United Internet (ETR:UTDI) executives used the company’s analysts and investors conference in Frankfurt to review fiscal 2025 performance, outline expectations for 2026, and address investor questions ranging from cloud growth and taxation to the potential impact of AI across its portfolio.
Portfolio overview and access business trends
CEO Ralph Dommermuth described United Internet as operating across “internet access and applications” for both consumer and business customers, supported by more than 10,000 employees, an 86,000-kilometer fiber network, a 5G mobile network, and roughly 100,000 servers. Key brands mentioned included 1&1 in consumer access, 1&1 and Versatel in business access, GMX/Web.de/mail.com in consumer applications, and IONOS (and its subsidiaries) in business applications.
Operationally, he noted customer contracts were down by 17,000, including a decline of 110,000 broadband accesses. Dommermuth attributed weaker mobile momentum partly to customer migrations in the prior year. Revenue in consumer access grew 0.8%, with service revenue “about the same” and other revenue—such as handset and tablet sales—up 3.7%. Consumer access EBITDA fell 11.7% year over year, with Dommermuth pointing to segment-level dynamics including the national roaming partner change and slower-than-expected growth in the Vodafone network during 2025. He also cited an accounting change related to Telefónica no longer activating a portion of costs.
Business access and applications performance
For business access, Dommermuth highlighted 1&1 Versatel’s footprint, describing a network covering 350 large German cities and growth in directly connected customers. He said turnover increased 2.1% and EBITDA improved by 2.1% to EUR 177 million, “despite the starting costs.”
Consumer applications (GMX/Web.de) posted stronger growth. Dommermuth said the business added more than 60,000 new accounts and reached 360,000 paid customers, emphasizing a model that starts with free accounts and converts users to paid offerings. He reported 310,000 additional paid accounts and noted that free accounts declined as conversions increased. Revenue rose 8.1% to EUR 322.6 million, driven by monetization, paid accounts, and advertising. EBT increased 8.7% to EUR 223.1 million. Dommermuth also referenced incorporating AI features as add-ons and within services.
In business applications, Dommermuth described IONOS as a digitization partner for small and medium-sized enterprises across Europe and North America, offering domains, websites, e-commerce, online marketing tools, office productivity products, storage, and cloud infrastructure with a focus on security standards and data protection compliance. He said customer contracts increased to 5.25 million, driven mainly by international growth, with domestic contracts at 4.8 million. Dommermuth said IONOS was able to offset the impact of a weaker U.S. dollar, and he reported EBITDA up 19.8% to EUR 464.1 million, implying a 35.2% EBITDA margin.
Group figures, cash flow, and balance sheet
CFO Carsten Theurer reiterated that the group added 0.7 million customers, “mostly from consumer business,” citing contributions from IONOS business applications (460,000) and consumer applications. He also emphasized the 310,000 paid-account additions in consumer applications from conversions.
Theurer said group revenue increased 1.9%. He clarified a mix-up in earlier commentary, noting that 19.8% referred to business applications EBITDA growth, while group EBITDA increased 2.4%. He also referenced IFRS 5 treatment of Sedo as a discontinued unit in the P&L (while remaining included in the balance sheet and cash flow).
On profitability, Theurer pointed to higher depreciation and said EBIT decreased 1.9% compared to 2024. He reported cash flow improved by EUR 70 million, attributing the change partly to the cash-flow impact of contingent payments—saying the company paid about EUR 200 million in advance, which will be used over time and no longer represents cash payments in coming years.
He said investing cash outflows reflected network expansion and reported capex of EUR 730 million, “a little bit less than last year.” Theurer also cited financing and capital allocation items, including a “catch-up dividend,” acquisition of 1&1 shares of over EUR 200 million in 2025, and share buyback programs involving both United Internet and IONOS.
Theurer reported that free cash flow after lease increased to EUR 320.6 million in 2025 from EUR 47 million in 2024. In the cash flow bridge, he highlighted taxes as the largest year-over-year swing, which he attributed to the timing of advance tax payments and the tax-group structure around Versatel and 1&1.
