NFON (NFN) Q2 2024 earnings summary

Executive summary

• Transformation journey in 2024 included management restructuring, new CTO and CRO appointments, and centralization of revenue functions, with a focus on dynamic growth and profitability.

• Completed merger of Deutsche Telefon Standard GmbH, consolidating German operations and strengthening market position.

• Acquisition of Botario GmbH, an AI communication specialist, for a low double-digit million euro price, expands AI-driven business communication and CRM segments, with a three-year earn-out structure.

• Number of seats increased 3.8% year-over-year to 665,022, with a low churn rate of 0.5% per month.

Financial highlights

• Recurring revenue grew 4.4% year-over-year to €40.1 million in H1 2024, representing 94.3% of total revenue.

• Total revenue increased 3.3% to €42.5 million, with non-recurring revenue declining 12.3% due to lower hardware sales.

• Adjusted EBITDA rose 62.3% to €5.5 million, with EBIT improving to €1.1 million.

• Gross margin improved to 84.5%, driven by high-margin recurring sales.

• Operating cash flow rose to €3.7 million from €2.3 million year-over-year; cash position at €13.5 million at period end.

Outlook and guidance

• Adjusted EBITDA for FY 2024 expected at €10–12 million.

• Recurring revenue growth anticipated in the mid- to upper-single-digit percentage range, with share projected to remain above 90%.

• Profitability targeted to grow faster than revenue, with revenue outpacing market growth.

• Free cash flow for 2024 projected at €3–4 million, excluding M&A.