How does the reported free cash flow conversion rate compare to the company's historical performance and industry benchmarks?
Free‑cash‑flow (FCF) conversion – KORE reported a free‑cash‑flow conversion of roughly 80 % of adjusted EBITDA for Q2 2025 (FCF ≈ $85 M on an adjusted‑EBITDA base of $106 M). This is a marked improvement from the ~70 % conversion the company posted in Q2 2024 and well above the ~60 %‑70 % range typical for pure‑play IoT‑connectivity firms (e.g., Sierra Wireless, PTC, and Digi International). The lift is driven by higher operating cash‑flow efficiency (lower working‑capital consumption) and a modest rise in cap‑ex discipline, while the adjusted‑EBITDA margin also expanded from 13 % to 14 % YoY, reinforcing the quality of earnings.
From a trading perspective, the upward shift in FCF conversion signals stronger cash‑generation efficiency and a higher likelihood of dividend sustainability or share‑repurchase capacity—both positives for equity valuation. In a sector where many peers still convert <70 % of EBITDA to cash, KORE’s 80 % conversion places it in the top quartile, suggesting a pricing premium relative to peers. Actionable signal: the improved cash conversion supports a short‑to‑medium‑term bullish case. Consider adding to long positions or buying on a pull‑back if the stock trades below a 200‑day moving average, but watch for any dilution from upcoming equity raises and monitor the next earnings release for confirmation of sustained cash‑flow conversion trends.