IONOS Group SE plans Initial Public Offering in the first quarter of 2023

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IONOS Group SE plans Initial Public Offering in the first quarter of 2023

• IONOS is the leading digitalization partner for SMBs in Europe, providing technology solutions to around six million customers around the world
• With sustainable growth, strong profitability and high cash flow generation, IONOS is well positioned in large and fast-growing markets driven by secular trends
• An Initial Public Offering is the next logical step to accelerate the Company’s growth trajectory and strengthen its brand
• Intended listing of shares and admission to trading on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange

Karlsruhe/Berlin, January 17, 2023. IONOS Group SE (together with its subsidiaries “IONOS” or the “Company”), the leading European digitalization partner for small and medium-sized businesses (“SMB”), together with its shareholders United Internet AG (“United Internet”) and WP XII Venture Holdings II SCSp, an affiliate of Warburg Pincus (together “Warburg Pincus”), announced plans for an Initial Public Offering (“IPO”) and listing of its shares on the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) in the first quarter of 2023, subject to market conditions. The IPO is expected to consist of the offering of existing shares held by United Internet and Warburg Pincus, with United Internet retaining a majority stake in IONOS following the completion of the IPO. The targeted free float is expected to create a liquid market for IONOS Group SE’s shares.

Achim Weiss, CEO of IONOS Group SE, says, “The planned IPO marks a new chapter in the IONOS success story. Our Web Presence & Productivity business has proven its capabilities for many years, and our Cloud Solutions business is growing quickly and already self-sustaining. Building on our strong financial profile, we expect that an IPO will enhance the appeal of our brand, which already enjoys a high recognition in many countries, and support IONOS in its ambitions to strengthen its position as the leading European partner for the digitalization of SMBs and as a powerful cloud enabler.”

Ralph Dommermuth, Chairman of the Supervisory Board of IONOS Group SE and CEO of United Internet AG, says, “Following the powerful growth and successful development of IONOS in recent years, an IPO is the next logical step on IONOS’ journey. As a standalone, publicly listed company, IONOS would enjoy greater flexibility.”

René Obermann, Co-Head Europe of Warburg Pincus and Member of the Supervisory Board of IONOS Group SE, adds, “Having contributed to IONOS’ successful journey over the past years, we are proud to accompany the Company on its way to the capital markets. The IPO marks an important milestone for IONOS, allowing it to explore many new growth opportunities in the future, and is a very exciting step for all stakeholders in the business.”

Growing Web Presence & Productivity business driven by clear leading European web hosting position

As the #1 European SMB digitalization partner and trusted cloud enabler, IONOS supports its customers along their digitalization journey. The Company operates a strategic footprint in a total of 18 markets in Europe and North America with its platform being accessible worldwide. It has leading #1 and #2 web hosting market positions in the core markets Germany, Spain, UK, France and Poland. IONOS has a broad portfolio of products and services, supported by award-winning customer service and state-of-the art infrastructure. It serves a large, diversified and loyal customer base with around six million customers worldwide (as of September 30, 2022).

IONOS provides digital infrastructure that is often mission-critical to these companies as a large, increasing number of SMBs have growing digitalization needs to enhance visibility and efficiency in order to ensure their operations and growth. IONOS’ businesses and markets have shown resilience even in times of crisis and have great potential to continue their growth trajectory. The Company’s served addressable market is expected to grow at a compound annual growth rate (“CAGR”) of approximately 19% from EUR 38 billion in 2021 to EUR 89 billion until 2026, with the Web Presence & Productivity (“WP&P”) market segment expected to grow at a 2021-2026 CAGR of approximately 9% to reach EUR 34 billion and the Cloud market segment of such served addressable market expected to grow at a 29% 2021-2026 CAGR to reach EUR 55 billion by 2026[1].

