Very warm welcome from my side. I'm Sabina Prüser, Head of Investor Relations. A very warm welcome to our presentation of the full year results 2022. With me are Klaus von Rottkay, our CEO, and Petra Boss, our CFO. Both will guide through our presentation, which will take about 20 minutes. As always, we will have the opportunity afterwards to ask your questions. With that, I hand over to Klaus. Klaus.
Okay. Just checking if we are complete, because I still see some people dropping in, but I think it's stabilizing. A very warm welcome from my side as well, to, you know, our official report on the full year results 2022. We already communicated the preliminary ones about a month ago. I can already say there will be no big surprises. Maybe on the news since then, as you have all seen, this week on Monday, we announced that I will not extending my term beyond November 2023. We are in a position to already announce my successor, Patrik Heider, who will join the board on May 15th.
From then on, basically, I will be able to transition my responsibilities to him and make sure this is going to be smooth and effective. With that, it's still, you know, my pleasure to, you know, take you back to, you know, what we've been, you know, what we set out to achieve and what we achieved in 22. Our, you know, our mission at Northstar obviously is to be a leading provider of integrated business communication in Europe, that is basically, you know, how we set out in 2023. In terms of strategy, the three pillars which it bases on and three, you know, main headline targets the company has and the board has.
Obviously it's to deliver growth, you know, according, you know, the, you know, across the three dimensions of products, channel and partnerships. A major focus, and that has been, you know, a shift in our strategy about a year ago, is towards, you know, profitable growth. Sustainability has, you know, it's like increasingly and continuously taken, a much larger share of our mind. And, you know, we've actually, you know, made this more prominent and, Sabina Prüser sitting across from me has actually, been leading that.
You know, we'll see in the non-financial report, you know, a lot of the progress we've done, and I'm excited about, you know, the things, the new things that we've set out for actually for 23 and beyond. As I mentioned, the three pillars that, you know, our profitable growth strategy bases on is to deliver, you know, additional products and product innovation across several dimensions. I would say like the top three strategy areas on the product side is, you know, to voice and PBX-enable Microsoft Teams. Second is to, you know, deliver more integration capabilities to live up to our mission of integrated business communications. The third one is to deliver more capabilities to enlarge our addressable customer share towards the enterprise.
You know, those are the three things that are basically on the roadmap with, you know, this year's roadmap, you know, mostly reflecting the Microsoft Teams side. We already published this year that, you know, we are now part of the Selected Operator Connect list for Microsoft and will, you know, in the middle of this year actually complete our portfolio with our fourth offering around Microsoft Teams, which, you know, by launching a Cloudya app for Teams. More to that when we get to the product announcements. Second, obviously we are a channel company. We have a large, dedicated and loyal channel and continuously work on, you know, making this channel more productive and even more successful with NFON. That's an important part.
Channel is not only important for us to, you know, basically sell our products, but overall, you know, partnerships can also serve us to enlarge our product portfolio and to deliver better services. You know, this is something where we have, you know, established some new partnerships in the past and built out those partnerships to scale, obviously, are always open for new partnerships to come and to help us further that. With that, I'll take a look at the, you know, the official results for last year, which pretty much exactly confirm our preliminary results, so I don't make it too suspenseful.
You know, we grew our customer base in terms of extensions managed in our data centers by 8%, which was in the upper part of the revised guidance. On the recurring revenue growth, we ended up at 8.3%, which was pretty much in the middle of our guidance. With our recurring revenue share, we clearly achieved the guidance of, you know, larger than 88%. You know, obviously that just confirms, you know, what we already published in the past.
Let's take a look under the hood and see what the numbers look like that led to these results. I'll then hand over to my colleague, Petra.
Hello, good morning to everyone. As Klaus said, we have exactly the same revenue figures as we published with the preliminary figures. No changes here at all. We have an all-time high of over 91% share of recurring revenue, which reflects our strong business model, that we have sustainable basis for future business. With an absolute figure, EUR 80.8 million revenue. The seed growth, as Klaus said, is met our guidance and we have globally length sales cycles and an overall slowdown economic environment, which is especially true for the UCaaS market. The tremendous growth figures which had been communicated in the past has slowed down a little bit.
