Q1 2025 Sunrise Communications AG Earnings Call
Joining us today.
Alex: Good morning, ladies and gentlemen, and thank you for joining us today. I'd like to welcome you to our Q1 2025 results. As this is our first pure quarterly update call since our listing, let me briefly summarize which documents were published today and which will also be made available on a quarterly basis going forward. So next to the press release we published earlier, you'll find on our investor relations website, the interim financial statements, the fact sheet, as well as the presentation that we will discuss.
I'd like to welcome you to our Q1 2025 results cool.
This is our first pure quarterly update call since our listing let me briefly summarize which documents were published today and which will also be made available on a quarterly basis going forward.
So next to the press release, we published earlier, you'll find on our Investor Relations website to interim financial statements. The fact sheet as well as the presentation that we'll discuss in this call.
Speaker Change: Now turning to the presentation itself as per usual with me today are older crowd our CEO.
Alex: Now turning to the presentation itself, as per usual with me today are André Krause, our CEO, as well as Yannick Routier, our CFO. We'll start the call with the presentation which will be followed by a Q&A session.
Speaker Change: That's the only for tier our CFO.
Speaker Change: We'll start to cope with the presentation, which will be followed by a Q&A session.
Speaker Change: With that let me hand over to address please go ahead.
Aubrey: With that, let me hand over to Aubrey. Yeah, thanks, Alex. And good morning, everyone, for our Q1 results. Let me start off the presentation by talking you through an overview of the key takeaways of today's presentation. So firstly, we have seen Q1 as being a quarter with continued customer growth. and with a number of new technical and product launches that we'll talk through in a minute. The quarter, as such, was somewhat softer in terms of trading, which was intentionally also driven by the fact that we had some price rises coming up and hence had reduced our activities a bit and had also a few spinover effects from the Black Friday activities in Q4, which had impacted the quarter.
unknown: Yes, Thanks, Alex and good morning, everyone for our Q1 results let.
Speaker Change: Let me start with the presentation.
Speaker Change: By talking you through an overview of the key takeaways of today's presentation.
Speaker Change: So firstly, we have seen in Q1 as being a quarter with continued customer growth.
Speaker Change: And it was a number of new technical and product launches, who will talk through in a minute.
Speaker Change: The quarter as such was somewhat softer in terms of trading.
Speaker Change: Which was intentionally also driven by the fact that we had some price rises coming up and handset reduced all activities a bit and it.
Speaker Change: Also a few spillover effects from the Black Friday activities in Q4, which had impacted the quarter.
Speaker Change: As I said, we launched a new product portfolio in April that is focusing on more multiple more for our customers and also on loyalty.
Aubrey: As I said, we launched a new product portfolio in April that is focusing on more for more for our customers and also on loyalty and there's a number of new innovative products on the basis on the back of that launch coming throughout the year. We also launched our 5G standalone technology and our network and we'll talk about that later on as well. Secondly the Q1 financials were in line with our expectations. And on the back of that, we are also confirming our full guidance for this year. Revenues were down by 3.3 percent, also impacted by lower hardware sales on the back of increasing replacement cycles on hardware.
Speaker Change: And there is a number of new innovative products on the basis on the back of that launch coming throughout the year.
Speaker Change: We also launched our <unk> Standalone technology in our network and we will talk about that later on as well secondly, the Q1 financials were in line with our expectations and.
Speaker Change: And on the back of that we are also confirming our full guidance for this year revenues were down by three 3% also impacted by lower hardware sales on the bank of increasing replacement cycles on hardware.
Speaker Change: And of course also impacting by the right pricing activities.
Aubrey: And of course, also impacting by the right price activities from last year on the fixed side in particular. Down to EBITDA we are plus 0.4% year-on-year. The revenue decline was only partially impacting gross profit and then with a number of OPEX optimizations and some phasing we see the EBITDA number growing year-on-year. We are fully confirming our guidance as set that includes also our dividend per share guidance that we expect to grow by 2.7% for the year 2025 to be paid in 2026.
Speaker Change: From last year on the fixed side in particular.
Speaker Change: Down to EBITDA, we are plus 0.4% year on year.
Speaker Change: The revenue decline was only partially impacting gross profit.
Speaker Change: And then with a number of Opex optimizations, and some phasing we see the EBITA number growing year on year.
Speaker Change: We're now fully confirming our guidance as set that includes also our dividend per share guidance that we expect to grow by two 7% for the year 2025 to be paid in 2006.
Speaker Change: Certainly we also held our first AGM just last week you probably all saw.
Aubrey: Thirdly, we also held our first AGM just last week. You probably all saw the outcome of that. Shareholders approved our 2024 dividend. The payment has been executed in the meanwhile.
Speaker Change: The outcome of it.
Speaker Change: Shareholders approved our 2024 dividend payment has been executed in the Meanwhile.
Speaker Change: And today, we are also announcing that we will go ahead with the <unk> pool.
Aubrey: And today we are also announcing that we will go ahead with the ADS delisting for the mid of August, 2025. Already 82% of our ADS has been converted. 98% of our Class A shares have been converted and 98% of the Class B shares have been converted. So we are progressing, as announced, as part of the IPO towards the delisting.
Speaker Change: Mid of August 2025.
Speaker Change: Already 82% of our ads have been converted.
Speaker Change: Of our class a shares have been converted and 98% of the class B shares have been converted so.
Speaker Change: So we are progressing as announced as part of the IPO to.
Speaker Change: What's the delisting.
Speaker Change: Now with that let me move to a bit more detail and granularity on our promotional performance and I would really like to start off with our new portfolio.
Aubrey: Now, with that, let me move to a bit more detail and granularity on our commercial performance. And I would really like to start off with our new portfolio. which is called Swiss Connect, and the name is actually the program of the new portfolio. It is, like I said, a more-for-more portfolio, so customers do get more roaming included. All tariff components now have certain roaming services included, and that comes then with a slightly higher price across all of the tariffs that we have. We also added a new Travel East plan, which covers the Balkan region, as we do have also quite some frequent travelers to that region that seems to be an important product and a need that we are covering with that tariff in particular.
Speaker Change: Which is called switch connect.
Speaker Change: And the name is actually the program.
Speaker Change: Of the of the new portfolio. It is like I said, the more for more portfolios for customers to get more roaming is included.
Speaker Change: All in tariff components know have certain roaming services included and that comes in with a slightly higher price across all of the terrorists that you have.
Speaker Change: We also added a new travel east plan, which covers the Bakken region.
Speaker Change: As we do have also quite some frequent travelers to that region that seems to be an important product and a need that we are covering was that was that terrific.
Speaker Change: Terrific particular.
Speaker Change: Important on top of that it's also this portfolio is not only looking at more for more and the inclusion of roaming.
Aubrey: Important on top of that is also this portfolio is not only looking at more for more and the inclusion of roaming but it's also adding loyalty rewards and these loyalty rewards are not only for new but also for existing customers. That is closing an important gap that we had in the past where existing customers were often complaining about the fact that our promotions were mainly focused on new customers and existing customers were not benefiting with the structure and the portfolio. This is now past history and hence we believe that this portfolio will drive more value also to our existing customers.
Speaker Change: But it's also adding loyalty rewards and loyalty rewards not only for you, but also for existing customers, let us closing an important gap that we had in the past where existing customers, we're awfully complaining about perfect.
Speaker Change: Our promotions were mainly focused on new customers and existing customers, we're not benefiting with the structure and the mechanics of the new portfolio. This is no past history and hence we believe that this portfolio will drive more value also to our existing customers.
Speaker Change: Lastly, we added also perplexity to our product lineup, so customers do get a exclusive loyalty offer which is a one year perplexity rose subscription that everybody can use.
