Half-Yearly Report as of June 3, 23
WEB.DE AG s first six months 23 at a glance Record sales revenues: 42% increase in revenues to 15.2 million EURO in the first half of 23 Profit and positive earnings before interest, tax, depreciation and amortization (EBITDA) for three quarters in a row Positive cash flow: increase by 4.1 million EURO in liquid funds to 99.3 million EURO 1% additional Com.Win functions and products per month Com.Win Business launched as multiple user solution for business customers WEB.DE Club now with more than 1, paying members Patent filled for WEB.DE three-way spam protection: Europe s largest computer magazine, ComputerBild, declares WEB.DE to be the test winner in spam protection (edition 15/3) Klaus-Dieter Scheurle elected by the Annual General Meeting to the Supervisory Board of WEB.DE AG with a large majority WEB.DE share again outperforms the TecDAX: increase of +64% or 2.89 EURO to 7.39 EURO by the WEB.DE share during the first half of 23 WEB.DE AG financials at a glance (in mln. EURO, except for share details) Q2/23 Q1/23 Q2/22 Q1-Q2/3 Q1-Q2/2 Revenues 7.9 7.3 5.9 15.2 1.7 Gross profit 6. 5.5 4.4 11.4 7.8 Marketing & Advertising (2.8) (2.7) (3.7) (5.5) (7.2) Research & Development (3.3) (3.1) (2.9) (6.3) (6.) Operating result (.6) (.7) (2.7) (1.3) (6.5) EBITDA 1. 1. (1.6) 2. (4.) Income for the period under review.3.2 (2.6).5 (6.1) Earnings per share (in EURO).1.1 (.7).1 (.17) Operating cash flow 1.8 1.6 (2.3) 3.4 (6.4) Liquid funds and securities 99.3 98.3 95.2 99.3 95.2 Balance sheet total 148.1 148.2 153.3 148.1 153.3
Contents Half-Yearly Report as of June 3, 23 3 Management Report Financials as of June 3, 23 4 8 WEB.DE AG Consolidated Profit and Loss Statement WEB.DE AG Consolidated Balance Sheet WEB.DE AG Consolidated Cash Flow Statement 13 14 15 Contents WEB.DE AG Development of Shareholders Equity Imprint and Corporate Calendar 16 17
Dear Shareholders, 4 Management Report The second quarter 23 met the expected good development so that WEB.DE AG accounts for record revenues and positive cash flow during a highly satisfactory and profitable first half year 23. Despite the difficult general economic conditions at present, WEB.DE AG has generated profits for three quarters in a row. During Q2/23 revenues increased from 5.9 million EURO in Q2/22 by 36% to 7.9 million EURO. During the first half year 23 WEB.DE was thus able to generate revenues of 15.2 million EURO versus 1.7 million EURO in the first half of the previous year (+42%). The gross profit on sales rose in Q2/23 to 5.9 million EURO (y-o-y); during the first half year 23 it increased by 46% to 11.4 million EURO, with a gross margin of 75% after 73% in the first six months 22. Consequently, WEB.DE is on plan. Higher revenues as well as the lean operating expense basis have further consolidated the earning strength of WEB.DE AG: The earnings before interest, tax, depreciation and amortization (EBITDA) amounted to 1. million EURO in Q2/23; in the first half of 23 they rose to 2. million EURO compared to -4. million EURO in the first half of 22. In Q2/23 the profit for that period amounted to.3 million EURO (Q2/22: -2.6 million EURO). Compared to the first half year 23, the company generated a profit of.5 million EURO versus a loss of -6.1 million EURO during the first half year 22. During the second quarter WEB.DE again achieved a positive operating cash flow of 1.8 million EURO. In the comparable prior year period it still amounted to -2.3 million EURO. Liquid funds amounted to 99.3 EURO million on the reporting date June 3, 23; this corresponds to an increase of 4.1 million EURO compared to the end of period date June 3, 22. The business model of WEB.DE AG which secures margins of more than 7% is based, in the long-term, on the extraordinarily solid and future-proof revenue sources of Online Advertising, e-commerce and Digital Services. The business model has thus proven its sustainability and therefore is the fundament for the expansion in the sector of Web-Telecommunication. In the profitable growing portal business, WEB.DE was able to further consolidate its market position through the continuous extension of its product and customer basis. A study by the renowned US market research institute Forrester Research of April 23 underpins the strong market position of WEB.DE. According to this study, T-Online and WEB.DE rank first and second amongst the portals on the German market the US-oriented portals like Yahoo, AOL or MSN fight for third place. The success formula behind our strong market position is the high customer retention of WEB.DE. It is embodied in a strong technology basis and excellent product quality. The most recent example is the three-way spam protection of WEB.DE, for which a patent application has been filled back in Q2/23. It protects WEB.DE users from unsolicited electronic mail.
