2.2 Business development

Use and definition of relevant financial performance measures

In order to ensure the clear and transparent presentation of United Internet’s business trend, the Group’s Annual Financial Statements and Interim Financial Statements include key financial performance measures – in addition to the disclosures required by International Financial Reporting Standards (IFRS) – such as EBITDA, the EBITDA margin, EBIT, the EBIT margin, and free cash flow.

United Internet defines these measures as follows:

• EBIT: Earnings before interest and taxes represents the operating result disclosed in the statement of comprehensive income.
• EBIT margin: Presents the ratio of EBIT to sales.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization are calculated as EBIT/operating result plus the depreciation and amortization (disclosed in the Consolidated Financial Statements) of intangible assets and property, plant, and equipment, as well as assets capitalized in the course of company acquisitions.
• EBITDA margin: Presents the ratio of EBITDA to sales.
• Cash flow before changes in balance sheet items (subtotal) : Cash flow before changes in balance sheet items is derived from net income, adjusted for non-cash effects. These include depreciation and amortization, result from associated companies, deferred taxes, and interest and financing expenses. This subtotal represents the cash inflow from operating activities before changes in working capital and other balance sheet items are taken into account.
• Free cash flow: Calculated as cash flow from operating activities (disclosed in the consolidated financial statement), less capital expenditure for intangible assets and property, plant, and equipment, plus payments from the disposal of intangible assets and property, plant, and equipment.
• Free cash flow after leases: Free cash flow after leases is calculated as free cash flow less the repayment portion of lease liabilities, which have been included in cash flow from financing activities since the fiscal year 2019 (IFRS 16).
• Cash capex: Cash capex is the sum of cash outflows for investments in intangible assets and property, plant and equipment (capital expenditures).

Insofar as necessary for a clear and transparent presentation, these indicators are adjusted for special items and disclosed as “key operating figures” (e.g., operating EBITDA, operating EBIT, and operating EPS). A reconciliation of EBITDA, EBIT, EBT, net income, and EPS (according to the consolidated statement of comprehensive income) with figures adjusted for special items can be found in chapter 2.3 “Position of the Group”.

Such special items usually refer solely to those effects capable of restricting the validity of the key financial performance measures with regard to the Group’s financial and earnings performance – due to their nature, frequency, and/or magnitude. All special items are presented and explained for the purpose of reconciliation from the unadjusted key financial figures to the key operating figures in the relevant section of the financial statements.

By contrast, expenses for the rollout of the 1&1 mobile network or start-up costs for new business fields of 1&1 Versatel are not adjusted but disclosed – should there be any – in the respective sections.

Currency-adjusted sales and earnings figures are calculated by converting sales and earnings figures with the average exchange rates of the comparative period, instead of the current period.

The most important key financial figures for managing the Group are sales and operating EBITDA according to IFRS.

Special items in fiscal year 2024

Termination of the business fields “Energy” and “De-Mail” in the Consumer Applications segment

Following a thorough review, the Management Board and Supervisory Board decided in March 2024 to discontinue the “Energy” and “De-Mail” business fields in the Consumer Applications segment.

Against this backdrop, United Internet reports the sales and earnings contributions of these business fields separately in its management reporting, both in the Consumer Applications segment and at Group level, and adjusts the key operating figures for 2024 and the comparative figures for 2023 accordingly. The same applies to customer contracts, which are also presented “adjusted”. The key financial figures for 2020-2022 remain unchanged in the multi-period overviews.

The aforementioned sales contributions of the Energy und De-Mail business fields amounted to € 27.3 million in the previous year and € 26.2 million in 2024, while the earnings contributions amounted to € -2.7 million (EBITDA) and € -2.8 million (EBIT) in the previous year and € -0.7 million (EBITDA) and € -0.9 million (EBIT) in the fiscal year 2024.

The “De-Mail” business field was discontinued at the end of the reporting period on December 31, 2024.

Non-scheduled, non-cash impairment of Tele Columbus investment

In an ad-hoc disclosure dated June 14, 2024, United Internet AG announced that it would make no further investments in the holding company Kublai GmbH. Kublai currently holds around 95% of shares in Tele Columbus AG.

This decision meant that United Internet waived the right to increase its stake in Kublai to 40% again after it was diluted to around 5% in the course of a capital increase in the first quarter of 2024. Due to the resulting loss of significant influence, a non-cash impairment loss on the investment in Kublai of € 170.5 million was recognized in the Consolidated Financial Statements as at December 31, 2024 and disclosed in the “Result from the loss of significant influence”.

As already reported in the Interim Statement Q1 2024, Kublai conducted a capital increase in the first quarter of 2024 to provide Tele Columbus with equity, in which United Internet did not participate. A further shareholder of Kublai is Hilbert Management GmbH, an indirect subsidiary of Morgan Stanley Infrastructure Inc (MSI), an infrastructure fund managed by the investment bank Morgan Stanley, which subscribed to the full amount of the capital increase totaling € 300 million. This resulted in a reduction of United Internet’s stake in Kublai to around 5% (previously 40%). Until June 17, 2024, United Internet had the option to increase its stake in Kublai back to 40% by acquiring shares from MSI in return for a payment of € 120 million.

