Ladies and gentlemen, welcome to the IONOS Group SE publication of the Q3 2026 Results Conference. I am Moira, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference has been recorded. The presentation will be followed by a question-and-answer session for analysts and investors. To ask a question from the webinar, you may click the Q&A icon on the left of the screen and click on "Raise Your Hand." If you are connected by a phone, please press star followed by one on your telephone keypad. For operator assistance, please press the operator assistance button on the bottom left side of your screen or star zero on your telephone keypad.
At this time, it is my pleasure to hand over to Stephan Gramkow. Please go ahead.
Hey, good morning, and welcome to IONOS Analyst and Investor Call for the first nine months of 2026. My name is Stephan Gramkow, and I am responsible for investor relations at IONOS. Let me walk you through today's agenda. Patrik Heider, CFO of IONOS, will provide a business update and the latest operational news. He will then cover nine months financials, with a particular focus on the third quarter, as well as our full-year outlook. Patrik will then be available for questions after the presentation.
I would now like to hand it over to Patrik. The floor is yours.
Thank you, Stephan. Good morning, everyone. Looking at our business as a whole over the first nine months of 2026, we are very pleased with the underlying commercial momentum and how well our teams delivered across all divisions. Customer growth reached an all-time high, adding 370,000 net new customers in the first nine months. We delivered growth above expectations, consequently adjusting the revenue guidance upwards in August, and we have successfully added more products to our Momentum ecosystem. In the third quarter alone, we added 90,000 net new customers, bringing our total base to 7 million. We continue to grow revenue across all relevant product lines, from web hosting to communications and back office, domain, and cloud. Looking at the third quarter, revenue growth was particularly strong in communications and back office, online marketing, and website builder.
On the right-hand chart, you can see the rising share of AI in Web Presence & Productivity revenue. We expect to reach around 50% as early as this year, rising to 80% by 2028. We continue to integrate AI across our entire product ecosystem as product features in the onboarding experience, but also as standalone products. In Web Presence & Productivity, we have launched a couple of new Momentum products in the third quarter, which we will discuss in more detail shortly. In Cloud Solutions, we are delivering sovereign, trusted European infrastructure for both SMBs and enterprise clients. Our portfolio extends from Public Cloud and Private Cloud to specialized AI services. In the last couple of months, we have further expanded the product portfolio with, for example, virtual GPUs, Cloud MCP, and AI server solutions.
The AI Phone Receptionist, which we launched in Germany and the United States at the end of last year, has been the first product within the comprehensive Momentum ecosystem we are building. The AI Frontdesk , which combines the AI Phone Receptionist chat and the recently launched AI Email Assistant, managed all inbound communication and will feed real-time data directly into the Knowledge Hub. The AI Presence Suite is the online identity for our customers. Websites, shops, and web applications created by the AI App & Site Builder are directly connected to the other tools. The AI Marketing Suite is the central hub for all marketing activities. It manages campaigns and online reputation or optimizes visibility in search engines and LLMs by auditing how ChatGPT or Gemini understand and recommend your businesses, delivering concrete actions to improve visibility.
The service layer will provide additional tools and functions to the system, including CRM, booking, and document management. The Knowledge Hub will be the foundation. It will aggregate a customer's data, documents, and interaction history into a unified, continuously evolving intelligence base. The more a business engages with the ecosystem and the more products of the Momentum suite our customer is using, the more the hub will learn. IONOS Momentum is not a collection of tools. It is an intelligent and Agentic self-learning platform, a central hub for managing all digital workflows. Our Momentum product portfolio is gaining traction. As already mentioned, we launched the AI Phone Receptionist in Germany and the U.S. at the end of 2025 and rolled it out across all IONOS markets and brands in the first half of 2026. Since July, Momentum has been a multi-product suite.
