Freenet stock falls 6% after soft quarter, declining mobile revenue

Freenet (ETR:FNTGn) stock dropped 5.7% after its Q2 results missed revenue (€609M) and EBITDA (€129M) consensus, stemming from declining mobile service revenue and stalled Waipu TV subscriber growth, prompting a downward revision of its full-year ARPU outlook. Despite these operational headwinds, the company maintained its full-year 2025 guidance for moderate revenue growth and robust free cash flow (€300-320M), supported by strong Q2 mobile net adds and FCF (€83M) exceeding expectations, with analysts noting the new CEO's commitment to existing targets.

Analysis

Freenet's stock reacted negatively, dropping 5.7%, following a second-quarter report that revealed operational headwinds despite some underlying financial strengths. The company missed consensus estimates on both revenue, which came in at €609 million (1.5% below), and EBITDA at €129 million (1.4% below). This underperformance was driven by a decline in mobile service revenue and stagnating subscriber growth in its Waipu TV streaming segment, prompting management to revise its full-year ARPU outlook downward from "stable" to a "moderate decrease." However, these challenges are contrasted by a strong free cash flow of €83 million, which surpassed consensus by 9.4%, and the fact that the company maintained its full-year 2025 guidance for moderate revenue growth and adjusted EBITDA of €520-540 million. The report marks the first under a new CEO, whose commitment to existing targets, including shareholder remuneration, was highlighted by analysts as a potentially stabilizing factor amidst the current scrutiny.

Key Decisions for Investors

• Investors should closely monitor trends in mobile ARPU and Waipu TV subscriber numbers, as these are the primary drivers of the current operational weakness and pose the main risk to future earnings.
• Despite the top-line miss, the company's strong free cash flow generation and commitment to shareholder remuneration plans may offer a degree of support for the valuation, particularly for income-oriented portfolios.
• The new CEO's reaffirmation of 2025 targets is a critical variable; continued execution on free cash flow and progress toward the guided €520-540 million in adjusted EBITDA will be essential for rebuilding market confidence.