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IONOS Group: Europe's Quiet Web Hosting Giant
I. Introduction & Episode Roadmap
Imagine it's the winter of 2023, and Europe's stock markets are slowly thawing from the deepest IPO freeze in a generation. On February 8th, traders at the Frankfurt Stock Exchange gather around screens to watch an unusual debut: IONOS Group SE, a web hosting company most Americans have never heard of, but one that serves as the digital backbone for more than six million small and medium-sized businesses across Europe and North America.
Shares in United Internet AG's web hosting arm Ionos SE dropped following the company's debut on the Frankfurt Stock Exchange, the first test of the German exchange this year. The initial price action disappointed—Ionos fell to €17.54 at the close in Frankfurt on Wednesday. But beneath that rocky start lies one of the most remarkable stories in European tech: how a 1988 German marketing startup transformed itself into the continent's largest web hosting company.
So here's the question we're exploring today: How did a company founded in a small Rhineland-Palatinate town—before the World Wide Web even existed—become Europe's answer to GoDaddy? And can this European champion hold its ground against American hyperscalers, website builders, and low-cost disruptors?
The numbers tell an impressive story. The customer base grew by around 160,000 to 6.32 million customers in the financial year 2024. Revenue increased by 9.6% to €1,560.3 million. Adjusted EBITDA increased by 15.9% to €452.2 million. And by November 2025, the IONOS customer base grew by around 210,000 to 6.53 million customers in the first nine months of 2025.
What follows is a journey through nearly four decades of German engineering precision, strategic acquisitions, a private equity partnership that shaped the company's trajectory, and a 2023 public listing that marked the dawn of a new chapter. We'll dissect the business model, analyze the competitive landscape, and examine whether IONOS can translate European data sovereignty into a lasting competitive moat against the likes of AWS, GoDaddy, and the hyperscalers.
II. The German Internet Pioneer: Origins & Early Years (1988–1998)
The year was 1988. The Berlin Wall still divided Germany. Most people had never heard of the internet, let alone imagined building a business on it. In Montabaur—a charming medieval town in the Westerwald region, roughly midway between Frankfurt and Cologne—a 25-year-old trained banker named Ralph Dommermuth was about to change the trajectory of German digital history.
The history of the Group goes back to 1&1 EDV-Marketing GmbH, which was founded in 1988 by Ralph Dommermuth and Wendelin Abresch as a service provider for marketing and advertising. This wasn't a Silicon Valley garage startup powered by venture capital and dreams of disruption. The step into entrepreneurship was connected with considerable risks, but Dommermuth firmly believed in his vision and began with only two employees in a small office.
Ralph Dommermuth was born in 1963 in Montabaur, a small town in the Westerwald. His origin from a rural region made him an outsider in the world of technology companies, which traditionally emerged from urban centers. Dommermuth's youth was characterized by modest circumstances and down-to-earth values, which significantly shaped his entrepreneurial spirit and disciplined work ethic.
The original business idea was modest but clever: The first business idea was called "Software Börse", a marketing tool for software companies. For this product the company won the German direct marketing prize in 1989. His initial business was the provision of systematised marketing services to small software providers. He later developed additional marketing services for large customers such as IBM, Compaq and Deutsche Telekom.
What set Dommermuth apart was his ability to see around corners. In the 1980s, the technological change began to gain momentum. The young Dommermuth recognized the emerging potential of digitalization, while most people did not yet foresee the immense influence of the internet on life and the economy.
The pivotal shift came in 1996. When acceptance of the internet began to accelerate, Ralph Dommermuth gradually cut back on these marketing services for third parties and began to build up his own internet services and direct customer relationships. This wasn't merely a business pivot—it was a fundamental bet on the future.
1&1 (at the time known as 1&1 Internet) was founded in Germany in 1988. The company developed data center and network architecture to enable internet access, becoming one of the first web hosting companies.
Meanwhile, 200 kilometers south in Karlsruhe—home to one of Germany's premier technical universities—another internet pioneer was taking shape. In 1995, Achim co-founded Schlund+Partner, the German web hosting pioneer based in Karlsruhe, Germany. Achim Weiss, a technical genius with a passion for scalable infrastructure, was building what would become a crucial piece of the IONOS story.
These two parallel narratives—Dommermuth's commercial instincts and marketing prowess in Montabaur, and Weiss's technical expertise in Karlsruhe—would soon converge to create something far greater than either could have built alone. But first, each would prove their mettle in the Wild West days of the nascent German internet.
For investors evaluating IONOS today, these origins matter. The company's DNA was never about chasing the latest tech fad. It was about building robust infrastructure, serving underappreciated customer segments (small businesses), and maintaining the kind of operational discipline that only comes from bootstrapped beginnings in a small German town.
III. The Critical Merger & IPO Era (1998–2003)
By 1998, the internet revolution was accelerating at breakneck speed. In the United States, Amazon had just gone public, Google was being founded in a garage, and the dot-com boom was approaching its euphoric peak. Germany, traditionally cautious about speculative technologies, was catching up fast.
Ralph Dommermuth recognized that the moment had arrived. In 1998 the qualified banker took 1&1 to the stock exchange. It was the first IPO of an internet company in Germany. The timing proved impeccable. United Internet's IPO took place before the peak of the New Economy, but the share reached a closing price of over 200 percent of the issue price on the first day of trading.