As just explained, we have launched six new AI products across AI Frontdesk, AI Presence Suite, and AI Marketing. This broader portfolio is already becoming visible in the figures. Momentum services inventory has grown at almost 50,000 at the end of September. The new products launching Q3 are already making a meaningful contribution. Within these three months of launch, AI Presence and AI Marketing services account for roughly 50% of our service inventory. At the same time, average revenue per service has grown steadily from the low single digits in January to more than EUR 14 per month in September, with further upside ahead. This is a particularly strong performance given a large share of customers are still in their initial promotional period. Customer feedback and usage support this picture.
Our early customer experience results show high satisfaction, and Momentum products are emerging as a driver of the overall NPS improvement. Adoption is also growing steadily, which is currently the strategic focus. Our AI Phone Receptionist handled 750,000 call minutes for our customers in October, more than twice the 360,000 minutes in June. Let me now turn to our financial performance for the third quarter and the first nine months of 2026. In the first nine months, we generated a total revenue of EUR 1.055 billion. Web Presence & Productivity continues to serve as the backbone of our business, contributing 83% of revenue, or EUR 871 million. Cloud Solutions accounted for 15% of revenue, or EUR 158 million. The remaining 2%, around EUR 26 million, comes from hosting services to United Internet Group companies.
Adjusted EBITDA reached EUR 390 million, which translates into a margin of 37%. This gives us a very solid foundation for the final quarter of the year. In the third quarter, revenue grew by 9% year-over-year to EUR 353.4 million, 8.7% on a constant currency basis, supported by a slight FX tailwind. Adjusted EBITDA increased by 10.3% to EUR 145.1 million, or 9.8% excluding FX effects. The adjusted EBITDA margin improved from 40.6% to 40.1%, 41%, despite EUR 9 million higher marketing investments compared to Q3 last year. Let's take a look at the two business areas in the third quarter. In Web Presence & Productivity, revenue rose by 8% to EUR 289.3 million, or 7.6% excluding currency effects. This solid performance continues to be driven by the strong customer growth of the last quarters and successfully cross and upselling.
In Cloud Solutions, revenue grew by 21.4% to EUR 55.5 million, or 20.9% on a constant currency basis. External revenue, which excludes hosting services to United Internet Group companies, grew by 9.9% year-over-year. Those intercompany hosting services contributed EUR 8.7 million in the quarter, down from EUR 10.5 million last year, reflecting the step-down we have planned. Building on the quarter, let us now turn to the first nine months. Revenue grew by 7.6% to EUR 1.055 billion, or 8.4% on a constant currency basis. In the first nine months, adjusted EBITDA increased by 5.9% to EUR 390.3 million, or 6.8% on a constant currency basis, while the margin reached 37% compared to 37.6% in the year before. Marketing investments were up by EUR 17.3 million year-on-year, driving record customer additions. We are seeing strong Momentum and intend to fully capitalize on it.
Customer acquisition costs remain stable, meaning the expanded spend translated directly into a higher inflow of new customers. Our underlying operational performance remains excellent, and we are fully confident in reaching our full-year targets. Turning to our operational performance, we recorded net additions of 90,000 customers in the third quarter compared to 60,000 a year ago. Our customer base now stands at 7 million. In the first nine months, net addition reached 370,000, up from 210,000 in the same period last year. For the fourth quarter, we also expect robust customer growth, matching the high level of last year's already strong fourth quarter. ARPU rose to EUR 60.50 per month, up from EUR 60.10 in Q3 last year, reflecting effective upselling and cross-selling alongside solid pricing power. At the same time, monthly churn remained at a best-in-class level of approximately 1%.
Over the past three years, customer count grew at a CAGR of roughly 5%, with ARPU expanding at 4%. Looking ahead, this triad of customer growth, expanding ARPU, and low churn creates a powerful compounding engine for 2026 and beyond. Moving to Cloud Solutions. Revenue in the third quarter grew by 21.4% year-over-year, 20.9% FX adjusted. Public Cloud led the way with growth of 51%. Private Cloud grew by 13%, while Managed Cloud was slightly lower, down 4%. This performance reflects strong demand for digital sovereignty, with growth led by SME and mid-market segments, complemented by gains in the public sector. Looking ahead, we continue to enhance our cloud offerings, notably in GPU and Private Cloud capabilities, and scale our global partner ecosystem.
