AI Terminal
IONOS Group SE
Interim / Quarterly Report • Aug 12, 2024
4508_10-q_2024-08-12_2c7ee705-ac22-4330-a954-3bc15cd30dbe.pdf
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
IONOS
Half-year Financial Report 2024
SELECTED KEY FIGURES
| June 30, 2024 | June 30, 2023 | Change | |
|---|---|---|---|
| NET INCOME (in €k) | |||
| Revenue | 751,614 | 708,644 | $6.1 \%$ |
| EBITDA | 207,400 | 204,015 | $1.7 \%$ |
| Adjusted EBITDA | 218,040 | 200,849 | $8.6 \%$ |
| EBIT | 152,814 | 150,383 | $1.6 \%$ |
| Adjusted EBT ${ }^{(1)}$ | 121,504 | 107,074 | $13.5 \%$ |
| Adjusted EPS (in €) ${ }^{(2)}$ | 0.63 | 0.56 | $12.7 \%$ |
| BALANCE SHEET (in €k) | |||
| Current assets | 265,420 | 213,152 | $24.5 \%$ |
| Non-current assets | 1,359,371 | 1,348,985 | $0.8 \%$ |
| Equity | 66,748 | $-70,958$ | |
| Equity ratio | $4.1 \%$ | $-4.5 \%$ | $+8.6 \%-P$ |
| Balance sheet total | 1,624,791 | 1,562,137 | $4.0 \%$ |
| CASH FLOW (in €k) | |||
| Operative cash flow | 177,692 | 157,688 | $12.7 \%$ |
| Cash flow from operating activities | 189,844 | 129,790 | $46.3 \%$ |
| Cash flow from investing activities | $-47,538$ | $-49,608$ | $-4.2 \%$ |
| Free cash flow ${ }^{(3)}$ | 150,995 | 92,214 | $63.7 \%$ |
| EMPLOYEES ${ }^{(4)}$ | |||
| Headcount as of June 30 | 4,107 | 4,195 | $-2.1 \%$ |
| thereof domestic | 2,153 | 2,215 | $-2.8 \%$ |
| thereof foreign | 1,954 | 1,980 | $-1.3 \%$ |
| SHARE (in €) | |||
| Share price as of June 30 (Xetra) | 25.40 | 13.02 | $95.1 \%$ |
| CUSTOMER BASE (in Mio.) | 6.28 | 6.10 | 0.18 |
| thereof domestic | 3.20 | 3.16 | 0.04 |
| thereof foreign | 3.08 | 2.94 | 0.15 |
[^0]
[^0]: (1) EBT excluding non-cash valuation effects from the contingent purchase price liability (H1 2024: € -14,197k; H1 2023: +€ 30,695k)
(2) EPS excluding non-cash valuation effects from the contingent purchase price liability (H1 2024: +€ 0.10; H1 2023: € -0.22). For reasons of comparability, EPS was calculated for H1 2023, as for H1 2024, on the basis of the 139,512,000 shares in circulation after the share buyback
(3) Free cash flow is defined as net cash inflows from operating activities, less investments in intangible assets and property, plant and equipment, plus cash inflows from disposals of intangible assets and property, plant and equipment; reported including repayments of lease liabilities, which are reported under cash flow from financing activities.
(4) Active employees as of June 30, excluding temporary staff and trainees.
CONTENT
FOREWORD OF CEO
INTERIM GROUP MANAGEMENT REPORT FOR THE FIRST HALF OF 2024
PRINCIPLES OF THE GROUP
GENERAL CONDITIONS
BUSINESS DEVELOPMENT
POSITION OF THE GROUP
SUBSEQUENT EVENTS
RISK AND OPPORTUNITY REPORT
FORECAST REPORT
INTERIM FINANCIAL STATEMENTS FOR THE FIRST HALF OF 2024
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED CASH FLOW STATEMENT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NOTES ON THE INTERIM FINANCIAL STATEMENTS
RESPONSIBILITY STATEMENT
FINANCIAL CALENDAR / IMPRINT
Note:
Due to rounding differences, figures in tables and cross-references may differ slightly from the actual figures (units of currency, percentages, etc.).
For reasons of better readability, the masculine form is used in the Combined Management Report for gender-specific designations. IONOS Group SE would like to point out that the use of the masculine form is explicitly to be understood as gender-independent.
Dear shareholders, employees and business partners,
IONOS Group SE's core business continued to develop positively in the first half of 2024. The number of customers increased by around 180,000 to 6.28 million compared to previous year period.
Revenues increased by $6.1 \%$ to $€ 751.6$ million in the first half of 2024 (H1 2023: € 708.6 million). The revenue growth was based on the strong performance of the IONOS core business, which grew by $11.2 \%$ in the first six months of 2024 and was therefore fully in line with our expectations. The lower-margin Aftermarket business
fell short of expectations due to temporary phasing effects in connection with a new product launch. Although we expect to see significant revenue growth in the Aftermarket business again in the further course of the year, the revenue growth originally planned for 2024 is unlikely to be achieved.
Adjusted EBITDA increased as planned by $8.6 \%$ to $€ 218.0$ million in the first half of 2024 (H1 2023: € 200.8 million), with marketing expenses changed in time compared to the previous year. The adjusted EBITDA margin rose from $28.3 \%$ in the same period of the previous year to $29.0 \%$.
As part of the preliminary half-year figures announced on July 12, 2024, we have slightly adjusted our revenue forecast for the 2024 financial year while leaving our earnings forecast unchanged and now expect overall currency-adjusted revenue growth of approx. 9\% (previously: approx. 11\%; 2023: € 1.423 billion). The adjusted EBITDA margin is expected to be around 29\% in 2024 (previously around 28.5\%; 2023: 27.4\%), which means that adjusted EBITDA is expected to remain unchanged at around $€ 450$ million (2023: € 390.3 million).
For 2025, IONOS is planning percentage revenue growth of around 10\% and a further increase in the adjusted EBITDA margin to around $30 \%$.
Adjusted earnings per share (EPS) rose from $€ 0.56$ in the same period of the previous year to $€ 0.63$ in the first half of 2024.
We are well positioned for the next steps in our company's development and are optimistic about the second half of the financial year. We would particularly like to thank all our employees for their commitment as well as our shareholders and business partners for the trust they have placed in IONOS Group SE.
Montabaur, August 8, 2024
Achim Weiß
INTERIM GROUP MANAGEMENT REPORT FOR THE FIRST HALF OF 2024
Principles of the Group
Group structure, strategy and control
The shares of IONOS Group SE have been listed on the regulated market of the Frankfurt Stock Exchange since February 8, 2023. Based on the shares outstanding as of June 30, 2024, United Internet AG holds 64.0\% and WP XII Venture Holdings II SCSp, Luxembourg / Luxembourg 21.3\% of IONOS Group SE shares. A further $14.7 \%$ are in free float.
IONOS Group SE is a pure holding company. The operating business is conducted via the companies IONOS SE, Montabaur, and STRATO AG, Berlin, and their subsidiaries, which are held by the intermediate holding company IONOS Holding SE.
A simplified presentation (as of June 30, 2023) of the Group structure, including significant operating subsidiaries of the Group, is as follows:
Business model
IONOS is an internationally active digitalization partner and reliable cloud enabler for small and mediumsized enterprises ("SMEs"), but also for individual users (e.g., freelancers) and larger corporate customers. It offers a comprehensive product portfolio in the area of Web Presence \& Productivity, as well as Cloud Solutions. This portfolio is supported by first-class customer support and infrastructure. The Group is therefore primarily active in the market for web hosting and cloud applications.
In the Web Presence \& Productivity segment, IONOS offers professional solutions for Internet presences, such as domain registration, web hosting, website construction kits supported by artificial intelligence and dedicated servers. This is supported by additional productivity products (e.g., e-commerce applications, email, and marketing applications) as well as additional services such as search engine optimization, business applications or storage and backup solutions.
The Cloud Solutions offering includes both public cloud and private cloud solutions with a wide range of services in the areas of Infrastructure-as-a-Service ("IaaS"), Platform-as-a-Service ("PaaS") and Software-as-a-Service ("SaaS"). The IONOS Cloud Solutions product range also includes a "Compute Engine" solution (a flexible IaaS solution for cloud computing applications), storage and backup, network services, managed services and database solutions.
The aftermarket business in IONOS is an online marketplace for buying, selling and parking domains that enables users to find, evaluate and trade domains. The business model is largely based on commissions for successful domain sales and domain parking or fees for additional services, such as domain valuations.
The products and solutions are developed in the company's own development centers or in cooperation with partner companies and are operated on over 100,000 servers in 30 data centers, 9 of which are the company's own data centers.
In addition to the international main brand IONOS, the product portfolio is marketed to specific target groups via differently positioned brands such as STRATO, arsys, fasthosts, home.pl and World4You. In addition, there are several brands with extensive domain expertise such as United Domains, InterNetX and sedo, which offer professional services for active domain management. The we22 brand specializes in website builders and the construction of websites for private and small business customers.
With its focus on small and medium-sized enterprises ("SMEs") in the Web Presence \& Productivity segment, IONOS operates in a market that is very fragmented on the customer side. On the product side, these customers are typically dependent on the products offered by IONOS, as these are indispensable for sales and sales support. In addition, in most cases the products only account for an insignificant proportion of an SME's costs and are usually paid for by the customer on a monthly basis. For example, it is unlikely that a small SME will stop operating its website or regularly compare prices with comparable but less well-known providers for cost reasons.
In its Cloud Solutions division, IONOS focuses on providing scalable and powerful cloud services to small and medium-sized businesses as well as enterprise customers looking for flexible and cost-effective solutions for their web presence and work productivity. IONOS' customized VPS, cloud servers and PaaS, IaaS and SaaS offerings are critical to the smooth operation and rapid growth of these businesses, with monthly payments and reliable support providing a firm foundation for their digital business success. Given the financial importance and strategic relevance of IONOS' cloud solutions, customers are unlikely to stop operating their cloud infrastructure due to cost pressures or to regularly compare providers, as the reliability and scalability of these services are essential to their business success.
Main focus areas for products and innovations
IONOS does not engage in traditional research and development (R\&D) comparable to that of a manufacturing company. Research and development expenditure also plays a rather subordinate role in the industry context. Against this background, IONOS does not report any R\&D figures.
Nevertheless, IONOS stands for innovative, web-based products and applications. The ability to further develop, combine, adapt and launch innovative products and services in large markets forms the basis for the Group's success.
In addition to continuous optimization and ensuring the reliable operation of all services offered, the programmers, product managers and technical administrators at the domestic and foreign locations worked on the following projects in particular in the first half of 2024:
- Introduction of an AI-based assistant in the email product in the first European markets.
- Introduction of an AI-based domain search for the Arsys and Fasthosts brands.
- Introduction of an AI chatbot for customer service at IONOS in Germany and the UK.
- Introduction of a domain expiry pool to improve the monetization of domains that are no longer required. Using automated processes, these domains are offered to our customers in a targeted manner and can be made available for sale via Sedo.
- Introduction of shared web hosting products for WordPress based on a scalable and high-performance new hosting platform.
- Introduction of a warning protection service at World4You for the legally compliant creation of websites in compliance with legal requirements.
- Rollout of the Bare Metal Cloud product in the Niederlauterbach data center to serve the French market.
- Rollout of the "Build-to-Order" service for dedicated servers in North America (USA, Canada). This enables customers to put together their own server architecture with the right hardware.
- Introduction of a private DNS solution.
- Introduction of an S/3-compatible object storage system with high scalability and redundancy based on Ceph.
- Introduction of Managed MariaDB and Managed Redis with administration, maintenance, and scaling of these databases by IONOS.
- Introduction of Logging-as-a-Service (LaaS): A cloud-based platform for managing infrastructure and application logs.
- Regional control plans for Managed Kubernetes with improved availability and resilience thanks to the option of regional assignment of the control level of Kubernetes clusters.
