Earnings Review and Free Research Report: VeriFone Surpassed Top-line Expectations

Research Desk Line-up: Steelcase Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 28, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on VeriFone Systems, Inc. (NYSE: PAY), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=PAY, following the Company’s reporting of its second quarter fiscal 2017 financial results on June 08, 2017. The maker of terminals for electronic payments met markets earnings estimates and provided guidance for the next quarter and fiscal year. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at: http://protraderdaily.com/register/.

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Earnings Reviewed

For the three months ended April 30, 2017, VeriFone’s net revenues of $474 million declined 10% compared to revenue of $526 million in Q2 FY16. The Company’s revenue numbers outperformed analysts’ expectations of $471.9 million.

VeriFone’s consolidated gross margin in Q2 FY17 was 39.5%, consistent with its own expectations, down 2.9 pts on a y-o-y basis, while it grew 60 basis points sequentially. The Company’s consolidated operating expenses were $254 million in the reported quarter, up 33% on a y-o-y basis, while restructuring and related charges totaled $69 million in the reported quarter, primarily attributable to its Petro Media business, where the Company recorded $50 million in net charges related to terminating certain customer agreements and other activities associated with forming the joint venture.

For Q2 FY17, VeriFone reported a net loss of $89.3 million, or $0.80 per share, versus earnings of $2.9 million, or $0.03 per share, in Q2 FY16. Adjusted for non-recurring items, the Company reported earnings of $0.30 per share compared with $0.47 per share in the prior year’s same quarter. VeriFone’s earnings met Wall Street’s expectations of $0.30 per share.

Segment Results

Q2 FY17 revenues for VeriFone’s Systems business was $285.7million, reflecting an increase of 8% from the prior quarter but down approximately 16.6% on a y-o-y basis. The Company attributed the y-o-y decline on difficult comp created by the prior year surge in US EMV-related demand. Systems margins of 38.7% in Q2 were higher sequentially by 80 basis points, driven by continued cost reductions in operations and supply chain.

VeriFone’s Services business delivered revenue of $188.0 million in Q2 FY17, up 2.3% on a y-o-y basis. Services strength in Latin America was offset by lower sales of Petro Media. The Company’s gross margins in Services segment were 40.7%, up slightly from the prior quarter.

In North America, VeriFone delivered revenue of $158 million, representing a 27% decline on a y-o-y basis and down 6% sequentially. The sequential decline was limited to the Company’s Petro vertical. VeriFone’s retail vertical grew by 12% sequentially, benefiting from several large QSR deployments, onboarding of new Payment-as-a-Service clients, as well as refresh business with early Tier 1 retail adopters of EMV.

In Latin America, VeriFone’s revenues for Q2 FY17 were $63 million, down 10% on a y-o-y basis. In Europe, Middle-East, and Africa, the Company’s revenues of $178 million were down 10% from the prior year and up 6% sequentially.

In Asia, VeriFone generated revenues of $76 million, up more than 50% on a y-o-y basis and more than 20% sequentially, driven by demand for its devices in India as a main driver of growth. The Company stated that its reported quarter revenue surpassed its total sales in this country for all of FY16. Additionally, VeriFone reported that several Asia/Pacific emerging markets, including Thailand and Malaysia, grew by low double digits year-on-year.

Balance Sheet

VeriFone ended the quarter with total cash of $134 million, gross debt of $878 million, and net debt of $744 million. The Company’s cash conversion cycle was 62 days in Q2 versus 74 days in Q1. This metric was helped by a 6-day increase in days of accounts payable due to the timing of payments and improved terms driven by supplier consolidation as well as strategic supply chain initiatives.

For Q2 FY17, VeriFone delivered cash flow from operations totaling $36 million and free cash flow of $19 million. Year-to-date, the Company’s free cash flow conversion ratio is approximately 80%. The Company reduced its CapEx with total outlays of $17 million during the reported quarter compared to $28 million in Q2 FY16.

Outlook

For FY17, VeriFone is forecasting GAAP net revenues of approximately $1.861 billion to $1.866 billion and GAAP net loss per diluted share of approximately $0.51 to $0.53. The Company is expecting non-GAAP net revenues of approximately $1.865 billion to $1.870 billion with non-GAAP net income per diluted share of $1.32 to $1.34.

For Q3 FY17, VeriFone is projecting GAAP and non-GAAP net revenues of approximately $463 million to $465 million. The Company is estimating GAAP net income per diluted share of approximately $0.14 to $0.15 and non-GAAP net income per diluted share of $0.35 to $0.36 in the upcoming quarter.

Stock Performance

At the close of trading session on Tuesday, June 27, 2017, VeriFone Systems’ stock price slightly declined 0.06% to end the day at $17.69. A total volume of 2.38 million shares were exchanged during the session, which was above the 3-month average volume of 1.77 million shares. The Company’s stock advanced 3.69% in the last twelve months. At Tuesday’s closing price, the stock’s net capitalization stands at $1.98 billion.

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