Aubrey: Lastly, we added also Perplexity to our product lineup. So customers do get an exclusive loyalty offer which is a one-year Perplexity Pro subscription that everybody can use. We are quite happy about that inclusion because for us it looks like the Perplexity is a great AI tool that helps our customers to use AI on a basis that includes all of the current news in the web, has great referencing tools and, while we are speaking, has already 10,000 customers who have taken this opportunity.
Speaker Change: We are quite happy about the inclusion because for us it looks like the complexities great AI tool that helps our customers to use AI on and on and I would say some basis that includes all of the current news and the web has great referencing tubes and <unk>.
Speaker Change: <unk> speaking has already 10, thousands customers who have taken this option.
Speaker Change: Now let me also talk about the price horizons that we have executed in the first quarter.
Aubrey: Now let me also talk about the price rises that we have executed in the first quarter. So you see on the slide that we have done price rises across all our brands, our Sunrise main brand, also our Sunrise B2B customers to the largest part of the portfolio and also for our yellow customers. For the Sunrise brands, those price rises have become effective in March, while yellow only became April. So you see from that that the price rise has only marginally impacted the quarter, and we are expecting more price rise positive impacts in the quarters to come.
Speaker Change: So you can see on the slide that we have done price rises across all our brands. Our Sunrise main brands also our sunrise <unk> customers to the largest part of the portfolio.
Speaker Change: And also for our yellow customers.
Speaker Change: For the Sunrise brands those price prices have become effective in March while yellow only became April so youll see from that that the price rise is only marginally impacted the quarter.
Speaker Change: And we are expecting more price rise positive impacts in the quarters to come.
Speaker Change: We have increased on the main brands side by one 8% on flanker brand by one five.
Aubrey: We have increased on the main brand side by 1.8% and on Flanker brand by 1.5%. The main brand scope includes fixed and mobile, while on the Flanker brand we are focused on mobile only. And hence, we are expecting also the benefits down to revenue and ARPU in the coming quarter. We've also added new Moments rewards to our Moments program. As you remember Moments is out there for three years now and it's actually growing in usage and it's trying to drive loyalty with our customers. We have focused in the past very much on entertainment experiences. We have now also added more features and more experiences for families, like for example Circus Knie and Europa-Park and the Partiz cinemas are also new additions that are broadening the scope of the rewards that we are providing and with that we think we are going to reach more of our customers going forward with those exclusive benefits that we are providing.
Speaker Change: <unk> scope included fixed and mobile while on the flanker brand we are focused on mobile only.
Speaker Change: And hence we are expecting also benefits down to revenue and a pool.
Speaker Change: Coming quarters.
Speaker Change: We've also added a new.
Speaker Change: <unk> moments and rewards to our moments program as you'll remember a moment is out there for three years now and it's actually growing and usage.
Speaker Change: And then.
Speaker Change: Trying to drive loyalty with our customers. We are focused on deposit very much an entertainment experiences.
Speaker Change: We have no also added more features and more experiences for families. Like for example, <unk> clean.
Speaker Change: And I Hope our park MD as the parties Cinemark also new additions that are broadening the scope of the rewards that we are providing and was that we think we are going to reach more of our customers going forward with the exclusive benefits that we are providing.
Speaker Change: As you know <unk> is a very important part of our story.
Aubrey: As you know, B2B is a very important part of our story and also in Q1 we have quite a number of movements. I'd like to talk you through our new Swiss Post testimonial campaign. Swiss Post is now a customer of Sunrise of more than 10 years and hence are now participating in this campaign. They are demonstrating how our fixed and mobile offerings that we are driving to the Swiss Post are supporting their business. As you can see from the numbers, Swiss Post obviously is a very large enterprise in Switzerland, very much operating in the entirety of the country and driving vast volumes of logistics throughout the country.
Speaker Change: Also in Q1, we have quite a number of movements.
Speaker Change: To talk you through.
Speaker Change: New Swiss post testimonial campaign.
Speaker Change: Swiss post is now a customer of sunrise of more than 10 years.
Speaker Change: And hence.
Speaker Change: No.
Speaker Change: Participating in this campaign.
Speaker Change: They are demonstrating how our fixed and mobile.
Speaker Change: <unk> that we are driving to this was posed.
Speaker Change: <unk> their business.
Speaker Change: And as you can see from the numbers was post obviously is the very large enterprise in Switzerland, and very much operating in the entirety of our country and driving vast volumes of logistics throughout the country and we are very excited that we have been with switch both in alongside with suppose though.
Aubrey: We are very excited that we have with Swiss Post and alongside Swiss Post for 10 years. I think this testimonial campaign is well demonstrating the strength and delivery that we have done for this customer. We also added new customers in the quarter, so we added, for example, the Aqua Group, the Patea Cinemas, the Volare Group, to name a few, and we also had important prolongations, so customers that have been with us and have prolonged their contracts, like the airport of Zurich, University Hospital of Zurich, Dertour, which is a touristic company, and also the Thurgauer Kantonalbank.
Speaker Change: For 10 years and I think this was this testimonial campaign as well demonstrating.
Speaker Change: The strings and delivery that we have done for this customer.
Speaker Change: We also added new customers in the quarter.
Speaker Change: So we added for example, the alcohol grew with the patio cinema Nicola regroup to name a few and we also had important prolongation so customers that have been with us and have prolonged in contracts like the airport of Zurich.
Speaker Change: Diversity in hospital Zurich.
Speaker Change: Del Toro, which is terrific.
Speaker Change: Company and also the two ago are kind of nonbank and again, we are excited about the momentum that we have in <unk>.
Aubrey: And again, we are excited about the momentum that we have in B2B, and I think we are in a good position to further accelerate our growth in the B2B areas in the quarters to come.
Speaker Change: And I think we are in good position to further accelerate our growth in the <unk> areas in the quarters to come.
Speaker Change: Also.
Speaker Change: As I said already at the beginning.
Aubrey: Also, as I said already at the beginning, we are very excited about the launch of 5G as A. Now we are the first operator in Switzerland that has launched 5G standalone. And furthermore, given the fact that we have rolled out this technology now to 99.5 percent, what we've rolled out to our entire network and our entire 5G network has 99.5 percent pop coverage. So this is not just a trial, but it's widely available in Switzerland. And we are rolling it out now also to our customers. We have started with a soft launch now in the second quarter, the beginning of the second quarter.
Speaker Change: We are very excited about the launch of five GSA, though we are the first operator in Switzerland that has launched <unk> standalone.
And Furthermore, given the fact that we have rolled out this technology now to 99, 5%.
Speaker Change: We've rolled out to our entire network and our entire five generically because 99, 5%.
Speaker Change: Pop coverage. So this is not just a trial, but it's really more in Switzerland, and we are rolling it out now also to our customers we.
Speaker Change: We have started was a soft launch now in the second quarter at the beginning of the second quarter.
Speaker Change: And on the back of that we are also going to switch of our switching network during the second and third quarter.
Aubrey: And on the back of that, we are also going to switch off our 3G network during the second and third quarter. As a result of that, we will also be in a position to reallocate spectrum to our 5G network, which will then further widen and expand our 5G coverage. We are expecting that 5G as A will not only improve the coverage, but will also reduce battery consumption, will provide higher security and encryption standards. We will also be able to provide unique services based on the slicing technology that is only fully usable with the implementation of 5G as A.
Speaker Change: As a result of that we will also be in a position to re allocate spectrum to our <unk> network, which will then further widening and.
Speaker Change: And expand our <unk> coverage, we are expecting that <unk> will.
Speaker Change: Not only improve the coverage, but will also reduce battery consumption will provide higher security and encryption standards and we will also be able to provide unique services based on the slicing technology that it's only fully usable with the implementation of five GSA.
Speaker Change: And also we will provide ultra high reliability.