- Introduction of Managed Kubernetes (MK8S) in the USA for the use of managed Kubernetes services and Kubernetes clusters.
- Development of an "airgapped" cloud solution in an isolated environment for ITZBund.
- Introduction of a bidirectional VPN for secure management of resources in the Private Cloud.
General economic, sector and legal conditions
Macroeconomic development
In its updated economic outlook (World Economic Outlook, Update July 2024), the International Monetary Fund (IMF) expects the global economy to grow by 3.2\% in 2024 (January forecast: 3.1\%), almost unchanged from the previous year's growth of $3.3 \%$.
At the same time, the Monetary Fund experts see growing tensions in global trade and political risks. This could accelerate inflation again, for example through higher prices for imports across the supply chains.
The Fund has adjusted its forecasts for 2024 for the North American target countries, IONOS during the year as follows. An increase of 2.6\% (previous year: 2.5\%) is expected for the USA, 0.5 percentage points more than in the January forecast. The forecast for Canada is for an increase of 1.3\% (previous year: $1.2 \%$ ), which is -0.1 percentage points less than originally expected. And for Mexico, the IMF expects economic output to increase by $2.2 \%$ (previous year: $3.2 \%$ ), -0.5 percentage points less than at the start of the year.
The IMF maintained its forecast for the eurozone, which is important for IONOS, and expects economic output to increase by $0.9 \%$ (previous year: $0.5 \%$ ), unchanged from the January forecast. The forecast for France was lowered slightly by -0.1 percentage points to $0.9 \%$ (previous year: $1.1 \%$ ), while the forecast for Spain was raised significantly by 0.9 percentage points to $2.4 \%$ (previous year: $2.5 \%$ ). Growth of $0.7 \%$ (previous year: $-0.2 \%$ ) is expected for Italy, unchanged from the January forecast.
The IMF is currently forecasting growth of $0.7 \%$ for the UK (previous year: $0.1 \%$ ), which is 0.1 percentage points higher than at the start of the year.
In contrast, the IMF revised its economic forecast for Germany, by far the most important market from IONOS' perspective (share of sales in 2023: around 53\%), downwards by -0.3 percentage points during the year and now only expects economic output to increase by $0.2 \%$ in 2024 (previous year: $-0.2 \%$ ). The IMF believes this is due to ongoing weakness in production.
Changes in growth forecasts 2024 for key target countries and regions of the IONOS Group SE:
| Actual 2023 | January forecast 2024 | April forecast 2024 |
July- forecast 2024 |
Change on January forecast | |
|---|---|---|---|---|---|
| World | $3.3 \%$ | $3.1 \%$ | $3.2 \%$ | $3.2 \%$ | $+0.1 \%-P$ |
| USA | $2.5 \%$ | $2.1 \%$ | $2.7 \%$ | $2.6 \%$ | $+0.5 \%-P$ |
| Canada | $1.2 \%$ | $1.4 \%$ | $1.2 \%$ | $1.3 \%$ | $-0.1 \%-P$ |
| Mexico | $3.2 \%$ | $2.7 \%$ | $2.4 \%$ | $2.2 \%$ | $-0.5 \%-P$ |
| Eurozone | $0.5 \%$ | $0.9 \%$ | $0.8 \%$ | $0.9 \%$ | $+/-0.0 \%-P$ |
| France | $1.1 \%$ | $1.0 \%$ | $0.7 \%$ | $0.9 \%$ | $-0.1 \%-P$ |
| Spain | $2.5 \%$ | $1.5 \%$ | $1.9 \%$ | $2.4 \%$ | $+0.9 \%-P$ |
| Italy | $-0.2 \%$ | $0.7 \%$ | $0.7 \%$ | $0.7 \%$ | $+/-0.0 \%-P$ |
| UK | $0.1 \%$ | $0.6 \%$ | $0.5 \%$ | $0.7 \%$ | $+0.1 \%-P$ |
| Germany | $-0.3 \%$ | $0.5 \%$ | $0.2 \%$ | $0.2 \%$ | $-0.3 \%-P$ |
Source: International Monetary Fund, World Economic Outlook (Update), January 2024, April 2024, July 2024
Development of the sector / core market
At its 2024 half-year press conference, the industry association Bitkom confirmed that the German ICT sector (ICT = information and communication technology) is experiencing stable growth in a difficult overall economic environment.
The Bitkom-ifo Digital Index is an indicator that reflects the business climate in the digital sector. It is compiled by the ifo Institute in collaboration with the industry association Bitkom and is based on the monthly ifo Business Survey. The index is made up of the values for the business situation and business expectations.
Bitkom is forecasting revenue growth of $4.3 \%$ to EUR 224.8 billion for the German ICT market in 2024. The digital index stood at 7.9 points in June, while the ifo business climate index for the economy as a whole remained in negative territory at minus 6.3 points.
The business situation in the digital sector fell slightly to 11.9 points, while business expectations were rated 6.6 points better than in the previous month at 3.9 points. This shows the robustness of the sector despite geopolitical crises and disrupted supply chains.
Similar growth of $4.7 \%$ to 235.4 billion euros is expected for 2025. However, individual segments such as consumer electronics (minus 7.5\%) or desktop PCs (minus 1.5\%) are shrinking, which underlines the need to focus on high-growth areas such as software and IT services.
Global cloud computing market
The cloud computing market continued to develop dynamically in the first half of 2024. In its latest study, Gartner, Inc. forecasts that global end-user spending on public cloud services will increase by $20.4 \%$ to a total of USD 675.4 billion in 2024, up from USD 561 billion in 2023. This growth will be driven by generative AI (GenAI) and application modernization.
All segments of the cloud market are expected to grow in 2024. Infrastructure-as-a-Service (IaaS) will record the highest growth with a forecast growth in end-user spending of $25.6 \%$, followed by Platform-as-aService (PaaS) with $20.6 \%$.
laaS continues to grow robustly, reflecting the ongoing GenAI revolution. The need for infrastructure to train, infer and fine-tune AI models is growing exponentially and has a direct impact on laaS consumption.
While cloud infrastructure and platform services are driving the highest spending growth, SaaS remains the largest segment of the cloud market in terms of end-user spending. Spending on SaaS is expected to increase by $20 \%$ to a total of USD 247.2 billion in 2024.
SaaS spending is being driven by applications that are being modernized by independent software vendors to run in a SaaS-based consumption model. Organizations continue to increase their use of the cloud for specific use cases such as AI, machine learning, Internet of Things and Big Data, which is driving this SaaS growth.
Legal conditions / Significant events
The legal framework for the business activities of IONOS remained essentially constant in H1 2024 compared to H1 2023 and therefore had no significant impact on the business development.
There were no significant events in the first half of 2024 that had a material impact on business performance.
Business development
Development of customer base in H1 2024
| in million | June 30, 2024 | June 30, 2023 | Change |
|---|---|---|---|
| Total customers | 6.28 | 6.10 | 0.18 |
| thereof domestic | 3.20 | 3.16 | 0.04 |
| thereof foreign | 3.08 | 2.94 | 0.14 |
| in million | June 30, 2024 | December 31, | ||
|---|---|---|---|---|
| Total customers | 6.28 | 6.19 | 0.09 | |
| thereof domestic | 3.20 | 3.19 | 0.01 | |
| thereof foreign | 3.08 | 3.00 | 0.08 |
The number of paying customers increased by around 180,000 year-on-year. This growth resulted from around 40,000 customers in Germany and around 140,000 customers abroad, supported in particular by our current TV campaigns at IONOS, but also by the efficient use of performance marketing measures. This brought the total number of customers to 6.28 million.
Quarterly development: change compared with prior-year quarter
| in $€ k$ | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|---|---|---|
| Revenue | 350,065 | 365,025 | 372,969 | 378,645 | 354,850 | $6.7 \%$ |
| EBITDA | 101,380 | 79,985 | 101,303 | 106,098 | 111,263 | $-4.6 \%$ |
| Adjusted EBITDA | 105,476 | 83,971 | 105,807 | 112,233 | 114,644 | $-2.1 \%$ |
| EBIT | 74,490 | 52,599 | 74,158 | 78,656 | 84,512 | $-6.9 \%$ |
Multi-period overview: Development of sales and key earnings figures
| in $€ \mathrm{k}$ | H1 2021 | H1 2022 | H1 2023 | H1 2024 | Change |
|---|---|---|---|---|---|
| Revenue | 533,159 | 629,804 | 708,644 | 751,614 | $6.1 \%$ |
| EBITDA | 168,503 | 170,045 | 204,015 | 207,400 | $1.7 \%$ |
| EBITDA margin | $31.6 \%$ | $27.0 \%$ | $28.8 \%$ | $27.6 \%$ | $-1.2 \%-P$ |
| Adjusted EBITDA | 181,791 | 181,402 | 200,849 | 218,040 | $8.6 \%$ |
| Adjusted EBITDA margin | $34.1 \%$ | $28.8 \%$ | $28.3 \%$ | $29.0 \%$ | $+0.7 \%-P$ |
| EBIT | 113,563 | 113,245 | 150,383 | 152,814 | $1.6 \%$ |
| EBIT margin | $21.3 \%$ | $18.0 \%$ | $21.2 \%$ | $20.3 \%$ | $-0.9 \%-P$ |
Quarterly development: Adjusted EBITDA
| in €k | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q2 2023 |
|---|---|---|---|---|---|
| EBITDA | 101,380 | 79,985 | 101,303 | 106,098 | 111,263 |
| Adjustement for LTIP ${ }^{(1)}$ | 1,367 | 1,759 | 1,671 | 1,892 | 1,216 |
| Adjustment for stand-alone activities ${ }^{(2)}$ | 2,729 | 2,174 | 2,474 | 3,059 | 2,057 |
| Adjustment for IPO costs ${ }^{(3)}$ | 0 | $-44$ | 0 | 0 | $-388$ |
| Adjustment for severance payments ${ }^{(4)}$ | 0 | 97 | 360 | 1,184 | 496 |
| Total adjustments | 4,096 | 3,986 | 4,505 | 6,135 | 3,381 |
| Adjusted EBITDA | 105,476 | 83,971 | 105,807 | 112,233 | 114,644 |
${ }^{(1)}$ Includes costs for employee stock ownership programs.
${ }^{(2)}$ Includes costs of preparing the spin-off from the United Internet Group and the establishment of IONOS Group SE as an independent group (primarily costs of the billing carve-out project (separation from billing systems of 1\&1 Telecommunication SE).
${ }^{(3)}$ Includes external costs incurred in connection with the IPO. In the first half year of 2023, this includes income from the recharging of costs incurred in connection with the IPO to the shareholders United Internet AG and Warburg Pincus.
${ }^{(4)}$ Includes expenses related to reorganization and restructuring measures which primarily consist of severance payments and other personnelrelated costs.
Multi-period overview: Adjusted EBITDA
| in €k | H1 2021 | H1 2022 | H1 2023 | H1 2024 |
|---|---|---|---|---|
| EBITDA | 168,503 | 170,045 | 204,015 | 207,400 |
| Adjustment for LTIP ${ }^{(1)}$ | 6,786 | 1,632 | 2,753 | 3,563 |
| Adjustment for stand-alone activities ${ }^{(2)}$ | 5,179 | 7,368 | 4,575 | 5,533 |
| Adjustment for IPO costs ${ }^{(3)}$ | 0 | 2,357 | $-11,675$ | 0 |
| Adjustment for consulting fees incurred for one-off projects ${ }^{(4)}$ | 1,323 | 0 | 0 | 0 |
| Adjustment for severance payments ${ }^{(5)}$ | 0 | 0 | 1,181 | 1,544 |
| Total adjustments | 13,288 | 11,357 | $-3,166$ | 10,640 |
| Adjusted EBITDA | 181,791 | 181,402 | 200,849 | 218,040 |
${ }^{(1)}$ Includes costs for employee stock ownership programs.