A test by ComputerBild, Europe s largest computer magazine, has selected the three-way spam protection of WEB.DE as test winner in its issue 15/3. WEB.DE was clearly ahead of its competitors GMX and Arcor, which each identified less than 75% unsolicited mail. WEB.DE is winner at the Spam protection test Provider WEB.DE 1. 2. GMX 3. Arcor 4. T-Online freenet.de daybyday epost Identified Spam* 91% 74 % 7% 15/3 no protection* no protection* no protection* no protection* * Automatic identification of unsolicited electronic mail * No automatic Spam protection The success of fee-based Digital Services continued during the second quarter 23: The WEB.DE Club, which provides WEB.DE users for a annual fee of 6 EURO with a particularly attractive mix of the most relevant, fee-based value-added functions, welcomed its 1,th paying member in June 23. This clearly demonstrates the high acceptance of feebased, value-added functions by WEB.DE users. In the second business line, Web-Telecommunication, which is particularly future-potential just like the Internet portal, WEB.DE combines very high margin software business (7%+) with the recurring revenue streams of telecommunications. Web-Telecommunication serves as a strategic and technological spearhead of WEB.DE AG. The Com.Win product family launched during Q4/22 is particularly innovative and well prepared for international deployment with more than 29 key patent applications. It already now enables extremely comfortable telephony services. WEB.DE Com.Win, today available in version 1.7, will in future integrate all communication forms. Due to WEB.DE s typical fast development cyle Com.Win users are offered 1% additional Com.Win functions and products on a monthly basis and this since the launch in October 22. The past quarter, too, saw the emergence of essential new functionalities: the contact data of Com.Win users can be synchronized in an easy and safe manner with the usual handheld computers like Palm etc. In addition, Com.Win allows telephoning with a click in standard business applications like Outlook, Lotus Notes, SAP/R3 or from the Microsoft Internet Explorer. This means that, in future, the annoying typing of a phone number from the phone book or a database will become absolutely unnecessary. 5 Management Report
6 Management Report As announced WEB.DE is offering Com.Win in a multiple user solution for business customers since June 23. Companies are directly offered, without any need for a change in telco contracts and installation, an ultramodern and highly comfortable communication infrastructure which is immediately ready for use with every online PC, every telephone system and every corporate e-mail system. Hence, it secures companies essential advantages. With its webbased telecommunication products, WEB.DE broadly targets the telecommunications market which, according to a study by the European Information Observatory EITO 23, amounts to EUR 64 billion in Germany and as much as US$ 1,2 billion worldwide. WEB.DE generates income both from subscriptions and license fees as well as from usage fees for e.g. telephone minutes, SMS, FAX or storage space. Consequently, WEB.DE also launched essential customer benefit-oriented further devel-opments in the new business line Web-Telecommunication. In the second half of 23, too, this will be a focus of the company s efforts in Web-Telecommunication which will advance the Com.Win product family with its eight development teams. In future Com.Win users will continue to benefit from 1% additional Com.Win functions and products every month. Q2/23 was also a very successful year for WEB.DE on the capital market: apart from the new entry into the analyst coverage of WestLB, a particularly high interest in WEB.DE AG was shown during the road shows in London, Zurich, Geneva and Frankfurt. The price of the WEB.DE share reflected this interest in a positive manner. Whilst the share price was at 5.35 EURO on April 1, 23, it closed at 7.39 EURO (+38%) on June 3, 23 and has currently exceeded 8 EURO. Hence, the WEB.DE share has once again outperformed the TecDAX, the technology selection index of the largest and most liquid technology securities below the DAX. Referred to the first half year 23, WEB.DE s share price development of the WEB.DE share has been highly satisfactory with a plus of 2.89 EURO or 64%. The Annual General Meeting of WEB.DE AG in Karlsruhe on July 17, 23 voted for all the resolutions submitted by the administration with clear majorities. Klaus-Dieter Scheurle, former President of the German Regulatory Authority for Telecommunications and Posts, today Managing Director of Credit Suisse First Boston, was elected by an overwhelming majority to the new Supervisory Board of WEB.DE AG. The Supervisory Board then elected Mr. Scheurle as Deputy Chairman of the Supervisory Board. Furthermore, the share-holders of WEB.DE AG voted in favor of continuing the share buyback program and all global author-izations for capital measures submitted by the Executive Board with view to the issuing of bonds with warrants and convertible bonds by July 17, 28. This provides WEB.DE AG with the necessary flexibility for its international growth and future investments which may become necessary in the Web-Telecommunication segment in the medium and long term.
