NFON AG

Quarterly Report • Nov 23, 2023

Our Facts and Figures Q3/23

NFON AG Quarterly Report for 3/2023

Who we are

NFON AG, with its headquarters in Munich, is a leading European provider of integrated cloud business communications. The listed company (Frankfurt Stock Exchange, Prime Standard) with more than 3,000 partners in 15 European countries and seven branches counts more than 50,000 companies among its customers. With its core product Cloudya, the smart cloud communications platform, NFON offers hassle-free voice calls, simple video conferencing and seamless integration of CRM and collaboration tools for small and medium-sized companies. The NFON portfolio comprises four areas: Business Communications with Cloudya, Customer Contact, Integration and Enablement. All of NFON's cloud services are operated in certified data centers in Germany, with 100% of their energy needs covered by renewable sources. NFON accompanies companies into the future of business communication by offering intuitive communication solutions.

Key performance indicators

in EUR thousand	9M 2023	9M 2022	Change	Q3 2023	Q3 2022	Change
Total revenue	61,700	60,435	2.1%	20,521	20,346	0.9%
Recurring revenue	57,766	54,960	5.1%	19,370	18,420	5.2%
Share of recurring revenue	93.6%	90.9%	2.7%	94.4%	90.5%	n.a.
Non-recurring revenue	3,934	5,475	−28.1%	1,151	1,925	−40.2%
Share of non-recurring revenue	6.4%	9.1%	−2.7	5.6%	9.5%	n.a.
ARPU blended1	9.7	9.8	−0.3	9.8	9.7	0.8
Number of seats	645,707	622,785	3.7%	5,134	13,145	−60.9
Adjusted EBITDA2	6,006	−765	n.a.	2,612	706	n.a.

1 Based on average number of seats per month in the periods under consideration

2 Notes on the adjustments can be found under "Results of operations"

Our Facts and Closed

Abbreviations

Figures
Q3 / 2023
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Our Facts and Figures Q3 / 2023

TABLE OF CONTENT

01	Company	4
	Letter from The Management Board	4
02	Interim Group Management Report	5
	Revenue performance	5
	Seat development	5
	Blended ARPU (Average revenue per user)	6
	Cost of materials	6
	Staff costs	7
	Other operating expenses	7
	EBITDA, EBIT, consolidated profit/loss	9
	Financial position	9
	Supplementary report	10
	Risks and opportunities	10
	Forecast	10

03	Condensed Interim Consolidated
	Financial Statements	11
	Consolidated Statement of Financial Position	11
	Consolidated Statement of Income and
	Consolidated Statement of Comprehensive
	Income	12
	Consolidated Statement of Cash Flow	13
	Consolidated Statement of Changes in Equity	14
	Consolidated Statement of Changes in Equity	15
04	Service	16
	Financial Calendar	16
	Imprint	16
	Interactive table of contents You can click on the individual

topics to go to the respective page. UCCaaS Unified communications and collaboration as a service

Patrik Heider

COMPANY

Letter from The Management Board

Closed

LETTER FROM THE MANAGEMENT BOARD

Dear stakeholders,

We initiated a status analysis of this at NFON in the second quarter of 2023. Based on initial findings, we launched our transformation process after the first half of 2023. Our aim is to once again better harness the great market potential in the future, bringing NFON closer to its goal of being a European leader in cloud business communication.

We have already reached initial milestones in creating this solid foundation for NFON. For example, staffing at management level has been reorganised over the last few months and clear areas of responsibility created at the C level. We recently appointed Andreas Wesselmann as Chief Technology Officer, who will join the Management Board team on 1 January 2024. With more than 20 years' experience in an international working environment and in various management positions and outstanding technological expertise, he is the ideal person to shore up NFON's technological innovation.

The last few months have once again made it clear that these milestones are only the start. There is still more structural work to do to ensure NFON's foundations are as strong as they need to be. To drive our profitable growth plans in 2024, we are focusing on aligning the three core areas of a tech company: technology, product and sales. This requires us to constantly improve collaboration between our customer and market-based product management and our service-focused sales units, as well as our agile development. In this context, we have also begun a top-to-bottom review of NFON's IT and process landscape to create an efficient, high-performance and customer-friendly system with clear interfaces.

