VeriFone Reports In Line - Analyst Blog

VeriFone Systems Inc (PAY) reported revenues of $292 million in the second quarter of fiscal 2011, up 21% year over year and up 3% sequentially, beating the Zacks Consensus Estimate of $283 million.

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.

On a segment basis, System Solutions generated revenues of $235.3 million, up 19.0% year over year. The company saw strong demand in its petroleum business as sites continue to upgrade for PCI-compliance. Services revenues grew 38.7% year over year to $57.1 million.

North America delivered a 14% year-over-year growth. Revenue from international markets grew 28% year over year. Latin America grew 11%, Europe grew by 41% and Asia increased by 25%.

Margins

Gross margin (excluding stock-based compensation and one-time items) came in at 43%, up from 41% in the previous quarter and 39% in the year-ago quarter. Including these items, gross margins came in at 42% compared to 39% in the previous quarter and 37% in the year-ago quarter.

Net income came in at $25.2 million or 27 cents in the first quarter compared with a net income of $32.0 million or 35 cents per share in the previous quarter and a net income of $20.2 million or 23 cents in the year-ago quarter.

Excluding one-time charges but including stock-based compensation expense, net income was 38 cents per share, in line with the Zacks Consensus Estimate.

VeriFone exited the quarter with cash and equivalents of $531.5 million, up from $479.2 million at the end of the previous quarter.

Outlook

Management expects revenues between $290 million and $300 million in the third quarter of 2011. Earnings per share are projected around 45 cents- 46 cents.

VeriFone upgraded its guidance for fiscal 2011.  For fiscal 2011, VeriFone projects revenues between $1.170 billion and $1.180 billion, up from the previous estimate of $1.150 billion and $1.160 billion. Earnings per share (excluding stock based compensation and one-time charges) are projected around $1.80 – $1.83, up from the previous estimate of $1.60 – $1.70. This excludes any impact from the Hypercom acquisition.

Earlier, VeriFone announced that it will acquire Hypercom Corporation (HYC) for approximately $7.32 per share or $485 million in an effort to accelerate expansion in key international markets such as Europe. The acquisition is expected to close in the second half of 2011. 

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