${ }^{(2)}$ Includes costs of preparing the spin-off from the United Internet Group and the establishment of IONOS Group SE as an independent group (primarily costs of the billing carve-out project (separation from billing systems of 1\&1 Telecommunication SE).
${ }^{(3)}$ Includes external costs incurred in connection with the IPO. In the first half year of 2023, this includes income from the recharging of costs incurred in connection with the IPO to the shareholders United Internet AG and Warburg Pincus.
${ }^{(4)}$ Includes consulting fees incurred for one-off projects for e.g. reorganization measures.
${ }^{(5)}$ Includes expenses related to reorganization and restructuring measures which primarily consist of severance payments and other personnelrelated costs.
Revenue increased by $+6.1 \%$ from $€ 708,644 \mathrm{k}$ in the previous year to $€ 751,614 \mathrm{k}$ in the first half of 2024. The increase in revenue is mainly due to the continued positive development of new customer business and higher revenue from cross-selling and upselling to existing customers, particularly with email, web hosting, online marketing, and website builder products. In addition, this development is due to the price adjustments introduced for some products in the second half of 2023 and is also driven by the Cloud Solutions business division, in particular by virtual private server products and the key account business around Enterprise Cloud in the first half of 2024. Excluding Sedo's aftermarket business (domain trading platform and domain parking), revenue growth amounted to $11.2 \%$ in the first half of 2024.
In total, revenue from contracts with customers breaks down into product revenue from the Web Presence \& Productivity segment in the amount of $€ 647,668 \mathrm{k}$ (H1 2023: $€ 614,160 \mathrm{k} ;+5.5 \%$ ) and from the Cloud Solutions segment in the amount of $€ 81,142 \mathrm{k}$ (H1 2023: $€ 71,950 \mathrm{k} ;+12.8 \%$ ). Revenues also include revenues with related companies, i.e., with Group companies of the United Internet Group. These revenues recorded slight growth (H1 2024: € 22,804k; H1 2023: € 22,534k; +1.2\%).
EBITDA developed positively in the first half of 2024 with an increase of $€ 3,385 \mathrm{k}$ to $€ 207,400 \mathrm{k}$ (+1.7\%), despite the change in the timing of marketing expenses of $€ 8,884 \mathrm{k}$ and the income of $€ 11,675 \mathrm{k}$ included in the previous year from passing on the costs incurred in connection with the IPO to the shareholders United Internet and Warburg Pincus. The EBITDA margin fell from $28.8 \%$ in the first half of the previous year to $27.6 \%$.
Adjusted EBITDA increased as planned by $8.6 \%$ from $€ 200,849 \mathrm{k}$ to $€ 218,040 \mathrm{k}$ in the first half of 2024, with marketing expenses changing over time. At 29.0\%, the adjusted EBITDA margin in the first half of the year was above the previous year's margin of $28.3 \%$.
EBIT increased by $1.6 \%$ from $€ 150,383 \mathrm{k}$ to $€ 152,814 \mathrm{k}$ and therefore developed positively as a result of the effects described above.
At 20.3\%, the EBIT margin in the first half of 2024 is slightly below the previous year's margin of $21.2 \%$.
Share and Dividend
The IONOS share price rose by $44.5 \%$ in the first half of 2024, from an initial price of $€ 17.65$ on January 1, 2024 to $€ 25.50$ on June 30, 2024, significantly outperforming the benchmark index SDAX, which rose by $8.2 \%$ in the same period.
The second public Annual General Meeting of IONOS Group SE was held in Frankfurt on May 15, 2024. All items on the agenda were approved by a large majority.
As an established participant in the capital market, active, continuous and transparent corporate communication with all capital market participants is particularly important to IONOS. The company aims to provide all target groups with information promptly and on an equal footing. To this end, the Management Board and Investor Relations were in regular contact with institutional and retail investors in the first half of 2024 .
The current analyst recommendations can be found on the website www.ionos-group.com in the Investor Relations / Share section under Analyst Coverage.
Personnel Report
As of June 30, 2024, IONOS employed 4,107 people. Due to staff turnover and optimizations in some specialist areas, the number of employees fell by 88 employees or $-2.1 \%$ compared to the previous year (4,195 employees) despite the company's positive performance.
The number of employees in Germany fell by 62 employees or $-2.8 \%$ from 2,215 in the previous year to 2,153 as of June 30, 2024. In the foreign companies, the number of employees fell by 26 employees or $1.3 \%$ from 1,980 in the previous year to 1,954 .
| June 30, $2021^{(1)}$ |
June 30, $2022^{(1)}$ |
June 30, $2023^{(2)}$ |
June 30, $2024^{(2)}$ |
Change | |
|---|---|---|---|---|---|
| Employees, total | 3,935 | 4,159 | 4,195 | 4,107 | $-2.1 \%$ |
| thereof domestic | 2,156 | 2,278 | 2,215 | 2,153 | $-2.8 \%$ |
| thereof abroad | 1,779 | 1,881 | 1,980 | 1,954 | $-1.3 \%$ |
${ }^{(1)}$ Active employees as of June 30 of the respective financial year.
${ }^{(2)}$ Active employees as of June 30 of the respective financial year excluding temporary staff and trainees
Personnel expenses increased by $10.5 \%$ from $€ 133,681 \mathrm{k}$ in the previous year to $€ 147,679 \mathrm{k}$ in the first half of 2024, partly due to one-off expenses for optimization measures. At $20.8 \%$, the personnel expenses ratio in the first half of 2024 was higher than in the same period of the previous year.
| H1 2021 | H1 2022 | H1 2023 | H1 2024 | Change | |
|---|---|---|---|---|---|
| Personnel expenses (€k) | 112,015 | 117,236 | 133,681 | 147,679 | $10.5 \%$ |
| Personnel expense ratio | $21.0 \%$ | $18.6 \%$ | $18.9 \%$ | $20.8 \%$ | $+1.9 \%-P$ |
Position of the Group
There were no acquisition and divestment effects on Group revenue and EBITDA in the first half of 2024.
Group's earnings position
Multi-period overview: Development of key cost items
| in $€ k$ | H1 2021 | H1 2022 | H1 2023 | H1 2024 | Change |
|---|---|---|---|---|---|
| Cost of sales | 252,487 | 332,771 | 376,393 | 375,948 | -0.1\% |
| Cost of sales ratio | $47.4 \%$ | $52.8 \%$ | $53.1 \%$ | $50.0 \%$ | $-5.8 \%$ |
| Gross margin | $52.6 \%$ | $47.2 \%$ | $46.9 \%$ | $50.0 \%$ | $+3.1 \%-P$ |
| Selling expenses | 124,966 | 137,731 | 143,691 | 165,339 | $15.1 \%$ |
| Selling expenses ratio | $23.4 \%$ | $21.9 \%$ | $20.3 \%$ | $22.0 \%$ | $1.7 \%-P$ |
| Administrative expenses | 35,820 | 39,528 | 45,854 | 50,882 | $11.0 \%$ |
| Administrative expenses ratio | $6.7 \%$ | $6.3 \%$ | $6.5 \%$ | $6.8 \%$ | $+0.3 \%-P$ |
For the development of revenue, please refer to the comments on business performance.
The cost of sales decreased by $0.1 \%$ to $€ 375,948 \mathrm{k}$ in the first half of 2024 compared to the first half of the previous year, while revenue increased by $+6.1 \%$, causing the gross margin to rise from $46.9 \%$ to $50.0 \%$. The main reason for this development is the decline in Sedo's lower-margin Aftermarket business.
Selling expenses increased by $+15.1 \%(+\in 21,648 \mathrm{k})$ in the first half of 2024 compared to the previous year and therefore at a faster rate than revenue growth. There was mainly an increase in personnel expenses ( $+\in 10,158 \mathrm{k} ;+17.1 \%$ compared to the previous year). Purchased marketing services were $€ 8,884 \mathrm{k}$ or $+18.4 \%$ higher than in the previous year. As a result of the development described above, the selling expenses ratio rose by +1.7 percentage points in the first half of the year.
Administrative expenses increased by $+11.0 \%(+\in 5,028 \mathrm{k})$ in the first half of 2024 compared to the previous year. This was due in particular to higher expenses for external work ( $€+1,594 \mathrm{k} ;+17.4 \%$ ) and higher money transfer costs ( $€+1,087 \mathrm{k} ;+20.2 \%$ ). Personnel expenses fell slightly ( $€-173 \mathrm{k}-1.0 \%$ ). A combined analysis of personnel expenses and expenses for external work shows an increase of $+5.3 \%$. Measured against turnover, the administrative cost ratio increased slightly from $6.5 \%$ to $6.8 \%$.
The net item from other operating income and expenses decreased by $€ 10,268 \mathrm{k}$ to $€ 2,599 \mathrm{k}$ (previous year: $€ 12,867 \mathrm{k}$ ). In the previous year, this included prior-period income from the charging on of IPO costs from previous years amounting to $€ 11,675 \mathrm{k}$.
The financial result amounted to $€-45,233 \mathrm{k}$ (first half of 2023: $€-12,593 \mathrm{k}$ ) and includes the valuation adjustment of the purchase price liability in connection with the acquisition of STRATO AG ( $€-14,197 \mathrm{k}$; previous year: $€+30,695 \mathrm{k}$ ). The amount of the purchase price essentially depends on the enterprise value of the company. The exercise date depends on future events, which must be estimated. This estimate was adjusted compared to the previous year. Please refer to the comments in the "Further disclosures" section. In addition, repayments of the loan from United Internet AG and the partial refinancing of this loan with a loan from a bank consortium lead to falling interest expenses (H1 2024: € -30,390k; H1 2023:
$€-41,380 \mathrm{k})$.
As the measurement of the purchase price liability with an expense of $€ 14,197 \mathrm{k}$ (previous year: income of $€ 30,695 \mathrm{k}$ ) did not lead to the recognition of a deferred tax item in the first half of 2024, the Group tax rate normalized in the first half of 2024 (from $20.7 \%$ in the first half of 2023 to $31.2 \%$ in the first half of 2024). After tax expenses of $€ 33,472 \mathrm{k}$ (previous year: $€ 28,556 \mathrm{k}$ ), consolidated net income amounted to $€ 73,835 \mathrm{k}$ (previous year: $€ 109,213 \mathrm{k}$ ).
Earnings per share (EPS) amounted to $€ 0.53$ in the first half of 2024 compared to $€ 0.78$ in the first half of 2023. In the previous year, the annual result was significantly influenced by income from the change in a purchase price liability (EPS effect: $€+0.22$ ). The change in the first half of 2024 had an EPS effect of $€-0.10$. Adjusted EPS (excluding the earnings effect from the measurement of the contingent purchase price liability) amounted to $€ 0.63$ in the first half of 2024 and $€ 0.56$ in the first half of the previous year.
Group's financial position
Development of key cash flow figures
| in $€ \mathrm{k}$ | H1 2024 | H1 2023 | Change |
|---|---|---|---|
| Operative cash flow | 177,692 | 157,688 | $12.7 \%$ |
| Cash flow from operating activities | 189,844 | 129,790 | $46.3 \%$ |
| Cash flow from investing activities | $-47,538$ | $-49,608$ | $-4.2 \%$ |
| Free cash flow ${ }^{(1)}$ | 150,995 | 92,214 | $63.7 \%$ |
| Cash flow from financing activities | $-134,358$ | $-85,397$ | $57.3 \%$ |
| Cash and cash equivalents on June 30 | 30,775 | 21,610 | $42.4 \%$ |
(1) Free cash flow is defined as net cash inflows from operating activities, less investments in intangible assets and property, plant and equipment, plus cash inflows from disposals of intangible assets and property, plant and equipment; reported including repayments of lease liabilities, which are reported under cash flow from financing activities.