Based on this foundation, our three strategic growth pillars will likely begin to have a lasting impact on NFON's future performance from the first half of 2024. After all, innovative product development, a focus on sales excellence and stronger partnerships are key to continuing to offer our customers firstclass solutions. Our medium-term aim remains to drive sustainable, profitable business development. Abbreviations

ARPU Average revenue per user

as a service

Operating developments in the first nine months of 2023 highlight the oppor tunities open to NFON and confirm our plans. Regardless of further optimi
sation potential, recurring revenue rose by more than 5% year on year to
million, while adjusted EBITDA improved significantly from million. Against the backdrop, we have decided to
raise our adjusted EBITDA forecast for 2023. For fiscal 2023, we are now pro jecting adjusted EBITDA of between EUR 7.8 and EUR 8.3 million. This revision
does not affect the forecasts for the other key performance indicators.
We can be proud of the progress we have already made and the roadmap
for securing long-term success at NFON until 2025 is in place. I would like to take this opportunity to expressly thank our employees for their commitment.
We would be delighted if you would join us as we move towards a promis
The Management Board,

INTERIM GROUP MANAGEMENT REPORT

Closed

Revenue performance

INTERIM GROUP MANAGEMENT REPORT

Total revenue increased by 2.1% year-on-year to EUR 61.7 million in the first nine months of fiscal 2023. With growth of 5.1% compared to the first three quarters of 2022, recurring revenue rose at a faster rate than total revenue to EUR 57.8 million. This primarily resulted from the successful acquisition of new customers and a rise in the number of installed seats within the existing customer base, particularly in Germany, Austria and Italy. Sales of the expanded product portfolio (premium solutions) among both new customers and the existing customer base also contributed to the revenue growth.

Recurring revenue essentially comprises monthly payments of a fixed licence fee per seat plus a fixed or volume-based fee for voice telephony usage per seat or SIP trunk.

Non-recurring revenue mainly consists of revenue from the sale of hardware and activation fees for seats and premium solutions. This figure declined by 28.1% as against the same period of the previous year to EUR 3.9 million in the reporting period, mainly as a result of lower hardware sales. Abbreviations

		The cumulative effect typical for revenue performance, in relation to seats gained over the year, is evident from the trend in the recurring revenue gen
		erated in the individual quarters of the reporting period.
	Seat development
	Seat base grows continuously
30.9. 2023		645,707
31.12.		+1.8% +3.7% 634,288
2022 30.9.		622,785
2022
	580,000 590,000 580 590 Number of seats (absolute)	600,000 610,000 620,000 630,000 640,000 650,000 600 610 620 630 640 650

Interim Group Management Report

This positive trend in seats testifies to the ongoing growth in demand for cloud telephony systems among business customers. The high level of satisfaction felt by NFON's very loyal customers underscores the quality of its product and service and has a stimulative effect The churn rate is still at a low level of around 0.6% per month (9M 2022: 0.5%). The slight increase as against the same period of the previous year is due to the planned post-contract churn of a major client. Compared to the 2023 half-year reporting period (0.7%), the churn rate improved once again.

Blended ARPU (Average revenue per user)

6 7 8 9 10 11

ARPU trended downwards slightly over the third quarter of 2023 but remained at a similar level to 2022 as a whole. As against the same period of the previous year, it declined from EUR 9.76 (9M 2022) to EUR 9.73 (9M 2023).

Cost of materials

Slight decrease in cost of materials

Closed

Staff costs

The average number of employees fell from 506 in the previous year to 444 in the first nine months of 2023. This reduction is in line with the strategic objective of profitable growth.

Staff costs for the reporting period include expenses of EUR 0.1 million in connection with the focus on Group-wide activities (9M 2022: EUR 0.2 million). Expenses of around EUR 0.9 million were incurred in conjunction with the reorganisation of top management (9M 2022: EUR 0.0 million). Expenses for employee options of EUR 0.5 million were recognised in the first nine months of 2022, compared to just EUR 19 thousand in the reporting period. Adjusted for these expenses, staff costs were down by 9.3% year-on-year at EUR 25.3 million (9M 2022: EUR 27.9 million). This represents an adjusted personnel costs ratio of 41.0% compared to 46.1% in the same period of 2022.

