NFON AG — Call Transcript 2023

Aug 23, 2023

NFON Earnings Call

H1 Results 2023 – August 24, 2023

Agenda for today

100 days Patrik Heider

02 Financial Figures H1 2023

03 Outlook

2023

04 Q&A Session

Highlights

100 days Patrik Heider

NFON 2023 - Strategy for continous and sustainable profitable growth

O U R O B J E C T I V E :

Sustainably profitable corporate development

T H E F O U N D AT I O N : Operational excellence

4

Operational excellence

Focus on three core areas: Organization and employees, business processes and internal system landscape

Setting the course for future profitable growth

Expanded and new management team to serve, customer needs more efficiently and better meet our high standards of customer centricity

Organization & employees:

Organizational clarity, new organizational chart, and clearer strategic focus.

• Position of Chief Technology Officer (CTO) on the Executive Board will be newly appointed
• − Deniz Beskök took over CTO duties on an interim basis
• Management team is expanded
• − Markus Krammer Chief Product Officer (CPO)
• − Gernot Hofstetter Chief Commercial Officer (CCO)
• − Heinke Bock Chief People & Culture Officer (CPCO)
• − Merano Mettbach Chief Sales Officer (Germany) (CSO) with effect of September 1, 2023

Our ambition at NFON

Financial Figures

H1 2023

H1 2023 Results at a Glance

Continuously growing share of recurring revenues

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

COMMENTS

• Recurring revenues grew by 5.1% compared to H1 2022
• − acquisition of new customers
• − increase in installed extensions (seats) within the existing customer base
• Total revenue growth of 2.7 % in comparison to H1 2022 due to decrease of non-recurring by 21.6 % compared to previous half-year
• High share of recurring revenue in total revenues of 93.2% provides predictable revenue streams

Further reliable high gross margin with increasingly positive development

Development of COGS (adj.)¹ in € million and gross margin²

COMMENTS

• Improved gross margin compared to the same period last year due to successfully growing share of higher-margin sales
• 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
• Despite an increase in sales, the cost of materials fell by 9.0% in the reporting period (H1 2023 €6.6m; H1 2022 €7.3m)
• This results in a further low material cost ratio of 16.0% compared to the same period of the previous year (H1 2022: 18.1%)

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

Reduced personnel expenses in line with strategic focus

Adj. personnel expenses in € million

COMMENTS

• Average number² of employees decreased from Ø 504 to Ø 451 (minus 10,5%)
• Personnel expenses as reported amount to €18.3m (H1 2022: €19.7m)
• Adjustments:
• − €0.0m for stock options (H1 2022: €0.3m)
• − €0.2m re-focusing group-wide activities (H1 2022: €0.3m).
• − €0.6m incurred in connection with the reorganization of top management (H1 2022: €0.0m).
• Adj. personnel expenses amount to €17.6m (H1 2022: €19.1m)
• Adj. personnel expense ratio of 42.7% (H1 2022: 47.7%) expected to decrease further in the course of 2023 due to scaling effects.

% of revenue ¹Adjustments explained in the comments on the right side of the slide

² Measures implemented primarily in the fourth quarter of the previous year to create the profitable further growth of the NFON Group

Adj. EBITDA improvement reflects focus on profitability Adj. EBITDA¹ in € million

COMMENTS

• Significant improvement in adj. EBITDA of €3.4m is the result of the strategic management decision to focus on profitability
• Adj. EBITDA margin in H1 2023 stood at 8.2%

1 Adjustments see next slide

2023

Guidance for continuous sustainable profitable growth

	20232021 2020 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%	Raised
Adjusted EBITDA	> € 4m We expect adjusted EBITDA to be in the range of € 6-7m	guidance: ▪ positive business development to date ▪ continuing positive
		outlook for Q3 & Q4

What's next?

• Setup of new Management structure
• New leadership team started their work
• Aligning and fine-tune on business unit level
• Setting up and launching the transition path

• Defining and initiating targets and measures

• Presenting the new roadmap for NFON

• Implementing initial measures
• First results of the changed structure

TOGETHER SUSTAINABLY PROFITABLE

Q&A Session

H1 2023

Seat growth in line with strategic focus

Development number of seats ('000) and ARPU

COMMENTS

• Increase of total number of seats by 5.1%
• ARPU development: H1 2023 stable on year's end level. Slight decline versus H1 2022
• Continuously low gross churn rate of ~0.7% per month underlines quality of product and service and guarantees continuous recurring revenues
• − Slight increase in the rate compared with the prior-year period as a result of a planned post-contract churn of a major customer
• Our innovative, automated, and userfriendly omnichannel solution Contact Center Hub has been developing positively since its launch at the beginning of 2023.

Earnings Call H1 2023 I August 24, 2023 19

Decrease of marketing expenses as planned

Marketing expenses in € million

COMMENTS

• Marketing expenses decreased by 61.5% yoy
• Focused and efficient marketing where we see market potential. Channel marketing moves to the forefront.

Selling cost slightly higher compared to H1 2022

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
• Overall selling costs might continue to raise slowly mainly as a result of a channel shift from direct business into the commission-based partner channels
• No further significant changes expected

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	May 11, 2018
Coverage	Berenberg Bank, Baader Bank, Hauck & Aufhäuser, ODDO

Shareholder structure in %, as of August 07, 2023

C-Level Team

Patrik Heider CEO /CFO

• With NFON since 2023
• ~20 years of C-Level experience and in the IT industry
• Previous experience includes
• − Nemetschek SE
• − Thinkproject
• − riskmethods

Gernot Hofstetter CCO

• With NFON since 2018
• Previous position:
• − MD Austria and Central and Eastern Europe (CEE)

• 20 years of experience, working as MD and Sales Manager for several telecom companies in Austria.

Heinke Bock CPCO

• With NFON since 2018
• Previous position:
• − VP HR

• 20 years experience in leading positions within the areas of HR and Legal Counseling

Markus Krammer CPO

• With NFON since 2015
• Previous position:
• − Managing Director for NFON Developments Lda.

• 20 years of experience in senior executive positions within the Telco industry

Deniz Beskök CTO (interim)

• With NFON since 2019
• Previous position:
• − VP Engineering and Agile Transition

• 20 years of experience within the IT /Telco industry and holds various key positions

Merano Mettbach CSO (Germany)

▪ With effect of September 1, 2023

23 Earnings Call H1 2023 I August 24, 2023

▪ …

Financial Calendar

24.08. • Financial Results Half-Year 2023 20 Web Conference 23 23.11.

25.05. • Financial Results Q1 2023 ✓

• Web Conference

30.06. • Annual General Meeting 2023 ✓

Munich

✓

• Financial Results Q3 2023

• Web Conference

Contact

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

https://facebook.com/NFONcom

https://twitter.com/NFONcom

FRIEDERIKE THYSSEN Investor Relations & ESG

NFON AG

Machtlfinger Straße 7

81379 Munich, Germany

TELEPHONE

Fon +49 (0) 89 453 00 449 friederike.thyssen@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 forward looking 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.