NFON AG — Call Transcript 2022

Aug 18, 2022

NFON Earnings Call

H1 Results 2022 – 18 August 2022

Agenda for today

Highlights H1 2022

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

Earnings Call H1 2022 - 18 August 2022 5

Rethink Cloud-strategies

Trend from individual cloud investments to enterprise-wide cloud strategies

• More agility and greater innovation power
• Digitization of internal processes, e.g. automation of workflows
• Establishment of platforms for flexible cooperation with third parties

From Cloud PBX to integrated Business Communications

General considerations on NFON's pace of development

Product Development

› Completing ramp-up of technical

resources

› Roll-out of new products based on own R&D

and clearly defined product roadmap

Business Communication with Cloudya

Integration

Customer Contact

Enablement

Partner Development

• › Roll-out new partner program to:
• Acquire new partners
• Strengthen relationship and develop existing partners to transform more of them into high revenue generating partners

Earnings Call H1 2022 - 18 August 2022

Customer Development

• › Increase upselling and cross-selling efforts in existing customer base
• › Grow customer base through
• › Strategy of focusing on Enterprise segment is starting to pay off.

Earnings Call H1 2022 - 18 August 2022

Financial Results H1 2022

Seat growth at guidance

Development number of seats ('000) and ARPU

COMMENTS

• Increase of total number of seats by 9.4%
• ARPU development: H1 2022 stable on year's end level. H1 2021 positively effected by switch to remote working
• Continuously low gross churn rate of ~0.5% per month underlines quality of product and service and guarantees continuous recurring revenues

Growing share of recurring revenues

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

COMMENTS

• Recurring revenues grew by 8.6% compared to H1 2021
• Positive one-off effect in voice minutes in Q2 2021
• Decrease of non-recurring by 15.9% compared to previous half-year
• Total revenue growth of 5.8% in comparison to H1 2021
• High share of recurring revenue in total revenues of 91.1%

Further reliable increase of gross margin due to increased share of higher margin revenues

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

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
• High gross margin (adj.) continues to show a constantly positive development
• Cost of materials on previous year's level. This results in a further low material cost ratio of 18.1% compared to the same period of the previous year (H1 2021: 19.4%)

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

Adj. gross margin

Development of personnel expenses

Adj. personnel expenses1 in € million

COMMENTS

• Personnel expenses as reported amount to €19.7m (H1 2021: €16.0m)
• Adjustments of €0.6m for stock options and re-focusing sales activities (H1 2021: €0.3m)
• Adj. personnel expenses amount to €19.1m (H1 2021: €15.6m)
• H1 2022: Ø 504 employees
• H1 2021: Ø 450 employees
• Adj. personnel expense ratio of 47.7%
• In line with expectations and resulting from strategic increase of resources
• Mainly full year effect from head counts increase in 2021

Increase of marketing expenses as planned

Marketing expenses in € million

9.0 6.7 3.6 9.8 5.0 2019 2020 H1 2021 2021 H1 2022 15.8 9.9 9.5 12.9 12.5

COMMENTS

• Marketing expenses increased by 39.4% yoy
• Investment phase started Q3 2021 and will slow down in the second half of 2022
• Investments in roll-out of new partner program & platform and repositioning of NFON brand
• Focus on channel marketing

% of revenue

Selling Costs in line with FY 2021 ratio

Selling expenses in € million

COMMENTS

• 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 12.6% compared to previous year

EBITDA

• High expenditures in headcounts and marketing will level out in the second half of the year
• Clear focus on profitability

Detailed reconciliation of one-off items

Reconciliation from EBITDA to adjusted EBITDA	H1 2022	H1 2021
€ million
EBITDA	-4.1	1.8
Stock options/Refocussing	0.6	0.3
M&A acitivities	1.2	0.2
Rebranding	0.8	0
Total EBITDA adjustments	2.7	0.5
Adjusted EBITDA	-1.5	2.3
Rounding differences are possible

NFON Guidance 2022

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

Telecommunication

Baader Bank, Hauck & Aufhäuser, ODDO Bryan Garnier Barclays

Shareholder structure (31 March 2022)

Earnings Call H1 2022 - 18 August 2022 23

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

18.08

• Half -year Results 2022
• Web Conference

24.08.

• Annual General Meeting

• Web Conference

17.11.

• Financial Results Q3 2022

Web Conference

Sep

• Investor's Conferences

Berenberg Goldman Sachs & Baader

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SABINA PRÜSER

NFON AG

Head of Corporate Communications & Sustainability

Machtlfinger Straße 7 81379 Munich, Germany TELEPHONE 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.