Therefore, we have a stable growth, but not meeting the same figures we had the last years. We are positive that we can develop from there on. Even if we are targeting now profitable growth, we will have stable growth in the future as well. This is based as well on our constantly low growth churn rate, which about 6% per year, so that we have an always growing seed base. The ARPU is slightly lower than in the last two years, but the last two years have been influenced by the pandemic, which had some positive side effects on the voice ARPU. We slowed down a little bit here, especially when we compare first quarter to first quarter.
As you can see, we are above pre-pandemic level. We are quite optimistic that we will be able to keep the ARPU stable as we had some price adjustment last year, and we did some price adjustment even this year. We can see in the first quarter already the effect that it is very stable. Furthermore, we selling more and more premium solutions, which are stabilizing the ARPU and can compensate for a slight decrease in the voice ARPU. Following this high share of recurring revenues, we have a rising cross margin as the recurring revenues have an higher margin. It's constantly growing from 76% in the year 2019 to now over 82%.
We don't have very much price increases on the material side, so we are not struck by inflation or hit on a very hard way, so we could keep our margin stable. We have higher personal costs with a plus of 81%. This is even more than the average number of employees, the headcount number. That's because we have some full year effect of people we hired the last year in Q3 and Q4. As we have communicated with the preliminary figures that we are on our path now to more profitability.
We are reviewing the and having the staff and want to make streamline the organization, make it more efficient, and have taken some measures will will have an effect in the in the year 2023. There we will see that we will be able to scale and have more revenues within stable or even decreased personal cost basis. The measures we've taken to be more profitable, you can see already in the past year by a decline of the marketing expenses and the ratio now declined from 12.9 to 10.5% compared to the revenues. We want to decrease this ratio even more in the next year to have a basis for profitability.
We review our marketing mix constantly, and we can profit from invest in the past in brand and channel marketing. It should be possible to guarantee our growth even with a little bit more moderate marketing invest. The selling costs increased. They increase always with the revenues, but the ratio has slightly increased as well. There are mainly two effects, and one is that as a portion of revenues we make through partners, where we pay commission have slightly increased compared to the portion of like direct channel revenues where we don't pay commissions. On the other hand, the selling costs consists not only of commissions, but costs for investment in partners like partner training costs as well.
We have invested in partner training to enable them to better sell our products. In the end, we more or less on the EBITDA level, especially on the adjusted EBITDA level, we meet last year's figures, and we will see the results of the measures we have taken to be more profitable in the year 2023. We had to make some adjustments, like you see, for stock options, which are not have no influence on the liquidity. We have taken measures to focus on core markets and some M&A activities and investment in rebranding, which are all one-off investments and therefore more effects, and therefore we adjust them and we landed at the EBITDA minus EUR 1.0.
In the future, you know, we've communicated that we will guide on EBITDA as well, and this reflects that we really strongly focus on profitability and we are keen on to communicate the figures for the first quarter. We are optimistic that you will see the effects of our measures here already. With that, I'll hand over to Klaus.
Sure. With that, I would like to reiterate the outlook for 2023. Obviously, you know, after, you know, the years has been underway for a while, we, you know, are happy to confirm that we expect the recurring revenue growth being to in the mid to upper single-digit % range from this, for this year. The recurring revenue should be again, you know, be responsible for a very high share of our revenue of more than 88%. We expect adjusted EBITDA to be larger than EUR 4 million.
You know, without stealing the thunder, and Petra has already alluded to, we'll be happy to report on the results for Q1 in a month from now, approximately, and which will show that we're on a good path to achieve this. Overall, obviously, let me summarize, you know, our strengths are that we, you know, are well-positioned in, you know, a growing market in Europe of integrated business communication targeted towards SME, but also to mid-tier enterprise customers, strongly positioned in the DACH area. We differentiate ourselves as, you know, a made in Germany, hosted in Germany solution that resonates not only in Germany but also in some of our European neighbor countries.
you know, we have, you know, a strategy that doesn't only rely on, you know, selling new seats but also have additional avenues of profitable growth. That's also why we guide now on EBITDA and showcase that we can become profitable on this customer base very well. you know, obviously our high share of recurring revenue basis of a recurring revenue gives us a large, you know, socket of stable revenue growth that's, you know, made stable by, you know, a large network of loyal partners that lead to very low customer churn. For that, I, you know, I think that's a little bit of the, you know, what we had to report. you know, we are looking forward to your questions.