Aubrey: And also, we will provide ultra-reliable latency communication. Now this is of course an enabler technology and we are on the back of that expecting further commercial launches during the course of this year and also in the next year. So very excited of our technology leadership in this mobile area. As I said I think we are pushing the bar higher again in the Swiss market and are positioning ourselves as a driver for this technology innovation.
Speaker Change: And agency communication to us now.
Speaker Change: This is of course, an enabling technology and we are on the back of that expecting further commercial.
Speaker Change: Launches during the course of this year and also into next year.
Speaker Change: So very excited of our technology leadership and Theres mobile area.
Speaker Change: As I said I think we are pushing.
Speaker Change: The bar higher again in the Swiss market.
Speaker Change: And are positioning ourselves as a driver for this technology innovation.
Speaker Change: Now, let me talk about the trading results in a bit more detail for the first quarter.
Aubrey: Now with that, let me talk about the trading results in a bit more detail for the first quarter. As I said, trading came in a bit softer on the back of the reduced, intentionally reduced, commercial trading activity on the back of the price rises coming. And as a result, we have seen 12,000 net additions on the mobile postcard side and 5,000 net additions on the internet side. I think that is pretty decent momentum, despite the fact that we had significantly reduced our promotional activities in the first quarter. Our FMC quota has further increased to 58.3.
Trading came in a bit softer on the back of the reduced intentionally reduced commercial trading activity on the.
<unk> of the price rise is coming and as a result, we have seen 12000 net additions on the mobile postpaid side and 5000 and net additions on the Internet side.
Speaker Change: I think that is.
Speaker Change: Really decent momentum.
Speaker Change: Despite the fact that we had.
Speaker Change: <unk> significantly reduced our promotional activities in the first quarter.
Speaker Change: Our FMC quarter has further increased to $58 three.
Speaker Change: One three percentage point due to a one five percentage points over the course of.
Aubrey: That's 1.3 percentage points or 1.5 percentage points over the course of the last year and demonstrates that convergence remains a key trend and supporting also our bundle product policy that we are driving. APUs, as you see on mobile, have been reducing to 28.6. So we have seen a reduction of 1.1 Swiss franc over the last year. This is mainly driven by roaming reductions that we have been seeing in the first quarter in particular. And on the back of that, the new product portfolio is intended to actually help us more for more to drive back volume that we have lost from the variable consumption of roaming and drive higher prices by including more roaming in this new portfolio.
Speaker Change: Last year.
Speaker Change: And demonstrates that.
Speaker Change: <unk> remains a key trends.
Speaker Change: <unk> also our Butler product policy that we are driving.
Speaker Change: <unk>.
As you'll see on mobile has been reducing to $28. Six so we have seen a reduction of $1 one Swiss franc.
Speaker Change: Over the last year.
This is mainly driven by booming reductions that we have been seeing in the first quarter in particular and on the back of that the new product portfolio is intended to actually help with more for more to drive volume and we have lost from the variety of the consumption of roaming.
Speaker Change: And to drive higher prices by including more.
Speaker Change: Roaming and in this new portfolio.
Speaker Change: Secondly on the fixed side I'm also more op, who has declined to 58 Swiss francs Thats clearly on the back of the annualized nation.
Aubrey: Secondly, on the fixed side, also our APU has declined to 58 Swiss francs, that's clearly on the back of the annualization. of the right pricing efforts that we are driving. We are now at around 12,000 remaining customers that still have to be migrated. And as we said earlier, we are intending to finalize the migrations of those customers by the middle of the year. On top of that, there's also the fact that our Flanker brand product is still growing on the internet side quite well. And given the ARPU differential between the first and the second brand, there's also some balancing happening on the fixed ARPU that is impacting the total ARPU of the customer base that we are showing here.
Speaker Change: On the right pricing efforts, we are driving we are now in a row.
Speaker Change: <unk>.
Speaker Change: <unk> thousand remaining customers that still have to be migrated and as.
Speaker Change: We said earlier, we are intending to finalize the migration of those customers by the middle of the year.
Speaker Change: On top of it. There's also the fact that our flanker brand product is still growing on the internet side quite well and given the upward differential between the first the second brand. There is also some balancing happening on the fixed AVO that is impacting the total outflow of the customer base.
Speaker Change: We are showing here now I think on both on mobile and fixed we are expecting a.
Aubrey: Now, I think on both, on mobile and fixed, we are expecting a sequential stabilization on the back of the price rises. On the mobile side, also on the back of the introduction, the migration of customers onto the new more for more portfolio. On the fixed side as well, we're expecting stabilization price rises helping, but also the tailing off of the right pricing activities should help us throughout the year. And we are expecting actually that the volume of trading may be lower, at least in the first half, on the back of all of the introductions that we did and on the introductions of the new portfolio.
Speaker Change: Sequential stabilization on the back of the price rises.
Speaker Change: On the mobile side also on the back of the introduction of the migration of customers onto the new more focused portfolio.
Speaker Change: On the fixed side.
Speaker Change: Well we.
Speaker Change: We are expecting stabilization in price rise is helping but also the tailing off of the right pricing activities should help us throughout the year.
Speaker Change: We are expecting actually that the volume of trading may be lower.
Speaker Change: In the first half on the back of all of the introductions that we did on the introduction of the new portfolio.
Speaker Change: But we are also expected a pause on the back of this.
Aubrey: But we are also expecting that ARPUs on the back of this will stabilize and will help our revenue then to achieve the guidance on the revenue end.
Speaker Change: Will stabilize and will help our revenue then to achieve the guidance on the on the revenue.
Speaker Change: Now with that.
Yummy: I'm handing over for Yummy for the more detailed financials.
Yanni: Now, with that, I'm handing over to Yanni for the more detailed financials. Thank you, André, and also welcome from my side. Before we start diving into the financials, let me remind everyone that the numbers that you're seeing on the pages are on a rebased basis. In Q1, there were two rebasings that we have laid out in a slide in the appendix. It doesn't change the revenue overall, but there was a shift from B2C customers to B2B as part of the legacy switch off of the UPC stack. And secondly, there was a product hierarchy reclassification that shifted some revenue from non-subscription to subscription.
Yummy: Thank you Andre and also welcome from my side.
Yummy: Before we start diving into the financials, let me remind everyone that the numbers that youre seeing on the pages are on a rebased basis. In Q1. There were two re basing says he has laid out in a slide in the appendix it doesn't change the revenue overall, but there was a shift.
Yummy: From B to C customers to be to be as part of the legacy suite shuffle CDP stick and secondly, there was a.
Product re class hierarchy reclassification that shifted some revenue from non subscription to subscription.
Yummy: Is that all of the numbers and the year over year movements that youre seeing in the subsequent pages are net of debt.
Yanni: But as said, all of the numbers and the year-over-year movements that you're seeing in the subsequent pages are in Nettlestead. So with that, if we zoom into the revenue, the 3.3% that Andre already referred to is mostly driven by the lower non-subscription revenue in both fixed and mobile across B2C and B2B, as well as the impact of the right pricing in the residential as part of the UPC-based migration. Then that is partially offset by continued customer growth in the Flanker brand, especially in the fixed part, and that is then tempering the revenue tailwinds. Then when we go to EBITDA, that is driven in part by a 1.3% decline in gross profit as some of the revenue decline is tempered because of the lower margin especially of the handset sales.
Yummy: So with that if we assuming to the revenue the three 3% that Andre already referred to.
Yummy: Mostly driven by the lower non subscription revenue in both fixed and mobile across B to C and b to B.
Yummy: As well as the impact of the right pricing.
Yummy: The residential as part of the UPC and base migrations.
Yummy: Then that is partially offset by continued customer growth in the flanker brand.
Yummy: Especially in the fixed part and that is tempering the revenue tailwind.
