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 Business Wire SAN JOSE, Calif. -- March 5, 2013 VeriFone Systems, Inc. (NYSE: 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. (IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES, UNAUDITED) Three Months Ended %Change January 31, January 31, (2) 2013 2012 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 $ 397 nm (5.6 )% currency (Note C) Gross margin as a % of net 43.6 % 42.9 % 0.7 pts revenues Net income per diluted share $ 0.51 $ 0.58 (12.1 )% GAAP: Net revenues $ 429 $ 420 2.2 % Gross margin as a % of net 40.1 % 37.3 % 2.8 pts revenues Net income (loss) per diluted $ 0.11 $ (0.03 ) nm share (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 http://ir.verifone.com. 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. CAUTION CONCERNING FORWARD-LOOKING STATEMENTS 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. (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. Additional Resources: http://ir.verifone.com VERIFONE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES) (UNAUDITED) 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 24,696 13,615 81.4% intangible assets 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 14,173 (12,556 ) nm taxes Provision for (benefit 2,463 (9,782 ) nm from) income taxes Consolidated net income 11,710 (2,774 ) nm (loss) Net (income) loss attributable to 128 (350 ) nm noncontrolling interests Net income (loss) attributable to VeriFone $ 11,838 $ (3,124 ) nm Systems, Inc. stockholders 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 VERIFONE SYSTEMS, INC. AND SUBSIDIARIES NET REVENUE INFORMATION (IN THOUSANDS, EXCEPT PERCENTAGES, UNAUDITED) Three Months Ended % Change (1) Note January 31, October 31, January 31, % SEQ % YoY 2013 2012 (1) 2012 GAAP net revenues: International 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 295,532 340,120 299,894 (13.1)% (1.5)% International 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) International 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 296,927 343,239 305,235 (13.5)% (2.7)% International 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 $ 428,747 $ 485,379 $ 419,524 (11.7)% 2.2% revenues Plus: Non-GAAP net A, D 907 3,178 5,676 nm nm revenues adjustments Non-GAAP net revenues 429,654 488,557 425,200 (12.1)% 1.0% (Note A) 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 391,035 nm 421,072 nm (7.1)% revenues (Note B) (1) "nm" means not meaningful or relevant (2) Reconciliations for the non-GAAP measures are provided at the end of this press release. For three months ended January 31, 2013 compared with three months ended January 31, 2012 Organic non-GAAP Impact due Organic Impact to non-GAAP due to net Net foreign revenues revenues acquired net at growth businesses revenues currency growth (C) constant (A) (B) currency growth International EMEA 10.8 % 23.9pts (13.1 )% (0.6)pts (12.5 )% LAC (27.2 )% 0.0pts (27.2 )% (5.9)pts (21.3 )% ASPAC 13.8 % 2.8pts 11.0 % 0.7pts 10.3 % Total (1.5 )% 12.6pts (14.1 )% (2.1)pts (12.0 )% International North America 11.4 % 1.0pts 10.4 % 0.1pts 10.3 % Total 2.2 % 9.3pts (7.1 )% (1.5)pts (5.6 )% VERIFONE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) January 31, 2013 October 31, 2012 (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 476,668 $ 454,072 Accounts receivable, net of 355,119 366,887 allowances of $9,424 and $8,491 Inventories 188,783 178,274 Prepaid expenses and other 138,175 136,210 current assets Total current assets 1,158,745 1,135,443 Fixed assets, net 152,107 146,803 Purchased intangible assets, net 719,134 734,808 Goodwill 1,206,008 1,179,381 Deferred tax assets 215,963 215,139 Other long-term assets 82,109 79,033 Total assets $ 3,534,066 $ 3,490,607 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 154,598 $ 193,062 Accruals and other current 221,172 230,867 