IONOS’ scalable platform and diversified product portfolio in WP&P as well as Cloud Solutions are designed to enable customers to grow online by providing them with fundamental and mission-critical digital solutions and infrastructure. In WP&P, which generated approximately 90% of the Company’s revenues[2] in 2021, IONOS offers a one-stop shop for all digitalization needs of SMB customers across their lifecycle: from domains and web hosting to classic website builders and do-it-yourself solutions, from professional e-mail to e-commerce solutions and online marketing tools. Further, the Company offers comprehensive aftermarket activities including among others the operation of a marketplace for domains. The aftermarket business has grown significantly over the past few years.

The business model is predominantly based on customer contracts with fixed monthly charges and contractually defined terms, providing stable, recurring and predictable revenue and cash flows. This offers protection against cyclicality and creates financial flexibility to exploit opportunities in new business areas and new markets. Additionally, IONOS targets revenue growth of the WP&P business at a high single-digit CAGR in the medium term while benefiting from significant barriers to entry.

Fast-growing and already self-sustaining Cloud Solutions business

One of IONOS’ main growth engines is its already self-sustaining Cloud Solutions business, which accounted for approximately 10% of revenues[2] in 2021. Recent investments, fully financed by reinvested earnings, have contributed to the division’s growth momentum: the Cloud Solutions business grew at 19% CAGR from 2019 to 2021. IONOS intends to significantly benefit not only from a global shift towards the cloud, as well as from the fact that it has its own tech stack that is independent from US providers.

Resilient business model based on sustainable growth, profitability and cash generation

IONOS’ resilient business model combines sustainable growth, strong profitability and high cash generation that fares better than many of its peers, in the Company’s assessment.

The Company generated total revenues of EUR 1.1 billion in 2021 and estimates to have achieved a total revenue growth year-on-year of 15-18% in 2022. In the first nine months of 2022, IONOS grew its total revenue by approximately 19% compared to the first nine months of 2021, thereby bolstering its growth trajectory in both WP&P and Cloud Solutions. In the mid-term, the Company aims for a total revenue growth CAGR of around 10%, with an underlying assumption that Cloud Solutions would deliver a CAGR of around 20%.

IONOS operates a highly profitable and asset-light business, with an Adjusted EBITDA Margin of 32.2% in 2021. While it estimates a lower margin for 2022 due to further investments in the IONOS brand, the Company aims to achieve an Adjusted EBITDA Margin that will progressively exceed and steadily remain above 30% in the mid-term.

Driven by the large share of subscription-based recurring revenue, the scalability of its business model and a high cash generation combined with low levels of maintenance capital expenditures in 2021, the Company has a Cash Conversion Rate of 89.5%.

Further growth supported by multiple growth levers and continued brand investments

With leading web hosting positions in several European markets underpinning IONOS’ strong position in the large and growing web hosting market, a best-in-class financial profile and a resilient business model, the Company is confident to be very well positioned for future growth. Besides continuous organic growth resulting from previous successful investments, e.g. in Cloud Solutions and the expansion across existing as well as into new local markets, IONOS aims to capitalize on further growth potential. At the same time, building the industry’s strongest brand is a key element to secure future market success, with up- and cross-selling of today’s product portfolio marking another strong growth opportunity. In the long-term, further international expansion, a broadening of the product portfolio and driving consolidation via opportunistic M&A are additional options to accelerate growth.

As a standalone, publicly listed company, IONOS believes that it will have an enhanced flexibility to implement this growth strategy. The Company further aims to benefit from increased visibility and prominence of IONOS’ brands, as well as direct access to the capital markets following an IPO, to further accelerate its growth trajectory and consolidate its leading position in the European web hosting market. IONOS has secured financing through intercompany loans provided by United Internet.

Further details on the intended IPO

IONOS Group SE’s current share capital is held by United Internet (75.1%) and Warburg Pincus (24.9%). The offering is expected to consist of a public offering in Germany and international private placements. The listing of the shares of IONOS Group SE is planned on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange. J.P. Morgan, Berenberg, Deutsche Bank and BNP PARIBAS are acting as the Joint Global Coordinators in connection with the planned transaction. Barclays and Goldman Sachs are acting as Joint Bookrunners. COMMERZBANK, DZ BANK and Landesbank Baden-Württemberg are Co-Lead Managers.

