United Internet Q3 Earnings Call Highlights

Key Points

• United Internet’s nine-month results improved: Revenue rose 3% to about €4.64 billion and operating EBITDA increased 10% to €1.06 billion. The company reaffirmed 2026 guidance of approximately €6.25 billion in revenue and €1.45 billion in operating EBITDA, excluding restructuring costs.
• Growth at IONOS and Mail & Media offset pressure at 1&1. IONOS revenue rose 7.6%, while Mail & Media revenue increased 6.8%; 1&1 contracts fell by 220,000 as the company exited low-margin discount offers, though its EBITDA margin improved to 17.4%.
• Free cash flow after leasing climbed more than 78% year over year to €313.5 million. United Internet said it has no plans to spin off its IONOS shares in the next several years.

United Internet ETR: UTDI reported higher revenue and operating earnings for the first nine months of 2026 and reaffirmed its full-year outlook, as growth at IONOS and Mail & Media helped offset contract losses at its 1&1 business.

Revenue rose 3.0% to approximately €4.64 billion, while operating EBITDA increased 10.0% to about €1.06 billion, CFO Carsten Theurer told analysts on the company’s quarterly call. Operating earnings per share rose 68% to €1.26, supported by higher operating EBIT and lower tax expenses.

Theurer said reported EBITDA and EBIT included €61.3 million in one-off expenses associated with transformation and restructuring programs at 1&1 Versatel and IONOS. Operating EBIT increased 25.4%, helped by stronger operating EBITDA and lower depreciation and amortization.

1&1 contracts fall as company exits discount offers

United Internet’s total customer contracts increased by 770,000 to 30.49 million during the nine-month period. At 1&1, however, contracts declined by 220,000 to 16.1 million, primarily because mobile internet contracts fell by about 240,000.

Theurer attributed the mobile decline mainly to the company’s April decision to withdraw from low-margin discount offers and focus on value rather than volume. Broadband connections increased by 20,000 to 3.86 million, which he said reflected new partnerships with fiber providers.

Revenue at 1&1 rose 1.2% to around €3.4 billion, driven mainly by higher hardware sales. Service revenue declined slightly to €2.71 billion. Operating segment EBITDA rose more than 11% to €593.3 million, excluding €60 million in provisions for one-off expenses related to the 1&1 Versatel restructuring program.

Theurer said the 1&1 EBITDA margin improved to 17.4%, reflecting a more value-oriented customer base, the elimination of migration costs and savings from increased data intake. He expects mobile-market competition to remain challenging through the end of 2026.

IONOS and Mail & Media expand

IONOS added 690,000 contracts to reach 10.74 million. Revenue increased 7.6% to more than €1.05 billion, or 8.4% excluding foreign-exchange effects. Operating EBITDA rose 5.9% to €374.2 million despite higher marketing expenses, and the operating margin remained above 35%.

Mail & Media added 300,000 paid accounts, bringing its total to 3.65 million, while advertising-financed free accounts declined by 340,000 from the end of 2025. Revenue rose 6.8% to €245.4 million, and EBITDA increased 20.5% to €99.9 million.

Theurer said the segment’s margin rose to almost 41%, helped in part by the purchase of server infrastructure previously leased from IONOS. The transaction shifted costs from operating expenses to depreciation. He estimated the EBITDA effect of that change at roughly €6 million.

Data storage is the main driver of conversions from free to paid Mail & Media accounts, Theurer said, while more sophisticated artificial intelligence features in paid accounts also support the shift.

Outlook and ownership plans

United Internet reaffirmed its 2026 guidance for approximately €6.25 billion in revenue and €1.45 billion in operating EBITDA, excluding about €95 million in restructuring expenses. It expects cash capital expenditure of €600 million to €650 million.

Free cash flow after leasing rose more than 78% year over year to €313.5 million in the first nine months. Net bank liabilities increased 3.1% to around €3.3 billion ahead of a planned repayment, Theurer said.

Asked about a potential IONOS spin-off, Theurer said United Internet was watching developments at Siemens but had no plans to spin off its IONOS shares in the next several years, even if tax issues could be resolved.

The company remains willing to buy additional 1&1 shares at reasonable prices and would not rule out passing a 90% holding, he said. He added that there were no delisting or squeeze-out plans in place.

Theurer also said there were no current plans to place Mail & Media under 1&1, although the company is seeking closer cooperation between the businesses. A mobile offer combining tariffs with cloud storage had been available for only about three weeks, making it too early to assess its success, he said.

CFO transition

Theurer said the call would be his last webcast before he leaves United Internet at the end of the year. His successor, André Driesen, has joined the management board and is taking over finance responsibilities.

Driesen, a former CFO of Drillisch and 1&1 Drillisch, said his priority was to continue Theurer’s work as seamlessly as possible. He said his responsibilities would cover United Internet’s holding-company functions.

About United Internet (ETR:UTDI)

United Internet AG, through its subsidiaries, operates as an Internet service provider worldwide. The company operates through Consumer Access, Business Access, Consumer Applications, and Business Applications segments. It offers landline-based broadband and mobile internet products, including home networks, online storage, telephony, and IPTV for private users; and telecommunication products ranging from fiber-optic direct connections to tailored ICT solutions, which include voice, data, and network solutions, as well as infrastructure services to national and international carriers and ISPs.

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