Yummy: Then when we go to EBITDA that is driven.
Yummy: Bart by a one 3% decline in gross profit as some of the revenue decline is temporary because of the lower margin, especially of the handset sales.
Yummy: With a slight improvement year over year in Opex, which was in part driven by efficiencies and in part by facing.
Yanni: with a slight improvement year over year in OPEX which was in part driven by efficiencies and in part by phasing. Then when we go to adjusted EBITDA less P&E you can see a slight decline and although revenue was more of EBITDA was more or less flat CAPEX was higher and that is in part because of the front loading of the network and the CPE related investments so purely phasing throughout the year rather than a sustained increase. When we get to adjusted free cash flow minus 117 and lower than prior year which is then again driven by CAPEX and two more things.
Yummy: Then when we go to adjusted EBITDA less peony, you can see a slight decline.
Yummy: And although revenue was more of EBITDA was more or less flat capex was higher and that is in part because of the frontloading of the network and CPE related investments so purely phasing throughout the year rather than.
Yummy: Sustained increase.
Yummy: When we get to adjusted free cash flow minus 117, and lower than prior year, which is then again driven by Capex and two more things one is the supplier phased payments phasings and some other typical facings in our in our seasonality and of course, the interest payments that we typically do.
Yanni: One is the supplier payment phasings and some other typical phasings in our seasonality and of course the interest payments that we typically do in Q1. When we go to the revenue slide then, minus 3.3 percent or 25 million down year over year. What you can see here is that both the residential and the B2B other revenue or mostly non-subscription revenue constitute to 12 million decline, which isn't as part of the softer takeoff of new product launches, both in mobile but also in TV where we had less TV gifting than what we typically do as part of our fixed subscription addition.
Yummy: In Q1.
Yummy: When we go through the revenue slide 10, minus three 3% or $25 million down year over year.
Yummy: Can see here is that both the residential and the b to b other revenue or mostly non subscription revenue constitute to $12 million decline, which isn't as part of the softer takeoff of new product launches at both the mobile but also in <unk>, where we had less <unk>.
Yummy: We typically do as part of our fixed subscription additions.
Yummy: Additions.
Yummy: When we then zooming to residential subscription you can still see the $50 million decline in the fixed subscription, which is driven by the right pricing on the one hand and by the brand mix between <unk> and the main Brent.
Yanni: When we then zoom into residential subscription, you can still see the 50 million decline in the fixed subscription, which is driven by the right pricing on the one hand and by the brand mix between Flanker and the main brand. Mobile, 3 million decline is in majority driven by the lower variable roaming use. We expect the residential movement to further improve from here. And this was already an improvement versus what we had seen in H2 2024, in part because of the new portfolio, the mobile portfolio that André already spoke about. Then also the tailwind from the price increases, just to reiterate, the B2C main brand price increases set in these numbers for one month, whereas the Flanker brand not at all yet.
Yummy: Mobile $3 million decline.
Yummy: The majority driven by the lower variable roaming usage.
Yummy: We expect the residential movement to further improve from here and this was already an improvement versus what we had seen in <unk> 2024.
Yummy: In part because of the new portfolio mobile portfolio that Andre already spoke about.
Yummy: And then also the tailwind from the price increases just to reiterate the B to C. Main brand price increases set in these numbers for one month rest to think comprising flanker brands not at all yet.
Yummy: And SVR finally through the customer migrations, we will still have about.
Yanni: And as we are finally through the customer migrations, we will still have about the three subsequent quarters impacted by the financial, financially from the right pricing, but the actual commercial activities are behind us. And that is then all partially offset by a continued growth in the Flanco brand. When we focus on B2B, on the one hand, we see continued growth in the large enterprise segment. However, that was slightly softer than what we saw in the prior quarters. And that had to do with the big one-off deal that we did in 2024, which, of course, has now been annualized.
Yummy: Three subsequent quarters impacted by the financial fit.
Yummy: <unk> from the right pricing, but the actual commercial activities are behind us and that listen all partially offset by continued growth in the thank you Brent.
Yummy: Let me focus on B to B on the one hand, we see continued growth in the large enterprise segment.
Yummy: However that was slightly softer than what we saw in the prior quarters and that had to do with the big one off deal that we did in 2024, which of course has now been annualized and secondly, we did see mobile lower liquidity in the market.
Yanni: And secondly, we did see mobile lower liquidity in the market. So when we then zoom to EBITDA, revenue decline significantly tempered down to gross profit, in part because of the lower margin of the handsets that I already referred to. And then also in B2B, you can see that the revenue growth was further accelerated by a number of reductions in direct cost and a solid MV&O performance. The growth that you see in Infra is in part due to the phasing of direct cost in relation to the network build that we're doing and then monetizing with our infrastructure partner I have for us is Selma.
Yummy: So when we then zoom to EBITDA.
Yummy: Revenue declined significantly tempered down to gross profit in part because of the lower margin of the handsets added I already referred to and then also in B to B you can see that the revenue growth was further accelerated by a number of.
Yummy: Reductions in direct cost and a solid <unk> performance.
Yummy: The growth that you see in <unk> is in part due to the phasing of direct cost in relation to the network builds that we're doing and then monetizing with R. F.
Yummy: Infrastructure partner sell mix.
Yummy: Opex you can see a $7 million decline in year over year, and I would classify half of those savings approximately is hard savings and the other half is phasing mostly into Q2 and that has to do with some of the marketing activities that we are driving.
Yanni: OPEX you can see a 7 million decline year over year and I would classify half of those savings approximately as hard savings and the other half as phasing mostly into Q2. And that has to do with some of the marketing activities that we are driving. Leasing, you can see a net increase, albeit that is again different phasing of the excess costs, whereas the underlaying leases are increasing due to switch, due to shift into the excess line or the allot deal that we have with Swissco. Then when we get to slide number 14 and focusing on the adjusted EBITDA, less B&E and adjusted FCF.
Yummy: Leasing you can see a net increase albeit status again different phasing of the excess costs, whereas the underlying leases are increasing due to switch to just shifts or into the <unk> line.
Yummy: Or the allo deal that we have for today's call.
Yummy: Then when we get to slide number 14, and focusing on adjusted EBITDA <unk> and adjusted FCS.
Yummy: You see on the left side, you see adjusted EBITDA less be any additions.
Yanni: What you see on the left side is the Adjusted EBITDA LSP and E additions. We are now giving you more granularity on the buckets of CAPEX, how we look at it. So with CPE coverage, capacity, product and enables and baseline, we will continue to report these categories going forward. And this is the way how we look at the spend of our CAPEX. And I think here, again, as a reference to what I read before, you see that the decrease on Adjusted EBITDA LSP and E additions comes solely from the higher CAPEX, which, as I referred to already, is due to the phasing.
Yummy: Now, giving you more granularity on the buckets of Capex, how we look at it so with CPE coverage capacity product and an 8% baseline. We will continue to report these categories going forward. So this is the way how we look at the spend of our Capex and I think here again, a reference to we're already before you see that.
Yummy: The decrease in adjusted EBITDA less any additions come solely from the higher Capex, which as I referred to already is due to the phasing full year, we expect a slight reduction of capex as we have guidance for versus prior year.
Yanni: For year, we expect a slight reduction of CAPEX, as we have guided for versus prior year. And when we get to adjusted FCF on the right, we spoke about CapEx already. The interest growth that you're seeing here is still in relation to the debt reduction that we did in Q4. So in Q4, we actually paid down the debt. But as everybody, I guess, is aware, we have both the FX and the interest rates fully hedged. And what you see here, the higher costs were in relation to the retirement of the derivative instruments in relation to the debt reduction of Q4.
Yummy: And when we get to adjusted FTF on the right.
Yummy: We spoke about Capex already.
