Nfon Ag · XETR:NFN
Nfon — H1 2018 Earnings Presentation
31 slides from Nfon's earnings presentation, Sep 20, 2018
Slide 1: The New Freedom of Business Communication
THE NEW FREEDOM OF BUSINESS COMMUNICATION Half-year Financial Report 2018 20 September 2018
Slide 2: We want to dominate the European Cloud telephony market
We want to dominate the European Cloud telephony market by delivering freedom of business communication. Growth Excellence Leadership Award 2017 2
Slide 3: Introduction & Strategy
1 Introduction & Strategy 3
Slide 4: NFON – The only true Pan-European Cloud PBX company
NFON – The only true Pan-European Cloud PBX company Classic on-premise PBX Advantages of cloud telephony Founded 2007 Increased functionality Device agnostic HQ in Munich, Germany PBX Analog/ISDN PSTN PBX Lower total Flexibility cost of Active in ownership 13 Cloud PBX European countries Minimal Aut
Slide 5: Shift to cloud communication creates unique opportunity
Shift to cloud communication creates unique opportunity European business PBX market 2017 Disruptive business Cloud PBX market €3.2bn €16.7bn €1.6bn 26m seats 135m 13m seats seats 16% CAGR On-premise & Hosted PBX solutions 2017 2022 Market potential based on NFON’s recurring ARPU1 Source: MZA (2017)
Slide 6: Coherent multi vector growth strategy
Coherent multi vector growth strategy Increase Capitalise on high penetration and Transform product Open APIs Expand regionally market fragmentation adoption Roll-out of innovative Further develop Leverage Consolidate highly Increase marketing features will attract open APIs to allow proven market f
Slide 7: Business Highlights
2 Business Highlights 7
Slide 8: NFON on schedule for growth
NFON on schedule for growth Strong revenue growth of 21.7% Recurring revenue even higher with 28.6% Increase of seats by 30% Customer base 80% recurring revenue at the top of guidance Further success in operational business development 8
Slide 9: Customer development in existing markets
Customer development in existing markets Leverage on proof of … for European rollout concept in Germany … >25% 13 German European market share countries +1,100 287k+ Seats Partners in Europe NFON Group Further success 31% in Wholesale partner business Start of European roll-out Source: MZA (2017) 9
Slide 10: Continuous product development
Continuous product development e.g. the new client Comments Easy-to-use Integrate services such as Softphone and Continous Ncontrol User friendly First introduction of new client at CeBIT 2018 product interfaces with high interest of partners and customers optimisation Launch second half 2018 New Cl
Slide 11: Disciplined M&A strategy to further accelerate growth
Disciplined M&A strategy to further accelerate growth Capitalise on high market Potential tragets should be fully aligned Compelling strategic rationale fragmentation to NFON’s acquisition criteria Size › Acceleration regional expansion ✓ Geography › Expansion product portfolio ✓ Business › Increase
Slide 12: Business Model & Financial Overview
3 Business Model & Financial Overview 12
Slide 13: NFON's top line mechanics are centred around recurring revenue
NFON’s top line mechanics are centred around recurring revenue Recurring revenue 80% Non-recurring revenue 20% Seats ARPU One-off €20.6m HY 2018 revenue Licence fee Airtime Premium Activation fee Hardware Professional per extension solutions services 13
Slide 14: Share of recurring revenues at the top line of guidance
Share of recurring revenues at the top line of guidance Development total recurring vs. non-recurring revenues Comments Increase of total revenues by 21.7% €m 82,0% − Driven by strong growth of recurring revenues 40 79.9 to €16.5m (+28.6%) 80,0% 35 − Stable share of non-recurring revenue 7.9 78,0% o
Slide 15: Sustainable recurring revenues based on growth in total number of seats
Sustainable recurring revenues based on continuous growth in total number of seats Development number of seats and ARPU Comments Increase of total number of seats by 30% #seats/€ per seat per month Growth on revenues based on an increasing number of seats and largely stable ARPU levels 288 ARPU leve
Slide 16: Consistently increasing gross margin
Consistently increasing gross margin Cost of materials and adj. gross margin development Comments Cost of materials are largely variable in nature and €m, % of revenue mainly comprise of costs for hardware sold, costs for airtime sold and data centre housing costs 9.7 Gross margin is positively infl