Following a successful ramp-up in 2025, the ITZBund contract has transitioned into regular operations, underlying our capability to provide sovereign cloud infrastructure that meets the highest public sector standards. Excluding this contract, organic Q3 revenue growth stood at roughly 16% year-over-year. We expect Public Cloud revenue to grow more than 20% for the full year 2026. Total CapEx in the first nine months stood at EUR 70.9 million, representing a CapEx ratio of 6.7% of revenue, compared to 4.1% last year. The increase comes from growth CapEx, which was EUR 61.5 million, compared to EUR 32.9 million in the prior period. The majority relates to Cloud Solutions. Maintenance CapEx remains low and predictable at EUR 9.4 million. We reaffirm our full-year CapEx target of EUR 75 million-EUR 85 million, or roughly 6% of revenue.
Turning now to our cash flow performance. Starting with adjusted EBITDA of EUR 390 million for the first nine months, we deduct EUR 17 million in adjustments for non-recurring and non-operating items, primarily related to billing carve-out and our long-term incentive program. In addition, AdTech had a negative EBITDA contribution of EUR 7 million. From there, we account for capital expenditures of EUR 71 million, tax payments of EUR 48 million, and the working capital and other outflow of EUR 19 million, partially offset by a EUR +5 million cash impact from LTIP and SAR settlements. This brings us to our free cash flow of EUR 233 million. After deducting EUR 11 million in lease payments, free cash flow after leases stands at EUR 221 million.
For context, this compares to EUR 243 million in the prior year period. The year-over-year movement is primarily driven by two factors. First, AdTech contributed an EBITDA of EUR 32 million in the first nine months of 2025. Second, CapEx increased to EUR 71 million this period, compared to EUR 41 million last year. In terms of capital allocation, we have deployed EUR 91 million year-to-date into share repurchases. All in all, our EBITDA to cash conversion remains excellent, above 80%. This exceptional cash generation highlights both the underlying resilience and the high predictability of our cash flow model. Our cash generation translates directly into deleveraging.
As of September 30, 2026, net debt stood at EUR 601 million, down from EUR 676 million at the end of June. It comprises external bank debt, less cash and receivables from United Internet. Our fixed interest rate remains stable at 4.7%. Our leverage ratio has stepped down to approximately 1.2x net debt to adjusted EBITDA from 1.4x in the second quarter. This low leverage and the strong cash flow gives us substantial balance sheet stability and financial flexibility. In addition, we are currently finalizing the refinancing of our term loan maturing at the end of the year, and we expect to close the new facility within the next few days.
Before discussing our outlook, let me give you a quick update on the sale of our AdTech business. Alongside the sales process, we are running a restructuring plan to align costs with current revenue levels, as the broader digital advertising market has not seen a sustained recovery. Regardless of market trends, we still expect a transaction by the end of the year. We are very pleased with our performance for the first nine months and confirm the guidance raised alongside of half-year results. We continue to expect currency-adjusted revenue growth of around 8% and around 9% excluding intercompany revenue. Within that, Web Presence & Productivity is expected to grow by around 8% and Cloud Solutions by around 10%-15%.
Intercompany revenues remain expected between EUR 30 million and EUR 40 million. Let me now update you on the strategic transformation program we announced on 10th of September this year. The acceptance rate of the voluntary program has been good, and we are making good progress towards the targets we set. Of the approximately EUR 35 million in restructuring costs previously communicated, EUR 1.3 million were recognized in the third quarter, with the remainder scheduled for the fourth quarter as planned. Please note that these one-time charges are excluded as special items and therefore are not impacting our adjusted EBITDA guidance. We maintain our target up to EUR 30 million in annual personnel cost savings starting in 2027.
A portion will support margin improvement, with the balance reinvested directly into AI product development and our expanding cloud businesses. Adjusted EBITDA is expected to reach around EUR 530 million, with the adjusted EBITDA margin projected at 37%-38%. Finally, we are reaffirming our midterm targets. We are aiming for double-digit growth in group revenues above 10%, supported by high single-digit growth in Web Presence & Productivity, and 20% growth in Cloud Solutions. Regarding profitability, we are targeting an adjusted EBITDA margin of 40% in the near to midterm. This will be driven by integrating AI-driven synergies directly into our operations. This approach ensures sustainable margin development while allowing us to reinvest into future growth opportunities. We will present an updated midterm guidance alongside a clear capital allocation strategy next year.
