🌐 Dueling Digitals: Ionos Soars, 1&1 Stumbles in United Internet's Q1 Report
Straight from the Source: Reuters Frankfurt
Internet provider United surges in confidence - sales goal hiked due to strong figures
United Internet, Europe's fourth-largest internet service provider, has shrugged off pockets of struggle at its mobile subsidiary, 1&1, to deliver a robust Q1 earnings report and a slight lift in its revenue forecast for the entire fiscal year. Ionos, the web hosting and cloud giant under the United Internet umbrella, is equally bullish, bolstering its profit outlook after a double-digit revenue leap to start the year.
On the market, Ionos shares surged by nearly 12% to hit an all-time high of €36.70, while United Internet and 1&1 shares basked in a general market upswing and peaked close to their highest levels in a year at €23.38 and €16.60, respectively.
Two Sides of the Coin: United Internet and Ionos's Confident Outlooks
United Internet added 150,000 customers and boosted revenue by 4.2% to €1.631 billion in the first quarter. Even so, its operating profit remained flat at €342.6 million due to heightened expenditure on 1&1's mobile network build-out. Still, the performance surpassed industry expectations, remarks DZ Bank analyst Karsten Oblinger. Yet, he questions why the parent company's profit expectations weren't adjusted despite Ionos raising its corresponding target.
As for Ionos, it anticipates an impressive 15% jump in its operating result, up from its earlier projection of €510 million to €520 million by 2025. In Q1, the company saw nearly a 24% hike in profit to €131 million and a revenue spike of about 20% to €446.3 million.
It's a Mixed Bag for 1&1
1&1 finds itself falling behind its kin. The trends of the last quarters persist, with the subscriber base shrinking by 40,000 in Q1. A multi-day network outage last year had spurred a wave of cancellations. Meanwhile, costs for building 1&1's mobile towers surged, causing a 14.5% drop in operating profit to €155.9 million in Q1.
For the year, 1&1 forecasts a stable subscriber base and service revenues similar to 2024 levels. The operating profit is projected to decline by approximately 3.4% to €571 million. However, a silver lining emerges in the form of the Federal Cartel Office's recent admonishment of Vodafone, alleging that Vodafone's mobile towers subsidiary Vantage Towers had obstructed 1&1's network expansion efforts.
A Tale of Two Subsidiaries
Ionos's remarkable growth story contrasts starkly with 1&1's network woes, highlighting the differing business dynamics within United Internet's portfolio. Ionos's emphasis on digital solutions and cloud services has fueled a dependable and expanding revenue stream, whereas 1&1's network expansion hurdles showcase the intricacies inherent in telecoms infrastructure development.
In the end, Ionos's strategic focus on high-growth segments is paying off, while 1&1's challenge underscores the significance of skillful network infrastructure management for profitability.
[1] Ionos Q1 2025 Earnings Report[2] Barclays Research Report on Ionos[3] Ionos AdTech Segment Performance Analysis 2025 Q1[4] Barclays Research Report on 1&1
- The robust Q1 earnings report from United Internet, which includes the growth of its web hosting and cloud giant, Ionos, highlights the significance of technology and finance in the business sector, with Ionos bolstering its profit outlook after a double-digit revenue leap.
- The contrast between Ionos's remarkable growth story, focusing on digital solutions and cloud services, and 1&1's network woes indicates the impact that technology and business strategies can have on a company's profitability in the competitive digital landscape.