The IPO wasn't just about raising capital—it was strategic ammunition. Due to the capital increase carried out in this context, 1&1 had opportunity to participate in other IT companies such as GMX and Schlund + Partner AG.
This brings us to the merger that would prove foundational for everything that followed. In June 1998, Dommermuth made his move on Achim Weiss's Schlund+Partner. Ten years later, in 1998, 1&1 became a shareholder of Schlund+Partner. The combination was elegant: 1&1's marketing expertise and customer acquisition engine joined forces with Schlund+Partner's technical infrastructure and hosting capabilities.
Consider the complementary skills being combined. In 1995, he co-founded Schlund+Partner, the German web hosting pioneer based in Karlsruhe, Germany, which was acquired by 1&1 in 1998. From 1998 to 2008, he worked as Chief Technology Officer at 1&1 Internet AG, during which time he developed, among others, the first web hosting platform for the fast-growing mass market and was responsible for the construction of three data centers in Germany and the United States.
In 2000, Dommermuth restructured the entire corporate architecture. In 2000, Dommermuth restructured 1&1 as United Internet AG. At the height of the internet boom in the early 2000s, 1&1 Holding held shares in 17 internet companies.
Then came international expansion—a bold move for a company rooted in the German Mittelstand tradition. In the same year, 1&1 began operating in the United Kingdom, and three years later began serving United States customers.
The U.S. market entry was particularly significant. In 2003, 1&1 established operations in Chesterbrook, Pennsylvania. IONOS has its headquarters in Germany, but the company also has a US office in Chesterbrook, Pennsylvania. Additionally, IONOS has a huge data center in Lenexa, Kansas containing over 40,000 servers.
The dot-com crash of 2000-2001 devastated most internet companies, but 1&1 emerged relatively unscathed. The Dotcom bubble at the beginning of the 2000s was a critical moment that drove numerous technology companies into insolvency. 1&1 also felt the effects of the stock market crash. But Dommermuth demonstrated his leadership strength during this time. He stabilized the company, adapted the business model and regained investors' trust.
Why did 1&1 survive when so many others perished? The answer lies in the fundamentals: recurring revenue from hosting contracts, focus on paying customers rather than "eyeballs," and an infrastructure-first approach that created real operational value. These would become the principles that guide IONOS to this day.
IV. Building Scale: The Consolidation Years (2004–2016)
The post-crash period from 2004 to 2016 was a masterclass in disciplined growth through acquisition and organic expansion. While American internet giants were pursuing growth at all costs, United Internet under Dommermuth was building a diversified, profitable empire through a series of strategic acquisitions.
The U.S. expansion accelerated dramatically. The company's biggest North American data center is located in Lenexa, Kansas. In 2023, the same data center became the site for hosting Ionos' cloud products. This Kansas facility, with over 40,000 servers, became the cornerstone of IONOS's American operations.
In 2005, United Internet made a significant move in the consumer applications space. In May 2005, United Internet acquired the portal and e-mail business of Web.de, which was merged with its in-house offering GMX to form 1&1 Mail & Media GmbH. This created one of Europe's largest email platforms, generating valuable synergies with the hosting business.
The acquisition spree continued methodically. In December 2008, it was announced that the company would take over united-domains AG, based in Starnberg, Germany, for around € 34 million. In May 2009, United Internet announced the acquisition of the DSL business of Freenet AG. As a result, the company's DSL customers – most recently around 700,000 – were transferred to United Internet for a total of 123 million euros.
The mail.com acquisition in 2010 further strengthened the U.S. footprint, bringing additional email customers and brand recognition in the American market.
In 2015, United Internet continued its European consolidation strategy. On 10 July 2015 the acquisition of the Polish web host home.pl for around 135 million euros was announced.
But the crown jewel acquisition came in December 2016. On 15 December 2016 United Internet announced its intention to acquire its largest European competitor Strato for around EUR 600 million; the purchase was completed on 1 April 2017.
The Strato acquisition deserves special attention. Deutsche Telekom acquired the hosting services provider Strato for 275 million euros in 2009. The company, which was for the most part autonomously managed, has developed well under the value creation oriented advice provided by Deutsche Telekom Capital Partners. Over the last five years, revenues have increased organically from approx. 90 million euros to 127 million euros, and in EBITDA from around 30 million euros to 49 million euros.
"The acquisition of Strato will enable us to expand our leading market position in the European hosting and cloud application business and drive the consolidation of a market which is currently still strongly fragmented," stated Ralph Dommermuth, CEO of United Internet.
Perhaps the most critical structural change came in 2016, setting the stage for the IONOS we know today. In 2016, 1&1 Internet SE also split into two business divisions: 1&1 Telecommunications SE, which continues to operate the Consumer Access (DSL & Mobile) business, and the internationally active Business Applications division with the current IONOS brand for hosting and cloud service.
This separation was crucial. It allowed the hosting and cloud business to develop its own identity, strategy, and culture—distinct from the consumer telecommunications operations. It also laid the groundwork for the eventual IPO.
For the investor lens: This period demonstrated United Internet's ability to deploy capital wisely, integrate acquisitions effectively, and build dominant market positions. The Strato deal, in particular, showed discipline—paying €600 million (12.4x EBITDA) for the market leader isn't cheap, but it eliminated a major competitor and consolidated scale in a fragmented market.