That concludes our formal presentation for today, and we are now happy to open the floors for your questions. Thank you.
We will now begin the question-and-answer session for analysts and investors. Anyone who has a question from the webinar may click the Q&A icon on the left and click on "Raise Your Hand." If you are connected via phone, please press star followed by one on your telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press "Lower Your Hand" from the webinar or press star and two on your telephone. Anyone who has a question may queue up now. The first question comes from the line of Dhruva Shah from UBS. Please go ahead.
Hey, Patrik. Thanks for taking the questions. I have three. The first one is really just on customer growth, which continues at an impressive rate. Could you share how much of a tailwind Entri has been to net adds in Q3, and more broadly, just how sustainable this level of growth is? You have obviously guided to what Q4 can be. Is the growth fueled by overall market growth, or is it more share gains from competitors?
Second question just on AI Momentum. In terms of financial impact, is it fair to assume a mid-single-digit million benefit this year? You mentioned you have not launched all products just yet, but you have launched in a number of markets and brands now. Going forward, as you launch the incremental products, do you see downside risk that marketing costs could increase as you do that?
Third question is just on Cloud. Both the underlying growth rate and growth, including the ITZBund contract, are solid. Could you also comment on the margin evolution of this unit and whether it can go from being break-even to positively contributing to EBITDA? Thanks very much.
Thank you very much for your questions. I would like to start with the first one, customer growth and the participation of our strategic partnership with Entri. In the first half year, it was much stronger. In the first quarter, you saw an exceptional contribution from Entri. In the second half year or the third quarter, we see an average contribution, which is also a good signal because it is really a broad gain of customer net growth. It is a combination of market share gains, but also new customers, as the potential is really high in both areas. As, for example, in the U.S., we are growing over-proportional at the moment, and that definitely is also a reflection towards the share gains from competition. In the AI Momentum, obviously, we see the marketing spend you asked for.
We are really happy, as you see. First of all, the guidance, you are absolutely right. We do see a single to midterm contribution in million euro for this year, but obviously, it will be a bigger driver for next year. We will come out with the guidance, obviously, together with the guidance of 2027 of next year. In terms of marketing spend across the overall portfolio, you saw that we spent almost EUR 17 million more this year because the momentum is such high. We will continue with that. There is no idea to really decrease again in the customer net growth, so there is no signal that the trend is going towards the other direction. Yes, there will be in higher pitch, obviously, also investments into upselling in the existing customer base of the 7 million, and obviously, into also sell our AI ecosystem.
In the Cloud Solutions, towards the margin, obviously, because we are very happy and pleased to see the growth now in the cloud area, we obviously also push towards the growth, revenue growth also next year. At the moment, it's break-even. Obviously, when the scale of the business will become much higher, and there will be a higher revenue contribution. Also, we do not see any reason why the cloud area should not go up to group level in margins at one stage. But obviously, we focus at the moment on revenue growth. We will also come up with a different, let us say, almost segmentation next year to give you a clearer indication where towards profitability the cloud segment will lead to. Hopefully, those answer your questions, and if not, please let me know.
No, that's super helpful. Thank you very much.
Thank you.
The next question comes from the line of George Webb from Morgan Stanley. Please go ahead.
Yeah, thanks. Morning, Patrik. A few from my side as well, please. I mean, just on the Cloud business, and I know you've touched on a few of those points there. Just as we think about the Q3 performance there, pretty strong. Was there any kind of one-off revenue? I know it was a mix of ongoing service revenue and one-off revenue. Was there much one-off there in Q3? I guess, as we think about the implied Q4, we think about some of those contracts, that sovereign cloud collaboration platform for schools contract you won. How do we kind of think about the Q4 that's implied versus where you want to be on Cloud into 2027? Is that just conservatism?