Multi-period overview: Development of key cash flow figures
| in $€ \mathrm{k}$ | H1 2021 | H1 2022 | H1 2023 | H1 2024 |
|---|---|---|---|---|
| Operative cash flow | 160,245 | 145,476 | 157,688 | 177,692 |
| Cash flow from operating activities | 141,026 | 140,828 | 129,790 | 189,844 |
| Cash flow from investing activities | $-44,794$ | $-50,608$ | $-49,608$ | $-47,538$ |
| Free cash flow ${ }^{(1)}$ | $96,776$ | 86,885 | 92,214 | 150,995 |
| Cash flow from financing activities | $-162,797$ | $-102,288$ | $-85,397$ | $-134,358$ |
| Cash and cash equivalents on June 30 | 40,205 | 38,993 | 21,610 | 30,775 |
(1) Free cash flow is defined as net cash inflows from operating activities, less investments in intangible assets and property, plant and equipment, plus cash inflows from disposals of intangible assets and property, plant and equipment; reported including repayments of lease liabilities, which are reported under cash flow from financing activities.
Net cash inflows from operating activities amounted to $€ 189,844 \mathrm{k}$ and increased by $€ 60,054 \mathrm{k}$ compared to the first half of the previous year (first half of 2023: $€ 129,790 \mathrm{k}$ ), which is due to the payment from employee participation programs in the previous year and increased advance payments of income taxes in the first half of 2024. However, the latter only represents a temporary shift that will balance out again by the end of 2024.
In the reporting period, net cash outflows from investing activities amounted to $€-47,538 \mathrm{k}$ and were slightly below the first half of 2023 ( $€-49,608 \mathrm{k}$ ). At $€-16,027 \mathrm{k}$, payments from the increase in surplus liquidity invested at United Internet AG were $€ 2,739 \mathrm{k}$ lower than in the previous year. In contrast, investments in intangible assets and property, plant and equipment increased by $€ 695 \mathrm{k}$ (H1 2024: $€-31,996 \mathrm{k}$; H1 2023: $€-31,301 \mathrm{k}$ ), with investments in servers also rising slightly (H1 2024: $€ 24,244 \mathrm{k}$; H1 2023: $€ 23,995 \mathrm{k})$.
Free cash flow at IONOS is defined as net cash inflows from operating activities, capital expenditure on intangible assets and property, plant and equipment, plus cash inflows from the disposal of intangible assets and property, plant and equipment, including payments for lease liabilities. Free cash flow in the first half of 2024 amounted to $€ 150,995 \mathrm{k}$, compared to $€ 92,214 \mathrm{k}$ in the first half of 2023 , mainly due to the increase in net cash inflows from operating activities described above.
Financial activities resulted in an outflow of $€ 100,000 \mathrm{k}$ from the repayment of the long-term loan to United Internet AG in the first half of 2024 (first half of 2023: $€ 30,000 \mathrm{k}$ ). IONOS also acquired treasury shares. This led to a cash outflow of $€ 12,633 \mathrm{k}$. At $€ 14,388 \mathrm{k}$, interest payments on the loan to United Internet AG and the syndicated loan were $€ 33,559 \mathrm{k}$ lower in the first half of 2024 than in the previous year (first half of 2022: $€-47,947 \mathrm{k}$ ). This effect is mainly due to a delay in interest payments from the syndicated loan, which will not be paid until July, and the higher interest level of the partially redeemed loan to United Internet AG.
Cash and cash equivalents amounted to $€ 30,775 \mathrm{k}$ as of June 30, 2024 - compared to $€ 21,610 \mathrm{k}$ as of the previous year's reporting date.
Group's asset position
At $€ 1,624,791 \mathrm{k}$, total assets are slightly higher than total assets as of December 31, 2023 (€ 1,596,265k).
Development of current assets
| In $€ \mathrm{k}$ | December 31, 2023 | Change | |
|---|---|---|---|
| Cash and cash equivalents | 30,775 | 22,652 | $35.9 \%$ |
| Trade accounts receivable | 82,201 | 73,512 | $11.8 \%$ |
| Receivables from related parties | 80,986 | 63,094 | $28.4 \%$ |
| Contract assets | 9,825 | 8,235 | $19.3 \%$ |
| Prepaid expenses | 30,529 | 25,530 | $19.6 \%$ |
| Other financial assets | 25,564 | 28,313 | $-9.7 \%$ |
| Income tax claims | 4,622 | 2,722 | $69.8 \%$ |
| Other non-financial assets | 918 | 727 | $26.3 \%$ |
| Total current assets | 265,420 | 224,785 | $18.1 \%$ |
The increase in current assets by $€ 40,635 \mathrm{k}$ is mainly due to the $€ 17,892 \mathrm{k}$ increase in receivables from related parties. This item includes cash pool receivables, which increased by $€ 16,027 \mathrm{k}$ as a result of the build-up of surplus liquidity invested at United Internet AG. In addition, trade receivables are $€ 8,689 \mathrm{k}$, accrued expenses are $€ 4,999 \mathrm{k}$ and advance payments for domains (in other financial assets) are $€ 1,788 \mathrm{k}$ higher than the respective balances at the end of the fiscal year.
Development of non-current assets
| in $€ \mathrm{k}$ | June 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Investments in associated companies | 3,889 | 4,279 | $-9.1 \%$ |
| Other financial assets/Receivables from finance lease | 3,468 | 3,612 | $-4.0 \%$ |
| Property, plant and equipment | 311,261 | 321,661 | $-3.2 \%$ |
| Intangible assets | 154,459 | 164,174 | $-5.9 \%$ |
| Goodwill | 828,421 | 826,271 | 0.3\% |
| Contract assets | 26 | 9 | $>100 \%$ |
| Prepaid expenses | 17,257 | 13,628 | 26.6\% |
| Deferred tax assets | 40,590 | 37,846 | 7.3\% |
| Total non-current assets | 1,359,371 | 1,371,480 | $-0.9 \%$ |
Overall, non-current assets are only slightly below the level at the end of the 2023 fiscal year. Property, plant, and equipment and intangible assets decreased by $€ 20,115 \mathrm{k}$, in particular as a result of depreciation and amortization ( $€ 54,586 \mathrm{k}$ ) exceeding investments ( $€ 33,642 \mathrm{k}$ ). Goodwill is higher than in the previous year due to exchange rates. Deferred tax assets were $€ 2,744 \mathrm{k}$ higher than in the previous year.
Development of current liabilities
| in €k | June 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Trade accounts payable | 78,558 | 89,227 | $-12.0 \%$ |
| Liabilities to related parties | 5,618 | 6,292 | $-10.7 \%$ |
| Liabilities due to banks | 18,684 | 1,125 | $>100 \%$ |
| Income tax liabilities | 36,845 | 21,982 | 67.6\% |
| Contract liabilities | 94,905 | 84,645 | $12.1 \%$ |
| Other provisions | 632 | 888 | $-28.8 \%$ |
| Other financial liabilities | 93,138 | 67,947 | 37.1\% |
| Other non-financial liabilities | 31,208 | 26,009 | 20.0\% |
| Total current liabilities | 359,588 | 298,115 | 20.6\% |
Current liabilities increased by a total of $€ 61,473 \mathrm{k}$ compared to the end of the 2023 fiscal year. Other financial liabilities increased by $€ 25,191 \mathrm{k}$, which is mainly due to the higher subsequent measurement of a purchase price liability in connection with the acquisition of STRATO AG. Current liabilities due to banks increased by $€ 17,559 \mathrm{k}$ due to accrued interest. The $€ 5,199 \mathrm{k}$ increase in other non-financial liabilities is due to higher VAT and payroll and church tax liabilities.
Development of non-current liabilities
| in $€ \mathrm{k}$ | June 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Liabilities due to banks | 797,059 | 796,462 | $0.1 \%$ |
| Liabilities to related parties | 250,000 | 350,000 | $-28.6 \%$ |
| Deferred tax liabilities | 35,524 | 33,652 | $5.6 \%$ |
| Contract liabilities | 1,832 | 1,929 | $-5.1 \%$ |
| Other provisions | 3,942 | 3,262 | 20.8\% |
| Other financial liabilities | 110,098 | 115,626 | $-4.8 \%$ |
| Total non-current liabilities | 1,198,455 | 1,300,931 | $-7.9 \%$ |
The main reason for the decrease in non-current liabilities is the repayment of the vendor loan to United Internet AG in the amount of $€ 100,000 \mathrm{k}$.
Development of equity
| in $\epsilon \mathrm{k}$ | June 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Issued capital | 140,000 | 140,000 | $0.0 \%$ |
| Reserves | $-45,455$ | $-122,222$ | $-62.8 \%$ |
| Treasury shares | $-12,633$ | 0 | n/a |
| Currency translation adjustment | $-15,304$ | $-20,697$ | $-26.1 \%$ |
| Equity attributable to shareholders of the parent company | 66,609 | $-2,919$ | n/a |
| Non-controlling interests | 140 | 138 | $1.2 \%$ |
| Total equity | 66,748 | $-2,781$ | n/a |
Equity in the Group rose from $€-2,781 \mathrm{k}$ as of December 31, 2023 to $€ 66,748 \mathrm{k}$ as of June 30, 2024. The increase is mainly due to the change in other reserves. In the first half of the year, this change was due to the addition of the consolidated net profit of $€ 73,835 \mathrm{k}$ and the valuation of the employee share option programs in the amount of $€ 2,934 \mathrm{k}$. The acquisition of treasury shares, which are to be deducted from equity, had the opposite effect.
IONOS Group SE did not hold any treasury shares as of the balance sheet date of December 31, 2023. On 8 May 2024, the Management Board of IONOS Group SE, with the approval of the Supervisory Board, initially resolved to acquire up to 850,000 treasury shares via the stock exchange based on the authorization granted by the Extraordinary General Meeting on 26 January 2023 to acquire treasury shares. This corresponds to approx. $0.6 \%$ of the share capital of $€ 140,000 \mathrm{k}$. The buy-back program is to be carried out from mid-May 2024 until 28 February 2025 at the latest.
As part of the buyback program, IONOS Group SE acquired a total of 487,937 treasury shares for the first time by June 30, corresponding to $0.3 \%$ of the share capital of 140 million shares. The purchase price excluding incidental acquisition costs amounted to $€ 12,633 \mathrm{k}$.
Net debt (i.e., the balance of liabilities to related parties and banks, receivables from related parties and cash and cash equivalents) decreased by $€ 107,408 \mathrm{k}$ from $€ 1,067,008 \mathrm{k}$ as of December 31, 2023 to $€ 959,600 \mathrm{k}$ as of June 30, 2024.
Multi-period overview: Development of key balance sheet items
| in $\in \mathrm{k}$ | December 31, 2021 | December 31, 2022 | December 31, 2023 | June 30, 2024 |
|---|---|---|---|---|
| Balance sheet total | 1,471,668 | 1,541,505 | 1,596,265 | 1,624,791 |
| Cash and cash equivalents | 49,520 | 26,440 | 22,652 | 30,775 |
| Trade accounts receivable | 49,526 | 66.,628 | 73,512 | 82,201 |
| Property, plant and equipment | 271,782 | 322,286 | 321,661 | 311,261 |
| Intangible assets | 201,437 | 178,826 | 164,174 | 154,459 |
| Goodwill | 825,261 | 820,844 | 826,271 | 828,421 |
| Liabilities due to banks | 0 | 0 | 797,587 | 815,744 |
| Liabilities to related parties | 1,315,000 | 1,245,000 | 350,000 | 250,000 |
| Issued capital | 360 | 360 | 140,000 | 140,000 |
| Equity | $-231,708$ | $-162,180$ | $-2,781$ | 66,748 |
| Equity ratio | $-15.7 \%$ | $-10.5 \%$ | $-0.2 \%$ | 4.1\% |
Management Board's overall assessment of the business situation
IONOS Group SE's core business developed well in the first half of 2024. The number of customers increased by around 180,000 year-on-year to 6.28 million.