Slide 17: Growing work force in line with growth strategy
Growing work force in line with growth strategy Development of personnel # of employees 216 195 182 35 Customer support 31 158 27 26 81 Sales & Marketing 81 77 69 Research & Development 59 49 55 37 Administration (HR, Legal, 41 Purchasing, Finance, 26 29 28 Logistics et al) 2015 2016 2017 HY 18 17
Slide 18: Increase of adj. personnel expenses corresponds to growing work force
Increase of adj. personnel expenses corresponds to growing work force Adj. personnel expense development Comments Historically, personnel expenses represent the €m, % of revenue 13.4 single largest cost position. Personnel expenses as 12.3 reported €13.1m One-off effect out of share-based payments o
Slide 19: Marketing expenses will further increase by implementing growth strategy
Marketing expenses will further increase by implementing growth strategy Marketing expense development Comments Given strong conversion rates, marketing expenses €m, % of revenue are highly correlated with future revenue development Marketing activities aimed at increasing the 3.7 penetration of exi
Slide 20: Consistent decrease of adj. other expenses demonstrates operating leverage
Consistent decrease of adj. other expenses as % of revenue demonstrates our high operating leverage Adj. other expenses development (without marketing expenses)1 Comments Other expenses comprise of sales commissions, €m, % of revenue supporting cost, general administration expenses and consulting fe
Slide 21: Adj. EBITDA break even despite higher costs
Adj. EBITDA break even despite higher costs Detailed reconciliation of one-off items Comments Enforcement of strategy implementation charges Reconciliation from EBITDA H1 2018 H1 2017 EBTIDA as planned to adjusted EBITDA EBITDA as reported amounts to €-6.6m €m − One-off effects in personnel expenses
Slide 22: Summarizing first half-year 2018 NFON AG is on track
Summarizing first half-year 2018 NFON AG is on track €20.6m revenues with 80% recurring revenues 287,000+ seats Customer Largely stable ARPU base <0.5% gross churn rate per month Adj. EBITDA break even Launch of new NFON-Client Expansion in other countries 22
Slide 23: NFON confirms guidance for 2018
NFON confirms guidance for 2018 2017 2018 Number 253k We expect a significant growth of our customer base by around 30% of seats Revenue We expect the revenue growth rate for 2018 to clearly outperform 17.3% growth (%) the revenue growth rate of 2017 Recurring revenue 77.9% We expect the resulting r
Slide 24: Key Investment Highlights and Q&A
4 Key Investment Highlights and Q&A 24
Slide 25: Key investment highlights
Key investment highlights Huge addressable business communication market being disrupted by 1 structural shift to Cloud PBX solutions Only true Pan-European Cloud PBX company best positioned to become 2 the dominant European player Strong business model resulting in unique combination of massive gro
Slide 26: Thanks
Thanks @NFONcom #cloud #telephony #allip 26
Slide 27: Appendix
5 Appendix 27
Slide 28: Management Board of NFON AG
Management Board of NFON AG Hans Szymanski Jan-Peter Koopmann César Flores Rodríguez CEO/CFO CTO CSO >20 years of C-Level >20 years of experience in >10 years of C-Level experience the IT/Telco industry experience Previous experience Previous experience Previous experience includes includes includes
Slide 29: NFON share at a glance
NFON share at a glance Facts Shareholder structure1 ISIN DE000A0N4N52 Segment Prime Standard/ Telecommunication Shares 13.8 million Designated Baader Bank sponsor ODDO Seydler First day of trading 11 May 2018 Coverage Berenberg Bank, Baader Bank, Oddo BHF 30.10% 17.8% 7.74% 7.36% 3.91% 35.95% Others
Slide 30: Financial calendar
Financial calendar Date Event 20 Sep 2018 Interim Half-year Report 2018 Web- and Telephone Conference 22 Nov 2018 Interim Report 3rd Quarter 2018 Web- and Telephone Conference 27 Nov 2018 German Equity Forum Frankfurt Analyst Presentation and 1-on-1 30
Slide 31: Contact
Contact Sabina Prüser Head of Investor Relations Blog NFON AG https://www.nfon.com/blog/de/ Machtlfinger Straße 7 81379 München Facebook https://facebook.com/NFONcom Telephone Fon +49 (0) 89 453 00 134 Twitter https://twitter.com/NFONcom Fax + 49 (0) 89 453 00 33 134 sabina.prueser@nfon.com 31