Second question on the core business, a slight deceleration mix in constant currency terms in Q3 to 7.6%. You're slightly above 8% in the first half. The target, maybe it changes, but was at least to get close to 9% over time. What drove that fall down tick in the quarter? As you think into next year, is this kind of a low point that you would expect to be re-accelerating from? The last question, just as you talked to that efficiency measures, that 12% headcount reduction that's targeted, how are you thinking about managing investment, the running of the business through 2027 as you go through that program to make sure it keeps running smoothly? Thank you.
Yeah, thank you very much, George, for your question. For the Cloud business, obviously, we have also still a huge portion of this ITZBund, but we become more and more independent from this order. As I already said, it becomes now an operational, let's say, normal performance. But in Q3, there was again a one-off effect from ITZBund. This is why the growth was as strong. Even without that one, as I reported already, we grew 17%. We do see the Public Cloud area in that area as the strongest one. We want to push really on that one, and the guidance is above the 20%. Moving forward, we don't see any signal why this 20% should not even increase for next year.
The pipeline is good, the products are ready, the market is becoming more and more mature for cloud awareness, and this is why we are really confident also moving to 2027. In the core business, we don't see it as a de-acceleration. We see in customer net growth, we see an acceleration to the quarter year before. We see revenue growth as planned in the forecast. We increased the guidance in the half-year one report. We do see definitely reaching the guidance, the adjusted guidance in revenue performance, also in Web Presence & Productivity. As I always said, the high single digit in midterm guidance for this segment, the Web Presence & Productivity, with the additional, let's say, opportunity we have with Agentic AI, with AI Momentum, we do even see to move to double-digit growth also in the Web Presence & Productivity part.
And obviously, for the, let's say, transformation program, as I always said, there are two portions of synergies. The first portion is still, we had a couple of synergies already executing from the so-called Internet Factory. As a reminder, up to 2023, we had strong M&A activities. Afterwards, we went into a phase of really doing the post-merger integration of those brands, there is still a couple of synergies we can execute on. Second is the AI synergies. If we do not implement AI also internally, who should do it then? Because we are also selling those solutions to our customers. This is why we really see a good traction and opportunity to also increase the efficiency, to increase also the investments into future growth opportunities.
The future growth opportunities are very clear. That is in the area of AI Momentum, and that is in the Cloud business. And we will balance obviously also marketing spend with all the things we can do into prioritizing growth. So definitely the midterm guidance, as I already say in the different discussions we have, is not that far away. Hopefully, that answers your questions.
That is great. Thanks, Patrik.
Thank you, George.
Next question comes on the line of Ines Mao from BNP Paribas. Please go ahead.
Hello. Thank you, Patrik. Congrats for the print. I have two questions. The first one is coming back on the core business. Could you help me unpack what is preventing web hosting growth from actually accelerating from H1 levels? I mean, the comps are actually easier into H2, and we are now more than one year after the large cohort of customers actually hit your user base in H1 of 2025. Is this due to dilution from new customer cohorts back then coming only for entry-range products and not actually subscribing to higher SKU products?
My second question is on the tech sovereignty thematic. It is not new on the European landscape. I just want an update from you, especially on the European AI Gigafactory project. Where do you stand? When do you expect the next big timeline to be in terms of timeline? Thank you.
Could you repeat the second question again? What topic is it?
On tech sovereignty, especially on the European AI Gigafactory topic.
Okay.
Where do you stand with your partnership with HOCHTIEF? I think you bid last year, and in terms of timing as well. Thank you.
Yes, absolutely. The first question on the ARPU, yes, that was exactly what you expected. Obviously, out of the strong customer net growth in the periods before, we have obviously that mathematical impact on the ARPU as well. If you do forecast our revenue growth and reaching the guidance, what we expect and being optimistically, obviously, that will go the other direction in Q4. It will go up to around about, if you do the math, to EUR 60.90. All in all, as I already communicated very often, there was always the 1/3, 1/3, 1/3. It is customer net growth, cross and upselling, and pricing impacts on the growth trajectory of IONOS. But it also will have an impact with Agentic AI. We definitely see strong across an upsell in the upcoming quarters, and that will obviously also positively influence the ARPU.