^[1] McKinsey (2022): The SMB Market for Digitization and Cloud Solutions. For its served addressable market, IONOS has deducted Cloud North America and server hosting North America from total McKinsey figures to align with IONOS current addressability.

^{[2]From contracts with customers.}

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About IONOS

IONOS is the leading European SMB digitalization partner and a trusted cloud enabler. The Company provides web presence and productivity solutions as well as cloud infrastructure and cloud solutions to more than six million customers and operates across 18 markets in Europe and North America, with its platform being accessible worldwide. With its comprehensive product portfolio, IONOS acts as a 'one-stop shop' for all digitalization needs: from domains and web hosting to classic website builders and do-it-yourself solutions, from e-commerce and online marketing tools to full-fledged servers and IaaS solutions. The Company’s scalable platform provides end-to-end solutions for freelancers, small and medium businesses and consumers as well as enterprise customers with complex IT requirements.

IONOS is part of the listed United Internet AG (ISIN DE0005089031).

IONOS press

Andreas Maurer

Phone: +49 2602 96-1275

press@ionos-group.com

IONOS Investor Relations

investor-relations@ionos-group.com

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Unless otherwise specified, the information in this announcement on the market environment, market developments, market sizes, growth rates, market trends and competition in the markets in which the Company operates are based on IONOS Group SE 's own assessments. In addition, the assessments by IONOS Group SE which are referred to herein as "Company Data Analysis" are based in part on internal market observations and on various market studies, including from Gartner (e.g., for cloud applications and services), Flexera, IDC, Bitkom Research GmbH, Germany's digital association, among others, and services commissioned from McKinsey & Company, Inc. None of IONOS Group SE, the Persons nor any of their respective directors, officers, personally liable partners, employees or agents has independently verified the data contained in the third party sources or the figures, market data or other information on which third parties have based their studies. In addition, certain of the industry and market position data contained in this announcement come from IONOS Group SE's own internal research and estimates, thus are not based on third party studies, and their underlying methodology and assumptions have not been verified by any independent source for accuracy or completeness and are subject to change. Additionally, certain sources of market data were prepared before the initial spread and/or renewed outbreak of the COVID-19 pandemic and have not been updated for the potential effects of this pandemic and assumptions around COVID-19 used thereafter may be inaccurate. IONOS Group SE, the Persons and any of their respective directors, officers, personally liable partners, employees or agents are not able to determine whether the third parties who have prepared such sources will revise their estimates and projections due to the potential impact of COVID-19 on future market developments and believe such revisions are inherently difficult to make accurately due to the nature of the pandemic and reactive measures being taken in various markets.

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In connection with the Offering, the Banks and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase securities of IONOS Group SE or United Internet and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such securities and other securities of IONOS Group SE or related investments in connection with the Offering or otherwise. Accordingly, references in the prospectus, once published, to the securities being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by the Banks and any of their affiliates acting as investors for their own accounts. In addition, certain of the Banks or their respective affiliates may enter into financing arrangements and swaps with investors in connection with which such Banks (or their affiliates) may from time to time acquire, hold or dispose of IONOS Group SE’s shares. The Banks do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

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In connection with the Offering, the stabilization manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot shares in IONOS Group SE or effect other transactions with a view to supporting the market price of IONOS Group SE's shares at a higher level than that which might otherwise prevail in the open market. A stabilization manager is not required to enter into such transactions and such transactions may be effected on any stock market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings of IONOS Group SE's shares on the Frankfurt Stock Exchange and ending no later than 30 calendar days thereafter.  However, there will be no obligation on the stabilization manager or any of its agents to effect stabilizing transactions and there is no assurance that stabilizing transactions will be undertaken. Such stabilizing measures, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilize the market price of IONOS Group SE's shares above the offer price. Save as required by law or regulation, neither the stabilization manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilization transactions conducted in relation to the Offering.