Revenue increased by $6.1 \%$ to $€ 751,614 \mathrm{k}$ in the first half of 2024 (H1 2023: $€ 708,644 \mathrm{k}$ ). While revenue in the core business developed according to plan in the first six months of 2024, revenue in the lower-margin Aftermarket business fell short of expectations due to temporary phasing effects in connection with a new product launch. Although the company expects significant revenue growth in the Aftermarket business again in the further course of the year, the planned revenue growth for 2024 will probably no longer be achieved. Excluding the Aftermarket business, revenue growth in the first half of 2024 amounts to $+11.2 \%$.
Adjusted EBITDA increased as planned by $8.6 \%$ to $€ 218,040 \mathrm{k}$ in the first half of 2024 (H1 2023: $€$ 200,849k), with marketing expenses changing over time. The adjusted EBITDA margin rose from $28.3 \%$ in the same period of the previous year to $29.0 \%$.
As part of the preliminary results for the first half of 2024 published on July 12, 2024, the company adjusted its revenue forecast for the 2024 fiscal year and now expects overall currency-adjusted revenue growth of approx. 9\% (previously: approx. 11\%; 2023: $€ 1.423$ billion). The adjusted EBITDA margin is expected to be around 29\% in 2024 (previously around 28.5\%; 2023: 27.4\%), which means that adjusted EBITDA is expected to remain unchanged at around $€ 450$ million (2023: $€ 390.3$ million).
IONOS is planning percentage revenue growth of around 10\% and a further increase in the adjusted EBITDA margin to around 30\% in 2025.
Based on the revenue and earnings figures achieved in the first half of 2024 and in view of the investments made in sustainable corporate development, the Management Board believes that the company remains very well positioned for future corporate development. Based on the forecast continuation of macroeconomic growth in the core sales markets of IONOS, the advancing digitalization and the increasing importance of artificial intelligence as well as the stable business model based primarily on electronic subscriptions, the Management Board continues to expect a positive development of the key financial and non-financial performance indicators.
Subsequent events
No events of particular significance occurred at IONOS after the balance sheet date of June 30, 2024 that have a major impact on the Group's net assets, financial position and results of operations with an effect on accounting and reporting.
Risk and opportunities report
IONOS' risk and opportunity policy is geared towards the goal of maintaining and sustainably increasing the value of the company by seizing opportunities and identifying and managing risks at an early stage. Risk and opportunity management regulates the responsible handling of uncertainties that are always associated with entrepreneurial activity.
Overall statement by the Executive Board on the Group's risk and opportunity situation
The assessment of the overall risk situation is the result of a consolidated view of all material risk areas and individual risks, taking into account interdependencies.
The overall risk and opportunity situation remained largely stable in the first 6 months of 2024 compared to the risk and opportunity reporting in the 2023 consolidated financial statements.
Compared to December 31, 2023, there was an increase in two risk areas and a reduction in the first half of 2024 .
In the "Recruitment market" segment, there was a further increase from Moderate to Significant in the current quarter, as the tightening of the labor market for IT specialists is still ongoing.
The increase from low to moderate in the "Financing" risk area is due to the first-time recognition of the financial covenants risk in the first quarter of 2024 in connection with a syndicated loan. The probability of occurrence is assessed as very low.
The risk area "Technical plant operation" was reduced from Significant to Moderate. This is due to the successful implementation of measures.
In the reporting period and at the time of preparing this quarterly statement, there were no identifiable risks to IONOS as a going concern, neither from individual risk positions nor from the overall risk situation.
IONOS counters these risks by continuously expanding its risk management and, where appropriate, limits them to a minimum by implementing specific measures.
Forecast Report
Economic expectations
In its updated economic outlook (World Economic Outlook, Update July 2024), the International Monetary Fund (IMF) expects the global economy to grow by $3.2 \%$ in 2024 and $3.3 \%$ in 2025, following growth of $3.3 \%$ in the previous year. At the same time, the Monetary Fund experts see growing tensions in global trade and political risks. This could accelerate inflation again, for example through higher prices for imports across supply chains.
The Fund expects the following economic developments for the IONOS target countries over the next two years: Specifically, the IMF anticipates an increase of $2.6 \%$ and $1.9 \%$ in the USA, $1.3 \%$ and $2.4 \%$ in Canada and $2.2 \%$ and $1.6 \%$ in Mexico in North America in 2024 and 2025.
In Europe, $0.2 \%$ and $1.3 \%$ are expected for Germany, $0.7 \%$ and $1.5 \%$ for the UK, $0.9 \%$ and $1.3 \%$ for France, $0.7 \%$ and $0.9 \%$ for Italy and $2.4 \%$ and $2.1 \%$ for Spain in 2024 and 2025.
| 2025e | 2024e | 2023 | |
|---|---|---|---|
| World | $3.3 \%$ | $3.2 \%$ | $3.3 \%$ |
| USA | $1.9 \%$ | $2.6 \%$ | $2.5 \%$ |
| Canada | $2.4 \%$ | $1.3 \%$ | $1.2 \%$ |
| Mexico | $1.6 \%$ | $2.2 \%$ | $3.2 \%$ |
| Eurozone | $1.5 \%$ | $0.9 \%$ | $0.5 \%$ |
| France | $1.3 \%$ | $0.9 \%$ | $1.1 \%$ |
| Spain | $2.1 \%$ | $2.4 \%$ | $2.5 \%$ |
| Italy | $0.9 \%$ | $0.7 \%$ | $-0.2 \%$ |
| UK | $1.5 \%$ | $0.7 \%$ | $0.1 \%$ |
| Germany | $1.3 \%$ | $0.2 \%$ | $-0.3 \%$ |
Source: International Monetary Fund, World Economic Outlook (Update), July 2024
Market/sector expectations
At its 2024 half-year press conference, the industry association Bitkom confirmed that the German ICT sector (ICT = information and communication technology) is experiencing stable growth in a difficult overall economic environment.
The association has specified its forecasts for 2024 as a whole and expects the ITC sector as a whole to generate sales of $€ 224.8$ billion, an increase of $+4.3 \%$. Growth at a similar level of $+4.7 \%$ to $€ 235.4$ billion is expected for 2025 .
As in previous years, the "information technology" submarket is expected to record the highest growth. According to the current forecast, IT sales will reach $€ 151.2$ billion in 2024. This corresponds to an increase of $+5.4 \%$.
The strongest growth is expected to come from software sales ( $+9.8 \%$ to $€ 46.6$ billion). Sales of platforms for the development, testing, and provision of software are expected to be particularly strong ( $+12.8 \%$ to $€ 12.6$ billion). Within this segment, artificial intelligence is expected to grow massively by $+39.2 \%$ to $€ 1.5$ billion. Business with software for the system infrastructure of companies is also expected to be strong ( $+8.4 \%$ to $€ 10.4$ billion). Security software will lead the growth with $+12.7 \%$ to $€ 4.7$ billion. Other software applications are forecast to reach $€ 23.5$ billion, representing growth of $+8.8 \%$. Collaboration tools, i.e.,
applications for collaboration and mobile working, are expected to achieve above-average growth in this area, with sales of $€ 1.3$ billion, $+15.1 \%$ more than in the previous year.
Sales of IT services are expected to increase by $+4.5 \%$ to $€ 51.6$ billion in the current year.
Following a decline in sales last year, IT hardware is forecast to grow again slightly by $+2.8 \%$ to $€ 53.0$ billion. However, there are areas in the hardware segment that are growing much more strongly, as well as those that are shrinking slightly. Strong growth is expected in the "Infrastructure-as-a-Service" segment in particular, i.e., rented servers, network, and storage capacities. After a weaker year, sales of wearables such as smartwatches are also expected to increase again, rising by $10.7 \%$ to $€ 2.6$ billion. Demand for security technologies is also expected to continue to grow at an above-average rate ( $+4.1 \%$ to $€ 1.2$ billion). Following a dip in growth in the wake of the coronavirus pandemic, sales of PCs ( $+1.1 \%$ to $€ 7.8$ billion) and workstations ( $+2.4 \%$ to $€ 0.9$ billion) are now also expected to return to slight growth. Sales of servers have not yet recovered (after the surge in demand during the coronavirus years) due to the expected slight decline of $-0.3 \%$ to $€ 3.1$ billion.
Forecast for the 2024 and 2025 fiscal years
With the publication of the preliminary results for the first half of 2024 on July 12, 2024, the company adjusted its revenue forecast for the 2024 fiscal year and now expects overall currency-adjusted revenue growth of approx. 9\% (previously: approx. 11\%; 2023: € 1.423 billion).
The adjusted EBITDA margin is expected to be around 29\% in 2024 (previously around 28.5\%; 2023: 27.4\%), resulting in an unchanged adjusted EBITDA of around $€ 450$ million (2023: $€ 390.3$ million).
For 2025, the company is planning percentage revenue growth of around 10\% and a further increase in the adjusted EBITDA margin to around 30\%.
Overall statement by the Executive Board on the expected development
The Management Board of IONOS Group SE remains optimistic about the future, also due to the stable business model based primarily on electronic subscriptions. The investments made in customer relationships in recent years - in particular through broad-based TV campaigns in the European core markets, the further expansion of new business areas and the launch of new products - have created a broad foundation for the planned increase in revenue and earnings.
At the time of preparing this half-year financial report, the Management Board of IONOS Group SE believes that the company is still very well positioned to achieve the revenue and earnings forecast described in more detail in the section "Forecast for the financial years 2024 and 2025" above.
Forward-looking statements
This half-year financial report contains forward-looking statements that are based on the current expectations, assumptions, and forecasts of the Management Board of IONOS Group SE and the information currently available to it. The forward-looking statements are subject to various risks and uncertainties and are based on expectations, assumptions, and forecasts that may prove to be incorrect in the future. IONOS does not guarantee that the forward-looking statements will prove to be correct, does not assume any obligation, and does not intend to adjust or update the forward-looking statements made in this interim report.