I think even, I think some have already received, come in by chat, but I hand it over, to the moderator to lead us through that. Thank you very much.
Thank you very much, Dr. von Rottkay and Ms. Boss for the detailed presentation. We will now move over to the Q&A session. Questions can be asked by audio line or chat. If you would like to ask your question directly to the management, please raise your virtual hand. As already mentioned, we already received a few questions from Mr. Knut Woller. The first question is MSFT Teams is enjoying a solid demand momentum. Is this still your premium solution seeing currently the highest demand?
Yeah. Overall, yes, Teams is in high demand and it grows rather quickly. For us, though, in terms of, you know, premium solution, our most important premium solution is contact center. You know, in terms of size, more important than Teams. I would say like, you know, obviously Teams helps pull through, you know, a lot of Cloudya seats. That's why it is already important now, and actually, you know, because of the high growth, it's becoming more important in the future. And that's also why we are, you know, position a lot of, you know, additional offerings around that. As I said, like, and that's I think your second question, how's the pipeline for your contact center offering building?
As I said, like, we will report on Q1 results later, I think we've had a pretty good start. Maybe took a little slower, longer in 2022 than anticipated. It's often like that with new products, but the feedback has been good from partner side, the feedback has been good from customer side. The collaboration is really working well with our partner company. Now we, you know, actually see the first, you know, larger wins come in. One actually happened already. Like, I mean, we're calling the triple agent wins, which we, you know, had one in December already in Germany. Especially in Q1, we see, you know, a strongly increasing momentum. We grow well on a relative, you know, basis.
I think, you know, we actually set out to exceed our, you know, I would say, rather modest, you know, budget, plans for this year quite well. I think if there's one thing I'm, I'm happy about, you know, that would be certainly, you know, a top contender for that. If I can keep going. I see the third question here in the chat. How is the pipe in Eastern Europe building? I think, you know, to be specific, we have, you know, in terms of also our focus on profitable growth, we have... It's like we are not massively investing in CEE as an overall region, but more specifically into Poland, yeah. We also do a little bit of CEE, but you know, the big focus is obviously Poland.
That's also the largest economy in that area. That is, I would say like, has started to pick up at the end of Q1. I can also report that, you know, after many like, things we had to do in order to set up the business well in 2022, that we now have a team in place that is delivering, you know, good results. The pipeline is continuously building. We, you know, Q1 ended well for Poland, and we have a Q2 pipe that's very solid. We have good line of sight for the, you know, the, let's say the next couple of months. And we are optimistic that it will, you know, carry us through the year. I think that is.
Actually I just happened to review the business for the quarter in this area. Poland is finally coming around. I just keep going. Sorry. I, you know, I see the next question is: Is there first noticeable tailwind from the Versatel partnership? I wouldn't say it's noticeable in terms of results. I think the collaboration has started very well. Some, you know, some of the milestones, you know, for the overall collaboration were maybe a little later than we would have wished for, we can attest to that they were, you know, kept on the day, on the spot, so very precise planning.
Actually just yesterday, I think, we had a, you know, large kickoff with one of Versatel on the sales leadership. There are a lot of, you know, input things going on, and we have already, you know, built a pipe, had the first win. I think it's the overall start is very encouraging. As I said, I will always, you know, like, manage expectations that these things take a long time, and partnerships of this dimension take years to build. I would say, we are off to a very good start.
Thank you very much, Mr. Doctor von Rottkay. I've received a question via Slido. Please go ahead, Stefan Basi.
Hello. Can you hear me?
Yes, we can.