Number of employees decreased

0 100 200 300 400 500 600

Other operating expenses Other operating expenses fell by EUR 5.0 million to EUR 21.4 million in the first nine months of 2023 (9M 2022: EUR 26.4 million). In the current reporting period, this included administrative costs of EUR 190 thousand (9M 2022: EUR 0 thousand). These expenses are classified as non-recurring effects (adjustments). Adjusted for non-recurring effects, other operating expenses fell by 8.9% to EUR 21.2 million in the first nine months of 2023 (9M 2022: EUR 23.3 million). This represents an adjusted ratio in relation to revenue of 34.4%, compared to 38.6% in the previous year. 0 6 12 18 24 30 36 9M 2023 9M 2022 Staff costs adjusted (in EUR million) Staff costs (in EUR million) −9.3% 0 6 12 18 24 30 36 26.3 25.3 28.7 27.9 −8.1% Abbreviations ARPU Average revenue per user CCaaS Contact centre as a service CPaaS Communication platform as a service CTI Computer-telephone integration CRM Customer relationship management ERP Enterprise resource planning PSTN Public switched telephone network SaaS Software as a service SIP Session Initiation Protocol UCC Unified communications and collaboration UCCaaS Unified communications and collaboration as a service

Declining personnel expenses

Interim Group Management Report

Marketing expenses break down as follows:

Significantly lower marketing expenses

Marketing expenses (in EUR million) 0 2 4 6 8 Abbreviations

		Sales expenses were higher due to the increased revenue volume and de
	veloped as follows:
Further increase in selling expenses
9M
2023		8.7 +8.9%
9M 2022		8.0
	0 2	4 6 8 10
	Selling expenses (in EUR million)
	0 2	4 6 8 10
		Selling expenses as a percentage of revenue were higher in the first nine months of 2023 than in the same period of the previous year at 14.1% (previ
ous year: 13.2%). This was due primarily to higher partner revenue.

Other operating expenses adjusted for one-off effects also declined

0 5 10 15 20 25 30

0 5 10 15 20 25 30

Interim Group Management Report

EBITDA, EBIT, consolidated profit/loss

NFON improved adjusted EBITDA by a considerable EUR 6.8 million year on year to EUR 6.0 million in the reporting period thanks to measures taken to increase profitability in the second half of 2022.

in EUR million	9M 2023	9M 2022
EBITDA	4.7	-4.7
Adjustments in staff costs:
Share options/ESOPS	0.0	0.5
Focus on Group-wide activities	0.1	0.2
Reorganisation of top management	0.9	0.0
Adjustments in operating expenses:
M&A expenses	0.0	1.3
Rebranding	0.0	0.9
Administrative costs	0.2	0.0
License payments for previous years	0.0	0.9
Total adjustments	1.2	3.9
Adjusted EBITDA	6.0	−0.8
EBIT	−0.6	−8.7
Consolidated loss	−0.8	−12.5
Adjusted consolidated net income (9M 2022: loss)	0.5	−8.6

Financial position

The increase in intangible assets to EUR 35.4 million as at 30 September 2023 (31 December 2022: EUR 34.0 million) mainly results from capitalised development costs in connection with new products and new features for existing products, and from the development/customisation of the new business support system (BSS). Capitalised costs for products in development or on which development has been completed amount to EUR 13.1 million as at the end of the reporting period (31 December 2022: EUR 11.4 million), and those for BSS customisation to EUR 5.6 million (31 December 2022: EUR 5.4 million).

Abbreviations

		Property, plant and equipment declined by EUR 0.9 million as against 31 De
cember 2022 (EUR In	8.7	million) to EUR 7.8 million as at 30 September 2023. particular, this development is due to depreciation on purchased hardware
period.		and capitalised right-of-use assets under leases recognised in the reporting
EUR 12.4	Bank balances declined by EUR million as at 30	0.8 million as against 31 December 2022 to September 2023. The positive operating cash flow
of EUR 5.4 EUR 4.2		million was offset by investment in intangible assets of around million. There were also payments of EUR 1.6 million in connection
with leases (IFRS		16). Equity declined by EUR 0.6 million as against 31 Decem
ber 2022 (EUR	47.8	million) to EUR 47.2 thousand as at 30 September 2023. This relates in particular to the negative profit or loss for the period of
EUR 0.8 against 31		million. The currency translation reserve rose by EUR 0.2 million as December 2022 as at the end of the reporting period.

Current and non-current financial liabilities amounted to EUR 5.5 million in total as at 30 September 2023 (31 December 2022: EUR 5.9 million). A money market loan agreement in the amount of EUR 5.0 million and maturing on 30 November 2026 was entered into with Bank für Tirol und Vorarlberg (BTV) on 22 December 2021. No funds from this credit facility had been utilised as at 30 September 2023.

Supplementary report

No matters arose after 30 September 2023 that could have a material impact on the net assets, financial position and results of operations.

Risks and opportunities

More information on this topic you can find in the Annual Report 2022

NFON AG has explained its risks and opportunities in detail in its annual report for 2022 . At the time of this report's publication, no changes have arisen compared to the 2022 report on risks and opportunities.