On the balance sheet, Theurer said fixed assets rose by EUR 350 million, largely due to fiber network investments and activation of contingent payments over time. He reported net debt of EUR 3.2 billion at the end of 2025 and a leverage ratio of 2.48. Equity decreased slightly, but he said the equity ratio remained solid at 43.6%.
2026 outlook and upcoming segment reporting changes
Dommermuth outlined 2026 targets, calling for revenue of EUR 6.25 billion and EBITDA of EUR 1.45 billion, which he described as EUR 170 million higher than the prior year. He guided cash capex to EUR 600 million to EUR 650 million, saying investments in decentralized and regional data centers would “slow down a bit” after roughly 350 sites were already up and running.
He also said the company will change its segment reporting beginning in January 2026. Dommermuth described plans to rename and reorganize segments so that the consumer access segment becomes “Consumer and Small Business.” A new segment, “Enterprise and Networks,” will combine the 1&1 mobile network with business access, positioning it as a wholesale/network-oriented view alongside Versatel’s large-customer focus.
Q&A: IONOS cloud, taxes, AI strategy, and free cash flow
- IONOS data center / EU “gigafactory”: Asked about a planned data center, Dommermuth said the topic likely referred to a potential EU gigafactory and that the company was still waiting for tender documents, which had been repeatedly delayed. He said the last he heard was “end of March,” and that IONOS management would decide whether to participate once details are available.
- IONOS cloud revenue trajectory: Executives said they had limited detail to share, but Theurer said the company had “a quite good start in the first quarter” and was optimistic about double-digit growth, particularly in the public sector.
- Tax charge outlook: Responding to a question about a notable step-down in taxes in 2025 versus 2024, Theurer distinguished between cash taxes and P&L taxes. He said the key special effect was cash back from advance payments made in 2024, and indicated taxes would normalize in 2027, with 2026 still impacted in the P&L by the Versatel/1&1 tax-group structure and Versatel losses.
- AI viewed as opportunity, not threat: Dommermuth said he was “quite relaxed” about AI’s impact on IONOS and argued AI should ultimately be beneficial, pointing to opportunities to sell AI solutions to SMEs and to embed AI into products for efficiency. He also addressed investor concerns that AI-assisted “vibe coding” could disrupt website creation, saying United Internet expects to offer similar capabilities and that infrastructure needs—domains, hosting, and customer relationships—remain essential.
- Consumer applications and AI-driven search changes: Dommermuth said he was “even more relaxed” about AI’s effect on consumer applications, arguing the business relies primarily on logged-in users rather than search traffic. He described AI features being rolled out in email products, such as translation, smart search, and drafting assistance, and discussed the possibility of distributing third-party AI agents through the company’s reach.
- Consumer applications EBITDA and sale speculation: Theurer said consumer applications were growing and that EBITDA was benefiting both from organic growth and from bringing server operations in-house after a shared-service arrangement with IONOS was wound down. He said expectations were “more than EUR 140 million” EBITDA and that a sale was “not on the agenda,” though he added the company would listen if an attractive offer emerged.
- Free cash flow expectation: Theurer gave a “very rough estimate” of free cash flow “around about EUR 600 million,” citing an expected EBITDA improvement at 1&1 and comparing against the prior year level “just under EUR 500.”
The conference concluded with management reiterating a focus on participating in AI-driven change while pursuing efficiency gains across operations, alongside continued investment in network and infrastructure.
About United Internet (ETR:UTDI)
United Internet AG, through its subsidiaries, operates as an Internet service provider worldwide. The company operates through Consumer Access, Business Access, Consumer Applications, and Business Applications segments. It offers landline-based broadband and mobile internet products, including home networks, online storage, telephony, and IPTV for private users; and telecommunication products ranging from fiber-optic direct connections to tailored ICT solutions, which include voice, data, and network solutions, as well as infrastructure services to national and international carriers and ISPs.
