS. IONOS is really delivering exactly what they promised to deliver. They are doing really a great job. So generally speaking, for us, it's a great asset to have in the group. And that's what our current position is on that. With regards to the contract with the government, I mean, yes, that's great. We are pleased that the team was able to close that. And yes, I think that's just going to be another good one in the books for our cloud strategy. And I think that's the current view we have.
And just a follow-up, if I can. Have you been approached by any possible buyer for a stake in IONOS, a possible industrial partner?
Sorry about any M&A kind of questions. I guess I'm just going to say the usual -- I mean, no comment at this point in time. So yes, so that's it.
Your next question comes from the line of Usman Ghazi from Berenberg.
I just had a question on consumer applications. I know that on the last call, you had mentioned that a new Chief Commercial Officer has been appointed to run the business. Could you perhaps give an indication of any kind of changes that are happening or expected to happen for the rest of the year, and the financial contribution that you expect from this segment for the rest of this year?
Sorry Usman, I don't know what it is, but you probably have -- you need to change your tech equipment. You're always pretty hard to understand, and apologies. I think you've asked about the new CEO in the -- mainly in the Consumer Applications business, whether strategy or something has changed. Is that correct? And I'm happy to answer.
Yes.
Okay. Great. Yes. So look, no, no, I don't think I would call it a change in strategy. I think we call it refinement, and it's always around focus, right? The day has got so many hours. And therefore, we here at United Internet, we like to really get people's attention to lesser things but do those great. And that's maybe a bit of a simplification, you could say. And I mean, I've been the CFO, I have worked there for 2 years. I think it's a fantastic asset, which has got an incredible data treasure we are sitting on. I think I spoke about this before. We've collected 20 million consent of people that we can utilize the data for commercial purposes. We need to harvest that better, and we will. And we've been saying this, I think, for many years now, and I'm now just a year here, at the helm of UI, but it's clearly something we -- I mean, I can see big value.
And the second one is where we've seen really good success and progress is in the subscription business where we increased prices because we hadn't for, I think, decades, to be honest. And still, we were able to acquire a lot more customers and to attract them to subscribe to the service with a few simple tweaks. I think more focus on that show them there is more value. People get a lot more used to having these little subscriptions every month. That's another strategy we want to pursue. And we believe that with Michael, we really able -- we were able to hire somebody very smart and good. So we have lots of hopes, okay?
Great. Could I ask a follow-up perhaps just on the eSIM strategy here, you had said that you would potentially look at selling eSIMs on the new mobile network into this base of consumer applications. Has that started or not yet?
Yes. I wish I could say this has started and a super successful. But look, we are still in the trial period and playing around a little bit. So I think that's going to take a bit more time to go prime time, unfortunately. But yes, we'll see if there is a market for us to capture, but not at this point, unfortunately, okay?
[Operator Instructions] Your next question comes from the line of Adam Fox-Rumley from HSBC.
I was just hoping to follow up on one of your final comments, Ralf, about CapEx. I think you mentioned right at the end of your prepared remarks that you think you'll now be in the lower end of the range. So if you just give us a little bit more color on the moving parts that you're seeing there? And then secondly, I should just ask about Tele Columbus, you still got your catch-up right, if I'm not mistaken. I just wondered if you've any thoughts of change there or your thinking is still ongoing?
Yes, Adam. Okay. So on CapEx, look, I mean as I've said in the presentation, it was quite some time ago when we've issued the guidance and there was a bit of uncertainty. Is it going to be in the year then, is it going to be in the year after. And as we go along, we've just seen it probably more stabilizing, I guess. That's why in the first place, I put out this wider range. But in addition, what I think I've spoke about before in Versatel, we're obviously connecting a lot of sites. And then we are very opportunistically trying to connect business parks nearby. And that I've always said is very discretionary. So -- and again, we've already done a few of these business parks, so we can maybe sell more to the ones that we've had or we can go to more. That's a bit of a trade-off. And all these things put together, I currently think we're going to be in the lower end of the range that we've issued.
And then on Tele Columbus, I think nothing has changed from the statement. I think it was Mr. Dommermuth himself did at the full year results. So, so far, our partner, MSI has agreed to put more money into the company, and we do still have a catch-up, right, as it's called, to pull equal on our share again, and that's some -- still some time to go. And therefore, we haven't really made up our minds fully on that, and we will -- and whenever we feel that we are at this point. So at this point in time, no changes to what we said before.
There seems to be no further questions. I would like to hand back for closing remarks.
Thank you, operator, and thank you, everyone, for attending our call today. Please don't hesitate to contact us for any follow-up questions. We wish you a nice day. Stay safe, and goodbye.