Vonex : June Quarterly Update & Appendix 4C

ASX Announcement

29th July 2022

only	June 2022 Quarterly Shareholder Update and Appendix 4C
Highlights:
	• Record quarterly gross unaudited revenue of $10.5 million (+81% year-on-year (YoY), including
	intercompany sales)
use	• Continued growth in new business activity with small-to-medium enterprise (SME) customers drove
quarterly total contract value (TCV) for new customer sales of $2.37 million, +47% YoY
• June quarter cash receipts of $9.5 million, +110% YoY, with monthly cashflow to improve by $833k post the
	final deferred payment on 2 August 2022 for the Direct Business acquisition
	• More than 100,000 active users registered on Vonex's cloud-based private branch exchange phone service
	following successful ongoing migration of customers of acquired businesses
personal	• Major supply contract secured with More Telecom, telco strategic partner of The Commonwealth Bank
drive growth in average revenue per user
	(CBA), via a binding agreement to develop, operate and maintain a custom software platform to enable,

provision and manage hosted PBX services, IP telephony hardware and softphone licenses for SME customers of More

• 2SG Wholesale division continues to deliver consistent growth, with NBN and IP Voice revenues up 22% and 37% YoY respectively, led by a leading product suite and world-class platform and user experience

• Annualised recurring revenue (ARR) grew to ~$36.2 million as at 30 June 2022, up 97% YoY

• Vonex continues to advance M&A pipeline opportunities which offer the potential to expand Vonex's customer base, provide geographic presence in new markets and boost cross-sellable product diversity to

Telecommunications innovator Vonex Limited ("Vonex" or the "Company") (ASX: VN8) is pleased to provide an update on its activities for the quarter ended 30 June 2022. The quarter was marked by progress and growth across the ForCompany's acquired business units: Voiteck (acquired January 2022), the Direct Business (August 2021), Nextel

(February 2021) and 2SG Wholesale Division (March 2020).

Financial Commentary

• Gross unaudited sales revenue for Q4 FY22 of $10.5 million, a YoY increase of 81%.
• Annualised recurring revenue (ARR) of ~$36.2 million as at 30 June 2022, up more than 97% YoY.
• $9.5 million in cash receipts earned during the quarter, a year-on-year increase of 110% driven by a rapidly growing customer base and continued expansion of cross-selling and market share.

The chart below shows Vonex's delivery of consistent long-termgrowth in ARR.

ASX Announcement

• Cashflow dynamics will improve to the tune of $833k per month following completion on 2 August 2022 of the final monthly cash payment as part of the deferred consideration for the Direct Business acquisition, which will then become complete.
• Cash on hand of $3.2 million as at 30 June 2022, ensuring surplus available liquidity for activities over the coming quarters.

onlyuse

personal(*) Gross sales revenue reflects the unaudited sales performance of the Company's wholesale and retail operations, on a standalone basis, including intercompany sales.

Retail Business Continues to Grow Strongly

The Company continues to deliver increases in contracted revenue through new and existing small-to-mediumForenterprise (SME) customers, with growth supercharged by Vonex's successful acquisition of the Direct Business

perations from MNF Group in August 2021 and Voiteck in January 2022.

ollowing record levels of revenue in Q3 FY22, Vonex added total contract value (TCV) for new customer sales of $2.37 million in the June quarter. This represents YoY growth of 47% and marks three successive quarters in which Vonex has added more than $2 million of TCV.

Vonex has now attracted more than 100,000 registered active users to its cloud-based private branch exchange (PBX) phone service, a YoY increase of 117% and a key indicator of the Company's business development progress.

ASX Announcement

M&A Integration Progress

Vonex remains focused on a proactive and disciplined M&A growth strategy, targeting profitable IT and telco businesses that offer potential for growth in revenue, profit, product diversity and entry into new markets.

onlyIn January 2022, the Company completed its acquisition of Voiteck, an established provider of voice and internet services to SME customers in South Australia. Since completing the acquisition, Vonex has rapidly integrated Voiteck i to the Group.

As at June 30, all Voiteck customers have been successfully migrated to the Vonex network. This process has also seen the successful migration to Vonex of all the Voiteck brand, financial and billing systems and network services.

Through its integration of the Direct Business, the Company has continued to deliver its phased migration of former useMNF customers to Vonex's network and PBX platform. Vonex has applied learnings from the first phase of the migration project which is now well advanced, redesigning its methods to optimise for customer experience and retention outcomes rather than speed at a cost to the business. This strategy has delivered a very strong net promoter core (NPS) of 64 for Hosted PBX migrated customers and will still see the SME migration complete in the first half of

FY23, with revenue from all migrated and unmigrated former MNF customers accruing to Vonex throughout.

Pleasingly, customer churn from the MNF direct business remains within normal parameters and appears to be largely

personalunaffected by the migration which is a positive result and better than expected.

Further efficiencies were identified in Q4 FY22 as the integration of the MNF direct business nears completion. Through careful rationalisation of roles, the Company anticipates net saving on staff costs to be $600-$700k per year.

2SG Wholesale Growth Continues

V nex's Wholesale division continued to deliver consistent growth in the June quarter, with quarterly revenues for NBN with 4G backup up by 22% YoY. Vonex's flagship IP voice product has also delivered ongoing growth with quarterly wholesale voice revenues up 37% YoY, with the strong sales increases across the product suite reflective of successful delivery of the Company's cross-sell /up-sell strategy.