United Internet regards the valuation of Tele Columbus AG on which the capital increase was based as inappropriately low. However, its majority of votes at the shareholders’ meeting enabled MSI to conduct the capital increase on the basis of a valuation determined by MSI. United Internet has since initiated the contractually stipulated anti-dilution proceedings and has arranged for the German Arbitration Institute (DIS) to review MSI’s valuation. If DIS agrees with United Internet’s assessment, United Internet may be awarded compensation of approx. € 300 million. If the court reaches a different conclusion, the awarded claim or compensation amount could be correspondingly lower.

The reason for the decision of the Management Board and Supervisory Board of United Internet AG not to make any further investments in Kublai was a difference of opinion between MSI and United Internet regarding the future funding of Kublai.

In its Management Report, United Internet has separately disclosed the n on-scheduled, non-cash impairment on its Kublai/Tele Columbus investment and adjusted its operating KPIs EBT and EPS accordingly.

“One-off tax effects 2024”

This special item results from a one-off writedown of deferred taxes on loss carryforwards capitalized in previous years on the level of 1&1 Versatel GmbH. There was an opposing effect from direct netting of current losses of 1&1 Versatel on the level of United Internet AG due to a profit and loss agreement concluded with 1&1 Versatel in November 2024.

In its Management Report, United Internet has adjusted these one-off net negative tax effects of € -52.0 million in its operating KPIs net income and EPS.

For further details, see note 15 of the Notes to the Consolidated Financial Statements.

Actual and forecast development 2024

Forecast development

In an ad-hoc announcement on December 19, 2023, United Internet published its guidance for the fiscal year 2024 and updated it during the year as follows:

Actual development

In the fiscal year 2024, consolidated sales rose by 1.9 % , from € 6.213 billion in the previous year to € 6.329 billion and were thus within the range of the sales forecast (November 2024: approx. € 6.35 billion). This merely moderate sales growth was mainly due to a year-on-year decline in low-margin hardware revenues (especially smartphones) in the Consumer Access segment (€ -92.3 million compared to 2023). Without the “Energy” and “De-Mail” business fields, sales amounted to € 6.303 billion (prior year: € 6.186 billion).

EBITDA for the Group amounted to € 1,294.0 million in the fiscal year 2024 (prior year: € 1,292.1 million) and – as already announced in the preliminary results for 2024 – was thus below the Company’s forecast (approx. € 1.38 billion). In addition to burdens on earnings (from the temporary outage of the 1&1 mobile network), EBITDA includes higher than expected expenses for the rollout of 1&1’s mobile network. In total, these amounted to € -265.3 million (prior year: € -132.4 million). This item also includes € 14.3 million out-of-period expenses from subsequent billing for the network rollout in 2022 and 2023. Without “Energy” and “De-Mail”, EBITDA amounted to € 1,294.7 million (comparable prior-year figure without IPO costs IONOS: € 1,296.5 million).

Summary: actual and forecast development of business in 2024

The net loss of United Internet AG (parent company) for the fiscal year 2024 amounted to € -365.3 million and was thus well below the 2024 forecast (subject to special items) of a balanced result for the year. This was due in particular to a non-scheduled loss from the dilution of shares in Kublai amounting to € 316.0 million. In addition, there was the assumption of the loss of 1&1 Versatel GmbH pursuant to the profit and loss transfer agreement concluded with 1&1 Versatel GmbH in November 2024, as well as – with an opposing effect – income from the change in deferred tax liabilities on the level of United Internet AG, which resulted in a net total of € -131.1 million and which was not yet included in planning at the time the forecast was published.

Adjusted for these non-scheduled factors, the annual result of the parent company for 2024 was well above the forecast of the parent company.

Development of divisions and segments

The Group’s operating activities are divided into the business divisions Access and Applications, which in turn are divided into the segments Consumer Access and Business Access, as well as Consumer Applications and Business Applications.

Details on the business models of the individual segments are presented in chapter 1.1 “Business model”.

Consumer Access segment

In addition to the continuing expansion of the 1&1 fiber-optic network and gradual migration of existing customers to the new mobile network, the Consumer Access segment focused on adding further valuable broadband and mobile internet contracts in the fiscal year 2024.

The number of fee-based contracts in the Consumer Access segment rose by 130,000 contracts to 16.39 million in the fiscal year 2024. While broadband connections fell slightly by 60,000 contracts to 3.95 million, mobile internet contracts increased by 190,000 to 12.44 million contracts. The growth in mobile contracts in particular was thus lower than expected. This was primarily attributable to effects from the network migration of existing customers, as well as contract terminations in connection with the temporary disruption of the mobile network in late May 2024.

Development of Consumer Access contracts in the fiscal year 2024

Development of Consumer Access contracts in the fourth quarter of 2024

Sales of the Consumer Access segment fell by -0.8% in the fiscal year 2024, from € 4,096.7 million in the previous year to € 4,064.3 million. High-margin service revenues – which represent the core business of the segment and were impacted by weaker contract growth – rose by 1.8% from € 3,243.2 million in the previous year to € 3,303.1 million in the fiscal year 2024. At € 761.2 million, low-margin hardware sales were -10.8% or € -92.3 million down on the previous year (€ 853.5 million). Hardware business is subject to seasonal fluctuations and also depends on the appeal of new devices and the model cycles of manufacturers.

