NFON AG reported a 3.8% year-over-year decline in total revenue to EUR 42.5 million for the first half of 2026, as growth in AI-driven offerings failed to offset weakness in its core business. Recurring revenue, which accounts for 94.1% of total revenue, fell 3.0% to EUR 40.0 million, while non-recurring revenue contracted to EUR 2.5 million.
Adjusted EBITDA dropped 22.9% to EUR 4.4 million, compressing the margin to 10.4% from 12.9% in the prior-year period. Gross profit declined 4.2% to EUR 36.4 million, with gross margins slipping to 85.6% from 86.1%. Material costs rose to 14.4% of revenue, up from 13.9%, while personnel expenses increased to 43.2% of revenue despite headcount rising to 427 employees.
Operational metrics reflected broader challenges. The blended average revenue per user edged up 0.2% to EUR 9.98, but the total seat base contracted by 4.2% to 629,869. Growth in AI-related segments such as Intelligent Assistant and Customer Engagement was notable, with recurring revenue in these areas up 39.0% and 11.7% respectively. However, these segments represent only about 10% of total revenue, limiting their impact on overall performance.
Cash flow showed mixed trends. Operating cash flow increased slightly to EUR 2.8 million, while investing cash flow reflected a EUR 3.7 million payment tied to the botario acquisition. Free cash flow, excluding M&A-related flows, stood at EUR 0.8 million, and cash and cash equivalents declined to EUR 8.5 million by the end of June from EUR 12.9 million at the start of the period.
The company revised its full-year 2026 guidance downward, cutting total revenue expectations to EUR 84.5–86.0 million from a prior outlook of low to mid-single-digit growth, which had implied roughly EUR 90–94 million. Adjusted EBITDA guidance was reduced to EUR 9.5–10.5 million, down from an earlier expectation of slightly above EUR 12 million.
NFON’s shares traded at $3.67, near the lower end of its 52-week range of $3.00 to $7.05, with a market capitalization of approximately $71 million. The company highlighted macroeconomic headwinds, including a 7.1% year-over-year increase in German corporate insolvencies in April and an expected 0.5% GDP growth in the euro area for 2026.
