Tuesday January 21 5:03 PM EDT
VeriFone Announces Fourth-Quarter and Full-Year Results: 1996 Net Revenues Increase 22.1 Percent To $472.5 Million
REDWOOD CITY, CALIF.--(BUSINESS WIRE)--January 21, 1997-- Verifone Inc today reported its results for the fourth quarter and the full year ended December 31, 1996.
Full-Year 1996 Financial Highlights
-- Net revenues for the full-year 1996 rose 22.1 percent to $472.5 million, compared with net revenues of $387.0 million in 1995.
-- Income from operations grew 28.2 percent to $53.5 million in 1996, compared with $41.7 million a year ago.
-- For the year, net income increased 20.8 percent to $39.3 million or $1.53 per share, compared with $32.5 million or $1.32 per share in 1995.
Fourth-Quarter 1996 Financial Highlights
-- Fourth-quarter 1996 net revenues grew 13.2 percent to $123.7 million, compared with $109.3 million in fourth-quarter 1995.
-- Income from operations grew 23.8 percent to $14.7 million, compared with $11.9 million in the year-ago period.
-- Net income for fourth-quarter 1996 increased 12.1 percent to $10.3 million or 42 cents per share, compared with $9.2 million or 37 cents per share in fourth-quarter 1995.
"1996 was a key year for VeriFone both strategically and tactically," commented Hatim A. Tyabji, VeriFone chairman, president and chief executive officer. "We continued to deliver solid financial results, while investing heavily in our new systems, software and service businesses, which positions the company as the key driver and continued leader in the transaction automation/electronic commerce industry."
Global Business Review
U.S. revenues for the year increased 16.9 percent to $287.5 million, compared with $246.0 million in 1995. Fourth-quarter 1996 U.S. revenues increased 10.2 percent to $73.7 million, compared with $66.9 million in the year-ago quarter.
-- U.S. Financial Retail (USFR) revenues for the year increased 9.4 percent to $187.4 million, or 39.7 percent of net revenues, compared with $171.3 million or 44.2 percent of net revenues in 1995. USFR revenues for fourth-quarter 1996 were $43.7 million or 35.3 percent of net revenues, compared with $46.9 million or 42.9 percent of net revenues in the year-earlier period.
-- U.S. Emerging Markets revenues grew 27.0 percent to $95.8 million in 1996, compared with $75.4 million in 1995. Fourth-quarter 1996 revenues grew 41.2 percent to $28.4 million or 23.0 percent of net revenues, compared with $20.1 million or 18.4 percent of net revenues a year ago.
-- Petroleum/Convenience-Store revenues grew 45.4 percent to $43.3 million in 1996, compared with $29.8 million in 1995. Fourth-quarter 1996 revenues grew 45.6 percent to $11.8 million, compared to $8.1 million in the year-ago period.
-- Retail Division revenues grew 15.2 percent to $39.8 million in 1996, compared with $34.5 million in 1995. Revenues in the fourth quarter grew 54.3 percent to $12.4 million, compared with $8.0 million in fourth-quarter 1995.
-- Government/Healthcare revenues grew 13.9 percent to $12.7 million in 1996, compared with $11.1 million a year earlier. During fourth-quarter 1996, Government/Healthcare revenues increased 5.6 percent to $4.2 million, compared with $4.0 million in fourth-quarter 1995.
For the year, international revenues increased 31.1 percent to $184.9 million and represented 39.1 percent of net revenues, compared with $141.0 million or 36.4 percent of net revenues at year-end 1995. Fourth-quarter 1996 revenues increased to $50.0 million or 40.4 percent of net revenues, compared with $42.4 million or 38.8 percent in the year-ago period.
-- Revenues in the Asia-Pacific region grew 57.5 percent to $64.4 million for the year, compared with $40.9 million in 1995. Revenues for the region increased 17.9 percent to $16.4 million in fourth-quarter 1996, compared with $13.9 million in fourth-quarter 1995.
-- Revenues in the Europe, Middle East and Africa region increased 21.1 percent to $69.0 million for the year, compared with $57.0 million at year-end 1995. Revenues for the region increased 21.8 percent to $18.6 million in the fourth-quarter, compared with $15.3 million in fourth- quarter 1995.
-- The Americas region which consists of Latin America, the Caribbean and Canada -- grew 19.4 percent to $51.5 million in 1996, compared with $43.1 million in 1995. During fourth-quarter 1996, revenues increased 13.5 percent to $15.0 million, compared with $13.2 in the year-ago period.
