VeriFone Slashes Fiscal 2013 Guidance, but Beats Wall Street in Q1

Andrew Klips  |

VeriFone Systems, Inc. (PAY) reported after Tuesday’s closing bell that it swung to a profit in the first quarter on modestly increasing revenues and better-than-expected profits. Gains in extended hours trading for beating earnings estimates are being tempered by the electronic payment technology company cutting is full-year guidance after already cutting first half guidance in mid-February went sent shares diving.

For the first quarter of fiscal 2013, San Jose, California-based VeriFone reported net revenue of $428.7 million, up 1 percent from $419.5 million in the first quarter last year.  The company reported a profit for the quarter of $11.8 million, or 11 cents per share, compared to a net loss of $3.1 million, or 3 cents per share, in the first quarter of fiscal 2012.  Adjusted earnings, which don’t count stock based compensation, acquisition and other costs, decreased from $64 million, or 58 cents per share, in the year prior quarter to $56 million, 51 cents per share, in the latest quarter.

The adjusted EPS figure topped Wall Street expectations of 48 cents per share and revenue totals nipped past predictions of $426.2 million.

“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.

On February 20, VeriFone announced that it anticipated adjusted first-quarter earnings in the range of 47 cents and 50 cents, well below what analysts were expecting, nearly halving shares from around $33 each to a low of $17.93.

Bergeron added today, “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.”

The Verifone chief is referring to a business model shift from primarily selling hardware (machines that allow vendors to accept debit and credit cards) in favor of a more service-oriented business of subsidizing the machines for recurring monthly fees.

To that end, revenue from services in the latest quarter was 37.6 percent higher at $147.0 million than the year prior quarter, but sales from systems fell 9.9 percent to $281.7 million.  Gross margin widened to 40.1 percent from 37.3 percent in Q1 fiscal 2012.

VeriFone maintained its second-quarter guidance of a Non-GAAP revenue range of $435 million to $450 million and non-GAAP net income between 45 cents per share and 50 cents per share.  However, the company slashed its full-year guidance from its original estimate of EPS between $3.25 and $3.30 and revenue in the range of $2.05 billion to $2.1 billion downward to EPS of $1.90 to $2.10 and revenue between $1.8 billion and $1.83 billion.

Shares eked upward during regular trading hours by 2.67% to $19.25 as part of the broad market rally and have moved up to $19.79 in after-hours trading.  Shares are off by about 57 percent in the past 52 weeks.

[Image via Flickr]

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