First quarter results 2019 Munich | 21 May 2019
Disclaimer NFON AG
This publication contains forward-looking statements regarding NFON AG ("NFON") or the NFON Group and its subsidiaries, including assessments, estimates and forecasts regarding the financial position, business strategy, plans and objectives of management and future operations of NFON and the NFON Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the results of operations, profitability, performance or results of NFON or the NFON Group to differ materially from those expressed or implied by such forwardlooking statements. These forward-looking statements are made as of the date of this press release and are based on numerous assumptions that may prove to be incorrect.
NFON makes no representations and assumes no liability with regard to the proper presentation, completeness, correctness, appropriateness or accuracy of the information and assessments contained herein. The information contained in this press release is subject to change without notice. They may be incomplete or abbreviated and may not contain all material information relating to NFON or the NFON Group. NFON assumes no obligation to publicly update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. This press release is not an offer to buy or subscribe for securities and should not be construed as a basis for investment decisions in NFON or the NFON Group, in whole or in part.
We want to dominate the European Cloud telephony market by delivering freedom of business communication.
Major strategic milestones already achieved >30,000 Customers CLOUDYA new core product 14 Countries Takeover Deutsche Telefon Standard AG One year after IPO
> 300 employees
>390,000 seats
>2,000 partners
> 35,000 SIP-trunk channels Key Figures
NFON AG starts on schedule in the financial year 2019
Business model
Proportion of recurring revenues well above guidance
Results for the first quarter 2019 6
Significant increase of recurring revenues
Development total recurring vs. non-recurring revenues
Comments
- Revenue first time with Deutsche Telefon Standard AG (only March 2019)
- Total revenues grow by 21% to €12.1m in comparison to €10.0m in the first quarter 2018
- Cumulative effect quarter by quarter due to steadily growing total number of seats
- Non-recurring revenues on previous years level
- Significant increase of recurring revenues by 29%
1 including extraordinary effect from R&D project amounting to €1.5m
Strong growth of seat base
Very strong development of seat base
Comments
- Increase of total number of seats by 45% including seats of Deutsche Telefon Standard AG (>50,000)
- Definition ARPU: Total recurring revenues minus revenues out of SIP-trunk-channel licence fees divided by total seat base
- Influencing factors for ARPU development
- Very successful development of business with wholesale partners selling their own airtime
- Lower licence fees for DTS AG seats (mid market segment)
- Very low gross churn rate of <0.5% per month underlines quality of product and service and guarantees continuous recurring revenues
- Additional premium solutions represent upside potential for ARPU development in the medium term
Gross Margin
Consistently increasing gross margin emphasizes scalability of the business model
Cost of materials and gross margin development
€m, % of revenue
Comments
- Cost of materials are largely variable in nature and mainly comprise of costs for hardware sold, costs for airtime sold and data centre housing costs
- Cost of materials rose disproportionately low in relation to revenue by 4%
- Gross margin continues to show a positive development and increases to 77.8%
1cost of materials adjusted for changes in inventories of finished goods 2gross margin defined as (revenue - adj. cost of materials)/ revenue
Securing tomorrow's growth by investing in today's workforce
Comments
- Personnel expenses as reported amount to €5.5m (Q1 2018: €4.2m)
- Adjustments of €0.3m for retention bonus and stock options (ESOP)
- Increase of adj. personnel expenses by 29.3%
- Adj. personnel expenses amount to €5.3m
- Q1 2018: 204 employees; Q1 2019: 333 employees (headcount)
- Increase headcount mainly in sales (Italy, UK and Germany) and also including DTS as of 31 March
1 Personnel expenses adjusted for share-based payments amounting to €0.3m, €0.4m, €0.1m €3.6m and €0.2m in 2016, 2017, Q1 2018, 2018 and Q1 2019 2 Exit bonus of €0.7m reimbursed by former shareholders and recognised in other income €0.7m
Gaining market shares through intensified marketing activities
Marketing expense development €m, % of revenue 2.7 3.6 0.8 5.5 1.6 2016 2017 Q1 2018 2018 Q1 2019 17.6 10.2 8.2 12.7 14.5 Marketing expenses % of revenue
Comments
Marketing expense increases as planned building a strong brand that drives sales and partner growth
- Clear separation of Central Marketing and Local Market Activation
- Teams focusing on implementation and local activation in the markets. Allows fast scaling, go-tomarket, high quality implementation from day one.