For the second question of the Gigafactory, we are in the middle of the process. We are obviously in the discussions. I cannot disclose because it is also confidential. We are ready to discuss submission with a consortium together, and we will keep you updated. There is always changing timelines as the European Union is changing always the timelines very shorthanded. At the moment, beginning of December, there will be, at the moment, that is the actual information for the bigger countries, like, for example, Germany, there will be the submission of the tenders. For the smaller countries, it is already shifted to February next year, and we will see if they also shift the bigger country submission date also to next year. But we will keep you updated. We are very positive. It looks promising, and we will keep you updated.
Important to note is that we will reach all our midterm guidance ambitions also without the Gigafactory. For us, it's a nice opportunity. The business case looks promising. We are doing it if the submission will be won, but also we are very positive even without the AIGF.
Okay. Just to come back on the first question, sorry, I was more targeting the Web & Productivity revenue growth. In Q3, you're lapping an easier comp. What is really preventing it from accelerating above the levels in H1? You say it's because customer cohorts were mostly targeting entry-range products. That's right?
Yes, exactly. That's right.
Okay. All right. Thank you.
Next question comes from Nizla Naizer from Deutsche Bank. Please go ahead.
Great. Thank you. I hope you could hear me.
I can hear you, yes.
Excellent. Thanks, Patrik. I have three questions, please. The first, I am not sure if you mentioned this, but in your last call, you mentioned how the ARPU for some of the AI products is as much as EUR 70. Could you give us an update as to how that has evolved, and how do you think it will move forward based on the appetite you are seeing among your customers for the new Momentum products? Has there been any more color on churn that you can share from these products? The customers who do take them, do they stay on with them? Any color you can give us there would be great.
The second question, a few weeks ago, we saw the internet going into a frenzy because of the PHP security concerns. In a situation like that, how does IONOS react? And as an IONOS customer, do they benefit from being a part of your ecosystem because you are able to react faster? If you could give us some color on how that situation unfolded for you as a web host, that would be great.
Lastly, back to the AI products, just confirming the impact of this is not in your midterm guidance that you have currently given us. All of the new AI Phone Receptionist, the Momentum products, that could potentially be an upside to the numbers that you have given us as your midterm guidance. Just confirming that as well. Thank you.
Yes, of course. Thank you very much for your questions. First one for the ARPU of the Momentum products. Yes, the receptionist, we communicated in the half-year results an ARPU in, that is very important, ARPU in, with EUR 70. The service ARPU we are seeing, that means with all the discounts and all the things we need to integrate into the real ARPU, which you can translate afterwards in revenues, is increasing steadily. It is, as I said in my speech, it is already up to EUR 15. That is all incremental revenues, and that is all with the mixture of the new products coming in. As I already stated, every agent needs to be priced differently. The receptionist might be higher than an email assistant.
We do see the EUR 15 at the moment, it is steadily rising from single digit to double digit now. It is all incremental, and it all pays into the ARPU we are already seeing. So that is very good. From the churn, we do not see any bigger churn rates at the moment, but it is the question is how our customers are using it. There is definitely a challenge in the market, as I already indicated always, that the Agentic AI opportunity is also a bottleneck, our customers, how to use it, how to onboard them. We do see definitely improvements.
You saw that in the call minutes I communicated, October to June, it already doubled for the receptionist, which is a good signal. But obviously, all our SMB customers, they need to understand how to use those agents. It is a fairly new product. It is not anymore a technical question, but it is a question of how to onboard them, how to make them really use our products.
On the PHP topic, your question two, our customers can be confident that we are surfing ahead the wave. So that was, we were really in this bigger one, we were really reacting very fast, and you saw that even in an NPS improvement, and we really got some good feedback returning from our customers, and we will continue to really invest into cybersecurity topics, as we are aware that they are becoming more often. For the midterm guidance, you are absolutely right. Currently, the midterm guidance was given, I think, three, four years ago, and currently, and that is why we want to adapt the midterm guidance and communicate a new one. The Momentum AI opportunity was not integrated into the midterm guidance. You are absolutely right.
