Clearlake-backed Ivanti reports 21% drop in EBITDA
Ivanti’s second-quarter earnings fell sharply, adding to pressure on the Clearlake Capital-backed cybersecurity software company as it works to revive growth and manage a heavy debt burden following its shift to a subscription-based model, according to a report by Bloomberg.
Ivanti, a cybersecurity software company backed by Clearlake Capital, reported a significant 21% drop in EBITDA for its second quarter, according to Bloomberg. The Utah-based firm disclosed revenue of $189 million, a 11% decline from the previous year. Pro forma adjusted EBITDA fell by 21% to $72 million. Annual recurring revenue (ARR) also dipped by 1% to $778 million.
Subscription and software-as-a-service products, which constitute about 83% of ARR, are growing at a rate of around 10%, though roughly 5% of the total recurring revenue is linked to products being phased out. The shift towards a subscription-based model has put additional pressure on Ivanti's finances. The company, which has a high debt burden, has about $1.8 billion in first-lien debt due in 2029.
S&P Global Ratings downgraded Ivanti to CCC in June, citing its elevated debt levels, ongoing cash burn, and limited liquidity, warning of an increased risk of default or distressed debt exchange. Ivanti is grappling with its new revenue model, which can depress revenue and earnings during the conversion period despite creating a larger base of recurring income over time.
The company is attempting to boost its performance with new products, including the Autonomous Endpoint Management offering, which leverages AI-based technology to identify and remediate security and compliance risks. The latest results follow a weak first quarter, with revenue falling 4% year-on-year to $204 million, and pro forma adjusted EBITDA declining 13% to $87 million.
Ivanti's financial struggles underscore the challenges private equity owners face as customers transition to subscription models and technology spending is pressured.
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