Märkte & Kurse

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Original-Research: NFON AG - from NuWays AG

Classification of NuWays AG to NFON AG

Company Name: NFON AG
ISIN: DE000A0N4N52

Reason for the research: 
Recommendation: Kaufen
from: 26.04.2024
Target price: EUR 11.70
Target price on sight of: 12 Monaten
Last rating change: 
Analyst: Philipp Sennewald

Final FY no surprise after strong prelims / chg.
 
NFON published final FY 2023 figures, which were in line with the
preliminary results published in early March. FY recurring revenues stood
at EUR 77.1m, up 4.8% yoy at a continuously strong recurring revenue ratio of
93.7%. This was particularly driven by further key account gains as well as
cross and upselling at existing clients. Total seats stood at 656k at YE,
up 3.4% yoy. Despite the disproportionate increase in recurring revenues,
the blended ARPU, which is adjusted for recurring sales from SIP-Trunks,
remained stable at EUR 9.71, which was caused by a decline in voice minutes
sold resulting from the fading out of Covid effects. Going forward, we
expect ARPU to rise again driven by (1) price increase, which the company
started to impose at the end of last year, and (2) from selling premium
solutions like CC Hub, were ARPU levels are seen at EUR 30-40, eNuW.
 
FY profitability significantly improved yoy, visible in an adjusted EBITDA
of EUR 8.4m (2022: EUR -1.0m; reported EBITDA of EUR 6.8m vs EUR -5.3m). Main
drivers for this have been an improved gross margin (+2pp yoy) resulting
from the higher recurring ratio, but more importantly the imposed
efficiency measures in relation to personnel (personnel ratio -3.9pp yoy)
as well as marketing (marketing ratio -5.2pp yoy), which already beard
fruit. A further highlight was clearly FCF, which came in at EUR 1m (2022: EUR
-12.4m), thus being positive for the first time since the IPO in 2018.
 
In FY '24, management aims to achieve recurring revenue growth in the mid-
to upper-single-digit-% range paired with an adjusted EBITDA improvement to
EUR 10-12m. This looks achievable in our view, driven by several effects like
an improved sales-mix as well as further efficiency improvements,
particularly the integration of DTS, which is seen to create significant
synergies from H2 onwards.
 
M&A as possible further catalyst. CEO Heider indicated in yesterday's
earnings call that inorganic growth climbed up the agenda and that the
company is already screening the market for possible targets. Here, the
focus should be on strengthening existing markets or tapping new ones, on
our view. Yet, given the ongoing organizational transformation, newsflow in
this regard seems unlikely during FY '24e.
 
Although NFON shares slightly recovered recently after a sluggish start to
the year, valuation remains attractive, as the stock is trading at only
1.1x EV/Sales '24e. We hence continue to recommend to BUY at with an
unchanged PT of EUR 11.70 based on DCF and keep the stock in our Alpha List.

You can download the research here:
http://www.more-ir.de/d/29527.pdf
For additional information visit our website
www.nuways-ag.com/research.

Contact for questions
NuWays AG  - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.

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The result of this research does not constitute investment advice
or an invitation to conclude certain stock exchange transactions.

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