Yes. Thank you very much for that. I have a couple of questions. The first one, if I may, regarding your footprint. Does it still make sense to operate in Italy, France and Spain? I mean, looking at the revenues over the past 2, 3 years, I mean, you know, France, Spain especially, have been difficult markets. There's a little bit of growth in Italy, but probably it still remains quite subscale. What is your thinking about this? I've got also a second question regarding to the contact center. You know, artificial intelligence potentially could be disrupting this industry. Are you confident that your solution is future proof versus, you know, the emergence of artificial intelligence? Finally, a third question.
I was just wondering whether there is any comment you could make about whether you have considered any tie-ups with new partners or even with competitors to get more scale in the past couple of months. Thank you.
Good. All right. Thank you, Stefan. First question was like, does it make sense to continue to operate in France and Spain? As I said, like we've downgrade, like downsized, both, you know, countries, quite significantly last year. I think overall, you know, we run this on a break-even basis. We don't invest additional, you know, say like outbound marketing, but we support existing partners who actually bring, you know, additional business. I have to say also in Spain, you know, we've seen some really nice wins, over the last couple of months.
In France, we have, you know, also a larger business opportunity without investing, just supporting existing partners. Obviously, you know, it's our, you know, our value proposition to our customers and our partners to, you know, have a pan-European offering. Therefore, basically we, you know, we put this in the, you know, into, you know, our offering for our customers, but we're not losing money in those countries. On Italy, it's a little bit different because we are actually a lot more bullish about the prospects and the low market maturity in Italy. In Italy, we're still, you know, investing because it's a very large European market. You know, 60 million people there. On the ARPU side, you know, much higher than Spain, for example, twice the size.
From the competition, you know, point of view, it's very large operator-centric. I think there's a large opportunity for when that market develops. We also, you know, are looking out for new strategic partners there to, you know, enhance our channel capacity. We have a good plan how to reach profitability soon there, but soon definitely doesn't mean 2023, you know. It's probably, like, 2 years out. You know, overall, and to have, you know, large potential in the short term on a relative growth basis and long-term growth basis. You know, for sure, Patrik is gonna, you know, evaluate this very closely and, you know, build his strategy regarding that. The second question was, I think, contact center versus AI.
Is that, you know, kinda like that's how I understood it. Please correct me.
No, it was.
It's like no. Yeah, of course, you know, with AI, like, how does our solution measure up to that? You know.
Yeah. Room to improve.
Exactly. I'm very happy to report that we, you know, our partner company, Daktela, has been very active on the area of AI. They have not only acquired, you know, IP on that side, i.e., you know, bought AI companies, but they're extremely fast at innovating. They have now integrated ChatGPT into their solution. They have, you know, like, have had different AI enhancements. I think we are, like, very much on the, you know, on the brink of innovation there. You know, also the size of the company has increased quite a bit, so there are a lot of very technically, say, savvy engineers working exactly on that.
I feel, yeah, very good regarding that. I think there's a lot of opportunity for our customers leveraging, you know, the additional AI capabilities. We have the right solution for that, I'm sure.
May I ask just one follow-up on this one? Do you have any chance to give us an idea of, you know, how much, therefore, your AI-driven contact center solution is cheaper than the traditional contact center solution? I understand that pricing is probably very different between one and the other. It's very difficult to compare apple and pears. Do you have a sort of rough idea, you know, what you can help customers save by that sort of solution?
Okay. All right. That's like 3 questions in one. First of all, in terms of pricing, you know, like We don't sell basically one contact center agent on the price list. It's always a solution. There are like, I think 150 product codes, that we pick from to create the solution for the specific customer scenario. It's extremely hard to, you know, to basically, you know, put a price tag on it. I would say our price position is very competitive, i.e., you know, I'm leaving out, you know, like companies like Genesys who are famous for being, you know, on the, you know, on the very high price side.
