United Internet : Successful first nine months of 2017 for United Internet PDF

Interim Statement Q3 2017

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SELECTED KEY FIGURES

CUSTOMER CONTRACTS IN CURRENT PRODUCT LINES (IN MILLION)

Sept. 30, 2017 Sept. 30, 2016 Change

Access, total contracts 12.39 8.30 + 4.09

thereof Mobile Internet 8.06 4.10 + 3.96

thereof DSL complete (ULL) 4.33 4.20 + 0.13

Business Applications, total contracts 8.00 6.05 + 1.95

thereof in Germany 3.99 2.34 + 1.65

thereof abroad 4.01 3.71 + 0.30

Consumer Applications, total accounts 36.90 35.64 + 1.26

thereof with Premium Mail subscription (contracts) 1.69 1.73 - 0.04

thereof with Value-Added subscription (contracts) 0.54 0.47 + 0.07

thereof free accounts 34.67 33.44 + 1.23

Fee-based customer contracts, total 22.62 16.55 + 6.07

1. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-year figure adjusted

2. EBITDA and EBIT 9M 2017 without extraordinary result from M&A activities (€ +303.9 million)

3. EBT 9M 2017 without extraordinary result from M&A activities (€ +303.9 million) and without writedowns on financial assets, especially Rocket impairment charges (€ -19.8 million); EBT 9M 2016 without writedowns on financial assets, especially Rocket impairment charges (€ -254.9 million)

4. EPS 9M 2017 after strong increase in minority interests due to investment of Warburg Pincus in Business Applications division and stake held by Drillisch shareholders in Consumer Access business, and without net positive special items from Rocket impairment charges

   (€ -0.10), one-off tax effects from Warburg Pincus investment and Drillisch takeover (€ -0.07), as well as extraordinary result from M&A activities (€ +1.52); EPS 9M 2016 without writedowns on financial assets, especially Rocket impairment charges (€ -1.25)

5. Cash flow from operating activities and free cash flow without tax effects (9M 2017 without capital gains tax refund originally planned for the fourth quarter of 2016 (€ +70.3 million); 9M 2016 without income tax payment (€ -100.0 million) originally planned for the fourth quarter of 2015

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CONTENT

4 FOREWORD

6 INTERIM GROUP MANAGEMENT REPORT FOR THE FIRST NINE MONTHS OF 2017

6 Business development

14 Position of the Group

1. Subsequent events

2. Risk and opportunity report

3. Forecast report

4. EXPLANATIONS FOR THE INTERIM STATEMENT

1. INTERIM FINANCIAL STATEMENTS

   FOR THE FIRST NINE MONTHS OF 2017

   26 Group balance sheet

   28 Group net income

   30 Group cash flow

   32 Changes in shareholders' equity

   34 Segment reporting

   35 FINANCIAL CALENDAR / IMPRINT

   Dear shareholders, employees and business associates of United Internet,

   United Internet AG maintained its growth trajectory in the first nine months of 2017. Once again, we achieved significant improvements in customer contract figures, sales revenues, and key earnings ratios. Moreover, we successfully closed the investment of Warburg Pincus in the Business Applications division (as of February 14, 2017), the complete acquisitions of Strato (consolidated since April 2017) and ProfitBricks (consolidated since August 2017), and the merger with Drillisch (consolidated since September 2017) during the reporting period. In addition, we contributed our affiliate marketing business operated by affilinet GmbH to AWIN AG - controlled by Axel Springer - in exchange for 20% of Awin shares. As a result, affilinet is no longer included in the sales and earnings figures of United Internet AG but disclosed separately as a discontinued operation.

   In the first nine months of 2017, we raised the number of our fee-based customer contracts in the current product lines organically by 0.61 million (prior year: 0.82 million). In addition, there were

   a further 5.22 million customer contracts from the above mentioned transactions, of which

   3.35 million from the initial consolidation of Drillisch and 1.87 million from the initial consolidation of Strato. As a result, there were a total of 22.62 million contracts as of September 30, 2017.

   Apart from these customer contracts in the current product lines, the Access segment includes a further 0.49 million contracts without basic monthly fees and service provider contracts (volume- based tariffs / MSP tariffs) from the Drillisch acquisition as well as 0.13 million DSL contracts in the phased-out T-DSL / R-DSL product lines.

   In the first nine months of 2017, consolidated sales grew by 6.4% to € 3.008 billion (comparable prior-year figure: € 2.828 billion). Revenue contributions from Strato and ProfitBricks

   (€ + 64.5 million) as well as Drillisch (€ + 54.6 million) were offset in part by burdens on sales from regulatory effects (€ - 33.2 million) and negative currency effects (€ - 6.0 million).

   Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 12.0% to

   € 684.1 million in the first nine months of 2017 (comparable prior-year figure: € 610.6 million). EBITDA was impacted by the earnings contribution from Strato and ProfitBricks (€ + 25.4 million) as well as from Drillisch (€ + 13.0 million), and - with an opposing effect - from regulation effects and costs for the Telefónica DSL migration (€ - 12.9 million), as well as negative currency effects

   (€ - 2.7 million).

   At the same time, earnings before interest and taxes (EBIT) rose by 9.7% to € 511.2 million in the first nine months of 2017 (comparable prior-year figure: € 466.0 million).

   In addition, EBITDA and EBIT were dominated by a positive net extraordinary result of

   € 303.9 million. This resulted from one-off, non-cash-effective extraordinary income from the Drillisch acquisition (due to the revaluation of Drillisch shares acquired before the complete transaction was closed) and the complete takeover of ProfitBricks (due to the revaluation of previously held ProfitBricks shares) totaling € 319.1 million. There were opposing effects from M&A costs for the above mentioned transactions of € 15.2 million.

   Including the aforementioned extraordinary result, EBITDA rose to € 988.0 million and EBIT to

   € 815.1 million.

   foreword

   interim management report

   group interim financial statements financial calendar / imprint 5

   Despite the strong increase in minority interests as a result of the investment made by Warburg Pincus in our Business Applications division and the stake held by Drillisch shareholders in our Consumer Access business held by Drillisch shareholders, operating EPS was unchanged from the prior-year figure at € 1.53. Moreover, there was a net positive impact on EPS from Rocket impairment charges in the first quarter (EPS effect: € - 0.10), from one-off tax effects relating to the Warburg Pincus investment and Drillisch takeover (EPS effect: € - 0.07), and from the above mentioned M&A activities (EPS effect: € + 1.52). In total, EPS therefore rose from € 1.53 to € 2.88 or

   - before amortization of purchase price allocations (PPA), especially from the Versatel, Strato and Drillisch takeovers - to € 3.05.

   Due to the merger of 1&1 Telecommunication SE and Drillisch AG under the umbrella of United Internet (United Internet stake: 73.29%), 1&1 / Drillisch have been operating with a coordinated procurement strategy for mobile telecommunications pre-services since November 2017. The next steps are to synchronize branding and customer targeting.

   Following the consolidation of Drillisch, United Internet has updated its guidance. With regard to fee-based customer contracts, we now expect an increase of approx. 6.1 million contracts in the current product lines for the year as a whole (of which 1.87 million from the initial consolidation of Strato and 3.35 million from the initial consolidation of Drillisch). Consolidated sales will be approx.

   € 4.2 billion. EBITDA (including regulation effects, costs for the Telefónica DSL migration, and currency effects) is expected to be between € 970 million to € 1 billion. In addition, there will be the net extraordinary result.

   We are very well prepared for the next steps in our company's development and upbeat about our prospects for the remaining months of the fiscal year. In view of the successful first nine months, we would like to express our particular gratitude to all employees for their dedicated efforts as well as to our shareholders, and customers for the trust they continue to place in United Internet AG.

   Montabaur, November 14, 2017

   Ralph Dommermuth

   INTERIM STATEMENT ON THE THIRD QUARTER OF 2017

   Business development

   Development of the Access segment

   Following the initial consolidation of Drillisch (since September 2017), United Internet's reporting of fee-based contracts is based on the current product lines with basic monthly fees. These include the Mobile Internet contracts of 1&1 and the MVNO budget contracts of Drillisch (grouped together under Mobile Internet), as well as the DSL / VDSL contracts (complete DSL contracts) of 1&1. Mobile tariffs without basic monthly fees and old mobile/DSL tariffs will only be reported for a transitional period. These include the volume-based and MSP tariffs of Drillisch and the phased-out T-DSL /

   R-DSL product lines of 1&1.

   The number of fee-based contracts for current product lines of the Access segment rose by

   3.85 million contracts to 12.39 million in the first nine months of 2017 - due in part to the consolidation of Drillisch. A total of 3.75 million customer contracts were added in the company's Mobile Internet business (of which 3.35 million from the Drillisch acquisition), thus raising the total number of contracts to 8.06 million. There was growth in complete DSL contracts (ULL = Unbundled Local Loop) with the addition of 100,000 customer contracts, taking the total to

   4.33 million.