Yummy: Interest growth that Youre seeing here.
Yummy: Still in relation to the debt reduction that we did in Q4. So in Q4, we actually paid down the debt.
Yummy: But as everybody I guess is aware we have the both the FX and the interest rates fully hedged and what you see here the higher costs were in relation to debt retirement of the derivative instruments.
Yummy: In relation to those debt reduction of Q4, so basically we take the do we retired some of the instruments and some of those instruments were in the money and so therefore, there was a cash outflow.
Yanni: So basically, we retired some of the instruments. And some of those instruments were in the money. And so therefore, there was a cash outflow. However, if you look at the underlying reduction, and therefore, the third-party debt obligations, they have actually gone down. And so therefore, the $7 million is a one-off, if you will, that is not expected to recur. Tax largely unchanged and I think important to note here that on an adjusted FCF basis we exclude the tax settlement that is in relation to the past because that was pre-funded by Liberty Global when we did the spin-off and secondly it is a non-recurrent event.
Yummy: However, if you look at the underlying reduction and therefore, the third party debt obligations. They have actually gone down and so therefore, the $7 million is a one off if you will that is not expected to recur.
Yummy: Net largely on.
Yummy: Unchanged and I think important to note here that on adjusted FCS basis, we exclude the tax settlement that is in relation to the past because there was pre funded by Liberty Global.
Yummy: When we did the spin off and secondly, it is a nonrecurring event. It gives you some more details later in the presentation on the actual tax settlement.
Yanni: I give you some more detail later in the presentation on the actual tax settlement. Lastly, net working capital significantly down, 18 million of that is in relation to leases, which as I spoke to earlier already is phasing. The other part is higher supplier payments that we typically have there and vendor financing repayments. All in all, as we have guided for, we expect this to normalize throughout the year. Go then to the next page.
Yummy: Lastly.
Yummy: Net working capital significantly down $18 million of that is in relation to leases, which as I spoke to earlier already is facing the other part is <unk>.
Yummy: Your supplier payments that we typically have their <unk>.
Yummy: <unk> financing repayments all in all as we have guided for we expect this to normalize throughout the year.
Yummy: Go down to the next page.
Speaker Change: Andre referred to it already but in general we are confirming all of our financial metrics with revenue broadly stable adjusted EBITDA stable to low single digit growth.
Yanni: Andre referred to it already, but in general, we are confirming all of our financial metrics with revenue broadly stable, adjusted EBITDA stable to low single-digit growth, CAPEX at 15 to 16 percent, and then leading to a free cash flow of 370 to 390 million. And lastly, upon achieving those guidance, we expect to propose a dividend of 3.42 for this class A shares or 34 cents for the class B shares that are there. Lastly, I would like to reiterate the fact that the growth metrics that you're seeing here for revenue and especially EBITDA are in relation to the rebased 2024 numbers, which include an approximately 30 million higher cost for 2024, which is in relation to all of the standalone items, which we have spoken about before.
Speaker Change: Capex of 15% to 16% and then leading to a free cash flow of three of $370 million to $319 million.
Speaker Change: And lastly, upon achieving dose guidance, we expect to propose a dividend of $3 42 for class a shares or 34 cents for the class B shares.
Speaker Change: And then our debt.
Speaker Change: Lastly, I would like to reiterate the fact that the growth metrics that you are seeing here for revenue and especially EBITDA are in relation to the rebased at.
Speaker Change: 2024 numbers, which include approximately $13 million higher cost for 2024, which is in relation to all of the standalone items, which we have spoken about before.
Speaker Change: Alright. So if we then go to my last slide.
Yanni: All right, so if we then go to my last slide. Two things to update you on. On the one hand, we paid the dividend actually today after it was improved during the AGM last week. spoke to you again tomorrow. And lastly, Dan, and we haven't disclosed this amount before, the remaining amount after the 2024 dividend payout is approximately 2.58 billion in reserves that then can be used to pay dividends on a tax rebate, on a Swiss withholding tax rebate.
Speaker Change: Two things to update you on the one hand, we paid the dividend actually today. After it was improved during the AGM last week.
Speaker Change: I spoke already about the growth of two 7% expected.
Speaker Change: And lastly, which is now also fully confirmed after the completion of the ATM. The dividends were paid out from foreign capital reserves, which means that they are not subject to Swiss withholding tax or in general for Swiss personal residents are fully techs excluded.
Speaker Change: And lastly, Dan and we haven't disclosed this amount before the remaining amount after the 2020 for dividend payout is approximately 2.5 dollars 8 billion.
Speaker Change: In reserves that can be used to pay dividends on the tax rebate from the Swiss withholding tax base.
Speaker Change: Then lastly on the right you can see at sort of the remaining process that were envisaging in relation to the ABS.
Yanni: Then lastly, on the right, you can see the sort of the remaining process that we're envisaging in relation to the ADS. So by now, 82% of the Class A ADSs have been canceled and 98% of the Class B. We can see that the volumes in the Swiss line have nicely and subsequently improved and are now on a daily basis accounting for more than the majority of the total traded shares. As part of the IPO, we had said that we intended to switch that listing off from the NASDAQ nine months after, which we are now confirming.
Speaker Change: So by now 82% of the class eight eight yes, it has been cancelled and 98% of the Chesapeake.
Speaker Change: We can see that the volumes in the Swiss line nicely and subsequently improved and are now.
Speaker Change: On a daily basis accounting for more than a majority of the total trade it.
Speaker Change: Sure.
Speaker Change: As part of the IPO, we had said that we intended to switch that listing off from the NASDAQ nine months after which we are now confirming that.
Speaker Change: D. ADF lifting was always only envisaged as a means to distribute the shares to our shareholders, but the original hypothesis of course was always that this share was better traded in Switzerland locally than on the NASDAQ.
Yanni: The ADS listing was always only envisaged as a means to distribute the shares to our shareholders. But the original hypothesis, of course, was always that this share was better traded in Switzerland locally than on the NASDAQ. Once we switch, once we delist the ADS, a class A ADS from the NASDAQ, then it's our intention to terminate the sponsorship of both ADS programs 90 days after the last trading, which then further reduces, if you will, the level of support for the ADSs. And by then, you can only trade the ADSs on an over-the-counter basis in the U.S.
Speaker Change: Once we switch once we do list.
Speaker Change: Our class eight.
Speaker Change: From the NASDAQ.
Speaker Change: It's our intention to terminate the sponsorship of both Adcs prompt programs 90 days after the last trading which then further reduces if you will the level of support for the <unk> and by then you can only treat <unk> on an over the counter.
Speaker Change: Sure.
Speaker Change: Basis in the U S.
Speaker Change: And then lastly, we intend to apply for the day registration with the U S Securities and Exchange Commission following the delisting and determined.
Yanni: And then lastly, we intend to apply for the deregistration with the US Securities and Exchange Commissions following the delisting and then the retraction of the sponsorship. And by doing that, we are terminating the reporting obligations under the SEC, which then will further simplify our operating model and also reduce cost in relation to that. We expect that termination to happen approximately 12 months after the original delisting and it has to do with the fact of certain requirements that have to be fulfilled in terms of where the volumes of shares are trading across the world before the SEC will accept the deregistration.
Speaker Change: Listing and then the retraction of the sponsorship.
Speaker Change: And by doing that we are terminating day reporting obligations under the SEC, which then will further simplify our.
Speaker Change: Operating model and also reduced cost in relation to that.
Speaker Change: We expect that at termination to happen approximately 12 months. After the original the listing and that has to do with the fact that.
Speaker Change: All sorts of requirements that have to be fulfilled in terms of where the volumes of shares are trading across the world at before the SEC will except.
Speaker Change: The day registration if you will.
Andre: And so with that I give it back to you Andre.