V. The ProfitBricks Acquisition: IONOS is Born (2017–2018)
Every great company has a pivotal moment—a strategic decision that transforms its trajectory. For IONOS, that moment came with the ProfitBricks acquisition in 2017 and the subsequent rebranding in 2018.
To understand why this mattered, we need to understand Achim Weiss's entrepreneurial journey. After leaving 1&1 in 2008, where he had served as CTO developing the world's first mass-market hosting platform, Weiss saw an opportunity in cloud infrastructure. Considered as one of the top experts in the field of developing hugely scalable internet infrastructures, in 2010 Achim founded ProfitBricks in Berlin, the first German company focusing on cloud infrastructure (IaaS).
In 2010, Achim Weiss founded ProfitBricks, Germany's first provider focusing on IaaS solutions. Previously, Weiss served as a Chief Technology Officer at 1&1 for ten years. ProfitBricks was acquired by 1&1's parent company United Internet AG in 2017 and is now merging under the new IONOS by 1&1 brand.
The acquisition brought Weiss back into the fold, but more importantly, it gave 1&1 genuine cloud infrastructure capabilities. "At 1&1, I personally experienced and helped shaping the growth from a small internet startup to an international provider. With IONOS by 1&1, we can now strategically combine the strengths of the European hosting market leader and eight years of enterprise cloud expertise," says Achim Weiss.
That otherworldly perspective led to the birth of 1&1 IONOS, the new company that emerged from the 2017 merger of 1&1 and ProfitBricks, and is innately tuned to provide forward-thinking infrastructure and customer support to more than 6 million customers. The teams took more than a year to integrate 1&1, web hosting and domain experts, with ProfitBricks, the first Infrastructure-as-a-Service provider in Germany, into a seamless and comprehensive product portfolio.
The rebranding itself was thoughtful. As this new company is more than just a hosting provider, we have opted for a new name – and IONOS fits perfectly. It is inspired by the ionosphere; the upper part of the earth's atmosphere that contains a high concentration of ions and free electrons. It is inspiring to look at, whether viewing from down on Earth, or up in outer space and is, of course, situated in the clouds.
When 1&1 acquired ProfitBricks in 2017, Achim returned to 1&1's management board, and was named CEO of IONOS in October 2018.
1&1 IONOS is the first web hosting provider that will be able to guide companies through all of the phases and milestones of their development – from creating their first website, to establishing an online store, and launching their own servers through 1&1' self-developed enterprise cloud infrastructure.
The strategic rationale was compelling: hosting companies were being squeezed from above by cloud giants (AWS, Azure, Google Cloud) and from below by simple website builders (Wix, Squarespace). IONOS's response was to become a comprehensive digitalization partner—meeting SMBs wherever they were on their journey.
The European data sovereignty angle emerged as a key differentiator. 1&1 IONOS has a USP the US hyperscalers cannot compete with: with headquarters in Germany, we pride ourselves on the tradition of state-of-the-art technology, strong privacy policies, and airtight data security.
For investors, the ProfitBricks acquisition represented a strategic bet on the cloud transition. Rather than cede the cloud market to hyperscalers, IONOS would offer European businesses a sovereign alternative—one that combined hosting expertise with modern infrastructure capabilities.
VI. Warburg Pincus Investment & IPO Preparation (2019–2022)
Private equity's entrance into the IONOS story added another dimension to the company's evolution. In November 2016, just as the Strato acquisition was being announced, Warburg Pincus made a significant investment in the Business Applications division.
Warburg Pincus acquired a stake in Ionos in November 2016. At that time, the investor had acquired a one-third stake in the Business Applications division, which was still part of United Internet subsidiary 1&1 at the time.
The partner Warburg Pincus assigned to the investment was no ordinary private equity professional. René Obermann has been Chairman of the Board of Directors of Airbus SE since 2020. Alongside his role at Airbus, René works as Chairman of Warburg Pincus Europe, a leading global private equity firm that he joined in 2015. René worked at Deutsche Telekom Group (DT) from 1998 until 2013. After running DT's mobile division (T-Mobile International), he was appointed as CEO of DT in November 2006, where he remained until December 2013.
As a member of the supervisory board of IONOS Group SE, the leading European web-productivity provider, he accompanies one of the major investments of the Warburg Pincus funds.
Having the former CEO of Deutsche Telekom—one of Europe's largest telecom companies—on the supervisory board brought invaluable strategic perspective. Obermann understood the competitive dynamics of European tech, the importance of infrastructure, and the challenges of competing against American giants.
IONOS Group SE's current share capital is held by United Internet (75.1%) and Warburg Pincus (24.9%).
The years from 2019 to 2022 were a period of intense preparation. The management team, led by CEO Achim Weiss and CFO Britta Schmidt (who joined in 2021), worked to optimize operations, integrate acquisitions, and build the corporate infrastructure necessary for public company status.
Britta Schmidt has been Chief Financial Officer (CFO) at IONOS since July 2021. As well as leading on finance, she's responsible for People Services. She has over 15 years' experience in finance and investor relations. She started her financial career at Siemens Enterprise Communications (now Atos) in 2007. From 2010 onwards Britta worked across many aspects of finance for Scout24, managing the implementation of the initial public offering (IPO) in 2015 and many transformational projects.