For the second half of 23 we expect, after the seasonally slower growth in the summer quarter Q3/23, a clear increase in revenues during the fourth quarter of 23. We confirm our growth course and expect a positive net income for the year as well as positive earnings before interest, tax, depreciation and amortization (EBITDA) for the full year 23. In the Web-Telecommunication business line, the focus will continue to be on the intensive development of the Com.Win product family both for retail and business customers. A significant stepping up of revenues is expected from 24 in this business segment also from international licenses. 7 Management Report We cordially thank you, dear Shareholders, for your continuing confidence in WEB.DE AG in the past quarters and in the quarters to come. We will work very hard in future on further extending our profitably growing portal business and our goal to develop WEB.DE into the world s largest provider of Web- Telecommunication in only ten years. Our efforts will continue to focus on reaching our revenues and profitability targets as well as a value-based, responsible corporate management with a view to enhancing shareholder value. Your Executive Board of WEB.DE AG Karlsruhe, July 23
Financials as of June 3, 23 8 Financials Revenues and gross profit During the second quarter 23 the revenues of WEB.DE AG increased from 5.9 million EURO (Q2/ 22) by 36% or 2. million EURO to 7.9 million EURO in Q2/23. In the first half year 23 revenues climbed from 1.7 million EURO during the comparable prior year period by 4.5 million EURO or 42% to 15.2 million EURO. WEB.DE AG hence reports the strongest quarterly revenues and the strongest half year revenues ever in its corporate history. The gross profit enjoyed a similarly positive development; it went up from 4.4 million EURO in Q2/22 by 1.6 million EURO to 6. million EURO in Q2/23. On a half year basis the gross profit on sales rose from 7.8 million EURO in the first half of 22 by 46% or 3.6 million EURO to 11.4 million EURO during the first half year 23. During the first half year 23 the margin amounted to 75% versus 73% during the comparable prior year period. Revenue development and gross profit (in mln. EURO) 16 14 12 1 8 6 4 2 Q1-Q2/2 Q1-Q2/3 Revenue structure In Q2/23 revenues from e-commerce of 1.7 million EURO were clearly above last year s level (+71%). During the first half year 23, revenues in e-commerce rose by.8 million EURO or 33% to 3.2 million EURO and accounted for 21% of total revenues. Revenue structure during the first half year 23 (in mln. EURO) 6.8 Digital Services Total: 15.2 Advertising e- Comme rce 5.2 3.2 Although revenues in the media business (Online Advertising) increased slightly compared to Q1/ 23, this business line did not perform according to expectations due to the war in Iraq and the poor general economic climate. Revenues from Online Advertising of 2.7 million EURO in Q2/23 were slightly below the level of Q2/22. Revenues Gross profit on sales
Compared to the first half year 23, Online Advertising generated with revenues of 5.2 million EURO, a slight plus of 3% versus the first half year 22. Online Advertising accounted for 34% of total revenues in the first six months. Digital Pay Services generated revenues of 3.5 million EURO during the second quarter of 23 which were clearly above the comparable prior year quarter. Compared to the first half year 23, revenues rose from 3.2 million EURO in the first half year 22 by 3.5 million EURO or 114% to 6.8 million EURO. Feebased Digital