- High scalability saves costs and creates synergies with every additional market.
- Mix of outbound and inbound marketing to harvest existing demand in the markets
- Over 2,000 partners across Europe need to be served with strong brand and leads generated through own NFON channels
Adjusted other operating expenses
Increase of other operating expenses due to ongoing European expansion
Other expenses development without marketing expenses and sales commissions
Comments
- In general other expenses comprise of sales commissions, supporting cost, general administration expenses and consulting fees amongst others and amount to €5.6m in total as reported (Q1 2018: €3.9m)
- NFON adjusts other expenses by one-off expenses (e.g. IPO €0.5m) marketing cost and sales commissions
- Sales commissions amount to €1.4m in Q1 2019 (Q1 2018: €1.0m) and are stable in relation to revenues
- Increase of other operating expenses from adjusted €1.5m to €2.0m due to various reasons (amongst others: start in Italy and France, expenses DTS consolidated since March)
12017: Adjusted for expenses for the introduction of a transfer pricing model, additions to provisions related to potential value-added tax repayments, social security contributions and payroll taxes, as well as fees for professional advisors related to those topics in 2017 in total amounting to €0.6m, in addition IPO related expenses in the amount of €0.2m; 2018: adjusted for IPO related one-off expenses €2.4m and €0.2m for social security contributions
Development of earnings
Despite dynamic growth strategy adj. EBITDA near break even
Detailed reconciliation of one-off items Comments Reconciliation from EBITDA to adjusted EBITDA Q1 2019 Q1 2018 €m EBITDA -1.7 -0.5 Stock options 0.2 0.1 Retention bonus 0.1 0 IPO costs 0 0.5 One-off expenses related to DTS AG 0.5 0 Total EBITDA adjustments 0.8 0.6 Adjusted EBITDA -0.9 0.1
- EBITDA as reported amounts to approx. €-1.7m
- In accordance with strategy, personnel costs, marketing and sales commissions further increased
- One-off effects in the amount of €0.8m burdened EBITDA
- Adj. EBITDA as planned at €-0.9m
1 Including equity and cash settled share-based payment programmes (non cash) 2Expenses related to tax and social security matters (2017: accruals, 2018: reversals)
Today and tomorrow: We count on our coherent growth strategy
Outlook 2019
Delivering on our growth strategy
Outlook 2019
Accelerating growth in 2019
Successfully implemented strategy with accelerating growth
Key investment highlights
Huge addressable business communication market being disrupted by structural shift to Cloud PBX solutions 1
Only true Pan-European Cloud PBX company best positioned to become the dominant European player 2
Strong business model resulting in unique combination of massive growth and sustainable recurring revenue 3
State-of-the-art "German Engineering" Cloud PBX solution tailored to European customer needs 4
5 Outstanding track record of scalable growth
6 Proven growth strategy leveraging multi dimensional layers of growth
Financial calendar
| Date |
Event |
| 21 May 2019 |
Interim Report 1st
Quarter 2019 |
Web-
and Telephone Conference |
|
| 22-23 May 2019 |
Berenberg USA Conference, New York |
| Presentation and 1-on-1s |
|
| 5 June 2019 |
Annual General Meeting |
| Munich |
|
| 20 Sep 2019 |
Half-year financial report 2019 |
Web-
and Telephone Conference |
|
| Sep 2019 |
Conferences Berenberg and Baader |
| Presentations and 1-on-1s |
|
Thanks
@NFONcom #cloud #telephony #allip
Appendix
Further information about NFON
Introduction & Strategy
NFON at a glance
NFON at a glance
Cloud PBX solutions tailored to the needs of today's business communication
Wind of change Business communication
Shift to cloud communication creates unique opportunity