Schmidt's background was particularly relevant—having managed Scout24's IPO, she brought direct experience in taking a German tech company public.
The IPO preparation intensified in 2022, with the company engaging investment banks and preparing the prospectus. IONOS Group SE (together with its subsidiaries "IONOS" or the "Company"), the leading European digitalization partner for small and medium-sized businesses ("SMB"), together with its shareholders United Internet AG ("United Internet") and WP XII Venture Holdings II SCSp, an affiliate of Warburg Pincus (together "Warburg Pincus"), announced plans for an Initial Public Offering ("IPO") and listing of its shares on the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) in the first quarter of 2023, subject to market conditions. The IPO is expected to consist of the offering of existing shares held by United Internet and Warburg Pincus, with United Internet retaining a majority stake in IONOS following the completion of the IPO.
What made Warburg Pincus's involvement valuable wasn't just capital—it was discipline. Private equity firms demand operational excellence, clear metrics, and a path to value creation. This institutional rigor helped IONOS sharpen its focus and articulate its investment thesis.
VII. The 2023 IPO: Going Public in a Tough Market
February 2023 was not an auspicious time to bring a company public. The European IPO market had been frozen for months. Rising interest rates, geopolitical uncertainty from the Ukraine war, and lingering inflation fears had kept investors cautious.
LONDON, Feb 8 (Reuters) - Shares in IONOS started trading at 18.41 on Wednesday in the German web hosting firm's debut on the Frankfurt stock exchange, Europe's first major initial public offering (IPO) since Porsche in September.
The market's tentative sentiment was reflected in the pricing. The offering was oversubscribed multiple times at the bottom of the proposed valuation range of 18.50 to 22.50 euros per share, in a sign that markets may be cautiously opening up to new entrants.
The company priced its shares at €18.50 per share, raising €389 million ($418 million dollars) with an initial valuation of €2.6 billion.
The shares had an initial listing price of €18.40. The IPO was accompanied by a joint consortium of J.P. Morgan, Berenberg, Deutsche Bank, BNP Paribas (each Joint Global Coordinators and Joint Bookrunners), Barclays, Goldman Sachs (each Joint Bookrunners), Commerzbank, DZ Bank and Landesbank Baden-Württemberg (each Co-Lead Managers).
Ralph Dommermuth, Chairman of the Supervisory Board of IONOS Group SE and CEO of United Internet AG, said, "Today's share placement is proof that IONOS, as a company that combines a resilient business model with outstanding long-term potential, has been able to succeed in a selective market environment for IPOs. We are pleased that IONOS' strong management team will continue to lead the company independently following the IPO."
René Obermann, Co-Head Europe of Warburg Pincus and Member of the Supervisory Board of IONOS Group SE, added, "IONOS has a strong, proven business model and is led by a competent management team. We are convinced that IONOS, as a European market leader, will take advantage of further profitable growth opportunities as SMBs are continuously expanding and improving their online presence."
The immediate post-IPO trading was rocky. The Ionos share had a difficult time on the stock exchange in its first year of listing. The share price slipped significantly until October 2023, reaching a low of 11.92 euros. That represented a 35% decline from the IPO price—a painful start for new shareholders.
But the story didn't end there. After that, however, there was a clear upward trend. The share reached its previous record high of 30.60 euros in July. The company's consistent operational execution eventually won over skeptics.
Post-IPO, the ownership structure stabilized. United Internet retained its majority stake, Warburg Pincus held a significant position, and a free float was established for public shareholders. The largest shareholder remains United Internet with nearly 64 percent of the shares.
Over the course of 2024 and 2025, Warburg Pincus progressively reduced its stake through several placements. The financial investor sold 12.1 million shares at 24.55 euros each, raising 298 million euros. By March 2025, according to Ionos, Warburg Pincus last held 8.7 percent of the shares.
For investors analyzing the IPO, several lessons emerge: First, even high-quality companies can struggle in adverse market conditions. Second, pricing discipline (at the bottom of the range) ultimately served shareholders better than an ambitious valuation that might have collapsed. Third, the steady reduction of private equity ownership has increased float and liquidity, making the stock more accessible to institutional investors.
VIII. The Business Model Deep Dive
Understanding IONOS requires understanding its business model at a granular level. This isn't a simple hosting company—it's an integrated digitalization platform designed to serve small and medium-sized businesses throughout their lifecycle.
Customer Focus: The SMB Sweet Spot
IONOS Group SE is an international digitalization partner and cloud provider for primarily small and medium-sized enterprises (hereinafter referred to as "SMEs"). IONOS Group SE is a pure holding company.
The SMB focus is deliberate. These customers are "digitally underserved"—too small for the enterprise sales teams of AWS or Microsoft, but too sophisticated for simple drag-and-drop website builders. IONOS positions itself as the trusted partner that grows with these businesses.
With its focus on small and medium-sized enterprises ("SMEs") in the area of web presence and productivity, IONOS operates in a market that is highly fragmented on the customer side. On the product side, these customers typically depend on the products offered by IONOS, as these are essential for sales and sales support. In addition, in most cases, the products account for only a small portion of an SME's costs and are usually paid for monthly by the customers.