In the fiscal year 2024, customer contracts, sales and earnings were unexpectedly burdened by the effects of a temporary outage of the new 1&1 mobile network in May 2024 and the associated increase in customer churn. Moreover, the planned migration of existing customers to the 1&1 mobile network was temporarily severely restricted due to the unforeseen undersizing of individual network components and could only be resumed extensively in the fourth quarter of 2024. As a result, the savings expected in fiscal year 2024 from the migration of existing customer contracts (on a wholesale basis) to the 1&1 mobile network were only achieved in part. In addition, there were temporarily higher expenses for the elimination of capacity bottlenecks identified as a result of the network outage.

Segment EBITDA amounted to € 590.8 million in the fiscal year 2024 (prior year: € 653.8 million). EBITDA includes higher than expected expenses for the rollout of 1&1’s mobile network. In total, these amounted to € -265.3 million (prior year: € -132.4 million). This item also contains out-of-period expenses of € 14.3 million from subsequent billing for the network rollout in 2022 and 2023.

Due to these expenses and increased depreciation for investments in the establishment of the 1&1 mobile network, segment EBIT of € 309.4 million was below the prior-year figure (€ 455.8 million).

The EBITDA margin decreased from 16.0% to 14.5% and the EBIT margin from 11.1% to 7.6%.

The number of employees in this segment decreased to 3,281 in 2024 (prior year: 3,320).

Key sales and earnings figures in the Consumer Access segment (in € million)

(1) Mainly hardware sales

(2) Including out-of-period expenses for network expansion from 2022 and 2023 (EBITDA and EBIT effect: € -14.3 million)

Quarterly development ; change over prior-year quarter ⁽¹⁾

(1) Unaudited; see note “unaudited disclosures” on page 3

(2) Mainly hardware sales

(3) Including out-of-period expenses for network expansion from 2022 and 2023 (EBITDA and EBIT effect: € -14.3 million)

Multi-period overview: Development of key sales and earnings figures

(1) Mainly hardware sales

(1) Including the non-period positive effect on earnings in 2021 attributable to the second half of 2020 (EBITDA and EBIT effect: € +39.4 million); excluding write-off of VDSL contingents that are still available (EBITDA and EBIT effect: € -129.9 million)

(3) Excluding a non-period positive effect on earnings attributable to the second half of 2020 (EBITDA and EBIT effect: € +39.4 million)

(4) Including out-of-period expenses for network expansion from 2022 and 2023 (EBITDA and EBIT effect: € -14.3 million)

In its operating business, the main focus of the Consumer Access segment was on the operation and further expansion of the 1&1 mobile network.

The national roaming partnership with Vodafone started in late August. The partnership enables 1&1 to offer its mobile customers high network quality even in those areas where 1&1 does not yet have its own coverage during the 1&1 O-RAN rollout phase. National roaming via Vodafone will be available to all 1&1 mobile customers by the end of 2025. At the same time, the national roaming advance services previously procured from Telefónica will be completely phased out.

1&1 also made good progress in its key objective of expanding the 1&1 mobile network as quickly as possible and making Open RAN technology available in an increasing number of areas.

Business Access segment

Sales of the Business Access segment rose by 1.9% in the fiscal year 2024, from € 564.0 million in the previous year to € 574.9 million.

Despite start-up costs for new business fields, segment EBITDA improved by 1.4% from € 162.9 million to € 165.1 million. The EBITDA margin fell slightly from 28.9% to 28.7%.

In the new “5G” business field, 1&1 Versatel is setting up data centers and fiber-optic connections for the antenna locations of 1&1’s mobile network and providing them to 1&1 on a rental basis as part of an intercompany agreement. In the other new business field “Expansion of business parks”, 1&1 Versatel uses newly constructed regional expansion clusters to provide fiber-optic connections for companies in business parks. In 2024, total start-up costs for the new business fields amounted to € -21.6 million (prior year: € -21.5 million) for EBITDA and € -117.4 million (prior year: € -65.2 million) for EBIT.

As a result of the aforementioned start-up costs for new business fields, as well as increased depreciation for the associated investments in network infrastructure, segment EBIT decreased from € -51.5 million in the previous year to € -78.6 million.

The number of employees in this segment increased by 7.8% in 2024 to 1,640 (prior year: 1,522).

Key sales and earnings figures in the Business Access segment (in € million)

Quarterly development ; change over prior-year quarter ⁽¹⁾

(1) Unaudited; see note “unaudited disclosures” on page 3

Multi-period overview : Development of key sales and earnings figures

Consumer Applications segment

As already mentioned in chapter 2.2 “Business development” under “Special items in fiscal year 2024”, the Management Board and Supervisory Board decided in March 2024 to discontinue the “Energy” and “De-Mail” business fields in the Consumer Applications segment. The key figures for 2023 and 2024 presented below have been adjusted accordingly. The key financial figures for 2020-2022 in the multi-period overviews, however, remain unchanged.

The business field “De-Mail” was discontinued as of the balance sheet date December 31, 2024.

The number of pay accounts (fee-based contracts) in the Consumer Applications segment rose by 240,000 to 3.04 million in the fiscal year 2024. At 38.93 million, however, ad-financed free accounts were down on December 31, 2023 (39.93 million), due to higher security requirements.

