NFON AG Shows Strong Profitability in FY23 Prelims, Analysts Reiterate Buy Rating

In a recent research update by NuWays AG, NFON AG has once again surpassed expectations with its FY23 preliminary results, demonstrating moderate revenue growth alongside significant profitability improvements. The report highlights NFON's FY23 recurring revenues at €77.1 million, marking a 4.8% year-over-year increase. This achievement is attributed to a growing customer base and the successful up-selling of premium solutions. Total sales for the year increased by 1.9% to €82.3 million.

NFON's adjusted EBITDA for the fiscal year showed a considerable leap to €8.4 million from a €1.0 million loss in FY22, exceeding both the company's guidance and consensus estimates. The improvement in profitability is primarily due to higher gross margins and efficiency measures, including a 14% reduction in staff after the first nine months. The company also reported a positive free cash flow (FCF) for the first time since it went public. Looking ahead to FY24, management has set ambitious targets for ARR growth and adjusted EBITDA, reflecting the company's ongoing turnaround success and potential for further growth in the integrated business communication market.

Despite recent share price gains, NuWays AG analysts find NFON's valuation attractive and maintain a "BUY" recommendation with an unchanged price target of €11.70. The outlook is based on the company's capital-light model, strong recurring revenue, and potential for further cost optimization.