€3.2bn
26m seats
Source: MZA (2017) / 1 calculated as respective number of total extensions/installed base based on MZA estimates multiplied with NFON's 2017 ARPU of €10.32 per seat per month Note: Cloud business telephony seats including public multi-tenant, public multi-instance and public single-instance technology
Market penetration and expected development
Penetration in Continental Europe is following the United Kingdom and North America
Source: MZA (2017 / Note: Penetration based on cloud business telephony seats including public multi-tenant, public multi-instance and public single-instance technology
Competitive environment in a fast changing business
Proven European roll-out strateggy
Roll-out strategy supported by leading market position in Germany
European Cloud PBX providers with own technology
Source: European Commission Regulation (EU) 2016/679 (2016), Allen & Overy (2017)
Sales channels
Flexible go-to-market model
Results for the first quarter 2019 28
One year after IPO
Preliminiary figures & Business highlights
Leading position in Germany fuels accelerated growth
- › Acquisition of Deutsche Telefon Standard AG in Feb/March 2019
- › Founded 2007, headquartered in Germany (Mainz)
- › Strong and focussed partner network in Germany
- › Complementary product portfolio
-
50,000 Cloud-PBX-Seats and >35,000 SIP trunk channels (bridge technology)
- › Active in Germany with 65 skilled employees
- › Attract additional and adaption of new customers
- › Up- and cross-selling into the extended customer and partner base
- › Harmonisation of investment programmes and product development roadmaps
- › Realisation of economies of scale, e.g. in purchasing
Complementary product portfolio – Attract additional customers
NFON accompanies entire customer development
ODDO German Conference 19 February 2019 31
Drive market penetration – Adoption of new customer
NFON wants to dominate the European cloud telephony market
In view of the fact that European carriers have already started to switch to All-IP, customers can look forward to a smooth transition to future-proof cloud PBX technology.
Situation PBX market TODAY
Expected situation PBX market in 2022
On-premise & hosted PBX solutions Cloud PBX
Presence in Europe being expanded as planned
market share1
1
NFON's European footprint Proof of concept >25%
NFON Italy
- › Office in Milano
- › Licence granted
- › Staff on board
- › Gaining new partners
- › Start March 2019
NFON France
- › Foundation of entity
- › Official start May 2019
- › First customers already acquired
Transform product
Introduction of Cloudya – More than a product
Management Board NFON AG
Hans Szymanski CEO/CFO
-
20 years of C-Level experience
- Previous experience includes
- − CEO/CFO Francotyp-Postalia
- − President Jenoptik LOS
- − Klöckner & Co
Jan-Peter Koopmann CTO
-
20 years of experience in the IT/Telco industry
- Previous experience includes
- − Founder Seceidos
- − Tiscali
-
− Telenor Group
-
10 years of C-Level experience
- Previous experience includes
- − Aconex
- − Co-founder conject Group
- − Mercer Management Consulting
Results for the first quarter 2019 36
Shareholder structure1
1 voting rights based on 13,8 million shares
ISIN DE000A0N4N52
Designated Baader Bank sponsor ODDO Seydler
First day of trading 11 May 2018
Segment Prime Standard/ Telecommunication Shares 14.1 million (as per 22 March 2019)
Facts
Investor Relations
Contact
Sabina Prüser Head of Investor Relations
NFON AG
Machtlfinger Straße 7 81379 Munich Germany
Telephone
Fon + 49 (0) 89 453 00 134 Fax + 49 (0) 89 453 00 33 134 [email protected]
Blog https://www.nfon.com/blog/de/
Facebook https://facebook.com/NFONcom
Twitter https://twitter.com/NFONcom
Thanks
@NFONcom #cloud #telephony #allip