VeriFone Reports Results for the First Quarter of Fiscal 2013

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VeriFone Reports Results for the First Quarter of Fiscal 2013

First Quarter Financial Highlights

  • Non-GAAP net revenues of $430 million, up 1% year-over-year
  • GAAP net revenues of $429 million, up 2% year-over-year
  • Non-GAAP net income per diluted share of $0.51, down 12% year-over-year
  • GAAP net income per diluted share of $0.11, versus $0.03 loss a year ago
  • Operating cash flow of $53 million

SAN JOSE, Calif.--(BUSINESS WIRE)-- VeriFone Systems, Inc. (NYS: PAY) , the global leader in secure electronic payment solutions, today announced financial results for the three months ended January 31, 2013 ("Q1 FY13"). Non-GAAP net revenues for Q1 FY13 were $430 million, compared to $425 million a year ago, a 1% increase. GAAP net revenues were $429 million, compared to $420 million a year ago, a 2% increase. Non-GAAP net income per diluted share was $0.51, compared to $0.58 a year ago, a 12% decrease. GAAP net income per diluted share was $0.11, compared to a loss of $0.03 a year ago. The table below provides additional summary non-GAAP and GAAP financial information and comparisons.

    Three Months Ended    



January 31,



January 31,


Non-GAAP (1):
Net revenues (Note A, D) $ 430 $ 425 1.0 %
Organic net revenues (Note B) $ 391 $ 421 (7.1 )%
Organic net revenues at constant currency (Note C) $ 397 nm (5.6 )%
Gross margin as a % of net revenues 43.6 % 42.9 % 0.7 pts
Net income per diluted share $ 0.51 $ 0.58 (12.1 )%
Net revenues $ 429 $ 420 2.2 %
Gross margin as a % of net revenues 40.1 % 37.3 % 2.8 pts
Net income (loss) per diluted share $ 0.11 $ (0.03 ) nm
(1) Reconciliations for the non-GAAP measures are provided at the end of this press release.
(2) "nm" means not meaningful or relevant

"While our first quarter results fell short of our expectations, VeriFone remains well positioned to take advantage of the secular shift from cash to cashless transactions and the increasing demand for payment security, which should continue to drive healthy payment industry growth," said Douglas G. Bergeron, Chief Executive Officer. "We are confident that our strategy to build out our service portfolio is sound, and we will continue to invest in multiple services infrastructure initiatives to enable us to offer innovative solutions and build deeper relationships with our customers. We have taken aggressive steps to address our execution challenges, including centralizing engineering resources, increasing investment in our world-class product portfolio and improving sales management of emerging market distributors and new services initiatives. We are likely to take additional steps as needed, including senior management changes, to ensure that we have the right executive team and resources in place to execute our strategic plan going forward."

Additional Financial and Business Highlights

  • North America GAAP net revenues increased 11% year-over-year.
  • Multi-Lane Retail GAAP net revenues increased 11% year-over-year driven by higher demand for new MX 900 series systems.
  • Petroleum convenience store system Topaz unit sales set a record as gas stations continued to migrate from serial keyboard based Ruby systems to the IP touch screen based Topaz platform.
  • Services comprised 34% of total non-GAAP net revenues, compared with 31% in the prior quarter.
  • Installed base of Point All-in-One payments-as-a-service ("PaaS") grew 25% in the last 12 months.
  • Accelerated rollout of PaaS in the Australia and New Zealand regions by signing agreements to acquire the largest electronic point of sale provider and the exclusive VeriFone distributor in New Zealand.

"We are continuing to execute our strategy and making the internal changes necessary to create long-term growth opportunities," continued Bergeron. "We are facing a less than perfect macro environment; however, we are encouraged by a number of positive trends including those around services, mobility, security and U.S. EMV. Our strategic priorities are aligned to execute against these opportunities and we are focused on creating value for our customers and shareholders."

Outlook for Second Fiscal Quarter 2013

  • Non-GAAP net revenues in the range of $435 million to $450 million
  • Non-GAAP net income per diluted share in the range of $0.45 to $0.50

Outlook for Full Fiscal Year 2013

  • Non-GAAP net revenues in the range of $1.80 billion to $1.83 billion
  • Non-GAAP net income per diluted share in the range of $1.90 to $2.10
  • Cash flow from operations less capital expenditures (free cash flow), in the range of $170 million to $190 million

Conference Call

VeriFone will hold its earnings conference call today, March 5, 2013, at 1:30 pm (PT). To listen to the call and view the slides, visit VeriFone's website To listen to the call over the phone, dial (800) 706-7748 within the U.S., or (617) 614-3473 outside the U.S., and use conference passcode 4783 6410. The recorded audio webcast will be available on VeriFone's website until March 12, 2013.


