NuWays AG Reiterates "Buy" for NFON AG Amid Q3 Expectations

On November 19, NFON AG will release its Q3 report, amid declining sales but recovering margins. Analysts from NuWays AG predict a 3.4% year-over-year decrease in sales to €21.1 million, showing an improvement from Q2’s 5.2% drop. The seat base is expected to decline faster than sales due to product portfolio simplification and weak order intake in legacy PBX business.

Price increases and premium solutions are maintaining the blended average revenue per user above €10. Despite a drop in project revenues, recurring revenues continue to grow, aided by the AI suite's productisation, keeping the recurring revenue ratio at 94%.

Adjusted EBITDA is projected at €2.5 million, reflecting an 11.8% margin, up from H1’s 10.3%, driven by restructuring savings and disciplined operating expenses. However, ongoing sales decline affects the year-over-year comparison negatively.

NuWays AG holds a "Buy" recommendation with an unchanged target price of €5. AI development progress remains crucial for future growth, with NFON benefiting from early AI adoption compared to peers.