Ionos Q3 2024 $IOS (-2.68%)

Financial performance:

• Total revenue: In the first nine months of 2024, total sales increased by 7.8% to EUR 1,141.6 million compared to the same period of the previous year.
• Adjusted EBITDA: Adjusted EBITDA grew by 9.2% to 334.5 million euros.
• EBITDA margin: The adjusted EBITDA margin improved to 29.3% compared to 28.9% in the previous year.

Balance sheet overview:

• Total assets: As at September 30, 2024, total assets amounted to EUR 1,656.6 million, a slight increase on the previous year.
• Net debt: Net debt fell to EUR 917 million, which corresponds to a gearing ratio of around 2.2x net debt to adjusted EBITDA for the last twelve months.

Details of the income statement:

• EBIT: EBIT for the first nine months of 2024 amounted to EUR 238.3 million, which corresponds to an increase of 6.0% compared to the previous year.
• Adjusted EBT: Adjusted EBT increased by 20.2% to 192.5 million euros.

Cash flow overview:

• Free cash flow: Free cash flow increased by 25.8% to EUR 219.1 million in the first nine months of 2024.
• Operating cash flow: Cash flow from operating activities increased by 21.3% to 285.7 million euros.

Key figures and profitability metrics:

• Adjusted earnings per share (EPS): Adjusted EPS increased by 11.6% to 0.96 euros.
• Gross margin: The gross margin improved from 47.8% in the previous year to 49.2%.

Segment information:

• Cloud solutions: Revenue in the Cloud Solutions segment rose by 7.6% in the third quarter of 2024 and recorded an increase of 11% since the beginning of the year.
• Web Presence & Productivity: Sales in this segment, excluding the aftermarket, grew by 12.3% year-on-year in the third quarter.

Competitive position: IONOS is well positioned as a digitalization partner for European SMEs and has established itself as a trusted cloud provider. The company uses the integration of AI to improve its product offering and customer experience.

Outlook and management commentary:

• Forecast for 2024: The company confirms its outlook for 2024 with constant currency revenue growth of 9% and an adjusted EBITDA margin of around 29%.
• Cloud solutions: Revenue growth in the cloud solutions segment is estimated at 13% for the year, slightly below the previously forecast 15-17%.

Risks and opportunities:

• Risks: A slowdown in the aftermarket business is expected in the medium term, which should have less of an impact on the EBITDA margin in the future.
• Political uncertainties: Political uncertainties in Germany could have an impact on government investments. Nevertheless, the company remains confident about its growth strategy.

Positive aspects:

• Strong sales growth of 7.8% year-on-year.
• Improved adjusted EBITDA margin to 29.3 %.
• Significant increase in free cash flow of 25.8 %.
• Successful integration of AI to improve the product range.
• Strong growth in customer base with 170,000 new customers.

Negative aspects:

• Cloud solutions fall slightly short of growth expectations at 13%.
• Volatility in the aftermarket business with lower margins.
• Higher marketing expenses impacting the EBITDA margin.
• Political uncertainties in Germany could impact federal contracts.
• Slight increase in churn rate to 14% due to price changes.