How to Invest in Securus Technologies 2024How to Invest in Securus Technologies 2024

How to Invest in Securus Technologies 2024- The Complete Guide for Beginners

Securus Technologies is one of the largest providers of technology solutions for corrections facilities and law enforcement agencies in North America. With a strong track record of growth and profitability, Securus has emerged as an attractive investment opportunity for those looking to invest in the public safety technology sector.

In this comprehensive guide, we will look at everything you need to know about investing in Securus Technologies, including:

  • An Overview of Securus Technologies
  • Securus Business Model and Revenue Sources
  • Securus Growth Strategy and Recent Developments
  • Securus Financial Performance and Valuation
  • How to Invest in Securus Technologies Stock
  • Risks and Challenges Associated with Securus
  • Outlook for Securus and the Corrections Technology Sector
How to Invest in Securus Technologies 2024
Overview of Securus Technologies

Overview of Securus Technologies

Founded in 1986 and headquartered in Dallas, Texas, Securus Technologies provides a wide range of technology solutions focused on corrections, investigations, public safety, and monitoring. The company serves over 3,500 public safety, corrections, and law enforcement agencies and over 1.2 million inmates across North America.

Securus Technologies operates through two business segments:

Technologies: This segment provides corrections-related technology solutions, including calling platforms, voicemail, visitation systems, email, tablets, content, and education solutions for inmates. Is Workoo Technologies Legit? An In-Depth Analysis 2024

Secure Call Platform (SCP): This segment offers investigative solutions such as location-based services, data analytics, emergency response solutions, and monitoring services.

Some of the key products and services offered by Securus include:

  • Inmate Telephone Systems: Platforms for inmate calling services within corrections facilities
  • Investigative Analytics: Data analysis and mapping for investigations
  • Biometric Voice Recognition: A Voice identification solution for investigations
  • Video Visitation: On-site and remote video visitation systems
  • Inmate Tablets: Secure tablet devices for education and entertainment
  • Medical Alert Monitoring: Monitoring systems for inmate health emergencies
  • Government Payment Services: Payment processing solutions for government agencies

Securus has a broad client base that includes large state and county departments of corrections as well as municipal law enforcement agencies. The company has a contracted sales model that provides highly recurring and predictable revenue streams.

How to Invest in Securus Technologies 2024
Securus Business Model and Revenue Sources

Securus Business Model and Revenue Sources

Securus Technologies operates on a business model that generates revenue from multiple sources, including:

  • Service Revenue: Paid for the usage of technology solutions by customers based on service contracts. This includes usage of calling platforms, video visitation, voicemail, email, etc.
  • Product Sales: Revenue generated from one-time sales of software licenses and products. For example, revenue from the sale of tablet devices goes to corrections facilities.
  • Government Payment Services: Transaction fees earned by Securus for providing payment processing solutions to government agencies.

The inmate calling services segment is the biggest contributor to Securus revenues. The company generates revenue from inmate calls through contracts with corrections facilities based on a Revenue Share Model. Under this model, Securus pays a percentage commission on gross revenues from inmate calls to the contracting correctional facility.

Revenues are also derived from other communication services like video visitation, voicemail, and messaging that are paid for by friends and families of inmates.

Investigative analytics solutions and government payment services provide recurring SaaS-based revenue streams. Sales of other products, like biometric devices and inmate tablets, also contribute to revenues.

Overall, Securus has a well-diversified business model with a strong recurring revenue base that generates steady cash flows.

How to Invest in Securus Technologies 2024
Securus Growth Strategy and Recent Developments

Securus Growth Strategy and Recent Developments

Securus Technologies has achieved robust growth over the last decade by pursuing strategic acquisitions and expanding its product portfolio.

Some of the key aspects of the Securus growth strategy include:

  • Acquisitions: Securus has acquired over 20 companies since 2013 to expand its suite of products and enter new segments. Some major acquisitions include JPay in 2015, Guarded Exchange in 2017, and JobView in 2020.
  • Increasing Penetration: Securus aims to deepen its relationship with existing clients by cross-selling new products. It leverages its incumbent vendor position to win new contracts.
  • New Product Innovation: Securus invests in developing innovative new products in corrections technology like video visitation, inmate tablets, biometrics, and analytics.
  • Geographic Expansion: The company is focused on increasing its client base by expanding across North America. It serves the majority of large prisons in the US and Canada.

Some recent developments include:

  • In 2021, Securus acquired Aventiv Technologies, a major provider of inmate communications solutions, to further expand its market share.
  • The company introduced a new 5G-enabled inmate calling tablet in 2022 with enhanced capabilities.
  • In 2022, Securus entered into a 15-year contract with the Maine Department of Correction to continue providing communication services across state prisons.
How to Invest in Securus Technologies 2024
Securus Financial Performance and Valuation

Securus Financial Performance and Valuation

Securus has demonstrated excellent financial performance with consistent revenue growth and profitability. Here is an overview of its recent financial results:

  • For 2021, Securus reported total revenues of $763 million, a 10% increase compared to 2020 revenues of $699 million.
  • Gross profit in 2021 rose to $433 million, compared to $411 million in 2020. Gross margin also improved to 57% from 59% in 2020.
  • The company reported strong adjusted EBITDA of $373 million in 2021, a 10% increase over prior-year EBITDA of $341 million. Adjusted EBITDA margins remained flat at ~49%.
  • Securus maintained a high recurring revenue base; monthly recurring revenue increased to $63 million in 2021 compared to $58 million in 2020.
  • As of June 2022, Securus was acquired by Platinum Equity in a deal that valued Securus at around $3.5 billion, including debt.

