DGAP-News: Gigaset AG presents 2018 Annual Results

Press Release
Munich, April 30, 2019

Gigaset AG presents 2018 Annual Report
Guidance met in full - revenue contributed by young business segments continues to grow

• Successful transformation: Growth in all young business segments
• Total consolidated revenue of EUR280.3 million
• EBITDA of EUR22.1 as planned
• Strong end-of-year business: Revenue in the 4th quarter of 2018 increases by 6.0 % to EUR111.6 million
• Positive outlook for 2019: Increase in revenue and free cash flow expected

Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its Annual Report for 2018. The company was able to meet its guidance for all key figures in full. The shift in contributions to revenue away from Phones and toward the three young business segments was intensified further in 2018. Smartphones, Smart Home and Professional all posted growth.

""Restructuring of the company is progressing. The appreciable rates of growth in the Smartphones, Smart Home and Professional segments makes us optimistic that we're on the right track," says Klaus Weßing, CEO of Gigaset AG. "We grew sharply in these segments in the past fiscal year and are now fully focused on the current one - that is the way forward for Gigaset. We aim to ensure that the young business segments soon generate revenue to match Phones."

Revenue of EUR111.6 million in Q4 2018
Thanks to the boost from volatile end-of-year business, Gigaset increased its consolidated revenue in the fourth quarter of 2018 by 6.0 % to EUR111.6 million. Gigaset also grew its revenue slightly in the Phones segment in the fourth quarter and so even posted growth in all four business segments on a quarterly basis.

Gigaset AG generated consolidated revenue of EUR280.3 million in fiscal 2018 (2017: EUR293.3 million), surpassing the adjusted guidance from December 2018. EBITDA was EUR22.1 million (2017: EUR30.4 million), likewise within the forecast range of EUR20 to 28 million.

"Even though revenue did not increase in absolute terms compared to 2017, our bottom line was positive. The fourth quarter of 2018 was the most successful in Gigaset's more recent history and the factored-in decline at Phones was, as planned, partly compensated for by growth in the young business segments," states Thomas Schuchardt, Finance Director of Gigaset Communications GmbH.

Overview of the business segments
In a fiercely competitive market, Gigaset generated revenue of EUR193.3 million in the Phones segment in the fiscal year just ended (2017: EUR215.3 million). In the meantime, Gigaset has adapted its products in this business segment comprehensively to the new circumstances of an all-IP landscape. The DECT cordless phone portfolio has been geared rigorously to Internet- and router-based requirements. Gigaset continues to offer customers the largest and most diverse cordless phone portfolio on the market, which is reflected by the fact that it is the European market leader in this segment.

Revenue in the Professional segment in fiscal 2018 rose by 8.3% to EUR59.9 million. Gigaset is focusing here on three topics: cordless phones, desktop phones, and single- and multi-cell solutions. Here, too, a new topic that will also be vital for Gigaset in 2019 was presented at the end of 2018: The N870IP PRO, a new multi-cell solution with which Gigaset is addressing the enterprise arena for the first time and can increase application limitations from 250 users (SMEs) to up to 20,000 users. Gigaset aims to share in the growth potential of this new business segment.

In the Smartphones segment, which increased its revenue in 2018 by 16.3% to EUR23.9 million, Gigaset has launched 10 models since 2015 and so successfully positioned itself in the price segment between EUR119 and EUR279. The unique selling point that the smartphones are produced in Bocholt, Germany, is of particular importance for the company. The GS185, the first smartphone to be made in Germany, came off the assembly line there in 2018. The next model - the GS280 - was presented this February. Further models will likewise be produced in Germany. Gigaset's main goal in that is to raise the quality of smartphones to match the company's high standards.

Revenue in the Smart Home segment last fiscal year was increased by 49.3% to EUR3.2 million. Gigaset has operated in this field since 2012. The sensor- and cloud-based security solution now comprises around 11 different sensors and actuators. Gigaset differentiates itself from the competition not only in terms of hardware, but also software. Gigaset only uses data that is absolutely necessary for using the service. Sensor data is stored and processed in the Gigaset cloud independently of the customer's personal data. The cloud itself is hosted on servers in Frankfurt am Main, Germany. In 2018 Gigaset expanded the original security portfolio to include further applications in the fields of Smart Comfort (control of the heating) and Smart Care (senior citizens assistance system). Experts put the overall market for ambient assisted living, i.e. the scenarios that Gigaset supports with Smart Security, Smart Comfort and Smart Care, at EUR56.18 billion^[1]. Gigaset likewise sees huge potential here in Europe, the second-largest market after the U.S.

Strategy for 2025 finalized - structural change toward a digital ecosystem
"Our products are becoming more and more digital. We are planning to launch numerous new products in 2019," adds Klaus Weßing. "As part of the digital transformation, we will develop new business models and expand Gigaset into an integrated hardware, software and service provider. We will be able to boost our efficiency and leverage synergies through modularization of the product platform."

Positive outlook for 2019: Increase in revenue and free cash flow expected
In 2019, Gigaset intends to continue the operational strategy it launched in 2016. Its entrepreneurial focus is on expanding the product portfolio while securing its Phones business. Accordingly, there will be an increase in research and development expenditure, part of which will be compensated for by strict cost management.

With regard to compensating for the factored-in decline in the market at the Phones segment, which Gigaset aims to cushion by expanding its activities and growing revenue in the Smartphones, Smart Home and Professional segments, the company expects for the current fiscal year 2019:

• A slight increase in revenues compared with 2018
• A considerable improvement in free cash flow as well as
• EBITDA at the previous year's level

The audited financial statements and the Annual Report for 2018 can be downloaded from Gigaset's website at www.gigaset.ag.

Gigaset is an internationally operating company in the area of communications technology. The company is Europe's market leader in DECT telephones and is also a leader in the international arena, with around 900 employees and sales activities in around 50 countries. Its business activities comprise not only DECT phones, but also an extensive smartphone portfolio, cloud-based smart home solutions, and business telephony solutions for small, medium-sized and enterprise customers.

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^[1] https://www.marketsandmarkets.com/Market-Reports/ambient-assisted-living-smart-home-market-95414042.html