Moody's Assigns 'B3' Corp. Family Rating to Cvent, Inc. (CVT); Outlook is Stable

Moody's Investors Service ("Moody's") assigned credit ratings to Cvent, Inc (NYSE: CVT)(together with Lanyon Solutions, Inc., "Cvent"). The Corporate Family rating ("CFR") was assigned at B3, the Probability of Default rating ("PDR") was assigned at B3-PD, the proposed enior secured first lien revolving credit facility due 2021 and proposed senior secured first lien term loan due 2023 were rated at B1 and the proposed senior secured second lien term loan due 2024 was rated at Caa2. The rating outlook is stable.

The proceeds of the term loans and cash and rollover equity from affiliates of financial sponsor Vista Equity Partners ("Vista") will be used to acquire Cvent, Inc. Vista then plans to combine it with Lanyon Solutions, Inc., which Vista already owns, as well as to pay transaction related fees and expenses.

..Issuer: Cvent, Inc.

Assignments:

....Corporate Family Rating, Assigned B3

....Probability of Default Rating, Assigned B3-PD

....Senior Secured 1st lien Bank Credit Facility, Assigned B1 (LGD2)

....Senior Secured 2nd lien Term Loan, Assigned Caa2 (LGD5)

Outlook:

....Outlook, Stable

RATINGS RATIONALE

The B3 CFR reflects very high debt to EBITDA of about 11 times at closing and Moody's expectations for financial leverage to remain above 6.5 times until 2017, limited free cash flow to debt of less than 2% and EBITDA less capital expenditures and capitalized software expenses to interest expense below 1.25 times. Revenue size is modest with about $360 million in sales expected in 2016. Moody's notes that before the planned merger, neither predecessor company generated positive operating profits. Future profitability is highly dependent upon the full and timely achievement of substantial cost reduction plans amounting to 20% of total pre-merger expenses. Revenue scope is also limited, with subscription and other revenues sourced from meeting planners and hotels, mostly in North America.

Moody's believes that historically high revenue growth rates at the legacy Cvent businesses must continue for the company to generate enough free cash flow to reduce debt; revenue at the legacy Lanyon businesses have not been growing. Subscription revenues paid up front and high customer retention and renewal rates provide support to the revenue growth forecast. While numerous potential competitors exist, there are few direct competitors today. Over $1 billion of cash equity from Vista also suggests that Cvent's value could be well in excess of the $640 million of rated debt. Moody's considers Cvent's liquidity profile good, with at least $40 million of balance sheet cash and the full $40 million revolving credit facility expected to be available at all times during the next 12 months.

All financial metrics cited reflect Moody's standard adjustments.

The stable ratings outlook reflects Moody's expectations for 8% annual revenue growth and operating profitability that should improve steadily to exceed 15% in 2016 and 20% in 2017. The ratings could be upgraded if Moody's expects sustained profitable revenue growth, debt to EBITDA below 6 times, free cash flow to debt above 5%, EBITDA less capital expenditures and capitalized software expenses to interest expense approaching 2 times, solid liquidity and balanced financial policies. A downgrade is possible if increased competition or customer losses drive down revenue growth, leading Moody's to anticipate debt to EBITDA remaining above 7 times, EBITDA less capital expenditures and capitalized software expenses to interest expense below 1 time or less than adequate liquidity.

The principal methodology used in these ratings was Business and Consumer Service Industry published in December 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

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