Andre: And so with that, I give it back to you, Andre.
Andre: Thanks, Johnny.
Andre: Before we open up for Q&A, Let me just quickly summarize one more time.
Andre: Yeah, thanks, Jani. And before we open up for Q&A, let me just quickly summarize one more time. So firstly, I would say we have landed the price rise well and successfully. Again, we have been leading the market by going first, but by now all of our competitors have followed. And I think this is displaying the leadership role and also the pricing power that we think we have. Our new portfolio is a more for more portfolio, which has a higher list price than before. Again, I think all of the movements are demonstrating our drive for value, which has come in the first quarter with somewhat softer trading.
Andre: Firstly.
Andre: I would say, we have learned that the price rise well and.
Andre: And successfully again, we have been leading the market by going first.
Andre: By now all of our competitors have followed.
Andre: And I think there is displaying.
Andre: The leadership role and also the pricing power.
Andre: We have our new portfolio is a more for more portfolio, which has a higher list price and 74.
Andre: Again, I think all of the movements are demonstrating our drive for value, which has come in the first quarter was somewhat softer trading and we are also expecting somewhat softer trading to continue for the second quarter on the back of this nevertheless, the price increase which has not yet.
Andre: And we are also expecting a somewhat softer trading to continue for the second quarter on the back of that. Nevertheless, the price increase, which has not yet left their mark really in our financials, will support a... improvement on APU as we go along and will help to drive value and revenues for the rest of the year. We have also again demonstrated technology leadership by going first to a 5G standalone network that now covers 99.5% of Switzerland. And I guess with that, we are not only the first in Switzerland, but from a reach of that network, we are probably one of the first in Europe that is doing that.
Andre: Lift there mark really in our financials.
Andre: To support a.
Andre:
Andre: Improvement on <unk> as we go along.
Andre: And will help to drive value and revenues for the rest of the year.
Andre: We are also again demonstrate the technology leadership by going first to <unk> Standalone network that now covers 99, 5% of Switzerland.
Andre: And I guess was that we are not only the first in Switzerland, but from a reach of that network and we are probably one of the first in Europe.
Andre: That is doing that and on the back of that there will be a variety of benefits to our customers that we will explore going forward.
Andre: And on the back of that, there will be a variety of benefits to our customers that we will exploit going forward. As Jani showed in detail, our financials are on track, which gives us the opportunity to fully confirm our financial guidance for the year and again, including also an increase of our dividend.
Johnny: As Johnny showed in detail.
Johnny: <unk> on track, which gives us the opportunity to fully confirm our financial guidance for the year.
Speaker Change: And again, including also an increase of our dividend.
Speaker Change: Two to three points 42 Swiss francs for the 25.
Andre: to 3.42 Swiss francs for the year 2025, which I think is again also demonstrating the financial strength of the business going forward.
Speaker Change: Which I think is again also demonstrating the financial strengths of the business.
Speaker Change: Going forward.
Speaker Change: With that we close the presentation and I'll ask the operator to start the Q&A.
Andre: With that we close the presentation and I'll ask the operator to start the Q&A. Thank you sir.
Speaker Change: Thank you Sir we will now begin the question and answer session anyone who wishes to ask a question May Press Star then one on the telephone you will hear a tone to confirm that just entered the queue.
Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered a If you wish to remove yourself from the question queue, you may press star and.
Speaker Change: If you wish to remove yourself from the question queue, you May press star two.
Speaker Change: Question is on the phone are requested to these able to loudspeaker mode and the mentally turned off the one I'm off the webcast when asking a question.
Operator: Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume of the webcast while asking a question. Anyone with a question may press star 1 at this time.
Speaker Change: Anyone with a question that the star one at this time.
Speaker Change: Our first question comes from Andrew Lee from Goldman Sachs. Please go ahead Sir.
Andrew Lee: Our first question comes from Andrew Lee from Goldman Sachs. Please go ahead. Good morning, everyone. I had two questions. Thanks for the detail you gave on your price adjustments in in Q1.
Andrew Lee: Good morning, everyone.
Speaker Change: Two questions. Thanks for the detail you gave on your.
Andrew Lee: Price adjustments in.
Andrew Lee: Q1, I was wondering if you could talk about what.
Andrew Lee: Just wonder if you could talk about what how you see the broader competitive environment and how you've seen that kind of response from competitors in particularly in residential, mobile and fixed. Just to give it context, Swisscom spoke about it a couple of weeks ago and said it hadn't really seen any change in the degree of competitive intensity on residential fixed, but had seen small kind of signs of slight increase in or improvement on on the mobile side. That's kind of first question. Then second question is just related to that. You talked about lower promotional spend in Q1.
Andrew Lee: How you see the broader competitive environment.
Andrew Lee: And how you're seeing that kind of response from competitors.
And particularly residential mobile and <unk>.
Andrew Lee: Fixed just to give it context, the swisscom think about a couple of weeks ago, and said I haven't really seen any change in the degree of competitive intensity on residential fixed but had seen small kind of signs of.
Andrew Lee: Slight increase or improvement on on the mobile fraud.
Andrew Lee: That's kind of first question and then second question is just related to that you talked about lower promotional spend in Q1 can you just explain exactly why you would reduce promotional spend through the press release.
Andrew Lee: Can you explain exactly why you would reduce promotional spend through the price rise process? And then should we expect promotional spend to increase again in Q2 back to normalized levels? How should we think about that? Thank you.
Andrew Lee: And then should we expect promotional spend.
Andrew Lee: Increase again in Q2 back to normalized levels, how should we think about that thank you.
Speaker Change: Yeah, Thanks, Andrew for those questions.
Andre: Yeah, thanks Andrew for those questions. So let me talk to the competitive environment and how we see it evolving. I think I would clearly echo that we see on mobile that the net prices, if you deduct the promotional period, have gone up over the last couple of months. I think post Black Friday there's some rationalization happening. Still, I think there's also a number of smaller players out there that are still operating at low price points. I think the situation is kind of fragile. So everybody has understood that the direction of travel should be that we can't continue to just drive prices down.
Andrew Lee: So let me talk to the.
Andrew Lee: Competitive environment, and how we see evolving.
Andrew Lee: I think I would echo that we see on mobile the net prices if.
Andrew Lee: If you deduct the promotional period have gone up.
Andrew Lee: Over the last couple of months I think post Black Friday, there are some rationalization of that happening.
I think there is also a number of smaller players out there that are still operating at low price points. I think the situation is kind of fragile. So everybody has understood that the direction of travel should be.
Andrew Lee: That we can't continue to just drive prices down.
Andrew Lee: <unk> is actually declining given.
Andre: Elasticity is actually declining, given the fact that prices have come down substantially over the last couple of years. And as a result, now we are, I think, at a turning point where we have to rationalize our pricing behavior. It's good to see that the price rises have been taken on also by our competitors. We would have not expected Swisscom to do that with the main brand, but they did with Ringo. I think that all is indicating towards the right direction. On fixed, I'm also not surprised that the promotional intensity has remained the same. In fact, prices have also not been moving for the last, I would say, three years, right?
Andrew Lee: Given the fact that prices have come down substantially over the last couple of years.
Andrew Lee: And as a result, I think that a turning point, where we have to rationalize our pricing behavior is good to see that the price rises have been take.
Andrew Lee: <unk> taken on also.
Andrew Lee: Competitors, we would've not expected Swiss going to do that was the main brand, but they did was wingo I think that all is indicating towards the right direction on fixed I'm also not surprised that the promotional intensity has remained the same in fact prices have also not been moving for the last I would say three years right. So if you look at the net price.
Andrew Lee: Is it a resulting then I think there is little to law enforcement.