Development of Consumer Applications accounts in the fiscal year 2024

Development of Consumer Applications accounts in the fourth quarter of 2024

(1) Contract figures as of December 31, 2024 excluding 0.02 million Energy contracts (value-added subscription); contract figures as of December 31, 2023 and September 30, 2024 excluding 0.02 million Energy contracts and 0.02 million De-Mail contracts (Premium-Mail subscription)

Rising advertising revenues and above all the growth of pay contracts led to sales growth of 6.6% to € 324.5 million in the fiscal year 2024, compared to € 304.3 million in the previous year. Adjusted for sales of € 27.3 million in the prior-year period and € 26.2 million in 2024 from “Energy” and “De-Mail”, sales of the Consumer Applications segment rose by 7.7%, from € 277.0 million to € 298.3 million.

There was also significant growth in key earnings figures: EBITDA rose by 8.7%, from € 103.5 million in the previous year to € 112.5 million, and EBIT by 9.5% from € 93.8 million to € 102.7 million in 2024. These figures include EBITDA and EBIT contributions from “Energy” and “De-Mail” of € -2.7 million (EBITDA) and € -2.8 million (EBIT) in the previous year and € -0.7 million (EBITDA) and € -0.9 million (EBIT) in 2024. Adjusted for the slightly negative earnings contributions from “Energy” and “De-Mail”, operating segment EBITDA increased by 6.6% from € 106.2 million to € 113.2 million and operating segment EBIT by 7.2% from € 96.6 million to € 103.6 million.

Correspondingly, the operating EBITDA margin fell slightly from 38.3% to 37.9% and the operating EBIT margin from 34.9% to 34.7%.

The number of employees in this segment increased by 3.5% in 2024 to 1,109 (prior year: 1,072).

Key sales and earnings figures in the Consumer Applications segment (in € million)

(1) Excluding the sales and earnings contributions from Energy and De-Mail (sales contribution: € 26,2 million; EBITDA contribution: € -0.7 million; EBIT contribution: € -0.9 million)

(2) Excluding the sales and earnings contributions from Energy and De-Mail (sales contribution: € 27,3 million; EBITDA contribution: € -2.7 million; EBIT contribution: € -2.8 million)

Quarterly development ; change over prior-year quarter ⁽¹⁾

(1) Unaudited; see note “unaudited disclosures” on page 3

(2) Excluding the sales and earnings contributions from Energy and De-Mail (sales contribution: € 6.6 million, EBITDA contribution: € -1.3 million, EBIT contribution: € -1.3 million in Q1 2024; sales contribution: € 6.8 million, EBITDA contribution: € +0.6 million, EBIT contribution: € +0.6 million in Q2 2024; sales contribution: € 6.5 million, EBITDA contribution: € +0.5 million, EBIT contribution: € +0.4 million in Q3 2024; sales contribution: € 6.3 million, EBITDA contribution: € -0.5 million, EBIT contribution: € -0.6 million in Q4 2024; sales contribution: € 6.8 million, EBITDA contribution: € -0.5 million, EBIT contribution: € -0.6 million in Q4 2023)

Multi-period overview : Development of key sales and earnings figures

(1) Excluding a non-cash valuation effect from derivatives (EBITDA and EBIT effect: € +4.9 million) and the intercompany disposal of AWIN AG (EBITDA and EBIT effect: € +50.1 million)

(2) Excluding a non-cash valuation effect from derivatives (EBITDA and EBIT effect: € -0.5 million)

(3) Excluding the sales and earnings contributions from Energy and De-Mail (sales contribution: € 27.3 million; EBITDA contribution: € -2.7 million; EBIT contribution: € -2.8 million)

(4) Excluding the sales and earnings contributions from Energy and De-Mail (sales contribution: € 26.2 million; EBITDA contribution: € -0.7 million; EBIT contribution: € -0.9 million)

Business Applications segment

The number of fee-based Business Applications contracts rose by 220,000 in the fiscal year 2024. This growth resulted from 60,000 contracts in Germany and 160,000 contracts abroad. As a result, the total number of contracts rose to 9.59 million.

Development of Business Applications contracts in the fiscal year 2024

Development of Business Applications contracts in the fourth quarter of 2024

(1) Contract numbers as of December 31, 2023 and September 30, 2024 retrospectively adjusted downwards by 0.02 million contracts following a change in policy at an IONOS Group subsidiary as part of the annual financial statements as of December 31, 2024.

Sales of the Business Applications segment rose by 9.6% in the fiscal year 2024, from € 1,423.7 million in the previous year to € 1,560.3 million.

Segment earnings in 2023 were impacted by special items in connection with the IPO of IONOS Group SE. In this connection, there was net income of € +11.7 million which mainly resulted from the contractually agreed assumption of total IPO costs by the IONOS shareholders United Internet and Warburg Pincus.

Adjusted for these special items in the previous year, operating s egment EBITDA increased by 15.1% from € 373.7 million in the previous year to € 430.2 million, while operating s egment EBIT rose by 19.7% from € 265.8 million to € 318.2 million.

The operating EBITDA margin and the operating EBIT margin increased correspondingly strongly from 26.2% to 27.6% and from 18.7% to 20.4%, respectively.

The number of employees decreased by 3.2% in 2024 to 4,226 (prior year: 4,364).