Overall, Securus has shown the ability to drive steady revenue growth and profitability improvement across business cycles. Its high-margin recurring revenue base offers stability and cash flow visibility.

How to Invest in Securus Technologies 2024
How to Invest in Securus Technologies 2024 Stock

How to Invest in Securus Technologies 2024 Stock

As a privately held company, regular investors cannot invest directly in Securus Technologies stock currently. Here are a few ways, however, that Securus investment exposure can still be obtained:

  • Invest in Platinum Equity: Since Platinum Equity acquired Securus in 2022, investors can gain exposure to Securus by investing in Platinum Equity through their private equity funds. However, minimum investment amounts are very high, starting at $5–10 million.
  • Wait for a Potential IPO: Securus may consider going public through an IPO in the coming years as its private equity owner looks to exit. An IPO will allow public-market investors access to Securus stock.
  • Invest in Public Corrections Technology Companies: Other publicly listed companies provide similar solutions to corrections facilities and law enforcement agencies. These include Globe Telecom and ICTS International.
  • Specialized ETFs: ETFs like the Invesco S&P SmallCap Information Technology ETF (PSCT) provide some exposure to corrections technology providers.

Overall, Securus remains an attractive sector based on the growth in public safety technology spending. However, investment options are currently limited given their private status. Going public through an IPO or SPAC deal could unlock shareholder value in the future.

How to Invest in Securus Technologies 2024

Risks and Challenges Associated with Securus

While Securus Technologies has strong growth prospects, it also faces some risks and challenges that investors should be aware of:

  • High Debt Levels: Securus carries significant debt obligations due to acquisitions. As of June 2022, it had about $3 billion in long-term debt. High debt could constrain future investments.
  • Commoditization Risks: The corrections technology market is seeing increased competition, which could erode Securu’s pricing power. Competitors like Telmate and ViaPath Technologies are vying for market share.
  • Regulatory Scrutiny: Controversies around the alleged misuse of call monitoring data have led to greater regulatory oversight. Any adverse regulations could impact operations.
  • County Jail Risks: The company generates a large portion of its revenues from large state and federal prisons. The loss of major county jail contracts could affect revenues.
  • High Customer Concentration: The top 10 customers account for over a third of Securus revenue, indicating reliance on key, large customers. The loss of any major contract would be a blow.

However, its incumbent position in a niche sector with limited alternatives and long-term customer contracts provides competitive advantages.

Outlook for Securus and the Corrections Technology Sector

The outlook for the correctional technology sector in general looks strong, supported by trends like:

  • Increasing Incarceration Rates: The US has the world’s largest prison population, creating steady demand for vendors like Securus.
  • Technology Modernization: Government investment in upgrading legacy systems in prisons and public safety agencies will drive sales.
  • Budget Pressures: Technology solutions help corrections facilities save costs and improve efficiency. This drives adoption.
  • Regulatory Support: Measures like the First Step Act emphasize rehabilitation, including education and communication access for inmates.

As the dominant player, Securus Technologies is well-positioned to capitalize on these trends. Its acquisitions have expanded market reach and product breadth. Investments in solutions aligned to market changes like video visitation, tablets, and analytics will support growth.

However, for Securus investors, returns will depend greatly on the entry valuation determined if and when the company goes public. The sector outlook remains positive, but risks around competition and debt levels need monitoring.

How to Invest in Securus Technologies 2024
Faq’s and Conclusion

Frequently Asked Questions (FAQs) on Securus Technologies

How does Securus Technologies make money?

Securus generates revenue primarily through paid usage of its technology solutions by corrections facilities and law enforcement agencies. This includes calling services, video visitation, investigative analytics, biometric products, education solutions, etc.

Does Securus Technologies pay dividends?

No, Securus is currently a private company and does not pay dividends to investors.

Who owns Securus Technologies?

Securus Technologies is owned by the private equity firm Platinum Equity, which acquired Securus for $3.5 billion in 2022.

Is Securus a public company?

No, Securus Technologies is currently a privately held portfolio company of Platinum Equity. It is not publicly listed on any stock exchange.

What is Securus Technologies worth?

Securus was acquired by Platinum Equity in 2022 for around $3.5 billion, including debt. This represents its current valuation as a private company.

Conclusion

In conclusion, Securus Technologies represents an attractive investment opportunity within the niche corrections and public safety technology markets. It dominates the corrections communications sector and is diversifying into fast-growing segments like analytics, biometrics, and payments through acquisitions. Steady revenue growth and strong cash flows make it a valuable platform investment. For suitable investors, exposure through its private equity owner or a future IPO/SPAC transaction could offer considerable upside. However, high debt levels and risks around competition and regulation need to be factored in as well.

 

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