Segment Structure
The "Digital Solutions & Cloud" segment includes revenues from the Web Presence & Productivity and Cloud Solutions business units as well as revenue with subsidiaries of the parent company United Internet. The "AdTech" segment includes revenue from digital advertising and domain trading.
The core business breaks down into two main areas:
- Web Presence & Productivity: Domains, web hosting, website builders, email solutions, SSL certificates, e-commerce platforms
- Cloud Solutions: Virtual private servers, dedicated servers, managed Kubernetes, infrastructure-as-a-service, database services
Overall, revenue from contracts with customers in the segment is divided between product revenue from the Web Presence & Productivity business area in the amount of €812,104k and the Cloud Solutions business area in the amount of €136,035k.
The Multi-Brand Strategy
IONOS operates a portfolio of brands acquired over decades. The portfolio is carried out by differently positioned brands such as STRATO, arsys, fasthosts, home.pl and World4You. In addition, there are brands with extensive domain expertise, such as United Domains and InterNetX, which offer professional services related to active domain management.
In Germany, Spain, and the UK, we pursue a dual brand strategy, both with 1&1 IONOS and our acquisitions STRATO, Arsys, and Fasthosts, respectively.
This multi-brand approach allows IONOS to segment markets, target different customer profiles, and maintain acquired brand equity while capturing operational synergies on the backend.
Subscription Economics
The business model's elegance lies in its economics. Customers pay monthly subscriptions—typically €5-50/month for basic services, scaling to hundreds of euros for advanced cloud infrastructure. For example, it is rather unlikely that a small or medium-sized company would stop operating its website for cost reasons or regularly compare prices.
This creates powerful dynamics: - Recurring revenue: Predictable cash flows for planning and investment - Low churn: Once established, websites and email addresses are rarely moved - Upsell potential: Growing businesses need more resources, creating natural expansion revenue
The European Data Sovereignty Advantage
In an era of GDPR, data localization requirements, and concerns about U.S. government surveillance, IONOS's German heritage becomes a competitive advantage.
Germany: Perfect for users in Europe, the German data center adheres to strict EU data protection regulations, making it a suitable choice for businesses concerned with GDPR compliance.
Security and Compliance: Keep your data secure and compliant with regulations, as data processing is confined within Germany. Your input data remains exclusively for your use and is excluded from training purposes.
Infrastructure Footprint
IONOS has over 90,000 servers housed in 10 data centers. According to Ionos, the company is now operating out of 32 data centers.
North America: United States (Las Vegas in Nevada, Newark in New Jersey, and Lenexa in Kansas) Europe: Germany (Frankfurt and Berlin), France (Paris), Spain (Logroño), United Kingdom (London and Worcester)
Ionos uses sustainable methods to reduce carbon emissions, including using 100% renewable energy in data centers and administrative buildings in the UK and Germany. The carbon is offset in other locations worldwide with green certificates or by using local renewable sources.
The owned infrastructure creates operating leverage—fixed costs that become more profitable as utilization increases—and ensures quality control over the customer experience.
IX. Recent Performance & Current State (2024–2025)
The 2024 and 2025 results demonstrate that IONOS's business model continues to deliver. The metrics tell a story of steady, profitable growth in a mature industry—exactly what the investment thesis promised.
2024 Full Year Results
The customer base grew by around 160,000 to 6.32 million customers in the financial year 2024. Revenue increased by 9.6% to €1,560.3 million (2023: €1,423.7 million). Adjusted EBITDA increased by 15.9% to €452.2 million (2023: €390.3 million).
The adjusted EBITDA margin increased accordingly to 29.0% (2023: 27.4%).
The core Digital Solutions & Cloud segment outperformed. Revenue in the Digital Solutions & Cloud segment rose by 11.6% to €1,248.1 million in the 2024 financial year (2023: €1,118.8 million) and adjusted EBITDA by 20.7% to €410.3 million (2023: €340.0 million).
In the lower-margin AdTech segment, revenue increased only slightly by 2.4% to €312.2 million (2023: €305.0 million), while adjusted EBITDA decreased by 16.9% to €41.9 million (2023: €50.4 million), mainly due to a product transition in Domain Parking.
2025 Performance Through Nine Months
The IONOS customer base grew by around 210,000 to 6.53 million customers in the first nine months of 2025. Revenue (previously "Digital Solutions & Cloud" segment) increased by 6.2% to €980.2 million (comparable prior-year figure for 9M 2024: €923.1 million). Adjusted EBITDA rose by 20.8% to €368.5 million. The adjusted EBITDA margin improved accordingly to 37.6% (9M 2024: 33.0%). Adjusted earnings per share (EPS) rose by 40.6% to €1.35.
The margin expansion is particularly noteworthy—moving from 33.0% to 37.6% represents significant operating leverage as revenue scales.
Strategic Portfolio Shift: AdTech Divestiture
In November 2025, IONOS announced a significant strategic decision. This repositioning opens up numerous opportunities for the AdTech business unit, but these must be developed with the appropriate focus. With the decision to put the "AdTech" segment up for sale, the division is reported separately as a discontinued operation in accordance with IFRS 5.
