freenet (FNTN) Q2 2024 earnings summary

Executive summary

• Q2 and H1 2024 delivered stable, positive results with no major surprises, supported by new long-term agreements with all three German network operators, enabling a broader 5G mobile tariff portfolio and new campaigns for H2 2024.

• IPTV (waipu.tv) saw record net adds, with 330,000 new subscribers in H1 and strong customer loyalty, positioning the business to surpass 2 million subscribers by year-end.

• The shutdown of Gravis was completed smoothly, classified as a discontinued operation, with cash flow and costs in line or better than planned.

• EBITDA from continuing operations was €252.2 million in H1, slightly below prior year due to higher marketing investments, but Q2 EBITDA was stable.

• Guidance for 2024 is confirmed, with expectations for stable ARPU and net mobile adds, and no share buybacks planned until after a November update.

Financial highlights

• Group revenues increased by 3.3% year-over-year to €1,197.9 million in H1 2024; Q2 revenue up 3.4% to €605.3 million.

• Gross profit rose 6.7% in the quarter and 5.4% in H1 to €470.0 million, with gross margin improved to 39.2%.

• Free cash flow for H1 was €151.2 million, in line with expectations; cash conversion remains above 50%.

• Adjusted consolidated profit from continuing operations increased 20.3% to €159.8 million.

• Dividend of €1.77 per share paid, totaling €210 million.

Outlook and guidance

• 2024 guidance confirmed: revenue stable, EBITDA €495–515 million, free cash flow €260–280 million.

• Moderate growth in postpaid customers and significant growth in waipu.tv subscribers expected; decrease anticipated in freenet TV subscribers.

• Waipu TV is expected to add over 300,000 net subscribers in H2, crossing 2 million by year-end.

• Additional €8 million in marketing investment planned for H2, totaling €20 million for the year.

• 2025 outlook: EBITDA at least €520 million, free cash flow above €260 million.