Cloud Software Group Holdings Inc.

Overview Key strengths Key risks Combination of Citrix and TIBCO increases business scale and product breadth and provides good presence in mission critical information technology (IT) infrastructure software markets Weakened free cash flow (FCF) and limited capacity for debt reduction over the next 12 months given cash outlays in support of restructuring actions and high interest expense burden High recurring subscription and maintenance revenue of 90% and long-standing enterprise relationships support high business and revenue predictability High financial risk tolerance shown by elevated debt to EBITDA of about 8.8x expected in fiscal 2023 Cost savings increase prospects for strong profitability with above-average EBITDA margin of 45%-50% Potential for business disruption from extensive restructuring actions to achieve operating efficiencies We view

...We view the company's high-risk tolerance and elevated debt to EBITDA as rating constraints. Cloud Software Group Holdings Inc. incurred $15 billion of funded debt to acquire Citrix and merge it with TIBCO in September 2022. We estimate the company's adjusted leverage exceeded 9.5x as of May 31, 2023, compared with about 11.5x at transaction close (or roughly 10x...

Full Report