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DGAP-News: NFON AG / Key word(s): IPO/IPO
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NFON AG preparing for IPO in 2018
- The only pan-European cloud telephony service provider today announces its intention to conduct an Initial Public Offering on the Frankfurt Stock Exchange with admission to the regulated market (Prime Standard).
- Impressive track record of scalable growth with a 2015-17 CAGR of 30% and clear proof of concept through adj. EBITDA 2017 break-even on Group level.
- With its more than 150 features and premium solutions, NFON's cloud telephony offering is tailored to the needs of today's business communication.
- Demand for cloud telephony solutions in Europe expected to experience strong support by major European carriers moving from ISDN to All-IP networks.
- Offer comprises a mix of primary and secondary shares with a targeted free float of around 50% post IPO.
- IPO gross proceeds of approx. EUR 50 million shall be predominantly used to drive penetration and adoption in existing markets, to further expand our European footprint as well as for continued product development.
Munich, 12 April 2018 - NFON AG ("NFON" or the "Company" and together with its subsidiaries, "NFON" or the "Group") is preparing an Initial Public Offering (IPO) of new and existing ordinary bearer shares to be admitted for trading on the regulated market segment (Prime Standard) of the Frankfurt Stock Exchange. The listing is expected to take place in the second quarter of 2018, subject to market conditions.
Hans Szymanski, CEO and CFO of NFON AG, said:
"NFON has been on an impressive growth track ever since its founding. We are the only pan-European service provider of Cloud Telephone Systems. The market for business communication is facing disruptive changes, which offers further massive growth potential. The planned IPO will support us with our continued expansion in Europe and provide us with additional financial flexibility to successfully pursue our rapid growth strategy."
Cloud based telephony solutions are the core business. Complementary offering includes premium solutions, e.g. for MiFID II compliant voice recordings, call centers or the hospitality industry to meet increasing customer needs.
NFON offers more than 150 different features to streamline telecoms processes of companies of all sizes, from small offices and home offices to large enterprises. Due to the way NFON offers its products and services, customers have a high degree of flexibility - pay what you need. Short contract periods allow customers to scale their business up or down as they need it. Product development is key for our value proposition. The Company has one guiding principle: Ease of use at superior reliability.
Since its foundation in 2007, NFON has rapidly grown organically. Between 2015 and 2017, total revenue increased at a CAGR of 30%. The extraordinary growth over the past years underscores NFON's excellent value proposition and strong business model. The latter is based on a unique combination of strong growth, sustainable recurring revenues (77.9% recurring revenues in 2017) and high customer loyalty.
Between 2015 and 2017, the customer base has grown at a compound annual growth rate (CAGR) of 37%. Over the same period the average monthly gross churn rate remained at a constantly low level of 0.4% per month in 2017, after 0.4% in 2016 and 0.3% in 2015. In 2017, the Company registered record revenue of EUR 35.7 million and surpassed the break-even point with an adjusted EBITDA margin of 0.5% (2016: -1.3%).
The market for business communication is undergoing a historic transformation. NFON is benefiting from the structural shift to cloud telephony solutions, which permanently changes the business communication market. The European cloud telephony market alone is expected to grow at a CAGR of 16% between 2017 and 2022. Therefore, NFON sees particularly strong growth opportunities in this market.
Incumbent European carriers (e.g. Deutsche Telekom, Orange or KPN) have announced the switch-off of ISDN and the move towards All-IP networks. Together with the growing proliferation of cloud delivery models, this is expected to result in growth in the cloud PBX segment that is expected to benefit NFON. Driven by these developments, current penetration rates of around 9% in Continental Europe are expected to follow more mature markets such as the UK with around 13% penetration rate and the US with around 19% penetration rate.
The upcoming EU General Data Protection Regulation (GDPR) provides additional advantages for European cloud communication providers such as NFON: By design, US competitors are not able to prevent the exchange of customer data between the European branch and its US headquarters.
This has just been exacerbated by the US passing the CLOUD Act. GDPR imposes personal liability for customers and employees using such solutions with severely increased penalties.
NFON's technology platform and cloud services are specifically designed for the strict requirements of the European market in terms of data protection. The Company has unlimited access to its technology infrastructure and can therefore respond to new regulatory requirements directly and immediately.
In connection with the IPO, the Company is currently anticipating a primary offer size of EUR 50 million and the sale of ordinary shares by existing shareholders, the amount of which is yet to be decided. Further ordinary shares will be made available by the selling shareholders pursuant to a customary over-allotment option (greenshoe). The ultimate free float post IPO will depend on the number of new shares issued by the Company and the number of existing shares sold to new investors in connection with the Offering and is targeted to be around 50% post IPO. Lock-up periods for the Company and selling shareholders will be in line with market standards.
The Company plans to use the majority of the net primary proceeds that it receives from the Offering to invest in continued regional expansion in Europe as well as in research and development activities with the aim of being able to offer additional features and solutions. Moreover, the Company plans to intensify its marketing and sales activities to drive penetration of existing customers and attract new customers in the markets, in which NFON is already present.
As of the date of this release, 35.77% of the current share capital of NFON AG are held by Milestone Venture Capital GmbH. Additional 34.48% are held by Earlybird Verwaltungs GmbH. MIG GmbH & Co. Fonds 9 KG holds a 12% stake and BayernLB Private Equity GmbH 6.40%. Further shareholders are: High-Tech Gründerfonds GmbH & Co. KG (4.88%), BayBG Bayerische Beteiligungsgesellschaft mbH (4.84%), MIG GmbH & Co. Fonds 11 KG (1.29%) and ASC Technologies AG (0.34%).
The Offering will consist of initial public offerings in Germany and Luxembourg, and will comprise an offer of shares to certain institutional investors in Germany and elsewhere outside of the United States in reliance on Regulation S under the Securities Act of 1933 as amended (the "Securities Act") and to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act.
Berenberg acts as a Sole Global Coordinator and Joint Bookrunner. Baader Bank and ODDO BHF have been mandated as additional Joint Bookrunners.
In the United Kingdom, this information is directed at and/or for distribution only to (i) investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) high net worth companies falling within article 49(2)(a) to (d) of the Order (each such person hereinafter a "relevant person"). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this information or any of its contents.
This release is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company. The offer will be made solely by means of, and on the basis of, a securities prospectus to be approved by the German Federal Financial Supervisory Authority (BaFin). After the approval, the securities prospectus will be available free of charge at the Company's office, as well as, for viewing in electronic form, on the Company's website (www.nfon.com). An investment decision regarding the publicly offered securities of the Company should only be made on the basis of the securities prospectus.