Research Update: VeriFone Systems Inc. Outlook Revised To Negative On Cash Flow Pressures And Approaching Debt Maturity, Ratings Affirmed

The weakness in U.S.-based payment and commerce solutions provider VeriFone Systems Inc.?s end markets led to a material decline in its hardware revenue and pressured its cash flow generation in the first quarter ended Jan. 31, 2024. We expect the company's persistent business pressures in the near-term and rising tax settlement obligations will lead to cash outflows and elevated debt to EBITDA of about 8.9x in fiscal year 2024 (up from 7.1x in fiscal year 2023). Additionally, VeriFone will need to address its $2 billion term loan maturing in August 2025. We believe the company may face elevated refinancing risk over the near term given its weaker credit metrics and evolving business strategy. We revised our outlook on VeriFone to

...- The weakness in U.S.-based payment and commerce solutions provider VeriFone Systems Inc.'s end markets led to a material decline in its hardware revenue and pressured its cash flow generation in the first quarter ended Jan. 31, 2024. We expect the company's persistent business pressures in the near-term and rising tax settlement obligations will lead to cash outflows and elevated debt to EBITDA of about 8.9x in fiscal year 2024 (up from 7.1x in fiscal year 2023). - Additionally, VeriFone will need to address its $2 billion term loan maturing in August 2025. We believe the company may face elevated refinancing risk over the near term given its weaker credit metrics and evolving business strategy. - We revised our outlook on VeriFone to negative from stable and affirmed all of our ratings, including our 'B-' issuer credit rating. - The negative outlook reflects our expectation that the uncertain demand environment, stemming from industry inventory digestion, will cause the company's debt...

Research Update