Overall, I think we are very cost competitive with all, you know, major solutions, i.e., potentially cheaper. Your question was like, how much can we save customers? That really depends a lot on the, on the customer scenario. Usually, the, you know, the thumb rules is, you know, how many people do you have now, on the, you know, on the, on the phone? How many agents and how many can you save with a good contact center solution? Which unfortunately is always the cost efficiency only, I would say, calculation that really often convinces the CFO. We should not neglect that many of the innovations are actually to make it more effective.
The whole omni-channel idea is to actually combine, you know, the multiple avenues of customer communication to integrate them into one panel to make sure you can provide better and consistent customer service and therefore actually increase your revenues. I think the, you know, a lot of the focus, especially on SMB side, is not just to become more efficient on the customer interaction but also become more effective. That's, you know, obviously much harder to quantify. As I said, like, I don't wanna, you know, give you the, you know, the classic, oh, 30%, you know, like cheaper answer. I would say I would feel pretty comfortable about comparisons like that.
Sure. Thanks. Sorry, there was a final one I asked about, whether you've looked at M&A. You always look at M&A, but whether, you know, you've been partly involved in, you know, strategic discussions, you know, in the past couple of months to get more scale?
Yeah.
Partners. Thank you.
I think there's only, I'll say like, there has been one conversation, but it's maybe not on the M&A front, but what I said, like the third channel partnerships and alliances. We are looking at an alliance on the product portfolio side with a partner. Nothing to announce now, but it's not an M&A deal. It's kinda like it's like a license deal, you know, similar to what we have on the contact center side. That I can confirm that we have, but on the M&A side, there hasn't been any immediate activity to report on.
Okay.
Very good. Thank you.
Thank you very much. We received another question by audio line. Please go ahead, Mr. Jürgen Popp.
We cannot hear anything yet?
It seems that it's right now not working. Please place your question in the chat. We also received one in the chat. How do you rate the startup Yaando from Klaus Haerisch Telegate? Is it comparable? The valuation is twice as high as NFON. Unfortunately, we cannot hear you. Seems that there is a problem with the audio connection of Dr. Klaus. We will give it a second and kindly ask you to unmute. Maybe it is possible to dial in again. We give it another second. We will wait a second until Mr. Dr. von Rottkay is back again.
This is pause.
Yes. We can-
Hear me again?
Yes, we can hear you again.
Okay. Now I can hear you. Okay. Jürgen Popp said that you muted him so that he was not able to answer it, but I think his question in the chat we already answered.
Okay.
Probably Mr. Popp, we can then, follow up with this question.
We can try. Give it a try again, if Mr. Popp has a follow-up question. Please unmute yourself. Mr. Popp, unfortunately, we cannot hear you right now. Is it maybe, possible to place your question in the chat if you have a follow-up question on the first one you have placed?
Okay. I think it seems there are no further questions. Okay. Stefan, If you have one further question.
Please go ahead.
Thank you. Can you hear me well?
Yes, we can hear you well.
Good. Good. Thank you. Yeah. I just wanted to follow up on two things. Perhaps one, to follow up on what Petra said. Are you confident that you can accelerate the growth even if you're more disciplined in your marketing and in your staff? What sort of, you know, you're hopeful to be able to keep up with. Related to that, but in a different angle, in the report that you published yesterday, I mean, you still show the expert, Cavell, forecast. I think for Germany, if I'm not mistaken, they are still targeting 20% revenue growth per annum over the next couple of years, which is obviously quite different to your level of growth.
Can you elaborate a little bit, you know, in the difference between, first, are we comparing the same thing? You know, what is making the difference between your growth and, you know, what they are forecasting? Is it the impact of Microsoft Teams competition? You know, what is explaining that difference, that gap? Thank you.
Stephan, do me a favor. Sorry for my voice. I'm a bit sick. Stephan, can you repeat, please, the company name that you want to compare to?
Oh, no, sorry. In the report yesterday, you still mentioned the forecast by Calwell, you know.
Calvert.
Market expert.
Cavell. Yes. Okay.
Yes. They still forecast 20% revenue growth. You're not, you know, looking at and producing that level of growth. Whether you could explain what is, you know, the gap, the factors behind that gap on what they are forecasting and what you are, you know, your growth rate today? Thank you.