Key sales and earnings figures in the Business Applications segment (in € million)

(1) Excluding IPO costs (EBITDA and EBIT effect: € +11.7 million net (IPO costs and offsetting assumption of costs by IONOS shareholders)

Quarterly development ; change over prior-year quarter ⁽¹⁾

(1) Unaudited; see note “unaudited disclosures” on page 3

Multi-period overview : Development of key sales and earnings figures

(1) Excluding IPO costs (EBITDA and EBIT effect: € -3.0 million)

(2) Excluding IPO costs (EBITDA and EBIT effect: € -8.8 million)

(3) Excluding IPO costs (EBITDA and EBIT effect: € +11.7 million net (IPO costs and offsetting assumption of costs by IONOS shareholders) )

Besides its operating business, IONOS continued to drive the acquisition of key accounts in its cloud business during the fiscal year 2024.

In April 2024, the German Federal Information Technology Center (ITZBund) commissioned IONOS to set up a private enterprise cloud for the ITZBund data centers. ITZBund is the IT service provider for 200 federal administrative authorities and is tasked with providing them with modern IT support and leading them into the digital future.

The framework agreement has a term of five years. As is common in the cloud sector, the variable order is invoiced on a pay-per-use basis.

Group investments

Significant changes in investments

Investment in Kublai

In June 2024, United Internet AG announced that it would make no further investments in the holding company Kublai GmbH. Kublai currently holds around 95% of shares in Tele Columbus AG.

This decision meant that United Internet waived the right to increase its stake in Kublai to 40% again after it was diluted to around 5% in the course of a capital increase in the first quarter of 2024. Due to the resulting loss of significant influence, a non-cash impairment loss on the investment in Kublai of € 170.5 million was recognized in the Consolidated Financial Statements as at December 31, 2024 and disclosed in the “Result from the loss of significant influence”.

As already reported in the Interim Statement Q1 2024, Kublai conducted a capital increase in the first quarter of 2024 to provide Tele Columbus with equity, in which United Internet did not participate. A further shareholder of Kublai is Hilbert Management GmbH, an indirect subsidiary of Morgan Stanley Infrastructure Inc (MSI), an infrastructure fund managed by the investment bank Morgan Stanley, which subscribed to the full amount of the capital increase totaling € 300 million. This resulted in a reduction of United Internet’s stake in Kublai to around 5% (previously 40%). Until June 17, 2024, United Internet had the option to increase its stake in Kublai back to 40% by acquiring shares from MSI in return for a payment of € 120 million.

United Internet regards the valuation of Tele Columbus AG on which the capital increase was based as inappropriately low. However, its majority of votes at the shareholders’ meeting enabled MSI to conduct the capital increase on the basis of a valuation determined by MSI. United Internet has since initiated the contractually stipulated anti-dilution proceedings and has arranged for the German Arbitration Institute (DIS) to review MSI’s valuation. If DIS agrees with United Internet’s assessment, United Internet may be awarded compensation of approx. € 300 million. If the court reaches a different conclusion, the awarded claim or compensation amount could be correspondingly lower.

The reason for the decision of the Management Board and Supervisory Board of United Internet AG not to make any further investments in Kublai was a difference of opinion between MSI and United Internet regarding the future funding of Kublai.

Due to the reduction of the shareholding from 40% to around 5% in fiscal year 2024, Kublai was reclassified from “Shares in associated companies” to “Investments”. Accordingly, the company’s prorated result is no longer recognized in Net Income (under “Result from the loss of significant influence”) but is presented in the Balance Sheet.

In addition to its (fully consolidated) core operating companies, United Internet held the following other minority shareholdings as of December 31, 2024, which are included in its result from associated companies.

Minority holdings in partner companies

In July 2013, United Internet acquired a stake in Open-Xchange AG (main activity: e-mail and collaboration solutions). United Internet has already been working successfully with the company for many years in its Applications business. As of December 31, 2024, United Internet’s share of voting rights amounted to 25.39%. United Internet expects Open-Xchange to post increased revenues and a slightly negative EBITDA for the fiscal year 2024.

In April 2014, United Internet acquired a stake in uberall GmbH (main activity: online listings). In addition, uberall and IONOS agreed a long-term cooperation contract for the use of uberall solutions. As of December 31, 2024, the share of voting rights held by United Internet amounted to 25.10%. For 2024, United Internet anticipates increased sales of uberall with a slightly positive EBITDA result.

In April 2017, United Internet acquired a stake in rankingCoach GmbH (main activity: online marketing solutions). In addition to the equity stake, rankingCoach and IONOS signed a long-term cooperation agreement for IONOS SE to use the online marketing solutions of rankingCoach as part of its hosting and cloud products marketed in Europe and North America. As of December 31, 2024, the share of voting rights amounted to 31.52%. United Internet expects rankingCoach to achieve sales growth in 2024 and a positive EBITDA result.

Following the contribution of affilinet GmbH to AWIN in October 2017, United Internet also holds a stake in AWIN AG (main activity: affiliate marketing). Several United Internet subsidiaries are currently working together with AWIN and using the company’s affiliate network as part of their marketing mix. As of December 31, 2024, United Internet’s share of voting rights amounted to 20.00%. United Internet expects further sales growth for AWIN in its fiscal year 2024 and a strongly positive EBITDA result.

