Original-Research: NFON AG (von NuWays AG): BUY

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Original-Research: NFON AG - from NuWays AG

23.05.2025 / 09:00 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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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: 23.05.2025

Target price: EUR 12.30

Target price on sight of: 12 months

Last rating change:

Analyst: Philipp Sennewald

More to come after solid start into the year; chg.

Q1'25 sales increased by 4.0% yoy to EUR 22.1m (eNuW: EUR 22.4m), of which EUR

20.8m were of recurring nature, implying a 94.0% recurring revenue ratio.

Main driver of the increasing top-line was botario, which was acquired at

the end of Q3'24. With EUR 0.8m sales in Q1 (% yoy), botario explained

about 90% of Q1 growth, thus implying organic growth of only 0.4%. The

reasons for the flattish organic sales development are as follows. (1) As

planned, non-recurring (especially hardware) sales further decreased by 0.9%

yoy to EUR 1.3m. (2) The migration of DTS clients to the NFON platform was

binding resources at partners, that could not be used for seat growth. The

good thing is, that 40% of clients were already migrated in the first

quarter and the remaining 60% are expected to be so until YE.

Improving ARPU. For the first time since Covid, NFON achieved a Q1 blended

ARPU of above EUR 10 with EUR 10.02, clearly reflecting the increasing focus on

premium solutions, which is seen to drive ARPU and thus margins further

going forward.

Despite an improved gross margin (.9pp to 86%), adj. EBITDA slightly

decreased yoy to EUR 2.6m (Q1:24: EUR 2.8m), implying a margin of 11.8%. Main

reason for the decline were planned investments in personnel and other OpEx

related to AI initiatives. Nevertheless, NFON was able to improve FCF

significantly from EUR 0.2m in Q1'24 to EUR 1.1m on the back of favorable WC

swings.

Guidance confirmed. After a solid start to the year, management confirmed

the FY25 guidance of 8-10% sales growth and EUR 13.5-15.5m adj. EBITDA.

Reaching the mid-point would require 10.6% sales growth on average in the

coming quarters as well as a 16.3% adj. EBITDA margin. Despite the, top-line

wise, slow start this looks absolutely achievable in our view, as (1) the

DTS migration is proceeding well, which should already become visible in Q2,

(2) lead-times in the core business are already normalizing (3) strategic

price increases starting in May as well as new AI products (e.g. voicemail

transcription, NIA) gaining traction. Moreover, the tune of quarterly

investments into AI and personnel should normalize, thus benefitting

margins.

We keep our conviction in the case, which has the potential to become one of

the key-players in AI supported communication services, backed by a strong

core business. We hence reiterate BUY with a EUR 12.30 PT and keep the stock

in our NuWays Alpha List.

You can download the research here: http://www.more-ir.de/d/32708.pdf

For additional information visit our website:

https://www.nuways-ag.com/research-feed

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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2144074 23.05.2025 CET/CEST

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