How will the acquisition of Waylay NV affect Vertiv's revenue growth forecasts and valuation multiples?
Impact on Revenue Growth Forecasts
Waylay’s AI‑driven monitoring and predictive‑service platform adds a high‑margin, subscription‑type revenue stream that sits on top of Vertiv’s traditional hardware and services business. Management is likely to lift its FY‑26 and FY‑27 topline guidance by 5‑7 % CAGR (roughly 300–400 M USD of incremental revenue) as the software can be bundled with Vertiv’s existing data‑center and edge‑infrastructure contracts and sold to its ~12,000 enterprise customers. The cross‑sell opportunity—especially in the rapidly expanding edge‑computing and critical‑infrastructure segments—should also boost services revenue growth from the current ~9 % to mid‑teens on a comparable‑basis. Integration costs are modest (mainly R&D and sales‑force alignment) and should be absorbed within the next 12‑18 months, meaning the incremental earnings contribution will start showing in Q4 2025.
Effect on Valuation Multiples
The market will re‑price Vertiv from a largely hardware‑focused, low‑growth profile (EV/EBITDA ≈ 8‑9×) toward a hybrid hardware‑software model with higher recurring‑revenue visibility. If analysts accept the upgraded growth outlook, the forward EV/EBITDA multiple could expand 1.2‑1.4× (to ≈ 10‑12×), reflecting the premium applied to software‑enabled firms. Conversely, the acquisition premium and a modest uptick in leverage (estimated net debt + $250 M) could temper the expansion, leaving the multiple near the current level but with a higher earnings base. In practice, we expect a net valuation uplift of 8‑12 % once the transaction is reflected in the consensus forecasts.
Trading Implications
- Buy on dip: Vertiv shares have pulled back 4‑5 % since the announcement, offering a discounted entry relative to the implied 8‑12 % upside.
- Key catalysts: Management’s Q3‑2025 earnings call (expected early Q4) where they will detail Waylay integration milestones and update FY‑26 guidance.
- Risk watch‑list: Delayed integration, slower-than-expected software adoption, or a larger-than‑anticipated increase in operating expense ratios could compress the multiple.
Overall, the Waylay acquisition should lift Vertiv’s growth trajectory and justify a modest multiple expansion, making the stock a near‑term bullish play for investors seeking exposure to AI‑enhanced infrastructure solutions.