Verisure Midholding

Overview Key strengths Key risks The leader in the European residential security-monitoring market, with more than 4.5 million customers in 17 countries across Europe and Latin America. Sustainable S&P Global Ratings-adjusted debt to EBITDA likely to remain at 7.0x-7.5x, despite the company's ability to deleverage, due to a track record of dividend recapitalization. Strong growth opportunities primarily from largely unpenetrated European countries and (to some extent) enhanced product offerings. Negative free operating cash flow (FOCF) historically, and our expectation of negative FOCF at least until 2024, given the high investment to acquire new customers, except in 2020. Low customer attrition of about nearly 7% in third-quarter 2022 (compared with 10%-15% for companies operating in the U.S.). Relatively modest scale, although

...Despite the slight increase in attrition rates, Verisure Midholding's growth prospects remain strong, driven by increased market share in existing markets and geographic expansion. The company's business remained resilient, supported by strong operating performance with 17.3% and 13.3% revenue growth in 2021 and the first nine months of 2022, respectively. This was supported by the continued customer growth, average revenue per user (ARPU) increase and low attrition rates from existing customers. The slight increase in attrition rate to 6.9% in third-quarter 2022 from about 6.4% in third-quarter 2021 relates to economic reasons, namely inflation and uncertainty regarding the economic outlook. For 2022-2023, we expect 12%-14% annual revenue growth as Verisure continues benefiting from the low penetration rates of the residential monitoring market in Europe and Latin America and continue expanding its market share in current geographies. However, we expect customer demand to remain slightly...

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