Märkte & Kurse

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Original-Research: NFON AG - from NuWays AG

19.08.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
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Classification of NuWays AG to NFON AG

     Company Name:               NFON AG
     ISIN:                       DE000A0N4N52

     Reason for the research:    Update
     Recommendation:             BUY
     from:                       19.08.2024
     Target price:               EUR 11.70
     Last rating change:
     Analyst:                    Philipp Sennewald

Q2 preview: Further improvements on top- and bottom-line

Topic: NFON will release its Q2 figures this week on Thursday.Here is what
to expect:

Q2 sales are seen to increase by 6% to EUR 21.6 based on an increased seat
base (eNuW: +4% yoy to 666k) as well as price increases that were imposed
during the quarter. Recurring revenues are seen to increase slightly
stronger by 6.4% to EUR EUR 20.3m, implying a recurring revenue ratio of 94%,
allowing for sound visibility given the company's excellent customer
retention (churn rate < 1% p.m.).

Q2 adjusted EBITDA is expected to show a further sequential improvement at EUR
2.9m, implying a 13.4% margin, marking a strong yoy improvement of 6.3pp.
Main reason for the increased efficiency was the implementation of ongoing
cost saving measures in connection with reduced marketing as well as
personnel expenses. Reported EBITDA should come in at EUR 2.5m (eNuW).

Against this backdrop, we expect management to confirm the FY guidance of
ARR growth in the midto upper-single-digit-% range (eNuW: +5.3% yoy) and an
adjusted EBITDA of EUR 10-12m (eNuW: EUR 11.5m). In our view, this should be
easily achievable, given that the lower end would require only 3.4%
recurring sales growth at a 10.7% adj. EBITDA margin in H2. Moreover, FCF
should again be positive and even slightly up sequentially (Q1: EUR 0.2m).

DTS integration to offer further optimization potential. In the beginning of
Q3, NFON announced the finalization of the formal merger with Deutsche
Telefon Standard GmbH (DTS), which was acquired back in 2019. DTS is
offering a similar product portfolio that was not fully integrated yet,
having its own salesforce, HR, accounting, etc. Going forward, DTS shall be
fully integrated into NFON, which should create significant synergies to
become visible as early as H2'24e.

Overall, NFON remains well positioned to benefit from the growth potential
in the still underpenetrated European, and especially German PBX market. On
top of this, cross- and up-selling of well perceived premium solutions like
CC Hub should allow for continuous ARPU and margin expansion going forward.

Valuation continues to appear undemanding, in our view, as shares are
trading on a mere 1.1 EV/Sales '24e (9.6x EV/EBITDA). We therefore reiterate
BUY with an unchanged PT of EUR 11.70 based on DCF. NFON remains part of our
NuWays Alpha List.

You can download the research here: http://www.more-ir.de/d/30537.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
++++++++++
Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
++++++++++

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1970015 19.08.2024 CET/CEST

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