Andre: So if you look at the net prices that are resulting, then I think there's little to no improvement on that, which has also to do with the wholesale nature of most of the fiber networks. So there is a natural limit to what can be priced. but on that on those levels it has been quite stable I would say so therefore I would also not see that there's increasing aggression on any of that. So from our point of view a fragile moment because you know everybody is trying to get in the right direction but everybody is also needing to then deal with lower volumes on the back of that.
Andrew Lee: <unk>, which has also to do with the wholesale nature of most of the fiber networks.
Andrew Lee: And metro limits to what can be can be priced.
Andrew Lee: But all of those levels has been quite stable I would say.
Andrew Lee: So therefore I would also not see that there is increasing aggression.
Andrew Lee: Any of that so from our point of view.
Andrew Lee: Fragile moment, because you know everybody is trying to get in the right direction.
Andrew Lee: But everybody is also needing to then deal with lower volumes on the back of that liquidity is not necessarily growing if the only feature that was stipulating that liquidity in the past which was price promotions.
Andre: Liquidity is not necessarily growing. If the only feature that was stipulating liquidity in the past, which was price promotions is being reduced. Now that's exactly where we are turning towards a main brand strategy that is more looking towards innovation service and loyalty and of course price will continue to play a role but it can't be the only argument going forward.
Andrew Lee: Is being reduced.
Andrew Lee: <unk>, where we are turning towards.
Andrew Lee: Main brand strategy is more looking towards innovation service and loyalty.
Andrew Lee: Of course price will continue to play a role, but it can't be the only argument going forward.
Andrew Lee: What I would depict the competitive environment and maybe on the on the promotional spend you want to take that one yes sure.
Yanni: That's how I would depict the competitive environment and maybe Jani on the proportional spend you want to take that one? Yeah sure. Well I think why one would reduce promotional intensity when you're doing the price increase I think Andre referred to it already.
Andrew Lee: Well I think why one vote at reduced promotional intensity when youre doing your price increase I think Andre referred to it already is that when you are bringing up the prices not sure you want to use and then a lot of above the line marketing to shout about new promotions, we typically come at a discount and so I think thats the.
Yanni: It's that when you are bringing up the price is not sure you want to use then a lot of above the line marketing to shout about new promotions which typically come at a discount and so I think that's the commercial reason behind it. I think like I said during the EBITDA slide of the seven million approximately three and a half million is phasing of which mark of the marketing campaigns is one. I think the way to think about it is that three and a half million hires of lower spend that we saw in Q1 is supposed to come back throughout the year and marketing campaigns is a large element of that but not the only one just to put that into context.
Andrew Lee: The reason behind it.
Andrew Lee: I think like I said during the Ebitdas flight of the $7 million approximately three and a half million dollars is facing.
Andrew Lee: Of which more of their marketing campaigns is one I think the way to think about it is that three and a half million higher of lower spend that we saw in Q1 is supposed to come back throughout the year and marketing campaigns is it large element of that but not the only one just to put that into context.
Speaker Change: Thanks, that's very helpful.
Andrew Lee: Thanks, that's really helpful.
Speaker Change: The next question comes from Polo Tang from UBS. Please go ahead.
Paolo Tang: The next question comes from Paolo Tang from UBS, please go ahead. Hi, thanks for the presentation. I've got three quick questions. The first one is, at the end of the remarks, you flagged softer trading in Q2. So can I just clarify, was this a reference to net ads? Because I'm assuming that your revenues will have the benefit of price rises and your new more for more portfolio. Second question, just continuing on revenues, in Q1 you saw a decline in terms of handsets, hardware or your non-subscription revenues. This is obviously lower margin, but I'm just curious in terms of how we should think about the evolution of this line in the next few quarters.
Polo Tang: Hi, Thanks for the presentation I've got three quick questions. The first one is at the end of the remarks, you flagged softer trading in Q2. So can I just clarify it was just a reference to net because I'm assuming that your revenues will have the benefit of price rises and you use more for more portfolio.
Polo Tang: Second question just continuing on revenues in Q1, you saw a decline in terms of handsets hardware or your non subscription revenues. This is obviously lower margins, but I'm just curious in terms of how we should think about the evolution of this line.
Polo Tang: Next few quarters. My final question is just on your plans to delist. The ABS is in August just given reduced reporting requirements just trying to work out whether this could be unusual saving or notes and how quickly could this feed through into numbers. Thanks.
Paolo Tang: My final question is just on your plans to delist the ADSs in August, just given reduced reporting requirements, just trying to work out whether this could be a noticeable saving or not, and how quickly could this feed through into numbers. Thanks.
Polo Tang: Yes, Hello. Thank you for your questions. So on the on the Q2 training remark that TD was related to the trading in terms of physical so not in terms of revenue Youre absolutely right. The revenue will have the benefit of the price rise is really coming through in full for the first time only was the Q2 numbers.
Andre: Yeah, Polo, thanks for your questions. So on the Q2 trading remark, it clearly was related to the trading in terms of physical, so not in terms of revenue. You're absolutely right. The revenue will have the benefit of the price rises really coming soon in full for the first time only with the Q2 numbers and from there on. In terms of volume, as I said, liquidity, given that promotional activity has been reduced and prices have gone up is slightly coming down and hence we are also not expecting that the Q2 net figure will be a very high one.
Polo Tang: From from there on.
Polo Tang: In terms of volume.
Polo Tang: Liquidity given that promotional activity has been reduced and <unk>.
Polo Tang: Prices have gone up.
Polo Tang: Slightly coming down and hence we are also not expecting that the Q2.
Polo Tang: Net debt figure will be.
Polo Tang: <unk> be a very high one and we rather expect it to be on software levels and Thats absolutely fine from our perspective, given the fact that we are benefiting from the pricing measures that we have taken.
Andre: We rather expect it to be on softer levels and that's absolutely fine from our perspective given the fact that we are benefiting from the price measures that we have taken in terms of revenue generation.
Polo Tang: In terms of revenue generation.
Polo Tang: And then hardware delisting, you know you're going to take us to yeah sure no problem.
Yanni: um and then hardware delisting you're going to take this too yeah sure no problem um well if you look at um The non-subscription declined as part of the Q1 results. They were significantly going down on a percentage basis. And that is in part because also some of the new launches happened typically in Q1 from some of the providers, which I think were not as strong this year. And we don't expect that sort of percentage-wise decline to continue throughout the year. We expect that to normalize throughout the coming year. And of course, nobody knows how the new Apple launch is going to be later this year.
Polo Tang: Well if you look at.
Polo Tang: Yeah.
Polo Tang: The non subscription decline.
Polo Tang: As part of the Q1 results they were significantly going down on a percentage basis than we did this in part because of also some of the new launches have been typically in Q1 from some of the providers, which I think.
Polo Tang: Were not as strong this year and we don't expect that to sort of percentage wise decline to continue throughout the year, we expect that to normalize throughout the coming year and of course, nobody knows for how the new Epsilon is going to be later this year and of course, we expect.
Yanni: And of course, we expect, let's say, a more temperate decline if you will.
Polo Tang: Let's say a more temporary decline if you will.
Polo Tang: Then on the day registration.
Yanni: Then on the deregistration. Two things. So yes, there's absolutely school savings that will occur as part of that.
Polo Tang: And.
Polo Tang: Two things so yes, there is absolute cost.
Polo Tang: Cost savings that will occur as part of that.
Polo Tang: <unk> days those will only at first start to appear in 2026, because what is important to note there is effectively three steps.
Yanni: But those will only at first start to appear in 2026, because what is important to note, there's effectively three steps in the de-registration process. So first is the delisting of the NASDAQ. Then secondly, is the retraction of the sponsorship, which then sort of makes the program not sponsored by us anymore. And then thirdly, is the de-registration from the SEC obligations, which can only happen. first time 12 months after the delisting of the NASDAQ because basically what the SEC says is that the trading volumes in the U.S. versus the rest of the world have to significantly reduce so that there is no exposure anymore for U.S.