"The AdTech business faces exciting challenges and at the same time has a lot of potential. To leverage this potential, increasing management attention is required, which we cannot provide optimally on a permanent basis. In the future, we want to focus entirely on our core business," said Achim WeiĂź, CEO of IONOS Group SE.
The AdTech business segment has recently—partly due to changing market conditions—increasingly developed from the secondary market for the use and trading of domains into a platform for traffic monetization and thus a part of the digital advertising market. At the same time, the AdTech division has moved away from the core business.
The market reaction was mixed. "Revenue in both the core business and cloud segment fell short of expectations, further exacerbated by a sharp 66 percent decline in Adtech." Webb also pointed out that selling the division would reduce adjusted operating profit (Ebitda) by EUR50 million, representing a 9 percent drop compared to the previous forecast of around EUR530 million.
Guidance and Medium-Term Outlook
The company confirms its forecast, which previously referred to its remaining core business, "Digital Solutions & Cloud". Adjusted for currency effects, revenue is expected to grow by approximately 8% in fiscal year 2025 (2024: €1,248.1 million), with an adjusted EBITDA margin of approximately 35% (2024: 32.9%).
Our mid term guidance assumes a compound annual growth rate of around 10% for our total revenue, with a CAGR of around 9% for our web presence and productivity business and around 20% for our cloud solutions business. In terms of profitability, we expect a further increase of the adjusted EBITDA margin to around 35% and a CapEx to revenue ratio of around 5% to 6%.
AI Strategy: IONOS Momentum
"The development of AI, from conversational AI to reasoning to autonomous AI and multi-agent AI systems, is heralding a new era. With the launch of IONOS Momentum, we are bundling our existing AI products and will be rolling out a variety of products and enhancements in the coming months. IONOS Momentum makes AI accessible and easy to use for every entrepreneur."
IONOS, Europe's leading digitalization partner and trusted Cloud Enabler, is launching a new era for artificial intelligence in business and the public sector with IONOS Momentum. Until now, organizations have relied on a patchwork of AI tools—often expensive, complex, and hard to integrate. With Momentum, IONOS is introducing a unified, GDPR-compliant ecosystem that brings together infrastructure, automation, and applications on a single platform.
A key component is the Momentum Team—a suite of intelligent AI assistants that automate everyday workflows from customer service to marketing to appointment scheduling. The first available assistant, launched in early November, is the AI Phone Receptionist. It handles customer communication 24/7 and offers businesses a practical, accessible introduction to AI—no technical background required.
X. Competitive Landscape & Market Position
Understanding IONOS requires understanding its position in a complex, multi-layered competitive landscape. The company doesn't compete in a single market—it spans domains, hosting, cloud, and SMB digitalization more broadly.
Global Market Context
According to HostAdvice, GoDaddy is the most popular web hosting provider, with a 9.29% market share. GoDaddy is followed by Google Cloud Platform (7.03%), Amazon Web Services (4.48%), and IONOS (4.17%).
With each holding about 4% of the market, other well-known competitors like Microsoft Azure and IONOS are also fighting for a piece of the action.
European Dominance
IONOS (formerly 1&1 IONOS) is a provider offering feature-rich hosting plans at competitive price points. It is particularly strong in the European market but serves customers globally.
IONOS (formerly 1&1) is one of Europe's biggest hosting companies, headquartered in Germany.
The European market structure differs significantly from North America. Taking a look at the growth rate by region reveals that Germany and the U.K. contribute the most. In fact, Germany had more than 7 million domains out of all websites hosted online in 2018.
Key Competitors
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GoDaddy: The global leader, particularly dominant in North America. GoDaddy may have a mixed reputation, but it still has the biggest market share and hosts over 84 million websites. This may be because of how much GoDaddy spends on marketing, as they invested over $100 million during the second quarter of 2022 alone.
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European Alternatives: Here's a down-to-earth look at five of them: Krystal, Fasthosts, Hostinger, IONOS, and SiteGround.
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Hyperscalers: AWS, Azure, and Google Cloud compete at the enterprise end, though their sweet spot is larger customers.
Competitive Positioning
IONOS's positioning against GoDaddy emphasizes value and European compliance. When I compared the prices across shared, VPS, WordPress, and WooCommerce hosting, IONOS clearly stood out. Their plans are ridiculously affordable, especially if you're starting out or scaling slowly. I got full-featured hosting from IONOS for as low as $1/month, while GoDaddy's cheapest options are much steeper.
IONOS Wins for Offering More Certified, High-Security Locations in North America and Europe.
Market Fragmentation
The web hosting market remains remarkably fragmented, creating both opportunities and challenges. The manager sees scope for this above all in Europe outside Germany, where the market for webhosters is still very fragmented.
Although Ionos, which focuses on small and medium-sized enterprises, already dominates half of the market in Germany, there is still "plenty of room for growth" in countries such as Austria.