Vonex continues to invest in developing and delivering a world-class platform and user experience for its wholesale customers. The Company continues to upgrade Fusion, its platform facilitating automatic ordering and management of mobile services for wholesale customers. Recently delivered updates include improved management tools to facilitate simpler plan changes for existing services, real time data usage reporting and a scheduling assistant to action forward dated cancellations or suspension of services.

ForV nex Partners with More, Telco Partner of CBA

During the quarter, Vonex partnered with telecommunications service providers More Telecom Pty Ltd and Tangerine Telecom Pty Ltd ("More") to become More's exclusive provider of hosted PBX services. This partnership will see Vonex deliver a new hosted PBX and IP telephony enablement platform for More's new and existing SME customers.

With annualised revenue over $100 million and more than 125k active customers, More is a Melbourne-based provider of a full suite of innovative NBN, business phone and mobile products, services and plans to consumers and SME business customers. More is part-owned by Commonwealth Bank, having announced a strategic partnership in July 2021 that unlocks special benefits for CBA customers.

Under the agreement, Vonex will charge More a one-off fee for the initial development of the customised software platform, which is estimated to be $70,000 based on a daily development rate.

ASX Announcement

At this stage the Company is unable to quantify the likely revenue from the ongoing managed services as it is dependent on the level of onboarded extensions; however, significant revenues are expected from providing ongoing managed services to More across four key areas:

only	- Monthly extension license fees. More has agreed to pay a license fee for each Hosted PBX Extension activated
via the Vonex Platform. As part of the relationship, More has also committed to migrate its 8,800 existing
	extensions to the Vonex platform.
	- The exclusive sale of hardware to More. More has agreed for all IP Phone related hardware needed for each
	new Business phone service to be purchased via the Vonex platform.
use	- Local and international call carriage. More have also committed to exclusively use Vonex carriage for national
and international minutes.
- Software licensing and Management fees. Softphone licenses will also be charged on a per license basis. The
agreement also includes an ongoing monthly management fee for the platform.

Vonex Managing Director, Matt Fahey, said:

"We are proud to report our continued delivery of our three-pronged growth strategy, focusing on growth in Retail, in

2SG Wholesale and through targeted acquisitions. We are particularly proud of the strong organic growth we have personalchieved across our businesses while also focusing on acquisition integration and search.

"We are pleased by the progress of our M&A program to date. The financial benefits, scale gains in customer numbers a d expansion into new regions have all met our expectations. We continue to advance pipeline opportunities which offer the potential to expand Vonex's customer base, provide geographic presence in new markets and boost our cross- sellable product diversity. We look forward to greater cross-selling activities in FY23 which we expect to boost our average revenue per user (ARPU).

"We continue to see a positive outlook for growth as the Company's customer base expands driven by organic growth initiatives, acquisition opportunities and market tailwinds."

CORPORATE

Executive Appointment

During the quarter, Vonex appointed Declan O'Callaghan as Vonex group Chief Operating Officer, adding significant Forst ength to the leadership team. Declan joined Vonex from the position of Managing Director of Voiteck, acquired by Vonex in January 2022. Declan's new role has supported and enhanced the Company's focus on growth via acquisition.

Cash Position

As at 30 June 2022, the Company had approximately $3.2 million of cash and $14.5 million drawn from a financing facility with Longreach Credit Investors. Vonex has one remaining deferred cash consideration payment payable to MNF Group of $0.8 million. The Company intends to repay this through a combination of cash at hand and future cashflows from the business. The Company retains sufficient funding to carry out its activities over the coming quarters.

ASX Announcement

DISCLOSURE

Listing Rule 4.7C.1

The net operating cash inflow for the June 2022 quarter was $1.3 million from cash receipts of $9.5 million (achieving
only
a financial year result: inflow of $5 million on $33.2 million in cash receipts).
Quarterly expenditure was focused on the following areas:
	• Cost of goods relating to sales across the Wholesale and Retail divisions of $4.4 million
	• Acquisition/Transaction related expenses of $0.3 million
use	• Advertising and marketing including investments in cross-selling opportunities of $0.2 million

• Employment, customer support, MNF migration, Voiteck integration/migration and contractor costs of $2.1 million

• Channel Partner training, support and expansion of $0.1 million

• Staff redundancies of $0.3 million

• Maintenance and continual improvements to the Company's systems and data security of $0.2 million

Note 6 to Appendix 4C

• Payments to related parties of the entity and their associates during the quarter:
• Director fees and wages of approximately $159,215
• Company secretarial and accounting fees of $13,500

personalMatthew Fahey	Nicholas Ong	Tim Dohrmann
This announcement has been authorised for release by Matt Fahey, Managing Director of Vonex Ltd.
		ENDS
For more details, please contact:
Managing Director	Non-Executive Chairman	Investor and Media Enquiries
For	Vonex Ltd	NWR Communications
Vonex Ltd
E: [e-mail]	E: [e-mail]	E: [e-mail]
T: [phone]	T: [phone]	T: [phone]

ABOUT VONEX:

Vonex is a full service, award-winning telecommunications service provider selling mobile, internet, traditional fixed lines, infrastructure solutions and hosted PBX and VoIP services - predominantly to small to medium enterprise ("SME") customers under the Vonex brand. Vonex also develops new technologies in the telecommunications industry, including a feature-richcloud-hosted PBX system.

The Company also provides wholesale customers, such as internet service providers, access to the core Vonex PBX, 5G mobile broadband and call termination services at wholesale rates via a white label model. Vonex is pursuing a disciplined M&A growth strategy, targeting profitable IT and telco businesses that offer potential for growth through further product expansion, scale and cross-selling.