Share and dividend

Share

In the fiscal year 2024, the United Internet share price fell significantly by 32.0% to € 15.67 as of December 31, 2024 (December 31, 2023: € 23.04). The share was thus outperformed by the DAX (+18.8%) and the MDAX (-5.7%) indices.

Share performance 2024, indexed

There was a corresponding decrease in the market capitalization of United Internet AG from around € 4.42 billion in the previous year to around € 3.00 billion as of December 31, 2024.

In the fiscal year 2024, average daily trading via the XETRA electronic computer trading system amounted to around 200,000 shares (prior year: around 410,000) with an average value of € 3.9 million (prior year: € 7.1 million).

Multi-period overview: share performance
(as of: December 31, 2024; in €; all stock exchange figures based on Xetra trading)

(1) EPS from continued operations

(2) EPS from continued operations and without special items

Share data

Shareholder structure (as of: December 31, 2024)

Presentation of the total positons shown above based on the most recent notification of voting rights in accordance with Sections 33 ff. of the German Securities Trading Act. Accordingly, only voting rights notifications that have reached at least the first notification threshold of 3% are taken into account. In addition, any directors' dealings announcements available to the Company have been taken into account accordingly.

The treasury shares held by United Internet do not carry voting or dividend rights. Due to the non-voting nature of treasury shares, the proportion of shares with voting rights held by companies controlled by Mr. Dommermuth in relation to the total number of voting rights of United Internet AG amounts to 54.37%, the proportion of shares with voting rights held by Helikon to 5.61%, the proportion of shares with voting rights held by Bank of America to 5.48%, the proportion of shares with voting rights held by Wellington to 3.35%, and the proportion of shares with voting rights in free float to 31.19%.

Dividend

United Internet’s dividend policy aims to pay a dividend to shareholders of approx. 20-40% of adjusted consolidated net income after minority interests (adjusted consolidated net income attributable to the “shareholders of United Internet AG” – according to the consolidated statement of comprehensive income), provided that funds are not needed for further Company development.

At the Annual Shareholders' Meeting of United Internet AG held on May 17, 2024, the proposal of the Management Board and Supervisory Board to pay a dividend of € 0.50 per share (prior year: € 0.50) for the fiscal year 2023, was approved with a majority of 99.98% of votes cast. As a consequence, a total of € 86.4 million (prior year: € 86.4 million) was distributed on May 23, 2024. The payout ratio was thus 35.6% of the adjusted consolidated net income after minority interests for 2023 (€ 243.0 million) and – in view of the investments already made and still due to be made in the 1&1 mobile communications network and in the expansion of the fiber-optic network – therefore within the upper range targeted by the dividend policy.

For the fiscal year 2024, the Management Board of United Internet AG will propose to the Supervisory Board a regular dividend of € 0.40 per share (prior year: € 0.50). In addition, a one-off catch-up dividend of € 1.50 per share is to be distributed as compensation for the reduced dividend payments for the fiscal years 2018 to 2023. In the past years, United Internet had assumed that Group subsidiary 1&1 would be able to acquire further spectrum by 2025 at the latest. Insofar as additional funds had been necessary, United Internet would have been called upon to provide these as 1&1’s main shareholder. Due to a decision taken by the German Federal Network Agency on March 24, 2025, the acquisition of spectrum has now been postponed for several years. In addition to investments in its network rollout, 1&1 expects it will be able to fund the acquisition of further spectrum itself by this time.

The Management Board and Supervisory Board will discuss this dividend proposal at the Supervisory Board meeting on March 25, 2025 (and thus after preparation of this Management Report). The Annual Shareholders' Meeting of United Internet AG on May 15, 2025 will then vote on whether to adopt the joint proposal of the Management Board and Supervisory Board.

On the basis of around 172.8 million shares with dividend entitlement (as of December 31, 2024 ), the regular dividend would result in a total dividend payment for fiscal year 2024 of € 69.1 million. The dividend payout ratio would therefore be 39.4% of adjusted consolidated net income after minority interests for 2024 (€ 175.5 million) and thus lie – despite the investments already made and still due to be made in the 1&1 mobile network and in the expansion of the fiber-optic network – at the upper end of the dividend policy. Based on the closing price of the United Internet share on December 31, 2024, the dividend yield would be 2.6%.

Multi-period overview: dividend development

(1) Subject to approval of Supervisory Board and Annual Shareholders' Meeting 2025

(2) Without special items

(3) As of: December 31

Annual Shareholders' Meeting 2024

The Annual Shareholders' Meeting of United Internet AG was held in Frankfurt am Main on May 17, 2024.

Of the Company’s registered capital stock of € 192,000,000.00, divided into192,000,000 no-par value shares, of which 19,183,705 treasury shares without voting rights, a total of 131,411,711 no-par value shares with the same number of voting rights were represented. Including the postal votes received for 804,467 no-par value shares, this corresponded to a total of 132,216,178 no-par value shares or 68.86% of the registered capital stock, or 76.51% of the registered capital stock less treasury shares.

The shareholders adopted all resolutions on the agenda requiring voting with large majorities.

Capital stock and treasury shares

Following the issue of shares as part of employee stock ownership plans, United Internet AG held a total of 19,162,689 treasury shares as at the balance sheet date of December 31, 2024, corresponding to 9.98% of the capital stock of 192,000,000 shares (December 31, 2023: 19,183,705 treasury shares or 9.99% of capital stock).