INTERIM FINANCIAL STATEMENTS FOR THE FIRST HALF OF 2024
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED CASH FLOW STATEMENT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESPONSIBILITY STATEMENT
FINANCIAL CALENDAR / IMPRINT
IONOS Group SE, Montabaur
Consolidated statement of financial position as of June 30, 2024 in €k
| June 30, 2024 |
December 31, 2023 |
|
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 30,775 | 22,652 |
| Trade accounts receivable | 82,201 | 73,512 |
| Receivables from related parties | 80,986 | 63,094 |
| Contract assets | 9,825 | 8,235 |
| Inventories | 111 | 69 |
| Prepaid expenses | 30,529 | 25,530 |
| Other financial assets | 25,564 | 28,313 |
| Other non-financial assets | 808 | 658 |
| Income tax claims | 4,622 | 2,722 |
| 265,420 | 224,785 | |
| Non-current assets | ||
| Investments in associated companies | 3,889 | 4,279 |
| Receivables from finance leases | 2,682 | 2,851 |
| Other financial assets | 786 | 761 |
| Property, plant and equipment | 311,261 | 321,661 |
| Intangible assets | ||
| Other intangible assets | 154,459 | 164,174 |
| Goodwill | 828,421 | 826,271 |
| Contract assets | 26 | 9 |
| Prepaid expenses | 17,257 | 13,628 |
| Deferred tax assets | 40,590 | 37,846 |
| 1,359,371 | 1,371,480 | |
| Total assets | 1,624,791 | 1,596,265 |
| LIABILITIES | ||
| Current liabilities | ||
| Trade accounts payable | 78,558 | 89,227 |
| Liabilities to related parties | 5,618 | 6,292 |
| Liabilities due to banks | 18,684 | 1,125 |
| Income tax liabilities | 36,845 | 21,982 |
| Contract liabilities | 94,905 | 84,645 |
| Other provisions | 632 | 888 |
| Other financial liabilities | 93,138 | 67,947 |
| Other non-financial liabilities | 31,208 | 26,009 |
| 359,588 | 298,115 | |
| Non-current liabilities | ||
| Liabilities due to banks | 797,059 | 796,462 |
| Liabilities to related parties | 250,000 | 350,000 |
| Deferred tax liabilities | 35,524 | 33,652 |
| Contract liabilities | 1,832 | 1,929 |
| Other provisions | 3,942 | 3,262 |
| Other financial liabilities | 110,098 | 115,626 |
| 1,198,455 | 1,300,931 | |
| Total liabilities | 1,558,043 | 1,599,046 |
| June 30, 2024 |
December 31, 2023 |
|
|---|---|---|
| EQUITY | ||
| Issued capital | 140,000 | 140,000 |
| Reserves | $-45,455$ | $-122,222$ |
| Treasury shares | $-12,633$ | 0 |
| Currency translation adjustment | $-15,304$ | $-20,697$ |
| Equity attributable to shareholders of the parent company | 66,609 | $-2,919$ |
| Non-controlling interests | 140 | 138 |
| Total equity | $\mathbf{6 6 , 7 4 8}$ | $\mathbf{- 2 , 7 8 1}$ |
| Total liabilities and equity | $\mathbf{1 , 6 2 4 , 7 9 1}$ | $\mathbf{1 , 5 9 6 , 2 6 5}$ |
IONOS Group SE, Montabaur
Consolidated statement of comprehensive income
for the period from January 1 to June 30, 2024 in €k
| 2024 January - June |
2023 January - June |
|
|---|---|---|
| Revenue from contracts with customers | 728,810 | 686,110 |
| Revenue from contracts with related parties | 22,804 | 22,534 |
| Total revenue | 751,614 | 708,644 |
| Cost of sales | $-375,948$ | $-376,393$ |
| Gross profit | 375,667 | 332,251 |
| Selling expenses | $-165,339$ | $-143,691$ |
| General and administrative expenses | $-50,882$ | $-45,854$ |
| Impairment losses on receivables and contract assets | $-9,231$ | $-5,190$ |
| Other operating income / expenses | 2,599 | 12,867 |
| Operating result | 152,814 | 150,383 |
| Financial result | $-45,233$ | $-12,593$ |
| Share of the profit or loss of associates accounted for using the equity method | $-274$ | $-21$ |
| Pre-tax result | 107,307 | 137,769 |
| Income taxes | $-33,472$ | $-28,556$ |
| Net income | 73,835 | 109,213 |
| thereof attributable to | ||
| non-controlling interests | 2 | 11 |
| shareholders of IONOS Group SE | 73,833 | 109,202 |
| Result per share of shareholders of IONOS Group SE (in €) ${ }^{(1)}$ | ||
| basic | 0.53 | 0.78 |
| diluted | 0.52 | 0.78 |
| Weighted average of outstanding shares (in thousand units) ${ }^{(1)}$ | ||
| basic | 139,512 | 140,000 |
| diluted | 141,204 | 140,000 |
| Reconciliation to total comprehensive income | ||
| Net income | 73,835 | 55,829 |
| Items that may be reclassified subsequently to profit or loss | ||
| Currency translation adjustment - unrealized | 5,394 | 6,534 |
| Other comprehensive income | 5,394 | 6,534 |
| Total comprehensive income | 79,229 | 115,747 |
| thereof attributable to | ||
| non-controlling interests | 2 | 11 |
| shareholders of IONOS Group SE | 79,227 | 115,736 |
[^0]
[^0]: ${ }^{(1)}$ Previous year adjusted. Calculation in the 2023 half-year report based on the weighted average number of shares outstanding as of the reporting date.
IONOS Group SE, Montabaur
Consolidated cash flow statement
for the period from January 1 to June 30, 2024 in €k
| 2024 January - June |
2023 January - June |
|
|---|---|---|
| Net income | 73,835 | 109,213 |
| Adjustments to reconcile net income to net cash provided by operating activities | ||
| Depreciation and amortization of intangible assets and property, plant and equipment | 44,308 | 43,444 |
| Depreciation and amortization of assets resulting from business combinations | 10,279 | 10,188 |
| Employee expenses from share-based payment programs | 3,563 | 2,753 |
| Payments from share-based payment programs | 0 | $-13,630$ |
| Share of the profit or loss of associates accounted for using the equity method | 274 | 21 |
| Distributed profits of associated companies | 116 | 156 |
| Other non-cash items from changes in deferred tax position | $-1,385$ | $-7,197$ |
| Income/Loss from the sale of intangible assets and property, plant and equipment | $-41$ | $-153$ |
| Non-cash change in purchase price derivative | 14,197 | $-30,695$ |
| Interest expenses | 32,546 | 43,588 |
| Operative cash flow | 177,692 | 157,688 |
| Change in assets and liabilities | ||
| Change in receivables and other assets | $-6,410$ | $-13,413$ |
| Change in inventories | $-42$ | $-14$ |
| Change in contract assets | $-1,606$ | 146 |
| Change in prepaid expenses | $-8,629$ | $-6,386$ |
| Change in trade accounts payable | $-10,669$ | $-4,811$ |
| Change in receivables from/liabilities to related parties | $-2,540$ | $-6,499$ |
| Change in other provisions | $-206$ | $-55$ |
| Change in income tax liabilities | 14,863 | $-4,885$ |
| Change in other liabilities | 17,228 | 2,271 |
| Change in contract liabilities | 10,163 | 5,748 |
| Change in assets and liabilities, total | 12,152 | $-27,898$ |
| Cash flow from operating activities | 189,844 | 129,790 |
| 2024 January - June |
2023 January - June |
|
|---|---|---|
| Cash flow from investing activities | ||
| Cash payments to acquire property, plant and equipment and intangibles | $-31,996$ | $-31,301$ |
| Cash receipts from sales of property, plant and equipment and intangibles | 485 | 1,175 |
| Payments for the acquisition/capital increase of associated companies | 0 | $-694$ |
| Cash payments/receipts from the sale of other financial assets | 0 | $-22$ |
| Payments within the framework of cash pooling | $-16,027$ | $-18,766$ |
| Payments related to other financial assets | 0 | 0 |
| Cash flow from investing activities | $-47,538$ | $-49,608$ |
| Cash flow from financing activities | ||
| Purchase of treasury stock | $-12,633$ | 0 |
| Taking out of loans | 0 | 0 |
| Repayment of loans | $-100,000$ | $-30,000$ |
| Redemption of lease liabilities | $-7,337$ | $-7,450$ |
| Interest paid | $-14,388$ | $-47,947$ |
| Cash flow from financing activities | $-134,358$ | $-85,397$ |
| Net increase/decrease in cash and cash equivalents | 7,948 | $-5,215$ |
| Cash and cash equivalents at beginning of period | 22,652 | 26,440 |
| Currency translation adjustments of cash and cash equivalents | 175 | 385 |
| Cash and cash equivalents at end of period | 30,775 | 21,610 |
Consolidated statement of changes in equity
| Issued capital €k | Reserves €k | Treasury shares €k | Currency translation adjustment €k | Equity attributable to shareholders of the parent company €k | Non- controlling interests €k |
Total equity €k | |
|---|---|---|---|---|---|---|---|
| Balance as of January 1, 2023 | 360 | $-136,644$ | 0 | $-26,019$ | $-162,303$ | 123 | $-162,180$ |
| Net income | 0 | 109,202 | 0 | 0 | 109,202 | 11 | 109,213 |
| Other comprehensive income | 0 | 0 | 0 | 6,534 | 6,534 | 0 | 6,534 |
| Total comprehensive income | 0 | 109,202 | 0 | 6,534 | 115,736 | 11 | 115,747 |
| Capital increase from company funds | 139,640 | $-139,640$ | 0 | 0 | 0 | 0 | 0 |
| Employee stock ownership program | 0 | $-24,525$ | 0 | 0 | $-24,525$ | 0 | $-24,525$ |
| Balance as of June 30, 2023 | 140,000 | $-191,607$ | 0 | $-19,485$ | $-71,092$ | 134 | $-70,958$ |
| Balance as of January 1, 2024 | 140,000 | $-122,222$ | 0 | $-20,697$ | $-2,919$ | 138 | $-2,781$ |
| Net income | 0 | 73,835 | 0 | 0 | 73,835 | 1 | 73,836 |
| Other comprehensive income | 0 | 0 | 0 | 5,394 | 5,394 | 0 | 5,394 |
| Total comprehensive income | 0 | 73,835 | 0 | 5,394 | 79,229 | 1 | 79,230 |
| Purchase of treasury shares | 0 | 0 | $-12,633$ | 0 | $-12,633$ | 0 | $-12,633$ |
| Capital increase from company funds | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Employee stock ownership program | 0 | 2,932 | 0 | 0 | 2,932 | 0 | 2,932 |
| Balance as of June 30, 2024 | 140,000 | $-45,455$ | $-12,633$ | $-15,303$ | 66,609 | 139 | 66,748 |
Notes to the interim consolidated financial statements
1. Information on the Company
IONOS, with IONOS Group SE as its listed parent company (hereinafter referred to as "IONOS Group SE" or, together with its subsidiaries, "IONOS"), is the leading European Internet specialist in the hosting segment. The Group also develops applications for the use of the Internet. IONOS is made up of various companies in Germany and abroad. In accordance with internal management reporting, there is a single operating segment.
IONOS Group SE has its registered office in 56410 Montabaur, Elgendorfer Straße 57, Germany, where it is registered with the local court under HRB 25386.
The shares of IONOS Group SE have been listed on the regulated market of the Frankfurt Stock Exchange since February 8, 2023. As in the previous year, United Internet AG held 63.8\% and WP XII Venture Holdings II SCSp, Luxembourg / Luxembourg 21.2\% of the shares in IONOS Group SE as of June 30, 2024. A further $15.0 \%$ are in free float. Part of the free float is held by IONOS Group SE as a result of the share buyback program. As of June 30, 2024, IONOS Group SE had repurchased a total of 487,937 treasury shares.
The share buyback program was resolved on May 8, 2024 by the Management Board of IONOS Group SE with the approval of the Supervisory Board. It enables IONOS Group SE to acquire up to 850,000 of its own shares via the stock exchange in order to service claims under the employee participation program and for other purposes approved by the Annual General Meeting.
2. Significant accounting, measurement and consolidation principles
The interim financial statements of IONOS Group SE as of June 30, 2024, like the consolidated financial statements as of December 31, 2023, were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
The condensed interim consolidated financial statements for the period from January 1, 2024 to June 30, 2024 were prepared in accordance with IAS 34 Interim Financial Reporting.
For the presentation of these interim consolidated financial statements, a condensed scope of reporting was selected compared to the consolidated financial statements, which should therefore be read in conjunction with the consolidated financial statements as of December 31, 2023. The accounting policies applied and the significant judgments and estimates made in the condensed interim consolidated financial statements are consistent with those used in the previous year, with the exception of the mandatory new standards, which are listed briefly below.
Mandatory adoption of new accounting standards
The following standards must be applied for the first time in the EU for the fiscal year beginning on or after January 1, 2024:
| Standard | Mandatory for fiscal years beginning on or after | Endorsed by EU Commission | |
|---|---|---|---|
| IAS 1 | Amendment: Clarification of the criteria for classifying liabilities as current or non-current and clarification in relation to non-current liabilities with covenants | January 1, 2024 | Yes |
| IFRS 16 | Amendment: Lease liabilities in the event of a sale and leaseback transaction. | January 1, 2024 | Yes |
| IAS 7 / IFRS 17 | Amendment: Disclosure of supplier financing agreements | January 1, 2024 | Yes |
The first-time application of the new accounting standards had no material impact on this half-year financial report.
Use of estimates and assumptions
In preparing the condensed interim consolidated financial statements, management makes judgments, estimates, and assumptions that affect the reported amounts of income, expenses, assets, and liabilities and the disclosure of contingent liabilities at the reporting date. However, the uncertainty associated with these assumptions and estimates could lead to results that result in significant adjustments to the carrying amount of the assets or liabilities concerned in the future.
Miscellaneous
All material subsidiaries and associated companies are included in the interim consolidated financial statements.
The scope of consolidation remained unchanged compared to the consolidated financial statements as of December 31, 2023.