   Development of Access contracts in the first nine months of 2017 (in million)

   Sept. 30, 2017 Dec. 31, 2016 Change

   Access, total contracts 12.39 8.54 + 3.85

   thereof Mobile Internet	8.06	4.31	+ 3.75
   thereof DSL complete (ULL)	4.33	4.23	+ 0.10

   Development of Access contracts in the third quarter of 2017 (in million)

   Sept. 30, 2017 June 30, 2017 Change

   Access, total contracts 12.39 8.88 + 3.51

   thereof Mobile Internet	8.06	4.57	+ 3.49
   thereof DSL complete (ULL)	4.33	4.31	+ 0.02

   In addition to the above mentioned customer contracts in the current product lines, United Internet's Access segment includes a further 0.49 million contracts without basic monthly fees and service provider contracts (volume-based tariffs / MSP tariffs) from the Drillisch acquisition as well as 0.13 million DSL contracts in the phased-out T-DSL / R-DSL product lines.

   Despite burdens from regulation effects, sales of the Access segment grew by 4.9% from

   € 2,167.2 million in the previous year to € 2,273.2 million in the first nine months of 2017. Revenue in the home-user business grew by 10.3%, from € 1,790.7 million to € 1,975.8 million (including the reclassification of 1&1 Versatel's mass market business as of May 1, 2017). This figure includes a revenue contribution from Drillisch of € 54.6 million as well as opposing burdens on sales from regulation effects (international roaming / termination charges) amounting to € 21.5 million. At

   € 325.8 million, sales to business users of 1&1 Versatel were down on the first nine months of the previous year (€ 383.8 million). As already reported in the half-yearly financial report 2017 - this was due to negative regulation effects (€ - 11.7 million), a decline in one-off revenue from project business (€ - 15.6 million), and the reclassification of mass market business (€ - 42.0 million).

   Without these effects, sales rose by € 11.3 million.

   In the reporting period, segment EBITDA increased by 10.3%, from € 384.5 million in the previous year to € 424.0 million. EBITDA in the home-user business grew by 25.5%, from € 288.3 million to

   € 361.9 million (including the reclassification of 1&1 Versatel's mass market business as of May 1, 2017). This figure includes an earnings contribution from Drillisch of € 13.0 million, as well as an opposing burden from regulation effects and costs for the Telefónica DSL migration of

   € 11.7 million. At € 62.1 million, EBITDA in 1&1 Versatel's business-user segment was down on the first nine months of the previous year (€ 89.8 million). This was due to negative regulation effects

   (€ - 1.2 million), a decline in one-off revenue from project business (€ - 7.8 million), and the reclassification of mass market business (€ - 19.2 million). Without these effects, EBITDA rose by € 0.5 million. Segment EBIT rose by 9.8%, from € 282.5 million in the previous year to

   € 310.1 million.

   In addition, segment EBITDA and segment EBIT were dominated by one-off, non-cash-effective, extraordinary income of € 303.0 million from the Drillisch acquisition (due to the revaluation of Drillisch shares acquired before the complete transaction was closed). Including this extraordinary income, segment EBITDA rose to € 727.0 million and segment EBIT to € 613.1 million.

   All customer acquisition costs for Mobile Internet and DSL products, as well as costs for the migration of resale DSL connections to complete DSL packages (ULL = Unbundled Local Loop) and upgrades to VDSL connections, continue to be charged directly as expenses.

   Key sales and earnings figures in the Access segment (in € million)

   Sales

   EBITDA

   424.0(1)

   384.5

   2,273.2

   2,167.2

   + 4.9%

   + 10.3%

   9M 2017

   9M 2016

   EBIT

   310.1(1)

   282.5

   + 9.8%

   (1) Without extraordinary income from Drillisch acquisition (€ +303.0 million)

   Quarterly development (in € million); change over prior-year quarter

   Q4 2016	Q1 2017	Q2 2017	Q3 2017	Q3 2016	Change
   Sales	750.0	730.6	743.8	798.8	732.5	+ 9.1%
   EBITDA	141.1	133.7	126.3	164.0(1)	135.5	+ 21.0%
   EBIT	107.4	99.9	91.7	118.5(1)	101.4	+ 16.9%

   (1) Without extraordinary income from Drillisch acquisition (€ +303.0 million)

   Multi-period overview: Development of key sales and earnings figures (in € million)

   9M 2013	9M 2014	9M 2015	9M 2016	9M 2017
   Sales	1,321.9	1,481.7	2,035.2	2,167.2	2,273.2
   EBITDA	175.9	213.9	344.6	384.5	424.0(1)
   EBITDA margin	13.3%	14.4%	16.9%	17.7%	18.7%
   EBIT	154.7	193.3	226.9	282.5	310.1 (1)
   EBIT margin	11.7%	13.0%	11.1%	13.0%	13.6%

2. Without extraordinary income from Drillisch acquisition (€ +303.0 million)

   Development of the Applications segment

   With regard to Business Applications, the main focus in fiscal year 2017 is still on the sale of additional features to existing customers (e.g. further domains, e-shops and business apps), as well as the acquisition of high-value customer relationships. Nevertheless, the number of fee-based Business Applications contracts was raised organically by 80,000 contracts in the first nine months of 2017. Moreover, the first-time consolidation of Strato as of April 1, 2017 resulted in the addition of 1.87 million contracts. The total number of Business Applications contracts as of September 30, 2017 therefore amounted to 8.00 million.

   Development of Business Applications contracts in the first nine months of 2017 (in million)

   Sept. 30, 2017	Dec. 31, 2016	Change
   Business Applications, total contracts	8.00	6.05	+ 1.95
   thereof in Germany	3.99	2.34	+ 1.65
   thereof abroad	4.01	3.71	+ 0.30

   Development of Business Applications contracts in the third quarter of 2017 (in million)

   Sept. 30, 2017	June 30, 2017	Change
   Business Applications, total contracts	8.00	7.98	+ 0.02
   thereof in Germany	3.99	3.98	+ 0.01
   thereof abroad	4.01	4.00	+ 0.01

   In the case of Consumer Applications, United Internet raised the number of pay accounts by 30,000 contracts to 2.23 million in the first nine months of 2017. At the same time, the number of free accounts increased by 380,000 to 34.67 million in the reporting period. Consequently, the number of Consumer Accounts increased by 410,000 in total to 36.90 million accounts in the first nine months of 2017.

   Development of Consumer Applications accounts in the first nine months of 2017 (in million)

   Sept. 30, 2017	Dec. 31, 2016	Change
   Consumer Applications, total accounts	36.90	36.49	+ 0.41
   thereof with Premium Mail subscription	1.69	1.72	- 0.03
   thereof with Value-Added subscription	0.54	0.48	+ 0.06
   thereof free accounts	34.67	34.29	+ 0.38

   Development of Consumer Applications accounts in the third quarter of 2017 (in million)

   Sept. 30, 2017	June 30, 2017	Change
   Consumer Applications, total accounts	36.90	36.53	+ 0.37
   thereof with Premium Mail subscription	1.69	1.72	- 0.03
   thereof with Value-Added subscription	0.54	0.52	+ 0.02
   thereof free accounts	34.67	34.29	+ 0.38

   Following the contribution of Group subsidiary affilinet GmbH to Awin AG completed on October 1, 2017, affilinet is carried in accordance with IFRS 5 in the consolidated financial statements as of September 30, 2017 and no longer included in the sales and earnings figures of the Applications segment but disclosed separately under discontinued operations. The sales and earnings figures of the previous year were adjusted accordingly.

   Despite burdens from currency effects, sales of the Applications segment rose by 10.3% from

   € 685.0 million (comparable prior-year figure after carrying affilinet acc. to IFRS 5) to € 755.5 million in the first nine months of 2017. With regard to subscriptions for Business Applications, sales rose by 16.3% from € 479.2 million to € 557.2 million. This figure includes a total contribution to sales from Strato AG (consolidated since April 1, 2017) and ProfitBricks GmbH (consolidated since August 7, 2017) of € 64.5 million, as well as burdens from currency effects of € 6.0 million. Following weak portal advertising revenues in the first quarter, total sales of Consumer Applications fell slightly by 1.9%, from € 205.8 million to € 201.8 million - whereby the second quarter was on a par with the previous year and the third quarter above the prior-year figure. Due in particular to the year-on-year devaluation of the British pound, segment sales generated abroad increased only moderately by 2.5% in the first nine months of 2017, from € 278.0 million (comparable prior-year figure) to € 284.9 million. Adjusted for currency effects, sales generated abroad were up 4.6%

   Despite the burdens from currency effects, segment EBITDA rose by 15.9%, from € 233.9 million (comparable prior-year figure) to € 271.2 million. EBITDA for Business Applications was up 28.2%, from € 145.4 million to € 186.4 million. This figure includes a total EBITDA contribution from Strato and ProfitBricks of € 25.4 million as well as an opposing burden from currency effects of

   € 2.7 million. Following weak portal advertising business in the first quarter, EBITDA for Consumer Applications as a whole fell by 4.3%, from € 88.5 million to € 84.7 million - whereby the second and the third quarter was above the prior-year figure once again. Segment EBIT improved by 10.4%, from € 192.3 million (comparable prior-year figure) to € 212.3 million.

