NFON AG

Earnings Release • Mar 27, 2023

NFON Earnings Call

Full Year Results 2022 – 27 April 2023

NFON aims to be the leading provider of integrated business communications in Europe.

NFON 2023 strategy for profitable and sustainable growth

NFON Group Targets

• Components of growth: Products, Channel, Partnerships
• Components of profitability: Operational Excellence
  • Sustainability as part of our strategy

Full Year Results 2022

Financial Results 2022 at a Glance

Recurring revenues strong base for profitable growth

Development total recurring vs. non-recurring revenues in € million

• Recurring revenues grew by 8.3% compared to 2021
• Decrease of non-recurring by 9.0% compared to previous year
• Total revenue growth of 6.5% in comparison to 2021
• High share of recurring vs. total revenues of 91.1%

Seat growth mirrors development in UC market

Development number of seats ('000)

• Increase of total number of seats by 8.0%
• Globally lengthened sales cycles
• Increasing market maturity affecting UCaaS growth rates
• Continuously low gross churn rate of ~0.5% per month underlines quality of product and service and guarantees continuous recurring revenues

ARPU development on pre-pandemic level

Development ARPU in Euro

• 2021 positively effected by switch to remote working
• Factors influencing ARPU:
• − Business with wholesale partners
• − Voice minutes usage
• Premium solutions
• Price adjustments

High gross margin continues to show a constantly positive development

Cost of materials (adj.)1 and gross margin2 development in € million

COMMENTS

• Cost of materials on previous year's level
• Further low material cost ratio of 17.8% compared to the same period of the previous year (2021: 19.0%)
• Increase in share of high-margin recurring revenues

Adj. gross margin

1Cost of materials adjusted for changes in inventories of finished goods 2Gross margin defined as (revenue - adj. cost of materials)/ revenue

Scaling effects will become evident in 2023

Adj. personnel expenses1 in € million

• Average number of employees rose from 466 to 526 (plus 12.9%)
• Especially in the sales and technical areas
• Personnel expenses as reported amount to €37.4m (2021: €31.7m), plus 18.1%
• Adjustments of €1.0m (2021: €0.4m)
• Stock options
• Focusing on core markets
• Adj. personnel expenses amount to €36.4m (2021: €31.2m) plus 16.5%
• Adj. personnel expense ratio of 45.0% (previous year: 41.2%) expected to decrease in 2023 due to scaling effects and reduction of staff

Pace of marketing expenses adapted

Marketing expenses in € million

• Marketing expenses reduced by 13.6% yoy
• Investments in roll-out of new partner program & platform and repositioning of NFON brand finalized in first half 2022
• Significant improvement of marketing expense ratio of 10.5% in 2022 compared to 12.9% in 2021
• Focus on channel marketing

Selling Costs in line with FY 2021 ratio

Selling expenses in € million

• Selling expenses mainly include sales commissions to dealers and distributors (excl. wholesale partners)
• Dealers and distributors only receive a percentage share of revenues per seat
• Increase of sales commissions by 11.7% compared to previous year
• Slight increase in selling costs ratio resulted mainly from partner commissions paid out for special campaigns

EBITDA

High expenditures in headcounts and marketing leveled out in the second half of 2022

NFON AG
---------	--

Reconciliation from EBITDA to adjusted EBITDA	2022	2021
€ million
EBITDA	-5.3	-2.0
Stock options Retention bonus (2021)	0.5	0.5
Focusing on core markets	0.5	n/a
M&A activities	1.4	0.3
License payments for previous years	0.9	0.0
Rebranding	0.9	0.0
Total EBITDA adjustments	4.3	0.7
Adjusted EBITDA	-1.0	-1.3
Rounding differences are possible

Outlook 2023

Guidance for profitable and sustainable growth 2023

	2021 20232020 2022
Recurring revenues growth	We expect recurring revenue growth in the mid to upper single-digit percentage range
Recurring revenues share	We expect the resulting recurring revenue ratio >88%
adjusted EBITDA	We expect adjusted EBITDA to be >€4mio

Key Investment Highlights

Questions & Answers

Appendix

Share at a glance

ISIN	DE000A0N4N52
Segment	Prime Standard/ Telecommunication
Shares	16.6 million (29 March 2021)
Designated sponsor	Baader Bank ODDO Seydler
First day of trading	11 May 2018
Coverage	Berenberg Bank, Baader Bank, Hauck & Aufhäuser, ODDO

Shareholder structure (11 April 2023)

C-Level Team

Dr. Klaus Von Rottkay CEO

• 20 years of C-Level experience in the IT industry

• Previous experience includes

• McKinsey & Company

• Microsoft

• Planet Home

Jan-Peter Koopmann CTO

• 20 years of C-Level experience in the IT/Telco industry

• Previous experience includes

• Founder Seceidos

• Tiscali

• Telenor Group

Petra Boss CFO

• With NFON since 2016

• 18 years of experience in the finance sector (various industries)

Jan Forster CMO

• With NFON since 2014

• 18 years of experience in B2B and B2C marketing (various brands)

Financial Calendar

27.04.

• Group Financial Results 2022
• Web Conference

• Web Conference

18.05. • Financial Results Q1 2023

30.06. • Annual General Meeting 2023

Munich

24.08. • Financial Results Half-Year 2023

Web Conference

https://www.nfon.com/blog/de/

https://facebook.com/NFONcom

https://twitter.com/NFONcom

Claudius Krause

cometis AG

krause@cometis.de

Fon +49 611 20 58 55 - 28

NFON AG

TELEPHONE

Machtlfinger Straße 7

81379 Munich, Germany

Fon +49 (0) 89 453 00 134

Fax +49 (0) 89 453 00 33 134

sabina.prueser@nfon.com

Disclaimer

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.