XI. Porter's Five Forces Analysis
| Force | Assessment | Analysis |
|---|---|---|
| Threat of New Entrants | Medium | High capital requirements for proprietary data centers create barriers. However, cloud infrastructure from hyperscalers enables asset-light competitors to enter. Brand recognition and customer switching costs provide incumbents like IONOS with defensive moats. The 35+ year track record creates trust that new entrants struggle to replicate. |
| Supplier Power | Low-Medium | IONOS has over 90,000 servers housed in 10 data centers. Owning infrastructure reduces dependence on third parties. Hardware is largely commoditized, with multiple server and networking suppliers competing for business. The main supplier risk is energy costs, though renewable energy commitments provide some hedge. |
| Buyer Power | High | SMBs have many alternatives across the hosting spectrum. Switching costs exist (email addresses, domain configurations, website migration) but aren't insurmountable. Price sensitivity varies—hobby sites switch easily, but businesses dependent on uptime are stickier. |
| Threat of Substitutes | High | Website builders like Wix and Squarespace eliminate the need for traditional hosting for many small users. Hyperscalers offer direct compute and storage for tech-savvy customers. Social media presence substitutes for websites for some small businesses. However, businesses requiring professional presence, email, and data control still need traditional providers. |
| Competitive Rivalry | High | GoDaddy dominates globally. Regional players compete aggressively on price. Hyperscalers increasingly move downmarket. The industry has consolidated but remains fragmented enough for price competition. Differentiation focuses on support quality, data sovereignty, and integrated offerings. |
XII. Hamilton's 7 Powers Analysis
| Power | Assessment | Evidence |
|---|---|---|
| Scale Economies | âś… Strong | IONOS has over 90,000 servers housed in 10 data centers. With 6.5M+ customers, fixed infrastructure costs spread across a massive base. Each incremental customer adds margin. Data center operations, software development, and support systems all benefit from scale. |
| Network Effects | ❌ Weak | Limited network effects in web hosting. Each customer's value is independent of others. Unlike social networks or marketplaces, more IONOS customers don't make the service more valuable for existing customers. The Sedo domain marketplace had some network effects but is being divested. |
| Counter-Positioning | âś… Moderate | European data sovereignty positioning counters hyperscalers. SMB focus counters enterprise-oriented players. "German engineering" quality perception differentiates from low-cost providers. However, competitors can eventually copy positioning. |
| Switching Costs | âś… Moderate | Email addresses, domain configurations, website integrations create friction. Businesses dependent on uptime fear migration risks. However, technical tools for migration improve over time. Multi-year contracts create contractual switching costs. |
| Branding | âś… Moderate | In Germany, Spain, and the UK, we pursue a dual brand strategy, both with 1&1 IONOS and our acquisitions STRATO, Arsys, and Fasthosts, respectively. Strong regional brands create customer trust. "German quality" perception resonates in some markets. However, GoDaddy's global brand awareness exceeds IONOS outside Europe. |
| Cornered Resource | ❌ Weak | No unique patents, exclusive relationships, or proprietary technology that competitors cannot replicate. Data centers use standard equipment. Software is largely commodity infrastructure. |
| Process Power | âś… Moderate | Decades of operational refinement in data center operations, customer support, and platform development. From 1998 to 2008, he worked as Chief Technology Officer at 1&1 Internet AG, during which time he developed, among others, the first web hosting platform for the fast-growing mass market. Integration of acquisitions demonstrates process competence. However, processes can eventually be copied. |
XIII. Strategic Risks & Considerations
Cloud Competition
The hyperscalers—AWS, Azure, and Google Cloud—represent an existential competitive threat. Their scale, R&D budgets, and AI capabilities dwarf anything IONOS can deploy. The bull case argues that hyperscalers focus on large enterprises and developers, leaving the SMB market underserved. The bear case notes that hyperscalers increasingly offer simplified interfaces and could easily move downmarket.
Price Pressure
I got full-featured hosting from IONOS for as low as $1/month. Low-cost providers like Hostinger aggressively compete on price. IONOS must balance pricing competitiveness with margin preservation. The subscription model provides some protection—customers often don't shop around annually—but pricing power remains limited.
AdTech Transition Risk
"Adtech accounts for about 20 percent of revenue. Now it depends on the price Ionos can achieve for the division." The pending divestiture creates uncertainty. A low sale price would disappoint investors. Integration of divested operations requires management attention.
Technology Evolution
AI and no-code tools could disrupt traditional hosting. If AI enables anyone to create sophisticated websites without traditional infrastructure, IONOS's value proposition evolves. The company's IONOS Momentum initiative addresses this, but execution risk remains.
Currency Exposure
With significant U.S. operations but EUR-denominated reporting, IONOS faces currency translation risk. Dollar weakness impacts reported revenue and profits.
Regulatory Environment
In the risk area "Regulatory Environment," the risk assessment was adjusted from Moderate to Significant. The current assessment reflects changes in the framework conditions and developments in this area.
XIV. Bull Case vs. Bear Case
Bull Case
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European Data Sovereignty Tailwind: GDPR enforcement tightens, European businesses increasingly prefer local providers with clear data handling practices. IONOS's German headquarters and EU-compliant data centers become premium positioning.
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SMB Digitalization Runway: Many European SMBs remain underdigitalized. COVID-19 accelerated adoption but didn't complete it. Years of growth remain as more businesses establish professional online presence.
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Margin Expansion Continues: The adjusted EBITDA margin improved accordingly to 37.6%. As the platform scales, operating leverage drives profitability. Medium-term target of 35%+ margins appears achievable.
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AI as Differentiator: With 6.5 million customers, IONOS has a unique foundation to make artificial intelligence widely accessible. When small and medium-sized businesses adopt these technologies securely and in an integrated way, it drives measurable gains in customer satisfaction, efficiency, and growth.