This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs and on currently available competitive, financial and economic data and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of VeriFone Systems, Inc. These risks and uncertainties include, but are not limited to: our assumptions, judgments and estimates regarding the impact on our business of the continued uncertainty in the global economic environment and financial markets, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, whether the expected benefits of our business initiatives are achieved, our ability to protect against fraud, the status of our relationship with and condition of third parties such as our contract manufacturers, distributors and key suppliers upon whom we rely in the conduct of our business, our dependence on a limited number of customers, risks and uncertainties related to the conduct of our business and operations internationally, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, our dependence on a limited number of key employees, short product cycles, rapidly changing technologies and maintaining competitive leadership position with respect to our payment solution offerings. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. For a further list and description of the risks and uncertainties affecting the operations of our business, see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. VeriFone is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

About VeriFone Systems, Inc. ( )

VeriFone Systems, Inc. ("VeriFone") (NYS: PAY) is the global leader in secure electronic payment solutions. VeriFone provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets. VeriFone solutions are designed to meet the needs of merchants, processors and acquirers in developed and emerging economies worldwide.

Additional Resources:

Three Months Ended January 31,
2013 2012 % Change (1)
Net revenues:
System solutions $ 281,708 $ 312,641 (9.9)%
Services 147,039   106,883   37.6%
Total net revenues 428,747   419,524   2.2%
Cost of net revenues:
System solutions 174,243 198,752 (12.3)%
Services 82,542   64,134   28.7%
Total cost of net revenues 256,785   262,886   (2.3)%
Gross margin 171,962   156,638   9.8%
Operating expenses:
Research and development 39,802 35,079 13.5%
Sales and marketing 45,748 39,986 14.4%
General and administrative 39,981 46,038 (13.2)%
Amortization of purchased intangible assets 24,696   13,615   81.4%
Total operating expenses 150,227   134,718   11.5%
Operating income 21,735 21,920 (0.8)%
Interest expense (12,590 ) (14,634 ) (14.0)%
Interest income 1,088 1,007 8.0%
Other income (expense), net 3,940   (20,849 ) nm
Income (loss) before income taxes 14,173 (12,556 ) nm
Provision for (benefit from) income taxes 2,463   (9,782 ) nm
Consolidated net income (loss) 11,710 (2,774 ) nm
Net (income) loss attributable to noncontrolling interests 128   (350 ) nm
Net income (loss) attributable to VeriFone Systems, Inc. stockholders $ 11,838   $ (3,124 ) nm
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
Basic $ 0.11   $ (0.03 )
Diluted $ 0.11   $ (0.03 )
Weighted average number of shares used in computing net income per share:
Basic 107,934 105,833
Diluted 110,558 105,833
(1)"nm" means not meaningful or relevant
Three Months Ended % Change (1)
Note January 31, 2013     October 31, 2012 (1)     January 31, 2012 % SEQ     % YoY
GAAP net revenues:
EMEA $ 171,626 $ 201,347 $ 154,907 (14.8)% 10.8%
LAC 73,026 79,971 100,289 (8.7)% (27.2)%
ASPAC 50,880   58,802   44,698   (13.5)% 13.8%
Total International 295,532 340,120 299,894 (13.1)% (1.5)%
North America 133,215   145,259   119,630   (8.3)% 11.4%
Total $ 428,747   $ 485,379   $ 419,524   (11.7)% 2.2%
Non-GAAP net revenues: (Note A) (2)
EMEA A $ 172,884 $ 203,980 $ 159,003 (15.2)% 8.7%
LAC A 73,026 79,971 100,289 (8.7)% (27.2)%
ASPAC A 51,017   59,288   45,943   (14.0)% 11.0%
Total International 296,927 343,239 305,235 (13.5)% (2.7)%
North America A 132,727   145,318   119,965   (8.7)% 10.6%
Total $ 429,654   $ 488,557   $ 425,200   (12.1)% 1.0%
GAAP net revenues $ 428,747 $ 485,379 $ 419,524 (11.7)% 2.2%
Plus: Non-GAAP net revenues adjustments A, D 907   3,178   5,676   nm nm
Non-GAAP net revenues (Note A) 429,654 488,557 425,200 (12.1)% 1.0%
Less: net revenues from businesses acquired in the past 12 months
Point B (38,279 ) nm (4,128 ) nm nm
Other B (340 ) nm   nm nm
Total (38,619 ) nm (4,128 ) nm nm
Organic non-GAAP net revenues (Note B) 391,035   nm 421,072  
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