   In addition, segment EBITDA and segment EBIT were dominated by one-off, non-cash-effective, extraordinary income of € 16.1 million from the complete takeover of ProfitBricks (due to the revaluation of previously held ProfitBricks shares). There was an opposing effect of € 8.7 million for M&A costs from the previous year (Warburg Pincus transaction) which were reallocated within the Group from United Internet Holding to the Business Applications segment in the third quarter of 2017. Including the extraordinary income from the ProfitBricks acquisition and the allocation of M&A costs, segment EBITDA rose to € 278.6 million and segment EBIT to € 219.7 million.

   Customer acquisition costs were once again charged directly as expenses, also in this segment.

   Key sales and earnings figures in the Applications segment (in € million)

   9M 2017(1)

   9M 2016(1)

   Sales

   EBITDA

   EBIT

   271.2(2)

   233.9

   212.3(2)

   192.3

   755.5

   685.0

   + 10.3%

   + 15.9%

   + 10.4%

3. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-year figures adjusted

4. Without extraordinary income from ProfitBricks acquisition (€ +16.1 million) and without M&A costs (€- 8.7 million)

5. Quarterly development (in € million); change over prior-year quarter

   Q4 2016(1)	Q1 2017(1)	Q2 2017(1)	Q3 2017(1)	Q3 2016(1)	Change
   Sales	237.5	229.6	264.2	261.7	223.4	+ 17.2%
   EBITDA	96.3	81.7	94.3	95.2(2)	80.8	+ 17.8%
   EBIT	82.0	68.5	71.5	72.3(2)	67.3	+ 7.4%

6. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-quarter figures adjusted

7. Without extraordinary income from ProfitBricks acquisition (€ +16.1 million) and without M&A costs (€ -8.7 million)

Multi-period overview: Development of key sales and earnings figures (in € million)

9M 2013	9M 2014	9M 2015	9M 2016(1)	9M 2017(1)
Sales	633.0	688.7	741.7	685.0	755.5
EBITDA	111.8	171.6	208.6	233.9	271.2(2)
EBITDA margin	17.7%	24.9%	28.1%	34.1%	35.9%
EBIT	63.2	126.1	163.6	192.3	212.3(2)
EBIT margin	10.0%	18.3%	22.1%	28.1%	28.1%

1. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-year figures adjusted

2. Without extraordinary income from ProfitBricks acquisition (€ +16.1 million) and without M&A costs (€ -8.7 million)

Significant changes in investments Takeover of Strato AG completed

On December 15, 2016, United Internet announced its intention to acquire Strato AG. The takeover was initially subject to approval by the German Federal Cartel Office ("Bundeskartellamt"). This approval was granted on February 10, 2017 and United Internet closed the transaction as planned in the first quarter of 2017. Strato has been included in the consolidated financial statements since April 1, 2017.

Investment of Warburg Pincus closed

The acquisition of a 33.33% stake in the Business Applications division by Warburg Pincus, announced on November 8, 2016, was successfully closed on February 15, 2017 with effect from January 1, 2017.

United Internet acquires stake in rankingCoach

On March 28, 2017, United Internet AG announced that it had acquired - via United Internet Investments Holding GmbH (formerly: United Internet Ventures AG) - a stake of 29.93% in rankingCoach GmbH in the course of a capital increase. Based in Cologne, rankingCoach was founded in 2014 by the company's managers Daniel Wette, Marius Gerdan and Thomas Meierkord as a spin-off of a major online marketing agency. Today, an international team of over 60 specialists supports small and mid-size enterprises (SMEs) in 11 languages and 24 countries. rankingCoach markets its products both directly to end-users and agencies, as well as indirectly via international partners, such as hosting providers, telecommunications companies and publishers. Online visibility and online reputation have a major impact on the business success of SMEs. rankingCoach offers affordable, web-based solutions in the field of search engine marketing (SEM), search engine optimization (SEO) and social media which are tailored to the needs of its various target groups.

The capital increase is aimed in particular at driving technical product development, the expansion of services, and the company's further internationalization. In addition to the equity stake, rankingCoach and the United Internet subsidiary 1&1 Internet SE have signed a long-term cooperation agreement for 1&1 to use the online marketing solutions of rankingCoach as part of its hosting and cloud products marketed in Europe and North America. At the time of its announcement, the transaction was still subject to approval by the relevant anti-trust authorities. This approval was granted on April 13, 2017.

Investment in Tele Columbus increased

In the first quarter of 2017, United Internet increased its stake in Tele Columbus AG from 25.11% as of December 31, 2016 and held around 28.52% of shares as of September 30, 2017. A total of

€ 34.9 million was paid for the purchase of additional shares.

United Internet and Drillisch create a strong fourth player in the German telecommunications market

On May 12, 2017, the Management Boards of United Internet AG and Drillisch AG (each with the approval of their respective Supervisory Boards) entered into a business combination agreement governing the step-by-step acquisition of 1&1 Telecommunication SE by Drillisch under the umbrella of United Internet.

The aim of the overall transaction (now completed) was to contribute 1&1 Telecommunication to Drillisch and thus create a more powerful full-service telecommunications provider under the umbrella of United Internet with considerable potential for synergies and growth. The combination of the two companies has now created a strong fourth player in the German telecommunications market alongside the three major full-service providers (Deutsche Telekom, Vodafone and Telefónica).

The merger of 1&1 Telecommunication and Drillisch was completed in two steps:

• In the first step, United Internet contributed 9,372 shares of 1&1 Telecommunication SE (corresponding to around 7.75% of the share capital of 1&1 Telecommunication) to Drillisch in the course of a capital increase for non-cash contribution from approved capital under the exclusion of subscription rights conducted by Drillisch. In return, United Internet received 9,062,169 new Drillisch shares.

• In a second step, the remaining 111,628 1&1 Telecommunication SE shares held by United Internet (corresponding to around 92.25% of the share capital of 1&1 Telecommunication) were contributed to Drillisch in return for the issue of 107,937,831 new Drillisch shares in total. This step required the approval of an Extraordinary General Meeting of Drillisch AG, which was held on July 25, 2017. At this general meeting, 97.85% of share capital represented voted in favor of the proposed capital increase for non-cash contribution. The majority of 75% required for approval was thus reached.

The transaction was accompanied by a voluntary public tender offer submitted by United Internet AG for all outstanding shares of Drillisch AG. United Internet offered to purchase the no-par value bearer shares, each representing a proportionate amount of Drillisch AG share capital of €1.10, from the current Drillisch shareholders. As compensation, United Internet offered to pay € 50 per no-par share - which is 8.2% more than the volume-weighted average domestic share price of Drillisch shares over the past three months as of May 11, 2017 (€ 46.20). The cash offer was made in accordance with the condition specified in the offer document published on May 26, 2017 regarding anti-trust approval. This condition was met with the approval of the German Federal Cartel Office ("Bundeskartellamt"). There was no minimum acceptance threshold for the tender offer. United Internet used bank loans to finance the Drillisch shares tendered as part of the tender offer. The financing banks confirmed that they would grant a maximum of € 2.5 billion (if all outstanding Drillisch shares were tendered). As at the expiry of the additional acceptance period on July 12, 2017, the tender offer had been accepted for a total of 1,224,157 Drillisch shares. After the acceptance period for the voluntary tender offer had expired, the related loan was canceled by United Internet as the acquired Drillisch shares were purchased from liquid funds.

With the registration of the capital increase for non-cash contribution in the Commercial Register on September 8, 2017, Drillisch acquired the remaining stake of approx. 92.25% in

1&1 Telecommunication. The capital increase had been approved by the Extraordinary General Meeting of Drillisch on July 25, 2017. 1&1 Telecommunication is thus a wholly-owned subsidiary of Drillisch. In return, United Internet received 107,937,831 new Drillisch shares, increasing United Internet's stake in Drillisch to more than 73%. As a result, Drillisch has been consolidated in the financial statements of United Internet since September 8, 2017.

The contribution of 1&1 Telecommunication to Drillisch under the United Internet umbrella offers extensive synergies and growth opportunities for both United Internet and Drillisch. These jointly- identified synergies are expected to arise at the level of their combined business starting in 2018. An annual volume of € 150 million is anticipated as early as 2020, rising to approx. € 250 million annually by 2025. Synergies will result in particular from joint purchasing of hardware and services, more efficient use of network capacity available to Drillisch, the expansion of the 1&1 product portfolio to include future technologies, and the availability of a larger product portfolio in Drillisch's stores. To achieve these synergies, the companies expect one-off implementation costs of around € 50 million at the combined business level.