Investor Relations

United Internet attaches great importance to maintaining close contact with institutional and private investors, as well as with financial analysts. The Company aims to provide all target groups with timely information without discrimination, as continuous and transparent capital market communication is essential for the long-term growth of the Company’s value. To this end, the Management Board and the Investor Relations team were in regular contact with capital market participants throughout fiscal year 2024.

United Internet continues to take an proactive approach to discussing and explaining the progress of its business strategy via its quarterly statements, half-year financial report and annual report, at its Annual Shareholders’ Meeting, at press and analyst conferences, and via virtual formats. Together with Investor Relations, management took part in numerous one-on-one discussions at the Company’s offices in Montabaur, as well as at roadshows and conferences in Europe and North America.

A range of topics were discussed at these meetings, including the Group's strategic priorities, its progress in expanding Europe's most advanced 5G mobile network, the financial targets including possible future capital allocation, and new product launches. External factors such as the upcoming spectrum auction of the Federal Network Agency and competitive developments were also of great interest.

In total, management and Investor Relations presented United Internet's equity story at roadshows and at national and international conferences on around 20 days. In addition, the Company is tracked and covered by numerous German and international financial analysts. The current analyst recommendations for the share, as well as the average upside target set by analysts for the United Internet share, are available online at www.united-internet.de/en/investor-relations/share/analyst-coverage.

Apart from one-on-one meetings, shareholders and potential future investors can also receive the latest news around the clock via the Company’s extensive and bilingual website (www.united-internet.de). In addition to the publication dates of financial reports, the dates and venues of investor conferences and roadshows are made publicly available at www.united-internet.de/en/investor-relations/financial-calendar.html. Online versions of the Annual Report and Sustainability Report are also provided on the corporate website.

Personnel report

As a telecommunications and internet company, United Internet is subject to the defining characteristics of the industry: rapid change, short innovation cycles, and fierce competition. United Internet AG has risen to these challenges with great success over many years now. One of the key factors for the success and growth of the United Internet Group are its dedicated and highly competent employees and executives with their entrepreneurial and autonomous approach to work. The Company therefore attaches great importance to a sustainable and balanced strategy across all aspects of its HR activities: from employee recruitment, to targeted entry-level and vocational training formats, tailored skills training programs, support with individual career paths, through to sustainable management development programs, and the long-term retention of executives, high potentials, and top performers.

United Internet AG was once again recognized as a top employer in 2024. Based on an independent study of the “Top Employers Institute”, United Internet received the “TOP Employers Germany” award – as in the preceding years. Certification is only awarded to organizations which offer staff attractive working conditions. Assessment is based on career opportunities, employer benefits, and working conditions, as well as training and development opportunities.

Headcount and personnel expenses

In the highly competitive market for skilled workers in the ICT sector, United Internet once again succeeded in recruiting top staff for its key positions and thus meeting the needs of its growing business.

In addition to targeted employer branding, partnerships with education and training providers, and the positive impact of the Company’s product brands, our successful recruitment efforts center around a candidate-friendly, highly competitive acquisition and selection process.

In the fiscal year 2024, the number of employees remained virtually unchanged from the previous year. Specifically, it rose slightly by 0.1% or 10 employees to 10,972 (prior year: 10,962).

Headcount in Germany rose by 0.2% or 17 employees, to 8,998 as of December 31, 2024 (prior year: 8,981). The number of employees at the Group’s non-German subsidiaries fell slightly by 0.4%, or 7 employees, to 1,974 (prior year: 1,981).

Multi-period overview: headcount development by location ⁽¹⁾ ; year-on-year change

(1) Active employees as December 31 of the respective fiscal year

Employees of United Internet AG work in an international environment at around 40 sites around the world.

Multi-period overview: employees by country ⁽¹⁾

(1) Active employees as December 31 of the respective fiscal year

From the segment perspective, there were 3,281 employees in the Consumer Access segment (prior year: 3,320), 1,640 in the Business Access segment (prior year: 1,522), 1,109 in the Consumer Applications segment (prior year: 1,072), and 4,226 in the Business Applications segment (prior year: 4,364). A further 716 people (prior year: 684) were employed at the Group’s headquarters (Corporate/HQ).

Multi-period overview: headcount development by segment ⁽¹⁾ ; year-on-year change

(1) Active employees as December 31 of the respective fiscal year

Due to salary adjustments to compensate for high inflation, personnel expenses rose by 7.7 % to € 818.4 million in the fiscal year 2024 (prior year: € 760.0 million). As a result, the personnel expense ratio increased to 12.9 % .

Multi-period overview: development of personnel expenses ; year-on-year change

Sales per employee, based on annual average headcount, amounted to approx. € 0.58 million in fiscal year 2024 (prior year: approx. € 0.58 million).

For further information on topics such as “Working Conditions and HR Strategy”, “Training and Skills Development”, “Diversity and Equal Opportunities”, and “Health and Safety”, please refer to the chapter “Social Information – S1 – Own Workforce” in the Sustainability Report 2024 of United Internet AG, which will be published in late March 2025 (at www.united-internet.de/en/investor-relations/publications/reports.html).