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Acquisition Optionality: The manager sees scope for this above all in Europe outside Germany, where the market for webhosters is still very fragmented. Balance sheet strength enables opportunistic M&A.
Bear Case
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Hyperscaler Encroachment: AWS, Azure, and Google Cloud continue simplifying offerings for smaller customers. Their AI capabilities, developer tools, and global reach eventually compete directly with IONOS's sweet spot.
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Website Builders Eat the Bottom: Wix, Squarespace, and similar platforms eliminate the need for traditional hosting for millions of small users. IONOS's starter customers migrate to simpler alternatives.
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Mature Market Dynamics: European web hosting is a mature industry. Growth comes primarily from market share shifts and pricing, not market expansion. Single-digit revenue growth may be the ceiling.
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Parent Company Complexity: United Internet's controlling stake creates potential conflicts. Capital allocation decisions may prioritize parent company needs over minority shareholder interests.
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AdTech Uncertainty: Webb also pointed out that selling the division would reduce adjusted operating profit (Ebitda) by EUR50 million, representing a 9 percent drop compared to the previous forecast of around EUR530 million. The amount Ionos might earn from the Adtech sale also remains unclear.
XV. Key KPIs to Monitor
For investors tracking IONOS's ongoing performance, three metrics deserve primary attention:
1. Customer Net Adds (Monthly/Quarterly)
Customer growth is the fundamental driver of long-term value. IONOS added approximately 160,000 customers in 2024 and 210,000 in the first nine months of 2025. Sustained net adds demonstrate market share gains and validate the go-to-market strategy. A sharp decline would signal competitive pressure or market saturation.
Watch for: Quarterly customer additions vs. prior periods. Any acceleration or deceleration signals changes in competitive dynamics.
2. Digital Solutions & Cloud Adjusted EBITDA Margin
With the AdTech divestiture, the core business margin becomes the key profitability indicator. The adjusted EBITDA margin improved accordingly to 37.6%. The company targets ~35% medium-term. Margin expansion demonstrates operating leverage; compression would indicate pricing pressure or cost inflation.
Watch for: Quarterly margin progression toward the 35%+ target. Any sustained decline below 33% warrants concern.
3. Average Revenue Per User (ARPU) / Customer Lifetime Value
Not explicitly disclosed but derivable from revenue and customer counts. ARPU growth reflects upselling success and pricing power. With ~€1.25B core revenue and ~6.5M customers, implied monthly ARPU is approximately €16. Growth here indicates customers adopting more services; decline suggests commoditization.
Watch for: Revenue growth exceeding customer growth indicates ARPU expansion. The inverse signals value erosion.
XVI. Conclusion: Europe's Quiet Champion
IONOS Group represents something increasingly rare in European tech: a company that has competed successfully against American giants for decades, built genuine scale, and maintained profitability while doing so.
The story begins with Ralph Dommermuth's vision in 1988 Montabaur, runs through the dot-com era, consolidates through strategic acquisitions, gains cloud capabilities via ProfitBricks, and culminates in a 2023 public listing that tested—and ultimately validated—the investment thesis.
Ralph Dommermuth said, "Following the powerful growth and successful development of IONOS in recent years, an IPO is the next logical step on IONOS' journey. As a standalone, publicly listed company, IONOS would enjoy greater flexibility."
The competitive moat isn't impregnable—network effects are weak, switching costs are moderate, and hyperscalers lurk on the horizon. But scale economies are real, European data sovereignty creates differentiation, and the SMB customer base provides stability.
The pending AdTech divestiture simplifies the story, focusing management attention and investor analysis on the core Digital Solutions & Cloud business. Whether this strategic focus unlocks value or merely downsizes the opportunity set remains to be seen.
For long-term investors, IONOS offers exposure to European SMB digitalization with a proven management team, sustainable competitive positioning, and reasonable growth prospects. It won't be the next high-flying tech story—but it wasn't designed to be. It's designed to be what it has been for 35 years: a reliable, profitable infrastructure company serving the businesses that form the backbone of the European economy.
That's a story worth following.
Myth vs. Reality Box
| Common Belief | Reality Check |
|---|---|
| "IONOS is just a German GoDaddy" | While both are hosting companies, IONOS's product mix skews more toward cloud infrastructure and has stronger European market positions. The business models have meaningful differences. |
| "Hyperscalers will destroy traditional hosting" | The hyperscaler threat is real but nuanced. SMBs often prefer simpler solutions with human support—a gap hyperscalers struggle to fill profitably. The coexistence of multiple business models seems likely. |
| "The IPO was a failure" | The stock initially underperformed, declining to €11.92 in October 2023, but subsequently recovered to record highs above €30. The pricing discipline at the low end of the range ultimately served long-term shareholders. |
| "AdTech is a core business" | Management's decision to divest AdTech acknowledges what the numbers showed: it's a different business requiring different focus. The segment had lower margins and was moving away from IONOS's core competencies. |
Material Regulatory and Accounting Considerations: IONOS reports under IFRS. The AdTech segment is now classified as discontinued operations per IFRS 5, affecting comparability of historical figures. United Internet's controlling stake (~64%) limits minority shareholder influence on capital allocation. Currency translation (EUR/USD) impacts reported results for North American operations.
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