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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: Update
Recommendation: BUY
Target price: EUR 11.70
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Philipp Sennewald

FY '23 prelims: Another beat on the bottom-line; chg. est.
Yesterday, NFON released FY '23 prelims, which show moderate top-line
growth but strong profitability improvements as well as another guidance
beat. The FY24 guidance points towards further ARR growth and an improving
profitability. In detail:

FY recurring revenues came in at EUR 77.1m (eNuW: EUR 76.8m), implying a
moderate 4.8% yoy increase at a continuously strong ARR ratio of 93.7%
(+2.6pp yoy). This was mainly based on slightly increased seat base of 656k
(+3.5% yoy) following further customer wins as well as successful
up-selling of premium solutions. Total sales increased by 1.9% yoy to EUR
82.3m (eNuW: 82.4m).

FY adj. EBITDA increased substantially to EUR 8.4m (vs EUR -1.0m in FY '22),
thus coming in ahead of our estimates (EUR 8.0m) as well as consensus (EUR
7.6m). With this, the company slightly outperformed the already upgraded
guidance range of EUR 7.8-8.3m. Reported EBITDA came in at EUR 6.8m (eNuW: EUR
6.7m) vs EUR -5.3m in FY '22. The strong improvement in profitability should
have been mainly due to an improved gross margin (eNuW: +1.9pp yoy) as well
as the effect of the imposed efficiency measures especially in relation to
personnel costs (14% staff reduction after 9M) as well as improved
marketing efficiency (e.g. channel marketing. Notably, NFON will report
positive FCF (EUR 1.0m vs eNuW: EUR -0.2m) for the first time since going
public, prooving that the cash burn of previous years is a thing of the
past now.

FY24 guidance. With the preliminary results, management also put out a
guidance for FY '24, targeting ARR growth in the mid- to
high-single-digit-% range (eNuW new: 7.3%), an ARR ratio of >90% (eNuW:
94%) as well as an adjusted EBITDA of EUR 10-12m (eNuW: EUR 10.7m), implying a
margin of 12.5% at midpoint. Given the scalability of the capital-light
business model with strong recurring revenues and further cost-optimization
potential in the cards (e.g. DTS integration), the new outlook looks
clearly achievable.

In our view, the release fully confirms the success of the ongoing
turnaround. We continue to like the company's positioning among the
technological leaders amid the structurally growing market for integrated
business communication. Here, especially the historically underpenetrated
German market should offer compelling growth prospects going forward.

Although NFON shares have been on a rise this week, valuation continues to
be attractive, as stock is trading on a mere 1.1x EV/Sales '23e. We
reiterate BUY, unchanged PT of EUR 11.70 based on DCF.

You can download the research here:
http://www.more-ir.de/d/29101.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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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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-------------------transmitted by 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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Quelle: dpa-AFX