liabilities Deferred revenue, net 119,003 91,545 Short-term debt 52,585 54,916 Total current liabilities 547,358 570,390 Long-term deferred revenue, net 39,056 37,062 Long-term debt 1,238,966 1,252,701 Long-term deferred tax liabilities 216,494 214,537 Other long-term liabilities 71,110 70,440 Total liabilities 2,112,984 2,145,130 Redeemable noncontrolling interest 817 861 in subsidiary Stockholders’ equity: Common stock 1,084 1,081 Additional paid-in capital 1,557,640 1,543,127 Accumulated deficit (192,185 ) (204,023 ) Accumulated other comprehensive 17,123 (32,390 ) income (loss) Total stockholders’ equity 1,383,662 1,307,795 Noncontrolling interest in 36,603 36,821 subsidiaries Total liabilities and equity $ 3,534,066 $ 3,490,607 VERIFONE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) Three Months Ended January 31, 2013 2012 Cash flows from operating activities Consolidated net income (loss) $ 11,710 $ (2,774 ) Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: Depreciation and amortization, net 50,932 31,859 Stock-based compensation expense 12,359 10,704 Non-cash interest expense — 4,112 Deferred income taxes (3,934 ) (8,490 ) Gain on divestiture of assets (4,080 ) — Write-off of debt issuance costs upon debt — 2,115 extinguishment Other (987 ) (1,804 ) Net cash provided by operating activities before changes in operating assets and 66,000 35,722 liabilities Changes in operating assets and liabilities, net of effects of business acquisitions: Accounts receivable, net 13,235 17,154 Inventories, net (8,072 ) (1,994 ) Prepaid expenses and other assets (1,832 ) (10,694 ) Accounts payable (39,297 ) (10,913 ) Deferred revenue, net 28,175 28,589 Other current and long term liabilities (4,778 ) (25,696 ) Net change in operating assets and (12,569 ) (3,554 ) liabilities Net cash provided by operating activities 53,431 32,168 Cash flows from investing activities Capital expenditures (20,789 ) (8,010 ) Acquisition of businesses, net of cash and (1,000 ) (1,067,517 ) cash equivalents acquired Proceeds from divestiture of assets 6,000 — Other investing activities, net 132 7 Net cash used in investing activities (15,657 ) (1,075,520 ) Cash flows from financing activities Proceeds from debt, net of issuance costs 2,427 1,409,177 Repayments of debt (18,506 ) (307,760 ) Repayments of senior convertible notes, — (279,159 ) including interest Proceeds from issuance of common stock 2,965 8,812 through employee equity incentive plans Payments of acquisition-related contingent (4,993 ) — consideration Distribution to noncontrolling interest (134 ) (135 ) stockholders Net cash provided by (used in) financing (18,241 ) 830,935 activities Effect of foreign currency exchange rate 3,063 (2,166 ) changes on cash and cash equivalents Net increase (decrease) in cash and cash 22,596 (214,583 ) equivalents Cash and cash equivalents, beginning of 454,072 594,562 period Cash and cash equivalents, end of period $ 476,668 $ 379,979 <td class="bwpadl0 bwnowrap bwpadr0 *Broken Story* VERIFONE SYSTEMS, INC. AND SUBSIDIARIES RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES) Three Months Ended January 31, 2013 Amortization Acquisition, Other of step-down divestiture Costs of Income % of % of net & Stock based charges tax Non-GAAP GAAP in deferred efficiency Non-GAAP revenues restructure compensation and effect net revenue at initiatives income revenues related acquisition NOTE: (1) (A) (D) (F) (F) (F) (F) (1) Net revenues: System $ 281,708 65.7 % $ 123 $ — $ — $ — $ — $ — $ 281,831 65.6 % solutions Services 147,039 34.3 % 1,312 (528 ) — — — — 147,823 34.4 % 428,747 100.0 % 1,435 (528 ) — — — — 429,654 100.0 % Cost of net revenues: System 174,243 nm — (11,617 ) (426 ) — — — 162,200 nm solutions Services 82,542 nm — (2,028 )
VeriFone Reports Results for the First Quarter of Fiscal 2013
Press spacebar to pause and continue. Press esc to stop.