Understood. Thank you very much.
Thank you for the questions.
Next question comes from the line of Gustav Froberg from Berenberg. Please go ahead.
Good morning, everyone. Thank you for taking mine also. A couple from me. Firstly, again on Momentum, I am just wondering if you are able to quantify how much of revenues came from the Momentum suite in Q3. I know you said mid-single digit for the full year, so just curious how much that was already.
Then a question on WP&P core and what goes on ex-Momentum. I was wondering if you could help us break down the growth there into the different categories you have, a la website builder, online marketing, domains, web hosting, et cetera, and talk us through how you view the evolution of growth there, and if there are any of these segments or sub-segments that need to pick up in order for us to see growth reach 9% and beyond. Lastly, just on the one-off in cloud, could you quantify that for the quarter, please, as well?
Yes. First, thank you very much, Gustav, for the questions. The first one is, it was obviously, we do not report now exact million euro figures, but definitely we will come up with a guidance next year where you also see and can track the Momentum contribution. But for this year in Q3, it was obviously a low single-digit million euro number, and it becomes up to this year to a mid-single-digit EUR number. It is already contributing. Also in the ARPU, we already see a couple of cents already contributing to the ARPU improvement. In the WP&P segment, we see all product lines are growing. Obviously, you see that in the chart where you see also the AI contribution of 50% for net new revenue. We do not see any topics or weakness of a certain product segment.
Obviously, they are sometimes stronger, sometimes weaker. We see the communication and back office tools very strong with the topic of European sovereignty, so the Nextcloud collaboration we are offering to our customers. We won also a public deal, as we were communicating a week ago. We are happy to see that all the core business is growing steadily. For the cloud business, the ITZBund contribution, I turn it around. I do not tell you the ITZBund exact contribution, but I am saying that the Public Cloud segment was growing 17% without the ITZBund contribution. This is why we are happy.
The Cloud Solutions overall, sorry, and the Public Cloud is growing above the 20%. We are keeping the guidance of 10%-15% for Cloud Solutions and the Public Cloud above the 20%.
Brilliant. Thank you.
Thank you, Gustav.
Next question comes from the line of Mollie Witcombe from Goldman Sachs. Please go ahead.
Hi. Yes, good morning. Most of my questions have been asked and answered, but maybe just quickly on CapEx. Understand that you've reiterated guidance. Obviously, this quarter's CapEx was a bit more elevated. I know we discussed this last quarter, but it would be good to have an update on how you're thinking about CapEx longer term, and what the various pressures that you're seeing are, and how we should be thinking about it into next year. Thank you.
Yeah. Thank you, Mollie, for the questions. Yes, CapEx is a big topic at the moment. We still see the price increases in the hardware area. We don't see the other way around as we maybe forecasting at the beginning of the year. This is why we are confident and reaching the guidance for this year, but definitely we can already announce that we will be slightly higher. The 6%-7% of revenues for next year is most probably the biggest challenge. We do see definitely a reflection. I don't know where we land. It's not the time of giving a guidance today, but it will definitely be a bit higher for next year. So the price increasing are still the highest pressure.
We are already thinking about the planning of the first quarter and obviously second quarter, first half year of next year, and the price increases are going to continue. It won't be a major topic for us because we are somewhere in a CapEx-light model as well. We have a co-location concept, for example, in the Cloud area. We don't own all of our data centers, so that's a good topic at the moment, but definitely we will see a CapEx increase for next year. But I can't give you the exact guidance already.
Maybe I could just come back quickly. I think in the past you'd said, or had something about how you'd put off some CapEx or delayed some CapEx in order to stay within the CapEx envelope for this year. Is there a risk in the future, i.e., next year or the year after, that there's a little bit of a catch-up effect as you're forced to kind of invest, or is that kind of in order?
No, I don't see a risk.
Thank you very much.
Thank you.
The next question comes from the line of Victor Cheng from Bank of America. Please go ahead.