The Internet Commerce Division produced $3.2 million of revenues in 1996, of which $1.5 million was in the fourth quarter of 1996. We successfully completed the first installation of our vGATE software and began licensing our vPOS software. In the fourth quarter, we added First USA Paymentech and and Bank of America to our list of initial customers as our Internet commerce business continued to grow.
Operating Results
-- Gross margins were 45.8 percent for the year, compared with 47.7 percent in 1995. Fourth-quarter 1996 gross margins were 44.0 percent, compared with 46.5 percent in the year earlier period. The decrease in gross margins is due to various factors including fluctuations in our business segment mix, product mix and country mix.
-- Operating expenses decreased as a percent of net revenues to 34.4 percent in 1996, compared with 36.9 percent in 1995. For the fourth-quarter 1996, operating expenses were 32.1 percent of net revenues, compared with 35.6 percent in the year-earlier period. The decrease in operating expenses reflects our continued focus on effective spending controls.
-- Research and development (R&D) expenses increased 18.6 percent to $53.4 million in 1996, compared with $45.0 million in 1995. For the quarter, investments in R&D increased 18.6 percent to $13.8 million, compared with $11.6 million in the year-ago quarter. R&D as a percent of net revenues in fourth-quarter 1996 increased to 11.1 percent from 10.6 percent in fourth-quarter 1995. Our R&D spending reflects our continued focus on new product and market opportunities.
-- Selling, general, and administrative (SG&A) expenses grew 11.6 percent, but declined as a percent of net revenues to 23.1 percent in 1996, compared with 25.3 percent in 1995. SG&A expenses decreased 5.1 percent in fourth- quarter 1996 and represented 20.9 percent of net revenues, compared with 25.0 percent in the year-earlier period.
Balance Sheet
-- Cash and cash equivalents totaled $47.4 million at December 31, 1996, compared with $72.9 million at year-end 1995.
-- VeriFone completed the repurchase of 2.5 million shares of common stock in 1996, which included the purchase of 1.5 million shares in the fourth quarter. Interest income declined from $4.0 million in 1995 to $1.8 million in 1996, as we used $100.0 million of cash in the repurchase program.
-- Days sales outstanding were 95 at December 31, 1996, compared with 79 days in December 31, 1995.
-- Inventories decreased to $59.5 million, a reduction of 22.3 percent at December 31, 1996 compared with $76.6 million at December 31, 1995. Inventory turns increased in 1996 to 4.3, compared with 2.6 in 1995.
The Company
VeriFone, Inc. (http://www.verifone.com), the leading global provider of secure payment solutions, delivers electronic payment systems to financial institutions, merchants and consumers, as well as government agencies, healthcare providers and benefits recipients. The Company's more than 30 facilities including regional offices, development centers and manufacturing and distribution centers are located throughout North and South America, Europe, Asia, Africa, Australia and the Pacific. VeriFone has shipped more than five million Transaction Automation systems, which have been installed in 100 countries. The Company's 1996 net revenues totaled $472.5 million.
Safe-Harbor Legend under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release which are "forward looking statements" are based on current expectations, and numerous factors could cause actual results to differ from those indicated. For example: (1) There is no assurance that the Company's entry into new markets, including the Internet commerce and other markets referred to above, will contribute to the Company's profitability i.e., that these markets will develop as expected by the Company, that the Company's strategies for these markets will be successful, or that the Company will be able to timely develop and introduce products suitable for these markets. (2) The Company's relationships and expected relationships with customers, distributors, technology partners and other parties referred to above may not develop as expected by the Company, and thus, the expected benefits from these relationships may not be obtained. (3) A substantial portion of the Company's revenues in any quarter generally results from shipments during the latter part of the quarter, and thus, the Company may not learn of shortfalls in revenues, earnings or other financial results relative to the expectations of securities analysts until late in a quarter. (34) There is no assurance that, in the event of any revenue, gross margin or other shortfalls in a quarter, the Company will be able to control expenses sufficiently to meet profitability objectives for the quarter. The Company's operations are subject to numerous other risks and uncertainties, as described in the Company's SEC filings, including without limitation the section entitled "Factors That May Affect Future Results" and related sections in VeriFone's Form 10-Q for the quarter ended September 30, 1996, copies of which may be obtained by contacting VeriFone's investor relations department at (415) 598-5665. VeriFone undertakes no obligation to update the information contained in this press release.
NOTE TO EDITORS: VeriFone is a registered trademark of VeriFone, Inc. vGATE and vPOS are trademarks of VeriFone, Inc. All other marks are the property of their respective holders. |