Recording in progress.
Sorting out the audio, Stefan. Give us a second because Klaus is back online and back on track, so he's hopefully able to answer in a moment.
Good. Good.
Sorry, can you hear us?
We can hear you now, Klaus, yes.
You can hear us? We cannot hear you. I'm so sorry. This is a disaster.
Klaus, have you heard the question of Stefan Basi or do you want me to repeat it?
I think it was just about, you know, what I understood was Cavell. You know, we mentioned the Cavell numbers. They show like a high growth and higher than ours. What's the difference? Is that approximately right?
Yes.
Got it.
All right, good. I think what, you know, Cavell, I don't know, like, Cavell shows, you know, obviously reflects the high business potential in the market, in terms of long-term growth. How much of that, you know, they basically, you know, allocate to the different different time periods. My, you know, from my initial conversations was that, you know, they rather extrapolate how much, you know, growth of that in the future. I, you know, said like that was certainly quite depressed, was like over the last half year. I don't think that, you know, a precise breakdown of market growth by year is that accurate. I think on the long term growth perspective, I would say, you know, we are rather aligned.
Although the analysts have traditionally, with analysts, I mean basically Cavell and to a lesser part, MZA also been, you know, somewhat too optimistic. It is true that a large portion of the growth actually goes towards Teams, rather than, you know, traditional cloud PBX vendors. I think that will certainly explain some of the difference, which we don't think is quantitatively as significant as I said, reflected in the Cavell numbers. There was a marketing question also, and that I really didn't understand.
We haven't understood you. Could you please be so kind and repeat the first question?
Sure. Probably was a question to you, Petra, as a follow-up on one of your slides where you suggested that, you're gonna stabilize or even reduce marketing expenses and stabilize tabs. I was just wondering whether you can elaborate on if you think you can re-accelerate revenue growth, even if you're more disciplined in your cost structure. Thank you.
Yes, I think there are various reasons why we are optimistic to do so. One is that, as Klaus mentioned, that we focus regionally. In the past we have spent a lot of money, like in France and Spain, without gaining that much growth potential and realizing it. Therefore we are able to be a little bit more cost sensitive here. On the other side, we invested in the past 2 years in very many channel initiatives and to set the basis for partner and business, which we now want to harvest on. We are more and more want to be a channel only company. Therefore it's not important to target the end customer via expensive brand measures.
and with spending the money very carefully and reviewing it where it really makes sense and has the best mix, I think it should be able to be cost sensitive and enhance the marketing ratio substantially.
Thank you very much, Klaus, and best of luck with the future.
Thank you.
Thank you very much. We received from Mr. Popp the information that the answer, how the question that he asked wasn't answered due to the audio issue. I kindly ask you to repeat the answer. Should I read it out again? It was, how do you rate the startup Yaando from Klaus-?
Oh.
Harresch, Telegate? Is it comparable? The valuation is twice as high as NFON
Okay. As I said, like, you know, I don't know the company in detail. I just know it's a contact center company, and contact center obviously has very different multiples, than, you know, a combined, UCaaS, CCaaS player. As I said, like I'm not, familiar with that company in detail, so I cannot really comment on that. I'm happy to have a look at it.
Yes, indeed. It seems to be a completely different, very, very interesting business model. Concentrating mainly on contact center technology, but also on what they call talents. On really outsourcing, the contact center agents and not only the technology. It's a mixture of a technology, and the service that they're offering, which I believe is simply not comparable to the line of business that we're in.
Yeah, exactly.
Okay. Thank you very much. As it seems that there are no further question, thank you very much for your question, and thank you very much, Dr. von Rottkay, Mrs. Boss, and Mr. Koopmann for the detailed presentation and your time answering all those questions. For some final remarks, I hand over to Mrs. Prüser.
Thank you, Mrs. Boss. Yes, as it seems, there are no questions. If you have any further questions after this conference or would like to have more information, just don't hesitate to contact me or to contact us, in total. For now, we would like to say goodbye and thanks for attending our call today, and we wish you a very nice day. Thank you. Bye bye.