Flexera Software LLC

Overview Key strengths Key risks Good market positions for its core software monetization, license optimization, and information technology (IT) asset management businesses with diverse enterprise customer base. Difficult macroeconomic environment and high interest rates pressuring free cash flow generation. Pure subscription model with over 95% recurring revenue base. Very high financial leverage of over 10x as of June 2023, which we expect will continue over our forecast period. Sufficient liquidity with about $200 million cash on balance sheet at June 30, 2023 and full revolver availability. Small scale in a highly fragmented market competing against larger, better-funded software players, with narrow product focus on the IT asset management and software license optimization markets. Revenues grew mid-single-digits in the six months

...We expect Flexera Software LLC's revenues in 2023 to grow low-to-mid single digit percentage area, despite challenging macroeconomic environment. Revenues grew mid-single-digits in the six months ended June 30, 2023, driven by approximately 20% growth in cloud revenues and outperformance in on-premise subscription, which has a greater portion of revenue recognized upfront, offset by continued declines in maintenance revenues after the company's discontinuation of new perpetual licenses at the beginning of 2022. We expect growth for the full year to be about 4%. While retention rates have been consistent with no material booking delays in the first half of the year, a prolonged uncertain IT spending environment could pressure the company's new and...

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