Montabaur, May 11, 2010. United Internet AG, Europe's leading internet specialist with brands such as 1&1, GMX and WEB.DE got off to a good start in 2010 and is moving strongly into the growing Mobile Internet and Cloud Computing markets. In the first quarter of the current year, consolidated sales of United Internet AG grew by 13.0%, from EUR 409.4 million last year to EUR 462.8 million. Despite high expenses for the current DSL quality drive and development and pre-launch costs for new business fields, earnings before interest, taxes, depreciation and amortization (EBITDA) improved by 8.1%, from EUR 83.5 million to EUR 90.3 million.

Due in particular to scheduled higher depreciation following the acquisition of freenet's DSL customers, earnings before interest and taxes (EBIT) remained virtually unchanged at EUR 70.7 million (prior year: EUR 70.8 million). The acquisition of freenet's customers in late 2009 significantly enhanced the company's strategic position in the current consolidation of the DSL market. Earnings per share (EPS) improved slightly from EUR 0.16 last year to EUR 0.17.

In order to fully exploit the megatrends Mobile Internet and Cloud Computing, United Internet introduced a new segmentation for management and reporting purposes at the beginning of 2010: Access and Applications. "Access" combines the company's DSL and mobile internet business, while "Applications" comprises cloud applications and the online marketing business. "We got off to a successful start in the new year," states Ralph Dommermuth, CEO of United Internet AG. "With our business relations to millions of small firms and private users, we have an excellent opportunity to participate in these booming markets." The signing of an MVNO contract (Mobile Virtual Network Operator) with Vodafone in March 2010 represents an important milestone on this path. It will enable United Internet to move into the dynamically growing mobile internet market from summer 2010 onward.

Outlook

In view of the successful start to fiscal 2010, management has confirmed its forecasts and expects consolidated sales to grow by around 15%. Despite high expenses for the current DSL quality drive and further increased development and marketing costs in the following quarters for investments in new business fields and further foreign expansion, EBITDA is expected to remain at the record level of the previous year (without positive special items).

Segment development

The strong increase in consolidated sales was driven by the "Access" segment. Sales in the first quarter of 2010 grew by 19.3% to EUR 300.8 million. EBITDA improved by 42.2% to EUR 31.7 million, while EBIT grew by 17.2% to EUR 25.2 million, despite scheduled write-downs on the acquired freenet DSL customer base. Compared to December 31, 2009, the number of fee-based contracts in this segment remained stable at 3.50 million, thus continuing the positive trend of the previous quarters. A further 90,000 complete DSL contracts (of particular importance for customer retention) were added in the period under review.

In the "Applications" segment, United Internet invested heavily in customer growth and increased the number of fee-based contracts by 180,000 to 5.83 million. Sales growth in this segment was slowed by the contract conversion of a major customer of AdLINK subsidiary affilinet in late 2009. As a result, listed subsidiary AdLINK Internet Media AG posted a fall in sales of 23.5% in the first quarter of 2010 - whereas the rest of the segment enjoyed growth of 11.2%. Total segment sales thus grew by 3.0% from EUR 157.1 million to EUR 161.8 million. Despite increased marketing expenses and high development and pre-launch costs for new applications, segment EBITDA and EBIT grew by 3.2% to EUR 60.5 million and by 1.3% to EUR 47.4 million, respectively. Customer contracts outside Germany grew to 2.30 million and accounted for 80,000 of total growth in customer contracts of 180,000. The number of ad-financed accounts increased from 26.3 million to over 27.0 million in the first quarter.

Appendix: Key financials and customer tables

back to overview