VeriFone Reports Third Quarter Fiscal 2007 Results
biz.yahoo.com
Thursday September 6, 4:01 pm ET
Record Revenues of $232 million
Record EBITDA, as adjusted, margins of 27.3%
Record EPS, as adjusted, of 42 cents, grew 50%
Record Operating Cash Flow of $43 million
SAN JOSE, Calif.--(BUSINESS WIRE)--VeriFone Holdings, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months ended July 31, 2007.
Net revenues, for the three months ended July 31, 2007, were $231.9 million, 57% higher than the net revenues of $147.6 million for the comparable period of 2006. Net revenues from VeriFone's International business increased 106% while net revenues from VeriFone's North America business increased 22%. The significant increase in net revenues was driven largely by the acquisition of Lipman Electronic Engineering Ltd., which closed November 1, 2006.
Gross margins, excluding non-cash acquisition related charges and stock-based compensation expense, expanded to a record 48.2%, for the three months ended July 31, 2007, compared to 45.9% for the comparable period of 2006. GAAP gross margins for the three months ended July 31, 2007, declined to 44.0% from 45.0% for the three months ended July 31, 2006, primarily as a result of increased amortization of purchased technology assets.
GAAP operating expenses for the three months ended July 31, 2007 were $65.5 million compared to $38.0 million for the comparable period of 2006. This increase was primarily due to the Lipman acquisition and related integration expenses.
EBITDA, as adjusted, margins for the three months ended July 31, 2007, expanded for the twelfth consecutive quarter and reached a record level of 27.3%, compared to the 22.6% recorded in the three months ended July 31, 2006.
GAAP EPS for the three months ended July 31, 2007, was $0.16 per diluted share, compared to $0.24 per diluted share, for the comparable period of fiscal 2006. This decline resulted from acquisition related non-cash charges, higher stock-based compensation expense and a higher GAAP tax rate driven by an increase in the valuation allowance related to the Lipman acquisition. Net income, as adjusted, which excludes non-cash acquisition related charges and debt issuance costs, as well as non-cash stock-based compensation expense and Lipman integration costs, for the three months ended July 31, 2007, increased 50% to $0.42 per diluted share, compared to $0.28 per diluted share, for the comparable period in 2006.
"I am extremely pleased to report on another outstanding quarter as we once again achieved exceptional financial results," said Douglas G. Bergeron, Chairman and Chief Executive Officer. "During the quarter, we achieved record revenues and record gross and operating margins, all which led to strong EPS growth," continued Bergeron. "Our North American business continued to surge, growing 9% sequentially. Our compelling portfolio of wireless solutions and our strength in emerging markets were also significant factors driving our success this quarter."
"We are increasing our internal expectations for the fourth quarter and now expect to repeat these record third quarter results. Our guidance for the fourth quarter, therefore, is for net revenue of $231 - $233 million and net income, as adjusted, per share of $0.41 - $0.42. As a result, we are also increasing our full year fiscal year 2007 expectations for net income, as adjusted per share to $1.59 to $1.60 per share. As well, given the out-performance in profitability that we have consistently enjoyed since the closing of the Lipman acquisition last November, we are now taking this opportunity to update our long term financial model. We are reaffirming our revenue growth rate projection in the 10% - 15% range and we are increasing our margin expectations as reflected in the table below."
Long Term Model
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Prior New
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Gross Margin(1) 42% - 47% 45% - 50%
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EBITDA Margin(2) 18% - 24% 25% - 30%
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Net Margin(3) 12% - 17% 15% - 20%
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(1) Excludes non-cash acquisition related charges and stock-based compensation expense.
(2) Includes add backs of cash and non-cash acquisition related charges, amortization of debt issuance costs and other debt related costs and stock-based compensation.
(3) Excludes cash and non-cash acquisition related charges, debt issuance costs and stock-based compensation. Assumes long term cash tax rate of 28 percent.
Third Quarter Highlights
* VeriFone was selected as the sole provider of payment solutions to China Postal Savings bank, the fifth largest bank in the country, further solidifying VeriFone's leadership position in this important market.
* Cara, the largest operator of full service restaurants in Canada, has selected VeriFone's ON THE SPOT pay at the table system designed exclusively for the hospitality industry. With this multi-million dollar rollout, Cara becomes the largest restaurant operator and the first in Canada to provide its customers with the convenience and security of payment at the table.
* VeriFone now has more than 5,000 New York City taxicabs signed or committed to comprehensive multi-year agreements for in-taxi acceptance of credit cards. VeriFone also has 100% of the Philadelphia taxi fleet equipped for the acceptance of credit cards and has made inroads in Mexico City and Singapore as well. This business holds considerable promise for the future, including in the case of New York City, a share of the lucrative advertising revenue and per-transaction processing fees.
* In North America, VeriFone's retail business had yet another outstanding quarter signing a number of top tier customers. The TJX Companies, one of the top apparel and merchandise retailers in the United States with over 2,000 stores, chose to roll out the MX 870 to the entire enterprise to proactively meet industry PCI requirements and introduce new functionality to their customers. Rent-A-Center, the leading rent to own retailer in the United States, chose the new MX 850 system to provide debit and credit functionality to all of their stores. The MX 870 was also selected by Bon-Ton Department Stores, one of the largest regional department store chains in the United States. |