Complete takeover of ProfitBricks

In late July 2017, United Internet reached an agreement with the other shareholders of ProfitBricks GmbH, a technologically leading cloud hosting specialist, regarding the complete acquisition of the company. United Internet has held a stake in ProfitBricks since 2010 (previous shareholding 44.42%) and acquired the remaining 55.58% of shares from the other shareholders. The complete takeover has strengthened United Internet's activities with Business Applications, which are pooled with its subsidiary 1&1 Internet SE - in which Warburg Pincus holds a stake.

1&1 has thus expanded its leading position in Europe for cloud hosting and added an innovative enterprise cloud platform to its product range.

Based in Berlin, ProfitBricks was founded in 2010 and employs over 100 people from more than 20 nations. The company is the first and only specialized cloud computing provider of Infrastructure-as-a-Service (IaaS) in Germany and offers professional public and hybrid cloud solutions which comply with the strict German and European data privacy guidelines. ProfitBricks operates four data centers in Frankfurt am Main, Karlsruhe, Las Vegas and New Jersey.

The share purchase was approved by the German Federal Cartel Office ("Bundeskartellamt") on August 7, 2017. As a result, ProfitBricks has been included in the consolidated financial statements of United Internet since August 7, 2017.

Merger of affilinet and Awin

United Internet and Axel Springer plan to create a joint affiliate network by merging their companies affilinet and Awin. A corresponding agreement was signed on August 1, 2017.

As part of the transaction, United Internet contributed its affiliate marketing business operated by its subsidiary affilinet GmbH to AWIN AG in return for 20% of Awin shares. 80% of AWIN shares are held by Axel Springer.

The merger enables United Internet and Axel Springer to significantly strengthen their competitive standing in affiliate marketing and thus lay the foundation for accelerated growth in Germany and abroad. By pooling the expertise, skills and respective reach of Awin and affilinet, the companies also plan to drive new revenue models. In addition, the business combination will lay the foundation for the targeted IPO of AWIN AG.

The merger was approved by the relevant anti-trust authorities in Austria and Germany on September 12 and 15, 2017 and closed as of October 1, 2017.

Share buybacks and funding Share buyback program fully exhausted

United Internet purchased treasury shares once again in the first half of 2017. The share buyback was based on a resolution of the Management Board of June 30, 2016 to launch a new share buyback program. In the course of this new share buyback program, up to 5,000,000 shares in the company (corresponding to approx. 2.44% of capital stock) could be bought back via the stock exchange. The buyback followed the authorization of the Annual Shareholders' Meeting of May 22, 2014 to purchase treasury shares representing up to 10% of capital stock. The authorization was issued for the period up to September 22, 2017. In the period January 1 to February 3, 2017, a total of 2,000,000 treasury shares were purchased at an average price of € 38.58 and with a total volume of € 77.2 million. Together with the 3,000,000 treasury shares already purchased in fiscal year 2016, the share buyback program of June 30, 2016 has thus been fully exhausted. Following the issue of treasury shares as part of employee stock ownership plans, United Internet held 5,223,467 treasury shares as of September 30, 2017 (December 31, 2016: 3,370,943). This

corresponds to 2.55% of the current capital stock of € 205,000,000 (December 31, 2016: 1.64%).

New promissory note loan

In an agreement dated March 13, 2017, United Internet placed a new promissory note loan with a total amount of € 500 million for general company funding. The tranches of the new promissory note loan have terms of 5 to 8 years and are repayable at the issuance amount on the respective due dates. The average interest rate is 1.14% p.a. The new promissory note loan is not tied to any covenants.

Harmonization of bank borrowing

On May 5, 2017, United Internet signed an agreement with its core banks regarding a consolidation and adjustment of its existing bank borrowing. The syndicated loan of € 750 million arranged in August 2014 and syndicated loan of € 810 million arranged in July 2015 were consolidated into a single loan arrangement. At the same time, the Company renegotiated significant components of the loan agreements and in particular achieved a relaxation of certain covenants, optimized borrowing costs, and prolonged some of the terms in order to harmonize the current maturity profile.

Position of the Group

Following the disposal of affilinet GmbH on October 1, 2017, affilinet must be carried in the consolidated financial statements as of September 30, 2017 in accordance with IFRS 5 and the statement of comprehensive income (income statement) for the first nine months of 2017 and preceding periods must be adjusted accordingly. The revenues and expenses of affilinet are thus no longer included in the respective income statement items nor the sales and earnings figures stated below. The net income of affilinet after taxes is disclosed separately as a discontinued operation. However, the balance sheet of the previous year is to be disclosed unchanged.

Earnings position

In the first nine months of 2017, the number of fee-based customer contracts in current product lines rose organically and via the Strato and Drillisch takeovers by 5.83 million to a total of

22.62 million contracts. In addition to these customer contracts in the current product lines, the company holds a further 0.49 million contracts without basic monthly fees and service provider contracts (volume-based tariffs / MSP tariffs) from the Drillisch acquisition, as well as 0.13 million DSL contracts in the phased-out T-DSL / R-DSL product lines.

Consolidated sales grew by 6.4% to € 3.008 billion in the first nine months of 2017 (comparable prior-year figure: € 2.828 billion). Revenue contributions from Strato and ProfitBricks

(€ 64.5 million) as well as Drillisch (€ 54.6 million) were offset in part by burdens on sales from regulatory effects (€ - 33.2 million) and negative currency effects (€ - 6.0 million). Due in particular to the year-on-year decline in the value of the British pound, there was only a modest 2.5% increase in sales outside Germany, from € 278.0 million in the previous year to € 284.9 million in the first nine months of 2017. Adjusted for currency effects, foreign sales rose by 4.6%.

All customer acquisition costs for Access and Applications products, as well as costs for the migration of resale DSL connections to complete DSL packages and upgrades to VDSL connections, continue to be charged directly as expenses.

Due to economies of scale and improved conditions for the purchase of pre-services, the cost of sales increased more slowly than revenues in the first nine months of 2017, from € 1,847.0 million (65.3% of sales) in the previous year to € 1,924.5 million (64.0% of sales). Consequently, the gross margin rose from 34.7% in the previous year to 36.0%. As a result, the 10.5% increase in gross profit from € 981.2 million in the previous year to € 1,083.8 million easily surpassed sales growth (6.4%).

Sales and marketing expenses rose from € 392.5 million (13.9% of sales) in the previous year to

€ 433.8 million (14.4% of sales). Administrative expenses fell from € 135.8 million (4.8% of sales) in the previous year to € 131.8 million (4.4% of sales).

Other operating income relates primarily to the extraordinary result from M&A activities totaling

€ 303.9 million, as described below.

Multi-period overview: Development of key cost items (in € million)

9M 2013	9M 2014	9M 2015	9M 2016(1)	9M 2017(1)
Cost of sales	1,292.7	1,424.9	1,834.6	1,847.0	1,924.5
Cost of sales ratio	66.1%	65.6%	66.6%	65.3%	64.0%
Gross margin	33.9%	34.4%	33.4%	34.7%	36.0%
Selling expenses	351.6	340.6	423.0	392.5	433.8
Selling expenses ratio	18.0%	15.7%	15.4%	13.9%	14.4%
Administrative expenses	87.2	98.2	129.5	135.8	131.8
Administrative expenses ratio	4.5%	4.5%	4.7%	4.8%	4.4%

1. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-year figure adjusted

   Operating EBITDA increased by 12.0% to € 684.1 million in the first nine months of 2017 (comparable prior-year figure: € 610.6 million). EBITDA was impacted by the earnings contribution from Strato and ProfitBricks (€ + 25.4 million) as well as from Drillisch (€ + 13.0 million), and - with an opposing effect - from regulation effects and costs for the Telefónica DSL migration (€ - 12.9 million), as well as negative currency effects (€ - 2.7 million). Operating EBIT rose by 9.7% to € 511.2 million in the first nine months of 2017 (comparable prior-year figure: € 466.0 million). In addition, EBITDA and EBIT were dominated by a net positive extraordinary result from M&A activities of an additional € 303.9 million. This resulted from one-off, non-cash-effective, extraordinary income from the Drillisch acquisition (due to the revaluation of Drillisch shares acquired before the complete transaction was closed) and the complete takeover of ProfitBricks (due to the revaluation of previously held ProfitBricks shares) totaling € 319.1 million. There were opposing effects from M&A costs for the above mentioned transactions of € 15.2 million. Including the extraordinary result, EBITDA rose to € 988.0 million and EBIT to € 815.1 million. Operating EBT grew by 7.3% to € 479.1 million in the first nine months of 2017 (comparable prior- year figure without Rocket impairment charges: € 446.3 million). In addition, EBT in the reporting period was positively influenced in total by the non-cash-effective writedowns on Rocket shares in the first quarter of 2017 (€ - 19.8 million) and the above mentioned extraordinary result from M&A activities (€ + 303.9 million). Including these special items, EBT increased to € 763.2 million.