These interim consolidated financial statements have not been audited in accordance with Section 317 HGB or reviewed by an auditor.
Notes to the statement of comprehensive income
Only the items that have a significant impact on the result in the consolidated statement of comprehensive income for the first half of 2024 are explained.
1. Segment reporting
According to IFRS 8, the identification of reportable operating segments is based on the management approach. Accordingly, external reporting is based on the Group's internal organizational and management structure, as well as internal financial reporting to the chief operating decision maker. The function of chief operating decision maker is exercised by the Management Board of the company and the
Management Board of IONOS Holding SE, which reviews the financial information presented on a consolidated basis for the purposes of resource allocation and assessing the financial performance of the company as a whole. Accordingly, we have a single operational management level.
The control measures used to assess performance are presented below:
- Revenue from contracts with customers
- EBITDA and EBITDA margin
- Adjusted EBITDA and Adjusted EBITDA margin
The total revenue of IONOS from contracts with customers is distributed between Germany and abroad as follows:
| 2024 | 2023 | |
|---|---|---|
| €k | January - June | January - June |
| Domestic | 406,398 | 348,785 |
| Foreign | 322,413 | 337,325 |
| Total | $\mathbf{7 2 8 , 8 1 0}$ | $\mathbf{6 8 6 , 1 1 0}$ |
In the first half of 2024, revenue from contracts with customers is divided into product revenue from the Web Presence \& Productivity business division amounting to $€ 647,668 \mathrm{k}$ (previous year: $€ 614,160 \mathrm{k}$ ) and from the Cloud Solutions business division amounting to $€ 81,142 \mathrm{k}$ (previous year: $€ 71,950 \mathrm{k}$ ).
"EBITDA" is the consolidated result before finance costs and financial income, as well as before depreciation and amortization. "EBITDA margin" is the ratio of EBITDA to sales revenue from contracts with customers.
The EBITDA margin is calculated as follows:
| 2024 | 2023 | |
|---|---|---|
| €k | January - June | January - June |
| Total revenue | 751,614 | 708,644 |
| EBITDA (€k) | 207,400 | 204,015 |
| EBITDA margin (\%) | $27.6 \%$ | $28.8 \%$ |
| Adjusted EBITDA (€k) | 218,040 | 200,849 |
| Adjusted EBITDA margin (\%) | $29.0 \%$ | $28.3 \%$ |
Adjusted EBITDA is calculated as follows:
| 2024 | 2023 | |
|---|---|---|
| €k | January - June | January - June |
| Operating result | 152,814 | 150,383 |
| Depreciation and amortization of intangible assets and property, plant and equipment | 54,586 | 53,632 |
| EBITDA | 207,400 | 204,015 |
| Adjustment for LTIP ${ }^{(1)}$ | 3,563 | 2,753 |
| Adjustment for stand-alone activities ${ }^{(2)}$ | 5,533 | 4,575 |
| Adjustment for IPO costs ${ }^{(3)}$ | 0 | $-11,675$ |
| Adjustment for severance payments ${ }^{(4)}$ | 1,544 | 1,181 |
| Total adjustments | 10,640 | $-3,166$ |
| Adjusted EBITDA | 218,040 | 200,849 |
${ }^{(1)}$ Includes costs for employee stock ownership programs.
${ }^{(2)}$ Includes costs of preparing the spin-off from the United Internet Group and the establishment of IONOS Group SE as an independent group (primarily costs of the billing carve-out project (separation from billing systems of 1\&1 Telecommunication SE).
${ }^{(3)}$ Includes external costs incurred in connection with the IPO. In the first half year of 2023, this includes income from the recharging of costs incurred in connection with the IPO to the shareholders United Internet AG and Warburg Pircus.
${ }^{(4)}$ Includes expenses related to reorganization and restructuring measures which primarily consist of severance payments and other personnelrelated costs.
The following table shows the Group's revenue from contracts with customers and the non-current assets of the IONOS Group SE, broken down by the company's country of origin and other countries. In the presentation of information on a geographical basis, revenue from contracts with customers and assets are based on the geographical locations of the Group companies generating the revenue and the assets.
Revenue from contracts with customers based on the geographical locations of the Group companies generating the revenue:
| 2024 | 2023 | |
|---|---|---|
| €k | January - June | January - June |
| Germany | 406,398 | 348,785 |
| USA | 116,938 | 156,989 |
| UK | 77,904 | 67,411 |
| Spain | 62,069 | 56,285 |
| France | 35,238 | 29,780 |
| Poland | 21,888 | 19,558 |
| Austria | 8,375 | 7,302 |
| Total | $\mathbf{7 2 8 , 8 1 0}$ | $\mathbf{6 8 6 , 1 1 0}$ |
Non-current assets based on the location of the assets:
| December 31, | ||
|---|---|---|
| $€ k$ | June 30,2024 | 2023 |
| Germany | 826,965 | 844,699 |
| Poland | 151,679 | 152,032 |
| Spain | 127,163 | 127,471 |
| UK | 103,271 | 99,633 |
| Austria | 70,924 | 72,102 |
| USA | 30,654 | 29,153 |
| France | 4,818 | 5,175 |
| Romania | 1,265 | 1,569 |
| Philippines | 1,256 | 1,038 |
| Total | $\mathbf{1 , 3 1 7 , 9 9 5}$ | $\mathbf{1 , 3 3 2 , 8 7 2}$ |
Non-current assets do not include any financial investments (with the exception of financial assets accounted for using the equity method), deferred tax assets or assets from employee benefits.
2. Cost of sales
The decrease in the cost of purchased services from $€ 376,393 \mathrm{k}$ in the first half of 2023 to $€ 375,948 \mathrm{k}$ in the first half of 2024 is mainly due to the purchase of services in connection with the sale of domains and, in particular, low-margin parking revenue (i.e., unused domains that can be used by "parking" instead of just displaying an error message, e.g., with a display of the domain name that generates revenue when clicked on). i.e., unused domains that can be used by "parking" instead of just displaying an error message, e.g., with a display of the domain name that generates revenue when the display is clicked), meaning that the cost of sales has decreased in the opposite direction to revenue. The decrease in the purchase of services exceeded the increase in personnel expenses.
3. Other operating income / expenses
The net position from other operating income and expenses decreased by $€ 10,268 \mathrm{k}$ to $€ 2,599 \mathrm{k}$ in the first half of 2024 (first half of 2023: $€ 12,867 \mathrm{k}$ ). In the previous year, this included prior-period income from the recharging of IPO costs from previous years in the amount of $€ 11,675 \mathrm{k}$. The net loss from expenses and income from foreign currency translation increased from $€-1,352 \mathrm{k}$ in the first half of 2023 to $€-2,036 \mathrm{k}$ in the first half of 2024. This item mainly includes gains and losses from exchange rate changes between the date of origin and the date of payment of foreign currency receivables and liabilities, as well as losses from measurement as of the reporting date.
4. Depreciation and amortization
In the first half of 2024, depreciation of property, plant, and equipment and amortization of intangible assets amounted to $€ 41,459 \mathrm{k}$ (first half of 2023: $€ 43,444 \mathrm{k}$ ) and amortization of capitalized intangible assets from business combinations amounted to $€ 13,128 \mathrm{k}$ (first half of 2022: $€ 10,188 \mathrm{k}$ ). In the first half of 2024, depreciation of property, plant and equipment and amortization of intangible assets thus amounted to $€ 54,586 \mathrm{k}$ (first half of 2023: $€ 53,632 \mathrm{k}$ ).
5. Personnel expenses
Personnel expenses in the first half of 2024 amounted to $€ 147,679$ k (first half of 2023: $€ 133,681 \mathrm{k}$ ).
At the end of June 2024, IONOS had a total of 4,107 employees excluding temporary staff and trainees, 1,954 of whom worked abroad. The number of employees excluding temporary staff and trainees at the end of June 2023 was 4,195, of which 1,980 were abroad.
6. Financial result
The financial result amounted to $€-45,233 \mathrm{k}$ in the first half of 2024 and was therefore $€ 32,640 \mathrm{k}$ lower than the financial result in the previous year ( $€-12,593 \mathrm{k}$ ). This is mainly due to expenses from the subsequent measurement of the purchase price liability in connection with the acquisition of STRATO AG (first half of 2024: € -14,197k; first half of 2023: € +30,695k).
Notes to the statement of financial position
Explanations are only provided for items that show significant changes in the amounts shown compared to the last consolidated financial statements.
1. Receivables from related parties
Receivables from related parties mainly comprise receivables from the cash pool with United Internet AG and amount to $€ 80,986 \mathrm{k}$ as of June 30, 2024, € 17,892k higher than as of December 31, 2023.
2. Property, plant and equipment, intangible assets and goodwill
Investments in property, plant, and equipment and intangible assets in the interim reporting period totaled $€ 31,996 \mathrm{k}$ (H1 2022: $€ 31,301 \mathrm{k}$ ), with investments being made in particular in servers for the cloud business. Investments in property, plant, and equipment that are capitalized in the balance sheet as right-of-use assets in accordance with IFRS 16 were not included in CAPEX.
The reported goodwill of $€ 828,421 \mathrm{k}$ has increased by $€ 2,150 \mathrm{k}$ compared to December 31, 2023 due to exchange rate effects.
3. Other current financial liabilities
The increase in other current financial liabilities by $€ 25,191 \mathrm{k}$ from $€ 67,947 \mathrm{k}$ at the end of the financial year to $€ 93,138 \mathrm{k}$ as of June 30, 2024 is mainly due to the $€ 14,197 \mathrm{k}$ higher fair value of the variable purchase price liability from the acquisition of STRATO AG compared to the end of the fiscal year. In addition, liabilities for marketing and cost of sales increased by $€ 11,380 \mathrm{k}$.
4. Equity
The negative equity of IONOS Group SE in the previous year is not due to losses in the past, but is mainly the result of a non-cash distribution to the majority shareholder United Internet AG as part of a Group restructuring in 2017 in connection with the acquisition of 33.33\% of IONOS Group SE by Warburg Pincus LLC, New York / USA. For further information, please refer to Note 1 (Going Concern) in the 2023 consolidated financial statements of IONOS Group SE.
Significant changes in other reserves in the first half of 2024 were the increase from the consolidated net income attributable to the shareholders of IONOS Group SE in the amount of $€ 73,835 \mathrm{k}$ (first half of 2023:
€ 109,202k) and the expenses from employee participation programs in the amount of $€ 2,932 \mathrm{k}$ (first half of 2022: $€ 3,903 \mathrm{k}$ ) as well as the purchase of treasury shares in the amount of $€ 12,633 \mathrm{k}$.
Other items
1. Employee stock ownership programs
Long Term Incentive Plan 2017 and Stock Appreciation Rights 2023
An additional employee participation program (Long Term Incentive Plan, LTIP) was set up for the IONOS Group SE in the 2017 fiscal year. The objective of the LTIP program is to align the long-term interests of the members of company management and other key employees of the IONOS Group SE with the interests of the company in order to increase the equity value of the company (IONOS Group SE) and other companies in the IONOS Group SE.
Under the LTIP, so-called Management Incentive Plan (MIP) units are allocated to eligible employees. Vesting takes place on a straight-line basis over a period of four years (starting from the date of issue) and on condition that the employee concerned has not resigned at the end of each year.
On January 26, 2023, a new compensation system was introduced and the service contracts of the company's Executive Board and the members of the Executive Board of IONOS Holding SE were extended, both subject to the condition of an IPO. The compensation package includes long-term, share-based compensation in the form of a virtual Stock Appreciation Rights Plan (SAR Plan 2023), under which virtual stock appreciation rights (SARs) are granted, as well as a replacement bonus for the existing LTIP. In 2024, the program was extended to other members of the Executive Board and key employees of the IONOS Group SE.