Forecast

Forecast for 2023
Growth rate recurring revenues	Mid to upper single-digit percentage
Recurring revenues as share of total revenues	at least 88%
Adjusted EBITDA	EUR 7.8–8.3 million (previously EUR 6–7 million)

	The forecast is based on the information available as at 30 September 2023,
	taking the opportunities and risks of the NFON Group as presented into ac count. As a result of the NFON Group's risks and opportunities as presented,
	deviations can occur between the planning data and the figures actually achieved at the end of the year. Deviations are also possible as a result of
	the assumptions regarding general economic conditions. Please also refer
2022	to the comments in the report on risks and opportunities in the annual report . These applied unchanged as at 30 September 2023.
	Regarding the forecast for 2023, the company is still planning growth in re
	curring revenue of a mid to upper single-digit percentage. Accordingly, the company is planning a share of recurring revenue within total revenue of
	>88%, which is a little lower than the prior-year figure of 89.5%. After amend
ing the 2023 adjusted EBITDA forecast (EUR	6–7 million) after the first half of 2023, we are now once again raising this moderately. We are confident that
EUR 8.3	adjusted EBITDA for 2023 as a whole will likely be between EUR 7.8 million and million. This adjustment reflects our ongoing efforts to ensure solid
	operating performance and generate long-term profitable growth at NFON.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Closed

Consolidated Statement of Financial Position

as of 30 September 2023

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

in EUR thousand	30 Sep. 2023	31 Dec. 2022	in EUR thousand			30 Sep. 2023	31 Dec. 2022
Non-current assets			Equity
Property, plant and equipment	7,776	8,736	Issued capital			16,561	16,561
Intangible assets	35,384	34,045	Capital reserves			109,105	109,086
Investments in associates	672	672	Loss carryforward			−79,200	−78,404
Deferred tax assets	314	262	Currency translation reserve			725	558
Other non-financial assets	438	420	Total equity			47,190	47,801
Total non-current assets	44,584	44,135
Current assets			Non-current liabilities Non-current financial liabilities			4,074	4,051
Inventories	115	87	Other non-current liabilities			661	693
Trade receivables	9,526	9,276	Deferred tax liabilities			2,498	2,476
Other financial assets	390	390	Total non-current liabilities		7,232 7,220
Other non-financial assets	3,183	2,314
Cash and cash equivalents	12,441	13,218	Current liabilities
Total current assets	25,654	25,285	Trade payables			4,469	4,205
			Current provisions			2,795	2,310
			Current income tax liabilities			331	259
			Current financial liabilities			1,396	1,811
			Other non-financial liabilities			6,823	5,814
			Total current liabilities			15,815	14,400
Total assets	70,238	69,420	Total equity and liabilities			70,238	69,420

Consolidated Statement of Income and Consolidated Statement of Comprehensive Income

for the period from 01 January to 30 September 2023

in EUR thousand	9M 2023	9M 2022
Revenue	61,700	60,435
Other operating income	583	711
Cost of materials	−9,785	−10,828
Staff costs	−26,347	−28,655
Depreciation and amortisation	−5,310	−3,993
Other operating expenses	−21,422	−26,437
Impairment losses on receivables	22	95
Other tax expense	−9	−12
Result from continuing operations before net interest income and incomes taxes	−567	−8,685
Interest and similar income	104	0
Interest and similar expenses	−191	−176
Net interest expense	−87	−176
Earnings before income taxes	−654	−8,860
Income tax expense	−174	−151
Deferred tax income	31	−3,514
Net loss	−797	−12,526

in EUR thousand			9M 2023	9M 2022
Attributable to:
Shareholders of the parent company			−797	−12,526
Non-controlling interests			0	0
Other comprehensive income			167	−207
Taxes on other comprehensive income			0	0
Other comprehensive income after taxes			167	−207
Total comprehensive income Attributable to:			−630	−12,734
Shareholders of the parent company			−630	−12,734
Non-controlling interests			0	0
Net loss per share, basic			−0.05	−0.76
Net loss per share, diluted			−0.05	−0.75

