- First-Quarter Revenues Increased 21%
- EBITDA Margins, as adjusted, were 21% for the Quarter
- GAAP Net Income increased 136%
SAN JOSE, Calif.--(BUSINESS WIRE)--March 2, 2006--Verifone Holdings, Inc. (NYSE: PAY), a leading global provider of technology that enables electronic payment transactions, today announced financial results for the three months ended January 31, 2006.
Net revenues, for the three months ended January 31, 2006, were $134.6 million, an increase of 21% over net revenues of $111.3 million for the comparable period of fiscal 2005. The increase was driven by a 24% increase in net revenues from Verifone's International business and a 19% increase in net revenues in Verifone's North America business.
Gross margins, under generally accepted accounting principles (GAAP), for the three months ended January 31, 2006 were 44.3%, compared with 38.3% for the first quarter of fiscal 2005. Gross margins, excluding non-cash amortization of purchased intangibles and stock-based compensation expense, expanded for the fifth consecutive quarter and reached a record level of 45.6% compared with 40.1% for the first quarter of fiscal 2005.
Net income, for the three months ended January 31, 2006, was $13.8 million, or $0.20 per diluted share, compared to $5.8 million, or $0.10 per diluted share, for the comparable period of fiscal 2005. Net Income, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, for the three months ended January 31, 2006 was $16.6 million, or $0.24 per diluted share, compared to $9.4 million, or $0.16 per diluted share, for the comparable period of fiscal 2005.
EBITDA, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, expanded for the sixth consecutive quarter and reached a record level of $28.3 million, a 63% increase over the $17.3 million recorded in the three months ended January 31, 2005. As a percent of net revenues, EBITDA, as adjusted, for the three months ended January 31, 2006, reached a record level of 21%, compared to the 15.6% recorded in the three months ended January 31, 2005.
"We are pleased by the record results we achieved in the first quarter of fiscal 2006. Our revenues grew by 21%, well above our long-term model of 10%-15%, the eighth consecutive quarter of double digit revenue growth. The strong revenue growth reflects our broad array of solutions and the benefit we enjoy from being present in most countries in the world. We were able to convert this revenue increase into continued operating margin expansion and strong earnings per share growth as a result of our ability to execute several high value product launches over the last several quarters," said Douglas G. Bergeron, Chairman and Chief Executive Officer.
First Quarter Highlights
- Verifone signed its first major contract with FIMPE, the association of Mexican banks that is managing this multi-year national terminalization initiative, for approximately $11 million for systems and services to be deployed over the next approximately six months.
- As previously announced, in December we received one of the largest Indian orders in Verifone's history, winning a 50,000 unit order from ICICI, the country's largest private bank for Vx 510 systems. The Indian market for point-of-sales systems is growing rapidly and has vast potential given the size and increasing prosperity of the middle class and increasing participation of foreign banks.
- In China, we recently announced that our Vx Solutions have been certified to meet the People's Bank of China's standard for chip card payment acceptance, indicating our close alliance with this major bank. The bank's PBOC V2 standard is a localized version of EMV for domestic bank cards. We will now be able to support EMV cards and China UnionPay branded chip cards, inside and outside of China. Verifone has a strong presence in all markets that China UnionPay has penetrated in Asia, Europe and the USA.
- Verifone recently announced a major multi-year, multi-million dollar contract award from General Electric's Retail Sales Finance Unit, one of the leading providers of private label credit card programs. GE's Retail Sales Finance has relationships with over 200 retail partners and 60,000 independent dealers in the US alone.
- Verifone's MX870 received PCI PED Security approval from the bankcard associations making it the only PCI certified quarter-inch VGA screen solution in the market. In addition, Verifone's Vx 570 recently received PCI PED Security approval and began shipping during the quarter.
- Verifone announced the VisualPayments Suite, a set of secure, server-based applications for retailers to easily manage data flow to and from consumer-facing solutions in the checkout lane. The Suite streamlines the set-up and configuration of payment devices, providing remote diagnostics, troubleshooting and downloads. It also provides electronic signature capture, archival and retrieval. In addition, it provides the first practical and economical way to deliver branding, promotion and advertising content directly to the point-of-sale. This unique and innovative software suite is a browser-based, highly flexible, scalable and secure solution and is easily customizable to retailers' unique requirements.
Reconciliations for both of the non-GAAP measures presented in this press release are provided at the end of this press release. Management uses the non-GAAP measures presented in this release to help them evaluate Verifone's performance and to compare Verifone's current results with those for prior periods as well as with the results of other companies in our industry, but cautions investors that these non-GAAP measures should not be considered as substitutes for disclosures made in accordance with GAAP.
The management of Verifone will host a conference call, which will be simultaneously webcast, on March 2, 2006 at 1:30 p.m. (PST) to discuss Verifone's first quarter results. Management may provide forward looking guidance on this conference call. To access the live conference call, the dial-in numbers are as follows:
Domestic callers: 866-272-9941
International callers: 617-213-8895
To access the audio webcast, please go to Verifone's website (http://ir.verifone.com) at least ten minutes prior to the call to register. The recorded audio webcast will be available on Verifone's website until March 9, 2006.
A replay of the conference call, which can be accessed by dialing toll-free 888-286-8010, and outside the U.S. 617-801-6888, will be available until March 9, 2006. The access code for the replay is 75223751.
About Verifone Holdings, Inc. (www.verifone.com) Verifone Holdings, Inc. ("Verifone") (NYSE: PAY), a global leader in secure electronic payment technologies, provides expertise, solutions and services for today with a migration strategy for tomorrow. Verifone delivers solutions that add value to the point of sale, resulting in improved merchant retention and the generation of new sources of revenue for its partners and customers. Verifone solutions are specifically designed to meet the needs of vertical markets including financial, retail, petroleum, government and healthcare.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of Verifone Holdings, Inc. These risks and uncertainties include: the status of our relationship with and condition of third parties upon whom we rely in the conduct of our business, our dependence on a limited number of customers, uncertainties related to the conduct of our business internationally, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, our dependence on a limited number of key employees, short product cycles, rapidly changing technologies and maintaining competitive leadership position with respect to our payment solution offerings, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, and our ability to protect against fraud. For a further list and description of such risks and uncertainties, see our periodic filings with the Securities and Exchange Commission. Verifone is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.