Services and, more particularly, the WEB.DE Club now boasting more than 1, members are the clear growth driver and already account for 45% of overall revenues of WEB.DE AG. Operating expenses The operating expense structure of WEB.DE AG remained stable and lean throughout the entire first half year 23. Thanks to active cost management and active cost controlling, total operating expenses of 8.6 million EURO remained flat versus the comparable prior year quarter (8.6 million EURO) despite a 36% rise in revenues. The comparison on a half year basis even shows a decline from 17.2 million EURO during the first six months of 22 to 16.6 million EURO (-3%) during the first half year 23. Lean operating expense structure despite significant rise in revenues (in mln. EURO) 2 18 16 14 12 1 8 6 4 2 Q1-Q2/2 Revenue costs Marketing and Advertising General administrative expenses Research and Development Q1-Q2/3 The expenditure on research and development amounted to 6.3 million EURO during the first half year 23 versus 6 million EURO during the comparable prior year period. This rise in research and development expenditure to 3.3 million EURO in Q2/23 (+11% versus Q2/22) underlines the intensive development activities in the field of Web- Telecommunications. Net income for the period under review and earnings before interest, taxes, depreciation and amortization (EBITDA) In line with the significant increase in revenues both in Q2/23 and in HY1/23 at a stable operating expense basis, the earnings before interest, taxes, depreciation and amortization (EBITDA) improved significantly during the first half year 23 to +2. 9 Financials
1 Financials million EURO versus a negative EBITDA of -4. million EURO during the first half year 22. In Q2/23 WEB.DE AG generated a profit of.3 million EURO versus a loss of -2.6 million EURO in Q2/ 22. During the first half year 23 the net income for the period increased to.5 million EURO versus a loss of -6.1 million EURO in the first half year 22. WEB.DE AG hence generated a profit for the third quarter in a row. During the first half year 23 it recorded positive earnings per share of.1 EURO (first half year 22: -.17 EURO per share) The operating cash flow was again clearly positive during Q2/23 at +1.8 million EURO (Q1/23: +1.6 million EURO) and showed a significant improvement versus the prior year quarter Q2/22, when the operating cash flow still amounted to -2.3 million EURO. Despite investments in fixed assets as well as in intangible assets of.6 million EURO each, liquid funds rose to 99.3 million EURO as of June 3, 23. Development of operating cash flow (in mln. EURO) EBITDA development (in mln. EURO) 3 2 1-1 -2-3 -4. -4 +2. 3 2 1-1 -2-3 -4-5 -6-7 -6.4 Q1-Q2/2 Q1-Q2/3 +3.4-5 Q1-Q2/2 Q1-Q2/3 Balance sheet, cash flow and own shares On the reporting date June 3, 23 the balance sheet total of WEB.DE AG at 148 million EURO was almost unchanged versus Q1/23. The liquid funds including securities held to maturity and securities available for sale totaled 99.3 million EURO as of June 3, 23. This corresponds to a 1. million EURO rise versus Q1/23 and a 4.1 million EURO increase versus the comparable prior year quarter. The shareholders equity of WEB.DE AG amounted to 131 million EURO or 89% of the balance sheet total as of June 3, 23 and hence was slightly higher than in Q1/23 (88%). In the course of focusing on the core business, shareholdings in Radio 96 Baden Airport GmbH, Rheinmünster, and in Radio Karlsruhe GmbH & Co. KG, Karlsruhe, were divested during the last quarter.