Consolidated Statement of Cash Flow

for the period from 01 January to 30 June 2023

in EUR thousand	9M 2023	9M 2022
1. Cash flow from operating activities
Profit/loss after taxes	−797	−12,527
Adjustments to reconcile profit (loss) to cash provided
Income taxes	142	3,666
Interest income (expenses), net	87	176
Amortisation of intangible assets and depreciation of property, plant and equipment	5,310	3,993
Impairment losses on receivables	−22	−95
Equity-settled share-based payment transactions	19	524
Other non-cash items	12	−51
Changes in:
Inventories	−27	−3
Trade and other receivables	−1,114	−1,816
Trade payables and other liabilities	1,241	636
Provisions	486	425
Effects of changes in foreign exchange rates	167	−207
Interest paid	44	−54
Income tax payments/refunds	−124	−44
Cash flow from operating activities	5,424	−5,375

in EUR thousand		9M 2023	9M 2022
2. Cash flow from investing activities
Proceeds from the disposal of property, plant and equipment and intangible assets		−1	56
Payments on investments in property, plant and equipment		−450	−1,170
Payments for investments in intangible assets		−4,206	−5,893
Cash flow from investing activities		−4,657	−7,007
3. Cash flow from financing activities Payments for leases (IFRS 16)		−1,584	−1,557
Other proceeds		21	2
Cash flow from financing activities Change in cash and cash equivalents		−1,563 −796	−1,555 −13,938
Effects of movements in exchange rates on cash held		20	−23
Cash and cash equivalents at the beginning of the period		13,218	27,670
Cash and cash equivalents at the end of the period		12,442	13,709
As at 30 September 2023, cash and cash equivalents include bank balances of EUR		303	thousand
(31 ­December 2022: EUR 316 by customers with poor credit ratings.		thousand) that the Group cannot access freely as they are security deposits

Consolidated Statement of Changes in Equity

as at 30 September 2023

		Attributable to owners of the company
in EUR thousand	Issued capital	Capital reserves	Currency translation reserve	Loss carryforward	Total equity	Non-controlling interests	Total
As at 01 January 2023	16,561	109,086	558	−78,404	47,801	0	47,801
Total comprehensive income for the period
Loss (income) for the period	0	0	0	−797	−797	0	−797
Other comprehensive income for the period	0	0	167	0	167	0	167
Total comprehensive income for the period	0	0	167	−797	−630	0	−630
Transactions with owners of the company
Equity-settled share-based payment transactions	0	19	0	0	19	0	19
Total transactions with owners of the company	0	19	0	0	19	0	19
As at 30 September 2023	16,561	109,105	725	−79,201	47,190	0	47,190

0 19
0 19
0 47,190

CRM Customer relationship management

PSTN Public switched telephone network

UCC Unified communications and collaboration

UCCaaS Unified communications and collaboration

ERP Enterprise resource planning

SaaS Software as a service

SIP Session Initiation Protocol

as a service

Consolidated Statement of Changes in Equity

as at 30 September 2022

in EUR thousand	Attributable to owners of the company
	Issued capital	Capital reserves	Currency translation reserve	Loss carryforward	Total equity	Non-controlling interests	Total
As at 01 January 2022	16,561	108,600	891	−62,822	63,231	0	63,231
Total comprehensive income for the period
Loss (income) for the period	0	0	0	−12,526	−12,526	0 −12,526
Other comprehensive income for the period	0	0	−207	0	−207	0	−207
Total comprehensive income for the period	0	0	−207	−12,526	−12,734	0	−12,734
Transactions with owners of the company
Equity-settled share-based payment transactions	0	524	0	0	524	0	524
Total transactions with owners of the company	0	524	0	0	524	0	524
As at 30 September 2022	16,561	109,124	684	−75,348	51,022	0	51,022

Financial Calendar 2023/2024

Imprint

23 November 2023 Q4

Financial statements for Q3 2023

07 March 2024 Q1

Provisional financial statements for fiscal 2023

25 April 2024 Q2

Financial statements for fiscal 2023

23 May 2024

NFON AG

Friederike Thyssen Machtlfinger Str. 7 81379 Munich, Germany Phone: +49 89 45300-449 Fax: +49 30 45300-33198

ir-info@nfon.com

https://corporate.nfon.com

Financial statements for Q1 2024

Q4 Abbreviations

Q3

Financial statements for Q3 2024 ARPU Average revenue per user

CCaaS Contact centre as a service CPaaS Communication platform as a service

28 June 2024

Annual General Meeting

21 November 2024

Financial statements for H1 2024

22 August 2024

• CTI Computer-telephone integration
• CRM Customer relationship management
• ERP Enterprise resource planning
• PSTN Public switched telephone network
• Concept and Design IR-ONE AG&Co. KG, Hamburg SaaS Software as a service
• www.ir-one.de SIP Session Initiation Protocol
• UCC Unified communications and collaboration
• UCCaaS Unified communications and collaboration as a service

SERVICE

Financial Calendar

Imprint

Machtlfinger Str. 7 81379 Munich, Germany

Phone: +49 89 453 00 0 Fax: +49 89 453 00 100 https://corporate.nfon.com