DGAP-News: freenet AG: freenet increases subscriber base, EBITDA and free cash flow in the first quarter of 2022 2022 guidance reiterated

freenet increases subscriber base, EBITDA and free cash flow in the first quarter of 2022 2022 guidance reiterated

• Revenue stable higher service revenue share improves quality
• Profitability rises across all segments compared to prior-year quarter
• EBITDA up 8.4% to 118.0 million euros compared to prior-year quarter
• Positive trend in free cash flow (+5.5% compared to Q1/21)
• Subscriber base grows to over 8.8 million
• Guidance for 2022 financial year reiterated

Büdelsdorf, 12 May 2022 freenet AG [ISIN DE000A0Z2ZZ5] today announced its results for the first three months of the 2022 financial year.

Improved profitability with stable revenue in the first quarter of 2022

freenet continued to demonstrate the viability, crisis resistance and predictability of its business model at the start of 2022, reporting growth across almost all key performance indicators and increasing profitability overall despite the ongoing pandemic, new regulation (EECC) and the Ukraine crisis. The fact that demand for freenet products and services is impervious to crisis situations and its value creation is based on long-term subscriptions is crucial to the resilience of the business model.

At 616.8 million euros, revenue developed as expected between January and March 2022 compared to the prior-year quarter (619.2 million euros). This stable performance was driven by steady growth in the number of high value subscribers¹, which rose to 8,811.1 thousand in the first three months of the current year (end of 2021: 8,785.1 thousand). Moreover, Postpaid ARPU remained largely unchanged accordingly the relevant price structure compared to the prior-year quarter at 17.7 euros (prior-year quarter: 17.8 euros). With consolidated revenue remaining stable, the higher service revenue (SR) share leads to a further quality improvement of revenue, which is also reflected in EBITDA development.

The 4.4 million euro rise in revenue in the TV and Media segment to 73.9 million euros offset the marginal 4.1 million euro decline in revenue in the Mobile Communications segment to 544.6 million euros (prior-year quarter: 548.7 million euros). The increase in revenue in the TV and Media segment was primarily driven by strong growth in waipu.tv subscribers, which rose by 46.5 thousand to 769.0 thousand (end of 2021: 722.5 thousand), as well as higher advertising revenue at EXARING. The rise in waipu.tv subscribers also exceeded the drop in freenet TV subscribers (RGU) by 35.6 thousand to 761.0 thousand (end of 2021: 796.6 thousand). As a result, waipu.tv recorded its strongest start to a year since it was launched onto the market in 2016.

Revenue in the Mobile Communications segment declined, primarily because of the reduction in low-margin hardware sales. By contrast, service revenue in this segment rose by 3.9 million euros to 409.3 million euros (prior-year quarter: 405.4 million euros) to make up 75.1% of segment revenue (prior-year quarter: 73.9%). This was due to stable ARPU and growth in the number of postpaid customers relevant for steady revenues in the Mobile Communications segment to 7,182.8 thousand (end of 2021: 7,178.0 thousand). The number of customers on app-based tariffs² also rose to reach 98.4 thousand at the end of March 2022 (end of 2021: 88.0 thousand).

Improved profitability across all segments

Profitability based on EBITDA and free cash flow improved in line with expectations in the first quarter of 2022. EBITDA increased significantly by 8.4% from 108.8 million euros in the first quarter of 2021 to 118.0 million euros in the quarter under review. This improved profitability was driven by EBITDA increases across all segments and is mainly attributable to strong operating performance in these segments as well as sustainable optimisation of overhead costs within the group. Free cash flow rose by 5.5% from 59.5 million euros in the prior-year quarter to 62.7 million euros in the first quarter of 2022. For the first time, this included a dividend payment of 5.5 million euros from the equity interest in CECONOMY AG.

Amortisation of mobilcom-debitel brand

In January 2022, freenet began amortising the main brand mobilcom-debitel on a straight-line basis over a period of 18 months. This move was triggered by the reinforcement of the freenet umbrella brand as part of a comprehensive brand transformation. Overall, an intangible asset totaling 293.2 million euros will be amortised by the end of the first half of 2023.

Image: Reconciliation of EBITDA to adjusted consolidated profit (in EUR million)
 

This resulted in amortisation of 47.0 million euros during the first quarter of 2022, which reduced by corresponding deferred tax income had a negative impact of 40.2 million euros on consolidated profit. To improve comparability with prior-year quarters, freenet will be reporting adjusted earnings metrics³ for the next few quarters. The bottom line is that freenet generated adjusted consolidated profit of 62.8 million euros in the first three months of 2022 (prior-year quarter: 49.8 million euros). As a result, the adjusted earnings per share rose to 0.53 euros (prior-year quarter: 0.40 euros).

2022 guidance reiterated

Due to good quarterly results and continuing positive expectations for the 2022 full year, the Executive Board confirms its guidance for the current financial year. According to this guidance, the Executive Board expects EBITDA to rise to between 450 and 470 million euros and free cash flow to increase to between 230 and 250 million euros. The medium-term financial ambitions presented at the Capital Markets Day in November 2021 with the target of increasing EBITDA to at least 520 million euros and raising free cash flow to more than 260 million euros by the 2025 financial year also continue to apply.

Conference call webcast

On Friday, 13 May 2022 at 10:00 a.m. (CET), freenet will hold the management call on the first quarter 2022 results. All those interested in attending can attend the conference call via webcast (listen-only mode).

A recording will be made available following the event.

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¹ Total of postpaid, freenet FUNK, freenet FLEX, waipu.tv and freenet TV subscribers (RGU). All customer figures are
   shown as of the respective reporting date.
² freenet FUNK and freenet FLEX customers
³ Adjusted for effects from the amortisation of the mobilcom-debitel brand

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 AG 2021 Annual Report from page 38.

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Contact:
freenet AG
Investor Relations & ESG
Fon: +49 (0)40/ 513 06 778
Email: ir@freenet.ag
https://www.freenet-group.de