   Despite the strong increase in minority interests as a result of the investment made by Warburg Pincus in our Business Applications division and the stake held by Drillisch shareholders in the Consumer Access business, operating EPS was unchanged from the comparable prior-year figure at € 1.53. Moreover, there was a net positive impact on EPS from the aforementioned Rocket impairment charges (EPS effect: € - 0.10), from one-off tax effects relating to the Warburg Pincus investment and Drillisch takeover (EPS effect: € - 0.07), and from the above mentioned M&A activities (EPS effect: € + 1.52). In total, EPS therefore rose from € 1.53 to € 2.88 or - before amortization of purchase price allocations (PPA), especially from the Versatel, Strato and Drillisch takeovers - to € 3.05.

   Key sales and earnings figures of the Group (in € million)

   Sales

   EBITDA

   684.1(2)

   610,6

   3,008.2

   2,828.1

   + 6.4%

   + 12.0%

   9M 2017(1)

   9M 2016(1)

   EBIT

   511.2(2)

   466.0

   + 9.7%

2. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-year figure adjusted

3. 9M 2017 without extraordinary result from Drillisch/ProfitBricks acquisitions (€ +319.1 million) and without M&A costs (€ -15.2 million)

4. Quarterly development (in € million); change over prior-year quarter

   Q4 2016(1)	Q1 2017(1)	Q2 2017(1)	Q3 2017(1)	Q3 2016(1)	Change
   Sales	980.0	952.7	1,001.4	1,054.1	947.5	+ 11.3%
   EBITDA	225.2	213.0	216.9	254.2(2)	212.5	+ 19.6%
   EBIT	177.0	165.9	159.4	185.9(2)	164.5	+ 13.0%

5. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-quarter figures adjusted

6. Q3 2017 without extraordinary result from Drillisch/ProfitBricks acquisitions (€ +319.1 million) and without M&A costs (€ -15.2 million)

Multi-period overview: Development of key sales and earnings figures (in € million)

9M 2013	9M 2014	9M 2015	9M 2016(1)	9M 2017(1)
Sales	1,955.1	2,170.9	2,754.8	2,828.1	3,008.2
EBITDA	237.7	280.5(2)	541.0(3)	610.6	684.1(4)
EBITDA margin	13.5%	14.3%	19.6%	21.6%	22.7%
EBIT	169.2	210.6(2)	378.0(3)	466.0	511.2(4)
EBIT margin	9.6%	10.8%	13.7%	16.5%	17.0%

1. After carrying affilinet as a discontinued operation acc. to IFRS 5; prior-year figure adjusted

2. 9M 2014 without one-off income from the contribution of GFC investments to Rocket Internet (EBITDA and EBIT effect: € +71.5 million)

3. 9M 2015 without one-off income from the sale of Goldbach shares and partial sale of virtual minds shares (EBITDA and EBIT effect: € +14.0 million)

4. 9M 2017 without extraordinary result from Drillisch/ProfitBricks acquisitions (€ +319.1 million) and without M&A costs (€ -15.2 million)

   Financial position

   At € 461.1 million, operative cash flow in the first nine months of 2017 was virtually unchanged compared to the previous year (€ 461.8 million).

   Cash flow from operating activities in the first nine months of 2016 and the first nine months of 2017 were dominated by various tax effects. Whereas in the first nine months of 2016 (in Q1), an income tax payment of around € 100.0 million was made (originally planned for the fourth quarter of 2015), there was a capital gains tax refund of € 70.3 million in the first nine months of 2017 (in Q1; originally planned for the fourth quarter of 2016) in connection with an internal dividend payment in fiscal year 2015. Without consideration of these opposing tax effects, cash flow from operating activities rose from € 433.2 million (comparable prior-year figure) to € 503.5 million in the first nine months of 2017. Including the opposing tax effects, cash flow from operating activities increased from € 333.2 million to € 573.8 million. Cash flow from investing activities amounted to € 805.0 million in the reporting period (prior year: € 370.7 million). This resulted mainly from disbursements of € 154.3 million (prior year:

   € 116.6 million) for capital expenditures, payments for the purchase of shares in affiliated companies (less cash received) of € 534.7 million (Strato, ProfitBricks and Drillisch takeovers), and payments for the purchase of shares in associated companies totaling € 118.5 million (mainly for the increased stakes in Tele Columbus and Drillisch (before the complete transaction was closed) and the investment in rankingCoach). In addition to the aforementioned capital expenditures, cash flow from investing activities in the previous year was also dominated by payments of

   € 264.2 million for the purchase of shares in associated companies (stake in Tele Columbus).

   Without consideration of the above mentioned opposing tax effects, free cash flow (i.e. cash flow from operating activities, less capital expenditures, plus payments from disposals of intangible assets and property, plant and equipment) rose from € 320.1 million (comparable prior-year figure) to € 352.1 million in the first nine months of 2017.

   Cash flow from financing activities in the first nine months of 2017 was dominated by the purchase of treasury shares amounting to € 77.2 million (prior year: € 112.2 million), the assumption of loans with a net total of € 132.8 million (prior year: € 311.6 million), the dividend payment of

   € 159.7 million (prior year: € 142.9 million), and contributions from minority shareholders (investment of Warburg Pincus in the Business Applications division) amounting to

   € 386.3 million (prior year: € 0).

   As of September 30, 2017, cash and cash equivalents amounted to € 134.7 million- compared to

   € 87.7 million on the same date last year.

   Multi-period overview: Development of key cash flow figures (in € million)

   9M 2013	9M 2014	9M 2015	9M 2016	9M 2017
   Operative cash flow	185.2	285.2	394.2	461.8	461.1
   Cash flow from operating activities	196.9	274.0	394.7(2)	433.2(3)	503.5(4)
   Cash flow from investing activities	-192.4	-384.5	-535.2	- 370.7	- 805.0
   Free cash flow(1)	155.3	239.8	305.2(2)	320.1(3)	352.1(4)
   Cash flow from financing activities	6.8	235.6	-152.1	49.3	269.5
   Cash and cash equivalents on September 30	53.8	169.5	85.2	87.7	134.7

5. Free cash flow is defined as cash flow from operating activities, less capital expenditures, plus payments from disposals of intangible assets and property, plant and equipment

6. Without capital gains tax refund of € 326.0 million

7. Without the income tax payment of around € 100.0 million originally planned for the fourth quarter of 2015

8. Without the capital gains tax refund of € 70.3 million originally planned for the fourth quarter of 2016

9. Asset position

   The balance sheet total rose from € 4.074 billion as of December 31, 2016 to € 7.526 billion on September 30, 2017.

   Current assets increased from € 631.4 million as of December 31, 2016 to € 792.6 million on September 30, 2017. Cash and cash equivalents disclosed under current assets rose from

   € 101.7 million to € 131.1 million. Receivables from minority shareholders (resulting from a further planned purchase price payment of Warburg Pincus for its stake in the Business Applications division due in late 2017) amounted to € 41.0 million (prior year: € 0). As a result of closing-date effects and the expansion of business, trade accounts receivable increased from € 228.0 million to € 319.2 million. Inventories rose from € 39.5 million to € 49.7 million. Due also to closing-date effects and the expansion of business, current prepaid expenses rose from € 111.2 million to

   € 156.5 million. Other non-financial assets decreased from € 129.4 million to € 51.8 million as a result of the above mentioned capital gains tax refund.

   Non-current assets increased from € 3,442.3 million as of December 31, 2016 to € 6,684.9 million on September 30, 2017. Despite the increased stake in Tele Columbus and the investment in rankingCoach, shares in associated companies decreased from € 755.5 million to € 359.4 million. This was due to the acquisition and consolidation of ProfitBricks and Drillisch. Mainly as a result of the subsequent valuation of listed shares in Rocket Internet as of September 30, 2017, other financial assets rose from € 287.7 million to € 341.1 million. Property, plant and equipment and intangible assets rose from € 655.0 million to € 732.0 million, and from € 369.5 million to

   € 1,310.8 million, due to the Strato, ProfitBricks and Drillisch acquisitions. Goodwill also increased as a result of the Strato, ProfitBricks and Drillisch acquisitions from € 1,087.7 million to

   € 3,634.8 million.

   Assets of discontinued operations (affilinet) amounted to € 48.9 million (prior year: € 0). Current liabilities rose from € 1,269.4 million as of December 31, 2016 to € 1,592.9 million on September 30, 2017. Due to closing-date effects and the expansion of business, current trade accounts payable increased from € 373.7 million to € 412.0 million. Short-term bank liabilities rose from € 422.2 million to € 516.6 million. Income tax liabilities increased from € 64.1 million to

   € 177.2 million and other financial liabilities from € 114.7 million to € 170.5 million.

   Non-current liabilities increased from € 1,606.5 million as of December 31, 2016 to

   € 1,932.6 million on September 30, 2017. In addition to the rise in long-term bank liabilities from

   € 1,338.4 million to € 1,429.9 million, this was mainly due to the increase in deferred tax liabilities

   from € 94.2 million to € 311.6 million - mainly as a result of the initial consolidation of Drillisch AG.

