VeriFone Systems Inc.

Overview Key strengths Key risks Good brand recognition within the point-of-sale hardware market as one of the two leading global vendors. High interest rates and foreign exchange headwinds depress free cash flow generation for the second year in a row. Growing services revenue should provide better revenue visibility over time. First-lien term loan of $2.074 billion matures in 2025 and uncertain macroeconomic environment coupled with volatile capital markets could make refinancing more difficult or very costly. Above average profitability relative to other hardware peers with margin accretion stemming from price increases to offset inflationary pressures as well as adequate liquidity. High exposure to competitive and fragmented small and midsize businesses. We expect VeriFone and its new leadership will execute on

...We expect a revamp of the company's go-to-market strategy and changes to its manufacturing footprint will help boost its growth channel while also providing profitability upside. We expect VeriFone and its new leadership will execute on a growth strategy that emphasizes new customer wins through partnership expansion while simplifying its sales motion to create a more streamlined sales approach. We believe that VeriFone will reposition certain assets to create a more unified sales team, shifting away from the current siloes that it employs today. We also expect Verifone to employ low-cost manufacturing facilities closer to their core end markets to considerably reduce logistics timelines although it will likely take several quarters to realize the full benefits from a profitability standpoint. While VeriFone is no longer struggling to obtain chips for its terminals, its centralized supply chain has made it challenging to reduce inventory days outstanding which remains elevated above pre-pandemic...

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