Upcoming AWS Coverage on Steelcase
LONDON, UK / ACCESSWIRE / March 24, 2017 / Active Wall St. announces its post-earnings coverage on VeriFone Systems, Inc. (NYSE: PAY). The company reported its financial results for its first quarter fiscal 2017 on March 09, 2017. The maker of terminals for electronic payments reiterated its non-GAAP sales and earnings outlook. Register with us now for your free membership at:
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One of VeriFone Systems’ competitors within the Business Equipment space, Steelcase Inc. (NYSE: SCS), reported earnings for fiscal Quarter ending February 2017 on March 21, 2017, after market close. AWS will be initiating a research report on Steelcase following the release of its next earnings results.
Today, AWS is promoting its earnings coverage on PAY; touching on SCS. Get our free coverage by signing up to:
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Earnings Reviewed
For the quarter ended January 31, 2017, VeriFone’s GAAP net revenues totaled $453.9 million, while non-GAAP net revenues were $456.6 million, down 11% on a y-o-y basis, but exceeded the Company’s guidance. Non-GAAP net revenues also beat analysts’ consensus of $450 million.
VeriFone’s consolidated gross margin in Q1 FY17 was 38.9%, consistent with the Company’s expectations and comparable to its Q4 FY16 levels.
VeriFone reported net loss of $16.6 million, or $0.15 per diluted share, compared to earnings of $23.5 million, or $0.21 per share. The San Jose, California-based Company’s earnings, adjusted for one-time gains and costs totaled $0.21 per share above market estimates of $0.20 per share.
Segment Analysis
For Q1 FY17, revenue from VeriFone’s systems business totaled $265 million, down approximately 21% y-o-y, but slightly better than the Company’s expectation due to the higher sales in Asia. The year-on-year decline primarily reflects the difficult comp created by the prior year surge in US EMV-related demand. The Company’s systems margins of 37.9% in the reported quarter rebounded sequentially by approximately 300 basis points.
VeriFone’s service business delivered revenue of $191 million in Q1 FY17, up 9% y-o-y, and on an organic constant currency basis, revenues increased by approximately 1%. Gross margins in services were 40.4% as expected, and reflect lower sequential revenue in both taxi and media, where margins fluctuate on volume changes, given the higher fixed cost infrastructure in these businesses.
On a geographical basis, in North America, VeriFone delivered revenues of $169 million, for Q1 FY17, representing a 28% drop on a y-o-y basis. Excluding taxi, the Company’s North America revenue was up slightly on a sequential basis. VeriFone’s Latin America revenues for Q1 FY17 were $57 million, up 4% year-over-year. The Company enjoyed strong year-on-year results in Brazil, which was partially offset by ongoing softness in Mexico and Argentina.
During Q1 FY17, in Europe, Middle East, and Africa revenues were $168 million, which includes the benefit of VeriFone’s acquisition of InterCard in Germany, yet results were down 1% from the prior year. The solid underlying growth of the InterCard platform is helping to offset the expected and planned effects of lower device sales in Germany, where the Company benefited from a technology upgrade cycle in 2016. And Eastern Europe was strong sequentially as a contributor, particularly from Greece, which is undergoing government mandated cash to cashless migration.
During Q1 FY17, VeriFone’s revenue from Asia totaled $63 million up 19% on a y-o-y reported basis, primarily attributed to strong results in India. Separate from demonetization related demand, India has been one of the earliest adopters of Engage. Indonesia and Malaysia both posted double digit growth year-on-year, and the Company’s China business improved sequentially, driven by better success across tenders with the major banks.
Balance Sheet & Cash Flow
VeriFone ended the quarter with total cash of $147 million, gross debt of $904 million, and net debt of $757 million. The Company’s cash conversion cycle was 74 days in Q1 FY17, most significantly, days of accounts payable decreased by six days, due to the timing of payments for the previously-purchased inventory. VeriFone reduced inventory levels by $19 million on sequential basis, while it is expecting further opportunities to reduce those balances to more normalized levels over the coming quarters.
For the reported quarter, VeriFone generated cash flow from operations worth $45 million, while free cash flow was $25 million. The Company’s free cash flow conversion ratio exceeded 100%, and was above planned target. Additionally, total CapEx of $20 million represented a lower outlay to the levels reported in recent quarters.
Outlook
For Full year 2017, VeriFone is forecasting total GAAP revenue in the range of $1.895 billion to $1.91 billion and GAAP EPS to be between $0.32 to $0.36. For Q2 FY17, the Company is projecting GAAP revenue in the range of $470 million to $474 million and a GAAP EPS of $0.04 per share.
On a non-GAAP basis, VeriFone reaffirmed prior guidance and project total revenues of $1.9 billion to $1.915 billion for FY17. The Company is also reaffirming full-year non-GAAP earnings per share for FY17 in the range of $1.35 to $1.39, and expects free cash flow generation to be approximately $120 million.
Stock Performance
VeriFone Systems’ share price finished yesterday’s trading session at $18.77, climbing 1.30%. A total volume of 963.35 thousand shares exchanged hands. The stock has rallied 2.01% and 20.17% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have gained 5.87%. At Thursday’s closing price, the stock’s net capitalization stands at $2.10 billion.
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