   The Group's equity capital rose from € 1,197.8 million as of December 31, 2016 to € 3,976.4 million on September 30, 2017. The increase was due mainly to consolidation effects in connection with the investment of Warburg Pincus in the Business Applications division, as well as consolidation effects from the acquisition of Drillisch AG by means of contribution of 1&1 Telecommunication to Drillisch. There was a corresponding rise in the equity ratio from 29.4% to 52.8%. At the end of the reporting period on September 30, 2017, United Internet held 5,223,467 treasury shares (December 31, 2016: 3,370,943).

   Net bank liabilities (i.e. the balance of bank liabilities and cash and cash equivalents) increased from € 1,658.9 million as of December 31, 2016 to € 1,815.4 million on September 30, 2017.

   Multi-period overview: Development of key balance sheet items (in € million)

   Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2016	Sept. 30, 2017
   Total assets	1,270.3	3,673.4	3,885.4	4,073.7	7,526.3
   Cash and cash equivalents	42.8	50.8	84.3	101.7	131.1
   Shares in associated companies	115.3	34.9(1)	468.4(1)	755.5(1)	359.4
   Other financial assets	47.6	695.3(2)	449.0(2)	287.7(2)	341.4(2)
   Property, plant and equipment	116.2	689.3(3)	665.2	655.0	732.0(3)
   Intangible assets	165.1	385.5(3)	389.5	369.5	1,310.8(3)
   Goodwill	452.8	977.0(4)	1,100.1(4)	1,087.7	3,634.8(4)
   Liabilities due to banks	340.0	1,374.0(5)	1,536.5(5)	1,760.7(5)	1,946.5(5)
   Capital stock	194.0	205.0(6)	205.0	205.0	205.0
   Treasury stock	5.2	35.3	26.3	122.5	194.2
   Equity	307.9	1,204.7(6)	1,149.8	1,197.8	3,976.4(6
   Equity ratio	24.2%	32.8%	29.6%	29.4%	52.8%

10. Decrease due to contribution of the GFC and EFF funds to Rocket and complete takeover of Versatel (2014); increase due to investment in Drillisch (2015); increase due to investment in Tele Columbus (2016); decrease due to takeover and consolidation of Profitbricks and Drillisch (2017)

11. Increase due to investment in Rocket (2014), decrease due to sale of Goldbach shares and subsequent valuation of shares in listed companies (2015); decrease due to subsequent valuation of shares in listed companies (2016); increase due to subsequent valuation of shares in listed companies (2017)

12. Increase due to complete takeover of Versatel (2014); increase due to Strato, ProfitBricks and Drillisch takeovers (2017)

13. Increase due to complete takeover of Versatel (2014); increase due to acquisition of home.pl (2015); increase due to to Strato, ProfitBricks and Drillisch takeovers (2017)

14. Increase due to Rocket investment and takeover of Versatel (2014); increase due to increased stake in Rocket, Drillisch investment, and acquisition of home.pl (2015); increase due to Tele Columbus investment (2016); increase due to Strato takeover and increased stake in Drillisch and Tele Columbus (2017)

15. Increase due to capital increase (2014); increase due to consolidation effects in connection with the investment of Warburg Pincus in the Business Applications division and Strato takeover (2017)

    Subsequent events

    There were no significant events subsequent to the reporting date of September 30, 2017 which had a material effect on the financial position and performance of the Group or affected its accounting and reporting.

    Changes in the Management Board and Supervisory Board

    The overall transaction with Drillisch completed on September 8, 2017 has since resulted in changes to the Management Board and Supervisory Board of Drillisch. United Internet and Drillisch agreed these changes in their Business Combination Agreement of May 12, 2017.

    In a meeting of the Supervisory Board of Drillisch AG held on September 29, 2017, Mr. Martin Witt was appointed to the Management Board of Drillisch AG with effect from October 1, 2017. At the same time, Mr. Witt stepped down from his position as a member of the Management Board of United Internet AG, as agreed. Mr. Witt will continue to hold his office as CEO of 1&1 Telecommunication SE. At the same Supervisory Board meeting, Mr. Ralph Dommermuth was appointed as the new CEO of Drillisch AG. Mr. Dommermuth will hold this position until January 1, 2018. His position as CEO of United Internet AG is not affected by this appointment.

    The former Speaker of the Management Board of Drillisch AG, Mr. Vlasios Choulidis, will step down from his position as planned on December 31, 2017 and stand as a candidate for one of the six Supervisory Board seats of Drillisch AG at the next Annual Shareholders' Meeting. The Supervisory Board members of United Internet AG, Mr. Kurt Dobitsch, Mr. Michael Scheeren and Mr. Kai-Uwe Ricke were also appointed by the District Court of Hanau to the Supervisory Board of Drillisch AG on October 16, 2017. At the Supervisory Board meeting of November 13, 2017, Mr. Michael Scheeren was elected as Chairman of the Supervisory Board of Drillisch AG.

    Risk and opportunity report

    The risk and opportunity policy of United Internet AG is based on the objective of maintaining and sustainably enhancing the company's value by utilizing opportunities while at the same time recognizing and managing risks from an early stage in their development. The risk and opportunity management system regulates the responsible handling of those uncertainties which are always involved with economic activity.

    Management Board's overall assessment of the Group's risk and opportunity position

    The assessment of the overall level of risk is based on a consolidated view of all significant risk fields and individual risks, also taking account of their interdependencies.

    As a result of organic growth and the acquisitions made in the first nine months of 2017, there has been a corresponding increase in the overall risk and opportunity position compared with reporting on risks and opportunities in the Annual Financial Statements 2016. There were no recognizable risks which directly jeopardized the continued existence of the United Internet Group during the reporting period nor at the time of preparing this Interim Statement, neither from individual risk positions nor from the overall risk situation.

    From the current perspective, the main challenges focus on the areas of "potential threats via the internet", as well as risks from the fields of "market", "political and legal", and "fraud".

    The further expansion of its risk management system enables United Internet to limit such risks to a minimum, where sensible, by implementing specific measures.

    In United Internet's non-operating business, non-cash burdens from impairment may arise - as in the first half of 2016 and the first quarter of 2017 - depending on the further performance of the company's listed investments.

    Forecast report

    Forecast for fiscal year 2017

    After the completed takeover of 1&1 Telecommunication SE by Drillisch AG under the umbrella of United Internet (United Internet stake: 73.29%), 1&1 / Drillisch have been operating with a coordinated procurement strategy for mobile telecommunications pre-services since November 2017. The next steps are to synchronize branding and customer targeting.

    Following the consolidation of Drillisch, United Internet has updated its guidance. With regard to fee-based customer contracts, an increase of approx. 6.1 million contracts in the current product lines is now expected for the year as a whole (of which 1.87 million from the initial consolidation of Strato and 3.35 million from the initial consolidation of Drillisch). Consolidated sales will be approx.

    € 4.2 billion. EBITDA (including regulation effects, costs for the Telefónica DSL migration, and currency effects) is expected to be between € 970 million and € 1 billion. In addition, there will be the net extraordinary result.

    At the time of preparing this Interim Statement, the Management Board of United Internet AG believes that the company is still well on track to reach its updated guidance for the full year 2017 - as summarized in the table below.

    FY 2017 guidance of United Internet AG

    Forecast FY 2017 Actual FY 2016(3)

    Fee-based customer contracts + approx. 6.1 million(1) 16.79 million

    Sales + approx. € 4.20 billion € 3.81 billion

    EBITDA € 970 million - € 1 billion(2) € 836 million

16. In current product lines; of which € 1.87 million from the initial consolidation of Strato and € 3.35 million from the initial consolidation of Drillisch

17. Including regulation effects, costs for the Telefónica DSL migration, and currency effects; without extraordinary results

18. Customer contracts 2016 acc. to current product lines; sales / EBITDA 2016 acc. to IFRS 5 after sale of affilinet

19. Forward-looking statements

    This Interim Statement contains forward-looking statements based on current expectations, assumptions, and projections of the Management Board of United Internet AG and currently available information. These forward-looking statements are subject to various risks and uncertainties and are based upon expectations, assumptions, and projections that may not prove to be accurate. United Internet AG does not guarantee that these forward-looking statements will prove to be accurate and does not accept any obligation, nor have the intention, to adjust or update the forward-looking statements contained in this interim report.

    EXPLANATIONS FOR THE INTERIM STATEMENT

    Information on the company

    United Internet AG ("United Internet") is a service company operating in the telecommunication and information technology sector with registered offices at Elgendorfer Strasse 57, 56410 Montabaur, Germany. The company is registered at the district court of Montabaur under HR B 5762.

    Significant accounting, valuation and consolidation principles

    As was the case with the Consolidated Financial Statements as of December 31, 2016, the Interim Statement of United Internet AG as of September 30, 2017 was prepared in compliance with the International Financial Reporting Standards (IFRS) as applicable in the European Union (EU).

    The Interim Statement does not constitute an interim report as defined by IAS 34. With the exception of the mandatory new standards, the accounting and valuation principles applied in the Interim Statement comply with the methods applied in the previous year and should be read in conjunction with the Consolidated Financial Statements as of December 31, 2016.