Liquidity and finance

The Group’s financial strategy is primarily geared to the strategic business plans of its operating business units. In order to provide sufficient flexibility for further growth, United Internet therefore constantly monitors trends in funding opportunities arising on the financial markets. Various options for funding and potential for optimizing existing financial instruments are regularly reviewed. The main focus is on ensuring sufficient liquidity and the financial independence of the Group at all times. In addition to its own financial strength, the Group maintains sufficient liquidity reserves with core banks. The flexible use of these liquidity reserves enables efficient management of Group liquidity, as well as optimal debt management to reduce interest costs.

A euro cash pooling agreement (zero balancing) has been in place between United Internet AG and certain subsidiaries since July 2012. Under the agreement, credit and debit balances of the participating Group subsidiaries are pooled and netted via several cascades in a central bank account of United Internet AG and available each banking day.

At the end of the reporting period on December 31, 2024, the Group’s bank liabilities amounted to € 2,813.7 million (prior year: € 2,464.3 million) and mainly comprise promissory note loans, syndicated loans, and bilateral credit agreements / credit facilities.

Promissory note loans

In the fiscal year 2024, United Internet AG successfully placed a promissory note loan (“Schuldscheindarlehen”) – as in the years 2017, 2021, and 2023 – with an amount of € 280 million. The proceeds from this transaction are used for general company funding. There are no covenants attached to the new promissory note loan.

Moreover, two promissory note loan tranches totaling € 225.0 million were redeemed on schedule in the fiscal year 2024.

At the end of the reporting period on December 31, 2024, total liabilities from the promissory note loans 2017, 2021, 2023 and 2024 with maximum terms until April 2031 therefore amounted to € 1,217.0 million (prior year: € 1,162.0 million).

Partial repayment of the shareholder loan by IONOS Group SE

In December 2023, IONOS Group SE concluded a loan of € 800 million with a banking syndicate to partially refinance its existing shareholder loan with United Internet AG. The refinancing is at a fixed annual interest rate of 4.67%. The syndicated loan has a term until December 15, 2026 and is due at maturity.

Following further partial repayments in fiscal year 2024, the shareholder loan with United Internet amounts to € 170 million (prior year: € 350 million) and is subordinated. The shareholder loan continues to have a fixed annual interest rate of 6.75%, a term until December 15, 2026, and is to be gradually repaid before this date.

Syndicated loan facilities & syndicated loans

On December 21, 2018, a banking syndicate granted United Internet AG a revolving syndicated loan facility totaling € 810 million until January 2025. In the fiscal year 2020, the Company made use of a contractually agreed prolongation option and extended the term of the revolving syndicated loan facility for the period from January 2025 to January 2026. A credit facility of € 690 million was agreed for this prolongation period.

In December 2024, United Internet successfully refinanced the above-mentioned syndicated loan facility with its core banks. The new syndicated loan facility of € 950 million has a term until December 2029 with contractually agreed extension options.

As of the balance sheet date on December 31, 2024, € 150 million of the new syndicated loan facility had been drawn (prior year: € 150 million). As a result, funds of € 800 million (prior year: € 660 million) were still available to be drawn from the credit facility as at the balance sheet date.

In addition, the Group took out a syndicated loan of € 550 million in December 2024, which will fall due in December 2027. United Internet AG incorporated part of its existing bilateral credit lines with core banks into the syndicated loan, enabling it to successfully refinance them in the long term.

As of the balance sheet date on December 31, 2024, the above-mentioned syndicated of € 550 million was drawn in full (prior year: €0).

In addition, United Internet and Japan Bank for International Cooperation (JBIC) signed a loan agreement for up to € 800 million, also in December 2024. The funds will be provided by one tranche directly from JBIC, which is wholly owned by the Japanese government, and one tranche from a consortium of European and Japanese commercial banks guaranteed by JBIC.

The loan is intended to provide United Internet with funds to build a 5G network in Germany based on Open RAN technology through its subsidiary 1&1.

As of the balance sheet date on December 31, 2024, the above-mentioned loan had not been drawn down and the full amount of € 800 million was thus still available (prior year: €0).

Bilateral credit agreements / bilateral credit facilities

In addition, the Company continues to have various bilateral credit facilities amounting to € 294 million (prior year: € 475 million). These have been granted in part until further notice and in part have terms until September 30, 2025.

Drawings of € 94 million (prior year: € 295 million) had been made from these credit facilities as at the end of the reporting period on December 31, 2024. As a result, funds of € 200 million are still available.

United Internet therefore had free credit lines from syndicated loan facilities and bilateral credit agreements totaling € 1,800 million (prior year: € 840 million) as at the end of the reporting period on December 31, 2024.

For further information, please refer to “Subsequent events”.

In addition to the above mentioned credit lines, the Group has guaranty credit facilities of € 106.0 million (prior year: € 105.0 million) as at the end of the reporting period, which in some cases can also be used by other Group companies. The guaranty credit facilities are available in particular for the provision of operational bank guarantees.

Further disclosures on the various financial instruments, drawings, interest rates, and maturities are provided under note 31 of the Notes to the Consolidated Financial Statements.

As of the reporting date, there are purchase obligations for property, plant and equipment (especially for network infrastructure) totaling € 342.4 million (prior year: € 591.4 million). In addition, there are purchase commitments for intangible assets (especially software) totaling € 19.9 million (prior year: € 68.0 million).

For further details on significant investment obligations, please refer to notes 26 and 27 of the Notes to the Consolidated Financial Statements.