EQS-News: freenet AG: freenet continues to record significant growth in EBITDA and free cash flow during third quarter of 2022

freenet continues to record significant growth in EBITDA and free cash flow during third quarter of 2022

• Revenue stable year-on-year after nine months of 2022 (+0.4%)
• EBITDA up markedly by +6.6% to 362.3 million euros in the nine-month period of 2022
• waipu.tv reports its strongest third-quarter customer growth since launch (+51.6 thousand net new customers)
• Cash conversion remains high: free cash flow up +8.3% to 187.3 million euros after nine months of the year
• EBITDA and free cash flow likely to reach upper half of guidance range (470 480 or 240 250 million euros)

Büdelsdorf, 3 November 2022 freenet AG [ISIN DE000A0Z2ZZ5] today announced its results for the nine-month period of 2022.

freenet business resilient in the face of macroeconomic environment

freenet reported strong financial results after the nine-month period of the current financial year. The company demonstrated the robustness of its core business (mobile communications) while at the same time reaffirming its growth and profitability ambitions in the TV and media business. Despite the macroeconomic challenges, freenet increased all key performance indicators (see KPIs, Group table) for both the third quarter and the nine-month period of 2022. In light of this, EBITDA and free cash flow are likely to reach upper half of guidance  range 2022 (470 480 or 240 250 million euros).

KPIs, Group Increase in EBITDA reflects higher revenue quality

At 1,889.1 million euros, revenue remained stable between January and September 2022 compared to the prior-year period (1,880.8 million euros). This performance was partly driven by steady growth in the number of subscribers¹, which rose to 8,930.6 thousand in the nine-month period of the current year (end of 2021: 8,785.1 thousand). Postpaid ARPU, the key price indicator in the Mobile Communications segment, also remained stable compared to the prior-year period at 17.9 euros (9M/2021: 18.1 euros). With consolidated revenue remaining stable, the increased share of services revenues and the growth in the high-margin TV and Media businesss share of total revenue in particular caused quality of revenue to increase further.

EBITDA rose considerably in the nine-month period of the current year, increasing by +6.6% to 362.3 million euros (prior-year period: 339.9 million euros). This growth reflects continuing improvements in the quality of revenue as well as stable costs. The comparably low energy intensity of the business model as well as the debt ratio also helped to stabilise the cost base even in an environment dominated by rising inflation. Sustainable measures optimising the structure of the workforce also helped personnel expenses to remain unchanged despite higher salaries and the discontinuation of positive effects from short-time work. As a result, profitability based on the EBITDA margin in both segments increased year-on-year during the quarter under review. This meant that both segments contributed to the year-on-year rise in EBITDA (Mobile Communications: +14.9 million euros; TV and Media: +11.0 million euros). Against this backdrop, free cash flow increased by +8.3% to 187.3 million euros in the nine-month period of the year (prior-year period: 172.9 million euros).

KPIs, Mobile Communications segment Crisis resilience of mobile communications business confirmed

The positive trend across almost all performance indicators in freenets Mobile Communications segment over the past quarter demonstrates the crisis resilience of this business and reaffirms the trend from previous quarters. Stable postpaid ARPU and steady growth in the number of postpaid customers relevant for recurring revenues in the Mobile Communications segment to 7,235.0 thousand (9M/2021: 7,138.6 thousand) resulted in a stable level of revenue (9M/2022: 1,670.4 million euros; 9M/2021: 1,671.1 million euros). The particularly high-margin service revenue rose by +10.9 million euros to 1,247.9 million euros (9M/2021: 1,237.1 million euros), again making up the majority of segment revenue (75%). The only factor levelling off this growth at segment level was the decrease in low-margin hardware revenue caused by a lack of availability of hardware during the first half of the year. freenets innovative app-based tariffs² continue to attract new customers each quarter, resulting in a customer base of 112.1 thousand as of 30 September 2022 (30 September 2021: 84.4 thousand). The number of customers on these particularly high-margin tariffs recorded out of proportion growth of +32.9%. The temporary slowdown in growth for the mobile customer base caused by the entry into force of the new Telecommunications Act (TKG) was negligible over the nine-month period of the current year. The growth in net new customers surpassed the prior-year quarter by almost +40% in the third quarter of 2022. Overall, the segment contributed 292.4 million euros to Group EBITDA (9M/2021: 277.5 million euros).

KPIs, TV and Media segment Profitability-orientated growth

The TV and Media segment also continued its strong performance in the third quarter of 2022. Revenue rose by +16.2 million euros to 225.6 million euros in the nine-month period of the current financial year (prior-year period: 209.4 million euros). This increase was primarily driven by high net new customer growth in waipu.tv subscribers, which recorded the strongest third quarter in its history with a customer base of 871.8 thousand (30 September 2021: 668.5 thousand). Reflecting its role as a value for money leader in the German IPTV market, in 2022 waipu.tv recorded its three most successful quarters since its launch in 2016. The number of subscribers in the TV and Media segment grew by +101.6 thousand to 1,583.5 thousand (30 September 2021: 1,481.8 thousand) despite the anticipated decline in freenet TV subscribers (RGU), which fell by -101.7 thousand. As a result, the TV and Media segment contributed almost 50% to total net new customer growth (+225.8 thousand) over the past 12 months. Media Broadcasts infrastructure business (B2B) also performed very well and made another significant contribution to the considerable increase in segment EBITDA to 83.1 million euros (9M/2021: 72.1 million euros).

Conference call webcast

The conference call covering the results for the nine-month period and third quarter of 2022 will take place on Friday, 4 November 2022, at 10:00 (CET). All those interested in attending can follow the conference call via webcast (listen-only mode). A recording will be made available following the event.

The presentation and the nine-month statement are also available online.

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¹ Total of postpaid, freenet FUNK, freenet FLEX, waipu.tv subscription and freenet TV subscription customers (RGU)
² Key figure shown as at the end of the period
³ freenet FUNK and freenet FLEX customers

Note

In the interest of clear and transparent presentation, alternative performance measures (APMs) are used in the financial statements of freenet AG and in ad hoc disclosures pursuant to Art. 17 MAR, in addition to the disclosures defined by the International Financial Reporting Standards (IFRSs). Information on the use, definition and calculation of APMs can be found in the freenet Group 2021 Annual Report from page 38 onwards.

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Contact

freenet AG
Investor Relations & ESG
Tel.: +49 (0)40/ 513 06 778
Email: ir@freenet.ag
fn.de/investors