As part of the replacement of the existing LTIP, all awards under the existing LTIP vested on the first exchange trading day (February 8, 2023). In addition, the payment of one-third of the existing LTIP award was made conditional on three new trigger events (initial public offering, 18 months and 24 months after the first trading day, respectively), provided that the service agreement with the respective participant had not yet been terminated at the time of the occurrence of the respective trigger event.
The personnel expenses recognized in the first half of 2024 in connection with the share options issued (LTIP and SAR) amounted to $€ 3,563 \mathrm{k}$ (first half of 2023: $€ 2,753 \mathrm{k}$ ). In the first half of 2023, this also includes income from the reversal of an LTIP program to be settled in cash in the amount of $€ 1,150 \mathrm{k}$.
2. Additional disclosures on financial statements
The table below shows the carrying amounts for each category of financial assets and liabilities as of June 30, 2024:
| Measurement category acc. to IFRS 9 |
Carrying amount as of June 30, 2024 |
Amortized cost |
Fair value through profit or loss |
Measurement acc. to IFRS 16 |
Fair value as of June 30, 2024 |
|
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Cash and cash equivalents | ac | 30,775 | 30,775 | 0 | 0 | 30,775 |
| Trade accounts receivable | ac | 82,201 | 82,201 | 0 | 0 | 82,201 |
| Receivables from related | ac | 80,986 | 80,986 | 0 | 0 | 80,986 |
| parties | ac | 25,564 | 25,564 | 0 | 0 | 25,564 |
| Other current financial | ac | 786 | 786 | 0 | 0 | 705 |
| assets |
| €k | Measurement category acc. to IFRS 9 |
Carrying amount as of June 30, 2024 | Amortized cost | Fair value through profit or loss | Measurement acc. to IFRS 16 | Fair value as of June 30, 2024 |
|---|---|---|---|---|---|---|
| Financial liabilities | ||||||
| Trade accounts payable | flac | $-78,558$ | $-78,558$ | 0 | 0 | $-78,558$ |
| Liabilities to related parties | flac | $-255,618$ | $-255,618$ | 0 | 0 | $-258,879$ |
| Liabilities due to banks | flac | $-815,743$ | $-815,743$ | 0 | 0 | $-818,346$ |
| Other financial liabilities | ||||||
| Lease liabilities | n/a | $-118,048$ | 0 | 0 | $-118,048$ | n/a |
| Contingent purchase price liabilities | fvtpl | $-25,119$ | 0 | $-25,119$ | $-25,119$ | |
| Other | flac | $-38,569$ | $-38,569$ | 0 | 0 | $-38,569$ |
| Thereof aggregated acc. to measurement categories: | ||||||
| Financial assets at amortized cost | ac | 220,312 | 220,312 | 0 | 0 | 220,231 |
| Financial liabilities at amortized cost | flac | $-1,188,488$ | $-1,188,488$ | 0 | 0 | $-1,194,352$ |
| Financial liabilities measured at fair value through profit or loss | fvtpl | $-25,119$ | 0 | $-25,119$ | 0 | $-25,119$ |
The following table shows the carrying amounts of each category of financial assets and liabilities as of liabilities as of 31.12.2023:
| €k | Measurement category acc. to IFRS 9 |
Carrying amount as of December 31, 2023 | Amortized cost | Fair value through profit or loss | Measurement acc. to IFRS 16 | Fair value as of December 31, 2023 |
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Cash and cash equivalents | ac | 22,652 | 22,652 | 0 | 0 | 22,652 |
| Trade accounts receivable | ac | 73,512 | 73,512 | 0 | 0 | 73,512 |
| Receivables from related parties | ac | 63,094 | 63,094 | 0 | 0 | 63,094 |
| Other current financial assets | ac | 28,313 | 28,313 | 0 | 0 | 28,313 |
| Other non-current financial assets | ac | 761 | 761 | 0 | 0 | 673 |
| €k | Measurement category acc. to IFRS 9 | Carrying amount as of December 31, 2023 | Amortized cost | Fair value through profit or loss | Measurement acc. to IFRS 16 | Fair value as of December 31, 2023 |
| Financial liabilities | ||||||
| Trade accounts payable | flac | $-89,227$ | $-89,227$ | 0 | 0 | $-89,227$ |
| Liabilities to related parties | flac | $-356,292$ | $-356,292$ | 0 | 0 | $-373,671$ |
| Liabilities due to banks | flac | $-797,587$ | $-797,587$ | 0 | 0 | $-811,903$ |
| Other financial liabilities | ||||||
| Lease liabilities | n/a | $-124,610$ | 0 | 0 | $-124,610$ | n/a |
| Contingent purchase price liabilities | fvtpl | $-10,922$ | 0 | $-10,922$ | $-10,922$ | |
| Other | flac | $-28,279$ | $-28,279$ | 0 | 0 | $-28,279$ |
| Thereof aggregated acc. to measurement categories: | ||||||
| Financial assets at amortized cost | ac | 188,332 | 188,332 | 0 | 0 | 188,244 |
| Financial liabilities at amortized cost | flac | $-1,271,385$ | $-1,271,385$ | 0 | 0 | $-1,303,080$ |
| Financial liabilities measured at fair value through profit or loss | fvtpl | $-10,922$ | 0 | $-10,922$ | 0 | $-10,922$ |
The methods and assumptions used to determine the fair values are as follows:
- Cash and cash equivalents, trade receivables, trade payables, current receivables from and liabilities to related parties and other current assets and liabilities are very close to their carrying amounts, mainly due to the short maturities of these instruments. The same applies to current liabilities to banks.
- Liabilities in connection with finance leases show minor differences between the carrying amount and fair value due to the change in interest rates.
-
The fair value of financial assets and financial liabilities is stated at the amount at which the instrument could be exchanged in a current transaction (other than a forced sale or liquidation) between willing parties.
-
Long-term fixed-interest and variable-interest receivables/loans are measured by IONOS based on parameters such as interest rates, certain country-specific risk factors and creditworthiness of the individual debtors. Based on this valuation, allowances are made to account for expected defaults on these receivables. As of June 30, 2024, the carrying amounts of these receivables, net of allowances, did not differ materially from their calculated fair values.
- The fair value of other financial liabilities and fixed-interest non-current liabilities to related parties is estimated by discounting the future cash flows using interest rates currently available for borrowings on comparable terms, credit risks and remaining maturities. Option pricing models are predominantly used for the valuation of contingent purchase price liabilities.
- The fair value of unquoted financial assets and liabilities measured at fair value is estimated using appropriate valuation techniques.
Fair value hierarchy
IONOS uses the following hierarchy to determine and report fair values of financial instruments per valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for similar assets or liabilities.
Level 2: techniques in which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
Assets and liabilities measured at fair value
| As of June 30, | ||||
|---|---|---|---|---|
| €k | 2024 | Level 1 | Level 2 | Level 3 |
| Financial liabilities measured at fair value through profit or loss | ||||
| Contingent purchase price liability | $-25,119$ | 0 | 0 | $-25,119$ |
As in the previous year, there were no transfers between measurement levels during the reporting period.
| As of Dec. 31, | ||||
|---|---|---|---|---|
| €k | 2023 | Level 1 | Level 2 | Level 3 |
| Financial liabilities measured at fair value through profit or loss |
||||
| Contingent purchase price liability | $-10,922$ | 0 | 0 | $-10,922$ |
The significant unobservable inputs for the fair value measurements categorized within Level 3 of the fair value hierarchy and a quantitative sensitivity analysis as of June 30, 2024 and December 31, 2023 are presented below:
| June 30, 2024 | Measurement method | Main non- observable inputs |
Considered in measurement | Sensitivity of input on fair value | |
|---|---|---|---|---|---|
| Contingent purchase price liability | Black Scholes | Maturity | 1.00 years | $+1.25$ years | $+0.75$ years |
| € -1.2 million | € +1,6 million | ||||
| Volatility | $37.00 \%$ | $+1 \%$ | $-1 \%$ | ||
| € -0,3 million | € +0,3 million | ||||
| December. 31, 2023 | Measurement method | Main non- observable inputs |
Considered in measurement | Sensitivity of input on fair value | |
| Contingent purchase price liability | Black Scholes | Maturity | 0.25 years | $+0,50$ years | n.a. |
| € +1,2 million | n.a. | ||||
| Volatility | $33.7 \%$ | $+1 \%$ | $-1 \%$ | ||
| € +0,1 million | € -0,1 million |
3. Related party disclosures
Related parties as defined by IAS 24 are persons and companies if one of the parties has the ability to control or exercise significant influence over the other party.
Related parties of the Group include the Management Board and Supervisory Board of IONOS Group SE as well as the Management Board and Supervisory Board of IONOS Holding SE and IONOS SE and the Group companies of the United Internet AG Group, which are not part of IONOS. Furthermore, investments over which the companies of IONOS can exert a significant influence (associated companies) are classified as related parties. In addition, Mr. Ralph Dommermuth, the major shareholder of United Internet AG, is classified as a related party.
In the first half of 2024, the existing loan between IONOS Holding SE and United Internet AG was repaid in the amount of $€ 100,000 \mathrm{k}$. The balance as of June 30, 2024 amounts to $€ 250,000 \mathrm{k}$ (December 31, 2023: $€ 350,000 \mathrm{k})$.
The business premises of IONOS in Montabaur and at other Group locations were rented by Mr. Ralph Dommermuth or companies attributable to him. The associated rental expenses are at the usual local level and amounted to $€ 2,005 \mathrm{k}$ in the first half of 2024 (first half of 2023: $€ 2,030 \mathrm{k}$ ).
IONOS Group SE and its subsidiaries own and operate data centers whose services are made available to other Group companies in the Consumer Access and Consumer Applications segments of the United Internet Group. The revenues generated from this increased slightly compared to the previous year (H1 2024: € 22,804k; H1 2023: $€$ 22,534k) by $+1.2 \%$.
No other significant transactions took place.
4. Events after balance sheet date
After the balance sheet date of June 30, 2024, no further events of particular significance occurred in the Group that would have a major impact on the Group's net assets, financial position and results of operations with an effect on accounting and reporting.
Responsibility statement
To the best of our knowledge, and in accordance with the applicable accounting principles for interim financial reporting, the interim consolidated financial statements give in compliance with generally accepted accounting principles, a true, and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the fiscal year.
Montabaur, August 8, 2024
The Management Board
FINANCIAL CALENDAR
March 21, 2024 Publication of Annual Financial Statements 2023
May 08, 2024 Quarterly Statement Q1 2024
May 15, 2024 Annual General Meeting 2024, Alte Oper / Frankfurt/Main
August 08, 2024 Half-Year Financial Report 2024
November 12, 2024 Quarterly Statement Q3 2024
IMPRINT
Publisher and copyright © 2024
IONOS Group SE
Elgendorfer Str. 57
56410 Montabaur
Germany
www.ionos-group.com
Contact
Investor Relations
Email: [email protected]
Registry court: Montabaur HRB 25386
Note:
Due to calculation processes, tables and references may produce rounding differences from the mathematically exact values (monetary unites, percentage statements, etc.)
This half-year financial report is available in German and English. Both versions can also be downloaded from the internet at www.ionos-group.com. In case of doubt, the German version shall prevail.
For better readability, the masculine form is used for gender-specific terms in this half-year statement. IONOS would like to point out that the use of the masculine form is to be understood as explicitly genderindependent.
Produced in-house with Firesys
Disclaimer
This interim statement contains forward-looking statements that reflect the current views of IONOS Group SE's management with regard to future events. These forward-looking statements are based on our currently valid plans, estimates and expectations. Forward-looking statements are only based on those facts valid at the time when the statements were made. Such statements are subject to certain risks and uncertainties and other factors, many of which are beyond IONOS' control, that could cause actual results to differ materially from those expressed in the forward-looking statements. These risks, uncertainties and other factors are described in detail in our risk reporting in the Annual Reports of IONOS Group SE. IONOS Group SE does not intend to revise or update such forward-looking statements.
IONOS
IONOS Group SE
Elgendorfer Straße 57
56410 Montabaur
www.ionos-group.com