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

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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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Quelle: dpa-Afx