Research Update: Verisure Upgraded To 'B+' On Sufficiently Large Scale And Sustainably Strong Operating Performance; Outlook Stable

Alarm monitoring service provider Verisure Midholding AB (Verisure) is approaching 5 million subscribers and an annual revenue of €3 billion. In our view, this means the company has reached sufficient scale to reach break-even free operating cash flow (FOCF) while maintaining about 10% growth of its annual net subscriber base and revenue. In addition, Verisure has consistently posted strong operating performance--with revenue and EBITDA growth of at least 10% since 2016--even amid COVID-19-related disruptions, macroeconomic headwinds, and inflationary pressure. We project that Verisure's debt to EBITDA will remain below 7x, and the company has the capacity, absent large shareholder returns, to deleverage toward 5.0x debt to EBITDA by year-end 2024 from 6.6x at year-end 2022. We therefore raised our long-term

...- Alarm monitoring service provider Verisure Midholding AB (Verisure) is approaching 5 million subscribers and an annual revenue of 3 billion. In our view, this means the company has reached sufficient scale to reach break-even free operating cash flow (FOCF) while maintaining about 10% growth of its annual net subscriber base and revenue. - In addition, Verisure has consistently posted strong operating performance--with revenue and EBITDA growth of at least 10% since 2016--even amid COVID-19-related disruptions, macroeconomic headwinds, and inflationary pressure. - We project that Verisure's debt to EBITDA will remain below 7x, and the company has the capacity, absent large shareholder returns, to deleverage toward 5.0x debt to EBITDA by year-end 2024 from 6.6x at year-end 2022. - We therefore raised our long-term issuer credit rating on Verisure to 'B+' from 'B'. We also raised our issue ratings on its senior secured debt to 'B+' from 'B' and on its senior unsecured debt to 'B-' from...

Research Update