June 02, 2011 04:01 PM Eastern Daylight Time
SAN JOSE, Calif.--(BUSINESS WIRE)--VeriFone Systems, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months ended April 30, 2011 (“Q2 FY11”).
“We have become the critical enablers of payment security, payment-enabled media, and smartphone-based payment at the point of sale, and together with our industry partners we are reshaping the future of payments.”
Net revenues for Q2 FY11 were $292 million, compared to $284 million in the previous quarter and $241 million in the second quarter of fiscal year 2010 (“Q2 FY10”), a 21% year-over-year increase. Services revenue grew from Q2 FY10 at more than twice the rate of systems revenue.
Non-GAAP gross margins were 43% for Q2 FY11, compared to 41% in the prior quarter and 39% in Q2 FY10. GAAP gross margins for the latest quarter were 42% compared to 39% in the prior quarter and 37% in Q2 FY10.
Non-GAAP net income per diluted share for Q2 FY11 was $0.46, compared to $0.43 in the prior quarter and $0.29 for Q2 FY10, a 59% year-over-year increase. GAAP net income per diluted share for the latest quarter was $0.27, compared to $0.35 in the prior quarter and $0.23 in the year-earlier period. Cash balances increased $52 million in Q2 FY11 to $532 million.
"We are very pleased with VeriFone’s second quarter results,” said Douglas G Bergeron, Chief Executive Officer. "For the sixth straight quarter, revenue reached an all-time high, with growth once again exceeding 20%. Gross margins and operating margins continued to expand, highlighting the strength of our services-driven strategy." Bergeron added, "We have become the critical enablers of payment security, payment-enabled media, and smartphone-based payment at the point of sale, and together with our industry partners we are reshaping the future of payments."
Highlights Since Last Earnings Release
VeriFone announced a partnership with Google and top retailers to deploy Google Wallet using VeriFone’s near field communication (“NFC”)-enabled point-of-sale systems to power more engaging and consumer friendly transactions. The trials are occurring throughout the U.S. at leading retailers including American Eagle Outfitters, Foot Locker, Macy’s and Toys “R” Us. VeriFone’s broad retail presence, security infrastructure and brand recognition are keys to the success of this mobile payment offering. VeriFone believes that if the trials lead to wide scale NFC deployment, its revenue could be boosted for the next several years by $100 to $150 million per year in the U.S. and even more internationally.
VeriFone announced that it has entered into a definitive agreement to acquire Destiny Electronic Commerce (Pty) Ltd., trading as CSC, a South Africa-based electronic payments solutions provider. Headquartered in Johannesburg, CSC is a leading provider of secure payment technologies, services and solutions at the point of sale. South Africa is a very attractive market for VeriFone because of its highly developed infrastructure yet growth potential as an emerging economy. The acquisition will provide a base on which to expand VeriFone’s Africa business into the company’s next $100 million market. The acquisition is expected to close this summer subject to the satisfaction of customary closing conditions.
VeriFone and MICROS Systems, Inc., the premier provider in the hospitality systems market, announced a solution to incorporate smart mobile devices with restaurant management systems to accommodate NFC-activated payments at the table as well as redemption of electronic coupons and promotions. Central to the integrated solution is the VeriFone PAYware Mobile Enterprise mobile POS system, which adapts smartphones and wireless PDAs to securely accept payment transactions and utilizes VeriFone services to interface with MICROS table management and order management systems as well as the card payment networks. PAYware Mobile Enterprise incorporates a PCI-approved PIN debit keypad, which allows merchants to leverage dramatically lower transaction costs, as well as a 2D bar code scanner for tasks such as inventory control.
VeriFone announced two compelling PAYMEDIA offerings:
- PAYMEDIA for VeriFone’s PCI 2.0-approved Secure PumpPAY solution for pay-at-the-pump. PAYMEDIA delivers an entertaining and engaging mix of content and advertising to enhance the customer’s experience at the gas pump while generating profits for convenience operators. PAYMEDIA for Secure PumpPAY is driven by the VeriFone Digital Network (VNET), currently playing in more than 10,000 taxi cabs throughout the United States and the United Kingdom. VNET provides consumers with an engaging blend of news, weather, and lifestyle programming while also delivering targeted advertisements and promotions. Secure PumpPAY provides a very cost effective way for fuel retailers to upgrade existing fuel pumps to full PCI 2.0 approval.
- PAYMEDIA Solutions, a comprehensive, subscription-based offering that provides small to medium-sized merchants with payment solutions and access to payment-enabled media at the checkout counter, including the integration of online services such as digital couponing, loyalty, location-based social media and value-added services. As a turnkey solution, PAYMEDIA enables ISOs, acquirers and other resellers to equip merchants with a true “intelligent checkout.” VeriFone has established partnerships to bring the services of MocaPay and vPromos to the retail checkout through PAYMEDIA and will announce additional services throughout the year. PAYMEDIA will be available beginning in June through select resellers.
Guidance – Third Quarter 2011 and Full Year
For the third quarter ending July 31, 2011, the company expects to report net revenues in the range of $295 million to $300 million and non-GAAP net income per diluted share in the range of $0.45 to $0.46.
VeriFone is raising revenue and earnings guidance for the full fiscal year 2011. The company expects to report FY11 net revenues in the range of $1,170 million to $1,180 million and non-GAAP net income per diluted share in the range of $1.80 to $1.83, excluding any impact from the Hypercom acquisition.
HYPERCOM TRANSACTION
In connection with the proposed Hypercom transaction, VeriFone has filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that includes a proxy statement/prospectus relating to the proposed transaction. Investors are urged to read the form S-4 and proxy statement/prospectus (and all amendments and supplements thereto) and any other relevant documents filed with the SEC because they contain important information about VeriFone, Hypercom and the proposed transaction. You can obtain copies of the S-4 and proxy statement/prospectus, as well as VeriFone’s other filings, free of charge at the website maintained by the SEC at www.sec.gov. In addition, you may obtain documents filed with the SEC by VeriFone free of charge by visiting our website (www.verifone.com) or by directing a request in writing to: VeriFone, Attention: Investor Relations, 2099 Gateway Place, Suite 600, San Jose, CA 95110, by phone to (408) 232-7979 or by e-mail to ir@verifone.com. You may obtain documents filed with the SEC by Hypercom free of charge at Hypercom’s website (www.hypercom.com) or by directing a request in writing to Hypercom Corporation, Attention: Investor Relations, 8888 East Raintree Drive, Suite 300, Scottsdale, Arizona 85260, by phone to (480) 642-5000, or by e-mail to stsujita@hypercom.com.
About VeriFone Systems, Inc. (www.verifone.com)
VeriFone Systems, Inc. (“VeriFone”) (NYSE: 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.