During the second quarter 23 WEB.DE AG acquired a total of 11,295 own shares for a total price of.7 million EURO. On the reporting date June 3, 23 WEB.DE AG held a total of 1,925,62 own shares with an average share price of 5.71 EURO. This corresponds to an arithmetic share in the capital stock of 1,925,62 EURO or 5.4% of the capital stock. As far as the structure of the Stock Option Plan is concerned reference is made to the Annual Report 22, page 3f. Directors Holdings The reportable shareholdings of executive and nonexecutive directors as of June 3, 23 are as follows: 11 Financials Human Resources As of June 3, 23 WEB.DE AG employed 316 people (with part-timers included on a proportionate basis) versus 285 employees as of June 3, 22. The staff structure was as follows: Executive Board Matthias Greve Michael Greve Matthias Ehrlich Matthias Hornberger Robert Gratzl Shares none 1 none 546 4, Options none none 95, 181,43 181,43 Employee structure Supervisory Board Shares Options Department Executive Board Distribution, Marketing and Conversion Development and System Administration Digital Services and Content Services Customer Services Administration and Accounting Total Q2/3 Q2/2 Stock Option Plan As of June 3, 23 the company had issued a total of 1,56,92 options for the subscription of WEB.DE shares to employees of WEB.DE AG and its subsidiaries. One option right entitles the holder to acquire one WEB.DE share. 5 65 111 63 44 28 316 6 79 85 48 38 29 285 Hansjörg Reiter none none Dr. Peter Pagé none none Felix Greve none none Cinetic GmbH, Karlsruhe, of which Matthias and Michael Greve each hold 5% of the shares, continues to hold 21,584,55 shares of WEB.DE AG. Felix Greve indirectly holds 54, shares of WEB.DE AG through three asset management companies. Accounting principles The interim financial statement was prepared in conformity with generally accepted accounting principles valid in the United States of America (US- GAAP). The accounting and valuation principles as well as the consolidation principles are in conformity with APB 28 ( Interim Financial Reporting ) and correspond to the principles at the end of 22. Accruals and deferrals, which would not be admissible in annual reporting, were not made.
12 Financials Segment reporting During the second quarter of 23, too, the company only operated in one segment, i.e. portals. In this segment WEB.DE AG mainly generated income in the business lines Online Advertising, e-commerce as well as Digital Services including telecommunications. Outlook Despite the difficult general economic climate, WEB.DE AG looks optimistically to the future. For the second half of 23 WEB.DE AG expects, after the seasonally weak growth summer quarter Q3/23, a significant rise in revenues during Q4/23. The digital nature of the business model ensures particularly high gross margins and economies of scale. During the second half of 23, too, the intensive efforts in product development will be upheld. As announced, the focus will continue to be on an intensive development of the Com.Win family both for retail and business customers. WEB.DE AG confirms its growth course and expects a positive net income for the full year 23 as well as positive earnings before interest, tax, depreciation and amortization (EBITDA). From fiscal year 24 onwards, significant revenues and profit contributions are expected in Web-Telecommunications from the Com.Win product.
WEB.DE AG Consolidated Profit and Loss Statement (US-GAAP) as f June 3, 23 (in T EURO, except for share details) Q2/23 Q2/22 Q1-Q2/23 Q1-Q2/22 13 Revenues Cost of sales Gross operating profit Marketing and advertising General administration costs Research and development Operating result Financial income Net result for the period 7,935 (1,976) 5,959 (2,816) (483) (3,278) (618) 926 38 5,854 (1,444) 4,41 (3,659) (55) (2,947) (2,745) 133 (2,613) 15,28 (3,769) 11,439 (5,497) (972) (6,332) (1,362) 1,875 513 1,697 (2,887) 7,89 (7,29) (1,85) (5,981) (6,466) 363 (6,13) Consolidated Profit and Loss Statement Earnings per share from continuing activities.1 (.7).1 (.17) Earnings per share.1 (.7).1 (.17) Average number of outstanding shares 36,582,884 36,924,284 36,6,169 36,72,12