    Mandatory adoption of new accounting standards

    The following standards were mandatory in the EU for the first time in the fiscal year beginning January 1, 2017:

    Standard Mandatory for fiscal years beginning

    on or after

    Endorsed by EU Commission

    IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses

    Jan. 1, 2017 No

    IAS 7 Disclosure Initiative Jan. 1, 2017 No

    As the amendments have not yet been endorsed by the EU Commission, they were not taken into account in this Interim Statement.

    Use of estimates and assumptions

    The preparation of condensed interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, the uncertainty associated with these assumptions and estimates could lead to results which require material adjustments to the carrying amount of the asset or liability affected in future periods.

    Use of business-relevant key financial performance indicators

    In order to ensure the clear and transparent presentation of United Internet's business trend, the company's annual and interim financial statements include key performance indicators (KPIs) - in addition to the disclosures required by International Financial Reporting Standards (IFRS) - such as EBITDA, the EBITDA margin, EBIT, the EBIT margin and free cash flow. Information on the use, definition and calculation of these KPIs is provided in the Annual Report 2016 of United Internet AG starting on page 46.

    Insofar as required for clear and transparent presentation, the KPIs used by United Internet are adjusted for special items. Such special items usually refer solely to those effects capable of restricting the validity of the key financial performance indicators with regard to the company's financial and earnings performance - due to their nature, frequency and/or magnitude. All special items are presented and explained for the purpose of reconciliation with the unadjusted financial figures in the relevant section of the financial statements.

    Miscellaneous

    The Consolidated Interim Financial Statements include all subsidiaries and associated companies. The following companies were acquired in the reporting period 2017:

    • ProfitBricks GmbH, Berlin

    • Strato AG, Berlin

    • Cronon AG, Berlin

    In the reporting period 2017, the following company was acquired by means of a capital increase:

    • 1&1 Internet TopCo SE, Montabaur (formerly: Blitz 16-612 SE, Montabaur)

    • Drillisch AG, Maintal

    • Drillisch Logistik GmbH, Münster

    • Drillisch Netz AG, Maintal

    • Drillisch Online AG, Düsseldorf

    • Mobile Ventures GmbH, Maintal

    • yourfone Retail AG, Düsseldorf

    • yourfone Shop GmbH, Düsseldorf

    • IQ-optimize Software AG, Maintal

    The following company was renamed in the reporting period 2017:

    • United Internet Investments Holding GmbH, Montabaur (formerly: United Internet Ventures AG, Montabaur)

    In the reporting period 2017, shares were acquired in the following associated company:

    • rankingCoach GmbH, Cologne

    Otherwise, the consolidated group remained largely unchanged from that stated in the Consolidated Financial Statements as at December 31, 2016.

    This Interim Statement was not audited according to Sec. 317 HGB nor reviewed by an auditor.

    foreword group interim financial statements financial calendar / imprint25

    interim management report

    INTERIM FINANCIAL STATEMENTS

20. Group balance sheet

21. 28 Group net income

    30 Group cash flow

    32 Group changes in shareholders' equity

    26

    GROUP BALANCE SHEET

    as of September 30, 2017 in €k

    September 30, 2017	December 31, 2016
    ASSETS Current assets Cash and cash equivalents	131,134	101,743
    Accounts receivable from minority shareholders	41,044	0
    Trade accounts receivable	319,178	228,025
    Inventories	49,729	39,490
    Prepaid expenses	156,509	111,172
    Other financial assets	43,209	21,536
    Other non-financial assets	51,800	129,427
    792,604	631,393
    Non-current assets Shares in associated companies	359,359	755,546
    Other financial assets	341,359	287,688
    Property, plant and equipment	731,963	655,006
    Intangible assets	1,310,795	369,470
    Goodwill	3,634,787	1,087,685
    Trade accounts receivable	53,235	55,841
    Prepaid expenses	127,042	127,974
    Deferred tax assets	126,314	103,131
    6,684,854	3,442,341
    Assets associated with discontinued operations	48,887	0
    Total assets	7,526,345	4,073,734

    27

    September 30, 2017	December 31, 2016
    LIABILITIES AND EQUITY Liabilities Current liabilities Trade accounts payable	412,021	373,710
    Liabilities due to banks	516,629	422,236
    Advance payments received	10,363	12,326
    Income taxes liabilities	177,239	64,145
    Deferred revenue	256,706	235,503
    Other accrued liabilities	22,147	13,237
    Other financial liabilities	170,533	114,748
    Other non-financial liabilities	27,304	33,528
    1,592,941	1,269,433
    Non-current liabilities Liabilities due to banks	1,429,918	1,338,417
    Deferred tax liabilities	311,644	94,211
    Trade accounts payable	8,950	9,479
    Deferred revenue	32,683	33,820
    Other accrued liabilities	41,505	39,671
    Other financial liabilities	107,902	90,891
    1,932,603	1,606,489
    Total liabilities	3,525,544	2,875,922
    Equity Capital stock	205,000	205,000
    Capital reserves	2,717,551	377,550
    Accumulated profit	1,142,707	724,213
    Treasury stock	-194,210	-122,493
    Revaluation reserves	84,109	30,988
    Currency translation adjustment	-14,843	-17,794
    Equity attributable to shareholders of the parent company	3,940,314	1,197,464
    Non-controlling interests	36,068	348
    Total equity	3,976,382	1,197,812
    Liabilities directly associated with discontinued operations	24,419	0
    Total liabilities and equity	7,526,345	4,073,734

    28

    GROUP NET INCOME

    from January 1 to September 30, 2017 in €k

    Sales	2017	2016
    	Jan. - Sept.	Jan. - Sept.
    	3,008,224	2,828,119
    Cost of sales	-1,924,473	-1,846,969
    Gross profit	1,083,752	981,150
    Selling expenses	-433,826	-392,497
    General and administrative expenses	-131,829	-135,812
    Other operating expenses / income	296,978	13,168
    Operating result	815,074	466,008
    Financial result	-27,638	-20,778
    Amortization of financial assets	-19,768	-254,905
    Result from associated companies	-4,433	1,081
    Pre-tax result	763,235	191,406
    Income taxes	-165,435	-134,611
    Net income from continuing operations	597,800	56,795
    Net income from discountinued operations	2,308	1,774
    Net income before non-controlling Interests	600,108	58,569
    Attributable to
    non-controlling interests	21,911	148
    shareholders of United Internet AG	578,197	58,421

    29

    2017 Jan. - Sept.	2016 Jan. - Sept.
    Result per share of shareholders of United Internet AG (in €)
    - basic	2.89	0.29
    - diluted	2.88	0.29
    Thereof result per share for continuing operations
    - basic	2.88	0.28
    - diluted	2.87	0.28
    Thereof result per share for discontinued operations
    - basic	0.01	0.01
    - diluted	0.01	0.01
    Weighted average shares (in million units)
    - basic	199.97	203.82
    - diluted	200.43	204.59
    Statement of comprehensive income
    Net income	600,108	58,569
    Items that may be reclassified subsequently to profit or loss
    Currency translation adjustment - unrealized	-3,687	-14,253
    Market value changes of available-for-sale financial instruments before taxes - unrealized	55,605	20,319
    Tax effect	0	34
    Market value changes of available-for-sale financial instruments before taxes - realized	0	106,873
    Tax effect	0	0
    Categories that are not reclassified subsequently to profit or loss
    Share in other comprehensive income of associated companies	267	0
    Other comprehensive income	52,185	112,973
    Total comprehensive income	652,293	171,542
    Attributable to
    non-controlling interests	20,695	148
    shareholders of United Internet AG	631,599	171,394

    30

    GROUP CASH FLOW

    from January 1 to September 30, 2017 in €k

    Cash flow from operating activities	2017	2016
    	Jan. - Sept.	Jan. - Sept.
    Net income	600,108	58,569
    Net income (from discountinued operations)	2,308	1,774
    Net income (from continuing operations)	597,800	56,795
    Adjustments to reconcile net income to net cash provided
    by operating activities
    Depreciation and amortization of intangible assets and property, plant and
    equipment	121,373	110,458
    Amortization of intangible assets resulting from company acquisitions	51,560	34,135
    Amortization of financial assets	19,768	254,905
    Share-based payment expense	2,819	3,303
    Result from equity accounted investments	4,433	-1,081
    Share of profit of associated companies	19,823	19,272
    Change in deferred taxes	-37,324	-8,417
    Other non-cash positions	-319,149	-7,589
    Operative cash flow	461,103	461,781
    Change in assets and liabilities
    Change in receivables and other assets	-8,378	-15,124
    Change in inventories	-3,812	1,271
    Change in deferred expenses	-37,435	-60,057
    Change in trade accounts payable	-25,117	15,760
    Change in advance payments received	-706	-2,465
    Change in other accrued liabilities	-4,987	-1,683
    Change in liabilities income taxes	93,577	-82,662
    Change in other liabilities	26,664	11,711
    Change in deferred income	2,605	4,651
    Change in assets and liabilities, total	42,411	-128,598
    Cash flow from operating activities (before capital gains tax refund)	503,514	333,183
    Capital gains tax refund	70,293	0
    Cash flow from operating activities for continuing operations	573,807	333,183
    Cash flow from operating activities for discontinued operations	-1,393	-3,575
    Cash flow from operating activities	572,414	329,608

    31

    Cash flow from investing activities

    2017

    Jan. - Sept.

