NFON AG Reports Strong Q3 Profitability, Maintains Buy Recommendation

NFON AG has posted impressive Q3 results, surpassing profitability expectations. Quarterly sales increased by 5.9% year-over-year, reaching €21.7 million. Key drivers include a growth in the seat base by 3.1% and enhanced up-selling effects that improved the average revenue per user to €9.88.

Additionally, nonrecurring hardware sales showed a positive shift, rising by 6.1% year-over-year. Recurring sales also witnessed a 5.9% increase, reinforcing a 94.9% recurring revenue ratio. Adjusted EBITDA improved significantly by 35% to €3.5 million, suggesting effective cost management.

Despite these results, free cash flow was weaker than expected at €0.7 million, largely due to an unfavorable working capital shift. The full-year guidance remains stable, with anticipated recurring revenue growth and adjusted EBITDA between €10-12 million.

The acquisition of botario enhances NFON's AI capabilities and offers cross-selling prospects. The valuation remains attractive, with shares trading at 7.1x estimated 2024 EV/adjusted EBITDA. NFON AG is confirmed as a top pick on the NuWays Alpha List with a target price of €11.70.