Polo Tang: In the Deregister Asian process. So first is the delisting of the NASDAQ.
Polo Tang: Then secondly is the retraction of the sponsorship, which then sort of makes the program and not sponsored by US anymore and then thirdly is the day registration.
Polo Tang: From the SEC obligations, which can only happen.
Polo Tang: First time 12 months after the delisting of the NASDAQ because basically what D says is that the trading volumes in the U S versus the rest of the world is to significantly reduce so that there is no exposure any more first firstly for our U S. Investors. If you will as to which you can then start to report on.
Yanni: investors, if you will, after which you can then stop to report under U.S. law and to U.S. in terms of all of the requirements that come with that. So yes, there will be savings.
Polo Tang: The U S law to use in terms of all of the requirements that come with that so yes, there will be savings and we'll talk to dose at two U as we give guidance for 2026, because they don't impact the 2025 financials. If you will.
Yanni: We'll talk to you as we give guidance for 2026 because they don't impact the 2025 financials, if you will. Thanks.
Polo Tang: Thanks.
Speaker Change: As a reminder, if you wish to register for a question. Please press star followed by one.
Operator: As a reminder, if you wish to register for a question, please press star followed by 1.
Speaker Change: The next question comes from Maurice Patrick from Barclays. Please go ahead.
Maurice Patrick: The next question comes from Maurice Patrick from Barclays, please go ahead. Oh good morning guys, thank you for taking the questions. Just a couple from my side please.
Polo Tang: Yes.
Maurice Patrick: Oh good morning, guys. Thank you for taking the question just a couple from my side. Please.
Polo Tang: The first one is just a.
Maurice Patrick: The first one really is just a technical question, if you could provide the split of your net ads on the main brand and the sort of yellow brand would be helpful.
Polo Tang: Technical question, if you could provide the split of your net adds on the main brand and their brand to be helpful.
Polo Tang: The second question relates to just phasing of revenues Napa.
Maurice Patrick: The second question relates to just phasing of revenues in ARPU, so if I'm not wrong you've guided into broadly stable revenues, you were down 3.3% Q1, you've talked about a soft net add quarter, so presumably 2Q could be minus 2, minus 3% maybe depending on the equipment volumes you spoke to, I mean the price increase is relatively small, I'd love to understand the phasing of the ARPU and the revenues throughout the year, that'd be very helpful. All right. Thanks for your question, Maurice. Well, we are not splitting out the NetApps by brand, but I would say that there's no change either, right?
Polo Tang: Got it wrong, you've gotten to a broadly stable revenues you were down 3% three 3% Q1.
Polo Tang: You've talked about a soft quarter, so presumably <unk> could be minus two minus 3% might be depending on the.
Polo Tang: The equipment volumes you spoke to.
Polo Tang: Price increase is relatively small lift on us on the phasing of the offer and the revenues throughout the year that'd be very helpful. Thank you.
Polo Tang: Yeah.
Polo Tang: Alright, Thanks for your question Louise.
Polo Tang: We're not splitting out the net ads by brands.
Polo Tang: But I would say that Theres no change either right. I mean, you you remember that as part of the IPO of the listing we were talking a bit about of all the dynamics between the different brands are.
Andre: I mean, you remember that as part of the IPO listing, we were talking a bit about how the dynamics between the different brands are. It's pretty stable, but we continue not to share detailed NetApp figures by brand.
Polo Tang: That's pretty stable, but we continue to look to share.
Polo Tang: Detailed figures borrowed by brand.
Polo Tang: And for the phasing of revenues you want to take the one yes sure. So there I think.
Yanni: for the phasing of revenues, Yanni, you want to take the one? Yeah, sure. So the I think. Like I said on the revenue, half of the decline that we saw approximately in Q1 was driven to the hardware or hardware related revenues. And like I answered on Bolo, we expect that to significantly normalize over the quarters. So with that, if you will, on a normalized basis, the revenue decline was not 3.2 or the 3.3 that we saw was only half driven by subscription revenues, which then if you phase in the fact that we don't have really the price increase of 1.5 to 1.8% on a large part of those subscription revenues that have to come through.
Polo Tang: That guy set on the revenue.
Polo Tang: Fourth the decline that we saw approximately in Q1 was driven to dean hardware or hardware related revenues and like I answered on polo, we expect that to significantly normalized over the quarters. So with that if you will on a normalized basis. The revenue decline was not three.
Polo Tang: Are the three three that we saw was only half driven by <unk>.
Polo Tang: Subscription revenues.
Polo Tang: Which then if you're facing and the fact that we don't have really the price increase of one five to one 8% on a large part of those subscription revenues. It has to come through secondly, the fact that the right pricing is going to temporary in terms of year over year impact on the <unk>.
Yanni: Secondly, the fact that the right pricing is going to temper in terms of year over year impact on the subsequent quarters in the year. And then I don't want to sort of speculate here around the commercial performance that we are going to have in the outer quarters. But as Andre said, we are excited about some of the launches that we're doing. So of course, those sit in our plans as well then in terms of the expectations for the quarter. So I hope that helps you to sort of frame how the revenue is going to trend throughout the quarters.
Polo Tang: Quarters in the year, and then I don't want to sort of speculate here around the commercial performance that we are going to have in the outer quarters, but as Andre said, we are excited about some of the.
Polo Tang: Launches that we're doing so of course those sit in our plants as well then in terms of the expectations for the quarter. So I hope that helps you to sort of frame how the revenue is going to trend throughout two corners.
Polo Tang: Maybe it's a very quick follow on would it be fair to assume you're expecting most of the price increase there for the drop through to the bottom line to offer.
Maurice Patrick: Yeah, thanks for that.
Yanni: Maybe as a very quick follow up, would it be fair to assume you're expecting most of the price increase therefore to drop through to the bottom line? Yeah, look, most is a wide range, and I'm happy to confirm that most, if you will. I think I spoke about it, that we are very happy with how the price increase has evolved. We actually saw the result of it was better than expectations. I don't think we maybe want to say anything more about the percentages. But I think most is clearly the right term. 1.8% to 1.5% is also not massive increases.
Polo Tang: Yeah.
Polo Tang: Yeah look most is a is it a wide wide range and I'm happy to confirm that most if you will.
Polo Tang: I think they spoke about it at that.
Polo Tang: We are very happy with how the price increase has evolved we actually saw the result of it was better than expectations.
Polo Tang: Between maybe you want to say it more percentages, but I think most is clearly the right term.
Polo Tang: One eight to two 5% is also a message increases.
Polo Tang: B the counter.
Maurice Patrick: So the counter effect has been relatively small, and we are expecting that most of the price rise impact is going to land in our revenues and in the bottom line. Very clear. Thanks, guys. Thank you.
Polo Tang: So it's been relatively small and yes.
Speaker Change: Yeah, we are expecting that most of the price impact is going to land.
Polo Tang: And our revenues and at the bottom line. Thanks, guys.
Polo Tang: Thank you.
Speaker Change: Ladies and gentlemen, this was the last question I would now like to turn the conference back over to Alex Herrmann for any closing remarks. Please go ahead.
Operator: Ladies and gentlemen, that was the last question.
Alex: I would now like to turn the conference back over to Alex Herrmann for any closing remarks. Please go ahead. So, thank you all very much for attending today's call.
Alex Herrmann: So thank you all very much for attending today's call.
Alex Herrmann: That concludes our call for today as always if there are any further questions. Please reach out to the Investor Relations team. Thank you and all have a good day and weekend.
Alex: I think that concludes the calls for today. As always, if there are any further questions, please do reach out to the investor relations.
Thank you and all have a good day and week ahead.