    2016

    Jan. - Sept.

    Capital expenditure for intangible assets and property, plant and equipment -154,314 -116,607 Payments from disposals of intangible assets and property,

    plant and equipment 2,948 3,480

    Payments for company acquisitions less cash received -526,794 -238

    Purchase of shares in associated companies -126,432 -264,226

    Payments for loans granted -525 -472

    Payments from loans granted 0 2,874

    Proceeds from sale of financial assets 0 4,464

    Refunding from other financial assets 137 0

    Cash flow from investing activities for continuing operations -804,980 -370,725

    Cash flow from investing activities for discontinued operations -501 -532 Cash flow from investing activities -805,481 -371,257

    Cash flow from financing activities

    Purchase of treasury shares -77,214 -112,167

    Sales of treasury shares in connection with an employee stock ownership

    program 0 6,983

    Taking out of loans 132,779 311,597

    Redemption of finance lease liabilities -12,621 -13,980

    Dividend payments -159,703 -142,857

    Profit distributions to non-controlling interests 0 -329

    Payments from minority shareholders 386,293 0

    Cash flow from financial activities for continuing operations 269,534 49,247

    Cash flow from financial activities for discontinued operations 51 35

    Cash flow from financing activities 269,585 49,282

    Net increase in cash and cash equivalents 36,517 7,633

    Cash and cash equivalents at beginning of fiscal year 101,743 84,261

    Currency translation adjustments of cash and cash equivalents -3,532 -4,189

    Cash and cash equivalents at end of reporting period 134,728 87,705

    Cash and cash equivalents at end of reporting period associated with

    discontinued operations -3,593 0

    Cash and cash equivalents at end of reporting period 131,135 87,705

    32

    GROUP CHANGES IN SHAREHOLDERS' EQUITY

    from January 1 to September 30, 2017 in €k

    Capital stock	Capital reserves	Accumulated profit	Treasury stock
    Share	€k	€k	€k	Share	€k
    Balance as of January 1, 2016	205,000,000	205,000	372,203	695,799	917,859	-26,318
    Net income	58,421
    Other comprehensive income
    Total comprehensive income	58,421
    Issue of treasury stock	914	-8,409	-504,941	14,478
    Employee stock ownership program	3,303
    Dividend payments	-142,857
    Profit distributions
    Balance as of September 30, 2016	205,000,000	205,000	376,420	602,954	3,412,918	-124,007
    Balance as of January 1, 2017	205,000,000	205,000	377,550	724,213	3,370,943	-122,493
    Net income	578,197
    Other comprehensive income
    Total comprehensive income	578,197
    Purchase of treasury shares	2,000,000	-77,214
    Issue of treasury stock	-5,497	-147,476	5,497
    Employee stock ownership program	2,819
    Dividend payments	-159,703
    Transactions with minority shareholders	2,342,679
    Balance as of September 30, 2017	205,000,000	205,000	2,717,551	1,142,707	5,223,467	-194,210

    33

    Revaluation reserves	Currency translation adjustments	Equity attributable to shareholders of United Internet AG	Non- controlling interests	Total equity
    €k	€k	€k	€k	€k
    -96,021	-1,443	1,149,220	538	1,149,758
    58,421	148	58,569
    127,226	-14,253	112,973	112,973
    127,226	-14,253	171,394	148	171,542
    6,982	6,982
    3,303	3,303
    -142,857	-142,857
    0	-356	-356
    31,205	-15,696	1,075,875	330	1,076,205
    30,988	-17,794	1,197,464	348	1,197,812
    578,197	21,911	600,108
    55,871	-2,470	53,401	-1,217	52,185
    55,871	-2,470	631,598	20,695	652,293
    -77,214	-77,214
    0	0
    2,819	2,819
    -159,703	-159,703
    -2,750	5,421	2,345,350	15,025	2,360,375
    84,109	-14,843	3,940,314	36,068	3,976,382

    34

    SEGMENT REPORTING

    from January 1 to September 30, 2017 in €k

    January - September 2017 Access

    segment

    €k

    Applications

    segment

    €k

    Corporate

    €k

    Recon- ciliation

    €k

    United Internet

    Group

    €k

    Segment revenues 2,273,167 755,503 157 -20,603 3,008,224

    - thereof domestic 2,273,167 470,619 157 -20,603 2,723,340

    - thereof non-domestic 0 284,884 0 0 284,884

    EBITDA 727,022 278,574 -17,589 0 988,007

    EBIT 613,118 219,669 -17,713 0 815,074

    Financial result -27,638 -27,638

    Writedowns on investments -19,768 -19,768

    Result from at-equity companies -4,433 -4,433

    EBT 763,235 763,235

    Tax expense -165,435 -165,435

    Net income (from continued operations 597,800

    Net income from discountinued operations 2,308 2,308

    Net income before non-controlling Interests 600,108

    Investments in intangible assets, property, plant and

    equipment (without goodwill) 128,275 38,164 202 - 166,641

    Amortization/depreciation from continuing operations 113,904 58,905 124 - 172,933

    • thereof intangible assets and property, plant

      and equipment 82,989 39,260 124 - 121,373

    • thereof assets capitalized during

    company acquisitions	30,915	20,645	0	- 51,560
    Number of employees from continuing operations	4,527	4,561	338	- 9,426
    - thereof domestic	4,527	3,014	338	- 7,879
    - thereof non-domestic	0	1,547	0	- 1,547

    January - September 2016

    Segment revenues 2,167,230 684,965 136 -24,212 2,828,119

    2,167,230	406,927	136	-24,212	2,550,081
    0	278,038	0	0	278,038
    384,517	233,843	-7,789	0	610,601
    282,498	192,213	-8,703	0	466,008
    -20,778	-20,778
    -254,905	-254,905
    1,081	1,081
    191,406	191,406

    • thereof domestic

    • thereof non-domestic EBITDA EBIT

    Financial result Writedowns on investments Result from at-equity companies EBT

    Tax expense -134,611 -134,611

    Net income (from continued operations 56,795

    Net income from discountinued operations 1,7741,774

    Net income before non-controlling Interests

    Investments in intangible assets, property, plant and

    58,569

    equipment (without goodwill) 95,833 29,150 569 - 125,552

    Amortization/depreciation from continuing operations 102,019 41,660 914 - 144,593

    • thereof intangible assets and property, plant

      and equipment 72,302 37,242 914 - 110,458

    • thereof assets capitalized during

    company acquisitions 29,717 4,418 0 - 34,135

    Number of employees from continuing operations	3,420	4,230	196	- 7,846
    - thereof domestic	3,420	2,644	196	- 6,260
    - thereof non-domestic	0	1,586	0	- 1,586

    foreword

    interim management report

    group interim financial statements

    35

    financial calendar / imprint

    FINANCIAL CALENDAR

    March 3, 2017 Annual financial statements for fiscal year 2016

    press and analyst conference

    May 15, 2017 Interim Statement for the first quarter 2017 May 18, 2017 Annual Shareholders' Meeting, Alte Oper, Frankfurt/Main August 10, 2017 6-Month Report 2017

    press and analyst conference

    November 14, 2017 Interim Statement for the first 9 months 2017

    IMPRINT

    Publisher and copyright © 2017

    United Internet AG Elgendorfer Straße 57 D-56410 Montabaur Germany

    www.united-internet.com

    Contact

    Investor Relations

    Phone: +49(0) 2602 96-1100

    Fax: +49(0) 2602 96-1013

    E-mail: investor-relations@united-internet.com

    November 2017

    Registry court: Montabaur HRB 5762

    Due to calculation processes, tables and references may produce rounding differences from the mathematically exact values (monetary units, percentage statements, etc.).

    This Interim Report is available in German and English. Both versions can also be downloaded from www.united-internet.de. In all cases of doubt, the German version shall prevail.

    Disclaimer

    This Interim Report contains certain forward-looking statements which reflect the current views of United Internet AG's management with regard to future events. These forward looking statements are based on our currently valid plans, estimates and expectations. The

    forward-looking statements made in this 6-Month Report are only based on those facts valid at the time when the statements were made. Such statements are subject to certain risks and uncertainties, as well as other factors which United Internet often cannot influence but which might cause our actual results to be materially different from any future results expressed or implied by these statements. Such risks, uncertainties and other factors are described in detail in the Risk Report section of the Annual Reports of United Internet AG. United Internet does not intend to revise or update any forward-looking statements set out in this Interim Report.

    United Internet AG

    Elgendorfer Straße 57

    56410 Montabaur Deutschland

    www.united-internet.com