WEB.DE AG Consolidated Balance Sheet (US-GAAP) as f June 3, 23 14 ASSETS (in T EURO) 6/3/23 3/31/23 12/31/22 Short-term assets Consolidated Balance Sheet Cash and cash equivalents Marketable securities Trade accounts receivable Due from associated companies Prepaid expenses and other short-term assets Total short-term assets Assets up for sale 1,315 22,559 3,738 155 3,46 4,227 6,886 24,963 4,537 371 2,853 39,61 11,77 18,834 4,66 491 2,159 37,86 287 Property, plant and equipment 18,199 18,662 19,28 Intangible assets 3,967 3,918 3,872 Goodwill 6,729 6,729 6,989 Financial assets 3,997 4,29 4,29 Lendings 8,561 8,561 8,561 Marketable securities 66,46 66,47 67,769 Total long-term assets 17,859 18,549 11,68 Total assets 148,86 148,159 148,755 LIABILITIES (in T EURO) 6/3/23 3/31/23 12/31/22 Short-term liabilities Bank accounts payable 31 Trade accounts payable 94 1,38 1,583 Advance payments received 1,958 2,35 1,693 Provisions 1,71 1,728 2,111 Deferred revenues 2,76 2,218 1,955 Other short-term liabilities 1,384 1,644 1,557 Total short-term liabilities 8,662 8,933 8,93 Long-term financial leasing liabilities 8,317 8,385 8,452 Shareholders equity Common shares at 1 EURO 38,198 38,198 38,198 Capital reserve 12,824 12,824 12,824 Treasury stock (1,984) (1,919) (1,45) Other comprehensive income 3 276 499 Accumulated total result 769 462 257 Total shareholders equity 131,17 13,841 131,373 Total liabilities 148,86 148,159 148,755
WEB.DE AG Consolidated Cash Flow Statement (US-GAAP) as of June 3, 23 (in T EURO) Q2/23 Q1-Q2/23 Q1-Q2/22 15 Net cash provided by operating activities Net result for the period Depreciation/amortization on intangible assets and tangible assets Result from sales and depreciation of marketable securities Change in assets and liabilities Trade accounts receivable Due from associated companies Other assets and prepaid expenses Short-term liabilities 38 1,587 (271) 799 216 (67) (27) 513 3,359 (377) 868 336 (1,4) (268) (6,12) 2,511 (583) (1,97) (5) (298) (366) Consolidated Cash Flow Statement Inflow/outflow from operating activities 1,762 3,391 (6,435) Net cash used by investing activities Investments in intangible assets (564) (1,125) (864) Investments in property, plant and equipment (68) (1,33) (1,841) Sales of investments 212 212 Acquisition of investments (594) Change in marketable securities (2,76) (1,286) (4,749) Issuance of loans (2,436) Inflow/outflow of funds from investing activities 1,8 (4,132) (1,484) Net cash used by financing activities Discharge of long-term liabilities (68) (135) (126) Acquisition of treasury stock (65) (579) (899) Outflow of funds from financing activities (133) (714) (1,25) Increase/decrease of cash and cash equivalents 3,429 (1,455) (17,944) Cash and cash equivalents at the beginning of the period 6,886 11,77 3,78 Cash and cash equivalents at the end of the period 1,315 1,315 12,134
WEB.DE AG Development of Shareholders Equity for the period January 1, 23 to June 3, 23 16 (in T EURO) Common stock Capital reserve Accumulated total result Other comprehensive income Treasury stock Total Shareholders Equity December 31, 22 Acquisition of treasury stock Profit/loss for the period Other comprehensive income June 3, 23 38,198 38,198 12,824 12,824 257 512 769 499 (199) 3 (1,45) (579) (1,984) 131,373 (579) 512 (199) 131,17
Imprint Publisher WEB.DE AG Amalienbadstrasse 41 D-76227 Karlsruhe Tel. +49 () 721 94329- Fax +49 () 721 94329-22 http://webde-ag.de Contact: Richard Berg, Head of Investor Relations Nina Vorbeck, Manager Retail Investors investor.relations@webde-ag.de Design/Production Art Crash Werbeagentur GmbH Weberstrasse 9 D-76133 Karlsruhe Corporate calendar Dates 8/6-8/23 1/23/23 11/24-26/23 11/26-27/23 Roadshow USA Publication of report Q1-Q3 German Mid Cap Conference 23, Frankfurt/Main German Equity Forum, Frankfurt/Main
WEB.DE AG Amalienbadstrasse 41 D-76227 Karlsruhe Tel. +49 () 721 94329- Fax +49 () 721 94329-22 http://webde-ag.de http://web.de