Hi, morning. Thanks for taking my questions. Maybe just a follow-up on Momentum AI. Can you provide us maybe some more color on how different cohorts might have different behaviors? Think about, like, are new customers having a higher propensity to use these AI features? I think you touched on churn earlier, but is there any difference among cohorts as well? I think related to that as well, how are you thinking in terms of pricing Momentum AI solutions right now, balancing maybe a wider adoption versus profitability? Longer term, how should we think about the margin profile? Is there some pricing upside as users get used to and maybe some level of reliance on those AI features? Thank you.
Thank you, Victor, for the question. I would like to give you more updates and details, but we do not have them yet, to be very transparent and honest. Because we started with the receptionist the first couple of months, we added now six more products until Q3, and it is too early to give you those details. We just do not have them. We are definitely giving you the guidance and deeper outlook and more details also that you can track the progress. For the question of preferring profitability versus pricing, versus growth, we definitely would go for growth at the moment. There is a big opportunity. There is a couple of competition as well outside there.
We have a unique system with our ecosystem. We are building it up. I showed you that in the presentation with our AI Knowledge Hub. No one in the industry can deliver what we can deliver. Definitely, in such a situation, you need to definitely prioritize on growth. From a margin perspective overall, we do see also the AI agentic opportunity on a group level contribution. But at the moment, as we do in Cloud, we would definitely prioritize in growth. But let's wait another quarter, and giving you the guidance for next year, and we definitely give you some more details about cohort development and ARPU development at the moment, if that's okay.
Very clear. Thank you.
Thank you very much.
Next question comes from Ben Rickett from New Street Research. Please go ahead. Rickett, we cannot hear you. Maybe your line is on mute. Mr. Rickett, can you unmute your microphone, please?
Obviously, Mr. Rickett.
We cannot hear you.
Yeah. Mr. Rickett, you can also contact us after the call always. We are open for your question then.
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Yeah, good morning. Veysel Taze from Bankhaus Metzler. Few questions. Sorry for the background noise, but I hope you can hear me well. The first question would be, I mean, we see in the Cloud business that a lot of your competitors are raising prices, and that's really to a high degree, like 30%+ . There's a little bit the pushback, why is IONOS not raising prices in the Cloud business? The first one, and then the second one would be on your AI business. Do you think the pricing strategy creates a little bit confusion in your customer base, given that you have rather smaller customers, which means up to 10, 15 employees, so that the different products, different pricing can create kind of friction in the customer base? Thank you.
Yeah, thank you very much for your questions. For the first one, in the pricing in the cloud area, we're doing, I would say, average pricing development as well. We are focusing on the product innovations, obviously, and we added quite a bit, as I already said in my speech. At the moment, to gain more customers, we definitely want to convince about our customers that we are having the best product solution, and we are doing so. Obviously, pricing impacts for the future will be also in there. For the pricing strategy in the AI Momentum Suite and opportunity, I wouldn't say that it creates confusion, but it's complex. As we said already, there are different agents at the moment.
Every agent is differently priced. As, for example, the Receptionist to the Email Assistant, complete different pricing, because it's highly benefit-driven what the customer expects from a benefit perspective he's willing to pay. In the end of the day, that's the mixture we see in the ARPU or in the service ARPU, which goes up to double digit. But I wouldn't say that there is a confusion in the market. Obviously, there's a confusion maybe on the customer side. Confusion is maybe the wrong word, but there's a challenge on customer side how to use our product, how to get used to a receptionist, how to get used to an email assistant.
That's definitely a challenge, especially for the S market, because we're delivering the AI Momentum Suite, especially to the S in the SMB, to smaller business, to the flower shop, to the bike retailer, to the other one. Because it's quite new for them, it's a challenge how to use it. But there's always a challenge, and we are seeing good traction, but I wouldn't say that the pricing strategy is the topic here.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to IONOS for any closing remarks.
Thanks, Moira. Thank you very much, everyone, for joining today's call. Please feel free to reach out for any follow-up questions. Have a great day. Stay safe, and goodbye.