Original-Research: NFON AG (von NuWays AG): BUY

Classification of NuWays AG to NFON AG

Company Name:	NFON AG
ISIN:	DE000A0N4N52
Reason for the research:	Update
Recommendation:	BUY
from:	09.01.2025
Target price:	EUR 11.70
Target price on sight of:	12 months
Last rating change:
Analyst:	Philipp Sennewald

NFON remains an Alpha pick after strong operations in FY24e

Topic: After a strong operating performance in FY24e, NFON looks set to continuously expand margins at an increased top-line growth throughout FY25e.

Sales in FY25e are expected to increase by 12.7% to € 97.1m (eNuW; eCons: € 95.2m) based on an increased cloud adoption and hence further key customer wins in the company’s key markets as well as the initial full FY contribution of botario (acquisition closed in 09/24; eNuW: € 3.1m sales in FY25e). Hereby, the share of recurring revenues looks set to further increase to 94.6% (eNuW FY24e: 94.2%), given the decreasing importance of hardware sales also in connection with new customer wins.

Moreover, we expect NFON to improve its adj. EBITDA to € 15.7m (eNuW; eCons: € 14m unadj. EBITDA), implying disproportionate growth of 31% and a margin of 16.2%. This should come on the back of an improved sales mix, meaning less hardware sales as well as an increased ARPU following a higher share of premium solutions sold, as well as cost saving measures imposed during FY23/24, allowing for reduced personnel cost and marketing ratios. Also, the botario acquisition (23.5% EBITDA margin in FY24e) will also be a main driver of the margin expansion. Against this backdrop, FCF is seen to improve to € 5.5m (eNuW: € 3.8m in FY24e).

Speaking of botario, we anticipate the acquisition to not only be margin accretive but significantly enhance NFON’s capabilities regarding AI and process automation, thus marking a substantial competitive edge. In our view, this should help the company gain additional market share in the still highly fragmented market for integrated business communication going forward.

Overall, the above is seen to allow for notably improving returns (eNuW: ROIC 10% by FY25e) as well as cash generation, thus driving shareholder value.

That said, current valuation remains highly attractive given that the stock is trading on a 7.2x trailing EV/adj. EBITDA and a 5.2x EV/adj. EBITDA FY25e. In our view, this is not justified, as it does not at all reflect the significant operating improvements over the past 18 months. 

We hence reiterate BUY with an unchanged PT of € 11.70, based on DCF, as NFON remains part of our NuWays Alpha List.

You can download the research here: http://www.more-ir.de/d/31607.pdf
For additional information visit our website: https://www.nuways-ag.com/research-feed

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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