NFON AG Forecast Strong Growth in Q2

NFON AG, a European leader in PBX services, is set to release its Q2 figures, showing promising growth. According to NuWays AG, NFON's Q2 sales could increase by 6% to €21.6 million. This growth is attributed to an increase in seat base and price adjustments. Recurring revenues are projected to rise by 6.4% to €20.3 million, ensuring a strong recurring revenue ratio of 94%.

Adjusted EBITDA is expected to improve sequentially to €2.9 million, representing a 13.4% margin. The efficiency boost is due to cost-saving measures, including reduced marketing and personnel expenses. The reported EBITDA is anticipated to be €2.5 million.

Management is likely to confirm the full-year guidance for ARR growth in the mid- to upper-single-digit range. Additionally, Free Cash Flow is set to remain positive, with a slight sequential uptick expected.

Integration of Deutsche Telefon Standard GmbH (DTS) into NFON is likely to create more optimization opportunities. The merger announced at the beginning of Q3 will yield synergies by fully integrating DTS into NFON.

Despite the positive outlook, NFON shares remain undervalued, trading at only 1.1 EV/Sales for '24e. Therefore, NuWays AG maintains its BUY recommendation with a target price of €11.70, based on DCF valuation.