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VeriFone Swings To Loss On Costs

VeriFone Systems Inc. (PAY: Quote) said Monday after the markets closed that it swung to a first quarter loss, as acquisition and restructuring costs as well as higher expenses more than offset a 48% increase in revenue.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.

At the same time, the San Jose, California-based electronic payment technology company gave a soft earnings guidance for the second quarter, but raised its earnings outlook for the full fiscal year.

"We are delighted with our strong start to fiscal year 2012. We reported record revenues and non-GAAP EPS, the highest non-GAAP operating margin in over five years and continued double-digit organic growth," said Douglas Bergeron, VeriFone's Chief Executive Officer.

VeriFone shares are currently gaining 0.84% in after hours trading after closing the regular trading session at $46.55, down $1.15 or 2.41%. The shares trade in a range of $30.25 to $58.88.

VeriFone, which makes credit card payment terminals, has of late resorted to acquisitions to expand its product offerings and geographic reach. The company completed its $485 million acquisition of Hypercom Corp. in August. On December 30, VeriFone completed the acquisition of Point, Northern Europe's largest provider of payment and gateway services and solutions for retailers, for about EUR 600 million.

Last week, VeriFone announced the acquisition of LIFT Retail Marketing Technology, the provider of the LIFT Station - a digital marketing system that integrates with leading point-of-sale systems and increases sales by convenience stores and gas station shops.

For the first quarter ended January 31, 2012, VeriFone reported a net loss of $3.1 million or $0.03 per share, compared to net income of $32.0 million or $0.35 per share for the year-ago quarter.

Excluding items, adjusted net income for the first quarter was $64.0 million or $0.58 peer share, compared to $39.5 million or $0.43 per share in the prior year quarter.

On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the first quarter. Analysts' estimates typically exclude special items.

Net revenue for the first quarter rose 48% year-over-year to $419.520 million. Excluding amortization of step-down in deferred revenue on acquisition, adjusted net revenue for the quarter increased 50% to $425.20 million. Eleven analysts had a consensus revenue estimate of $417.49 million for the first quarter.

System solutions net revenue for the quarter rose 39%, while services net revenue surged 84% from a year earlier.

Region wise, U.S. And Canada revenue fell 6.8% to $119.6 million, while Europe, Middle East and Africa revenue jumped 96.8% to $154.9 million and Latin America revenue surged 100.1% to $100.3 million. Asia revenue grew 67.9% to $44.7 million.

Gross margins for the first quarter narrowed to 37% from 39% a year ago, while adjusted gross margin improved to 43% 41% last year.

Looking forward to the second quarter, VeriFone forecast adjusted net revenues of $465 million to $470 million and adjusted earnings of $0.59 to $0.60 per share. Analysts currently expect the company to earn $0.60 per share on revenue of $468.42 million for the second quarter.

For the full year of fiscal 2012, VeriFone now expects adjusted net revenues of $1.900 billion to $1.925 billion and adjusted earnings of $2.60 to $2.66 per share. Previously, the company expected net revenues of $1.90 billion to $1.92 billion and adjusted earnings of $2.53 to $2.60 per share.

Analysts currently expect the company to earn $2.60 per share on revenue of $1.91 billion for the fiscal year 2012.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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