- Second Quarter Revenues Increased 21%
- EBITDA margins, as adjusted, Increased to 21.6% for the Quarter
- GAAP Net Income Increased 71%
SAN JOSE, Calif.--(BUSINESS WIRE)--May 22, 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 April 30, 2006.
Net revenues for the three months ended April 30, 2006 were $142.2 million, an increase of 21% over net revenues of $117.9 million for the comparable period of fiscal 2005. The increase was driven by a 38% increase in net revenues from Verifone's International business and a 10% increase in net revenues in Verifone's North America business.
Gross margins, under generally accepted accounting principles (GAAP), for the three months ended April 30, 2006 were 44.6%, compared to 40.2% for the second quarter of fiscal 2005. Gross margins, excluding non-cash amortization of purchased intangibles and stock-based compensation expense, expanded for the sixth consecutive quarter and reached 45.7% compared to 41.7% for the second quarter of fiscal 2005.
Net Income for the three months ended April 30, 2006 was $15.0 million, or $0.22 per diluted share, compared to $8.8 million, or $0.15 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 April 30, 2006 was $17.9 million, or $0.26 per diluted share, compared to $12.3 million, or $0.22 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 seventh consecutive quarter and reached a record level of $30.8 million, a 52% increase over the $20.2 million recorded in the three months ended April 30, 2005. As a percent of net revenues, EBITDA, as adjusted, for the three months ended April 30, 2006 reached a record level of 21.6%, compared to the 17.2% recorded in the three months ended April 30, 2005.
"We had another outstanding quarter and are extremely pleased with our strong revenues, EBITDA and earnings growth. This momentum can be primarily attributed to our industry leading brand, consistent management execution and a global footprint with the scale and resources to make substantial investments in research and development," said Douglas G. Bergeron, Chairman and Chief Executive Officer.
"During the quarter we also announced our acquisition of Lipman, valued at $793 million based on Verifone's share price at the close of trading on April 7th, 2006. We continue to expect the transaction to close by October 31, 2006. As the two most profitable technology providers in the payments industry, the combined company will be even better positioned to take advantage of global industry trends, including the growth in payment solutions throughout emerging markets such as India, China and Turkey and the proliferation of wireless systems," continued Bergeron.
Second Quarter Highlights
- Verifone announced U.S. availability of the Vx 570 countertop payment solution, providing a next-generation migration path with seamless backward compatibility for users of the Verifone Omni 3750 and filling out the Vx Solutions product family. The Vx 570 features superior speed and performance, with optional memory up to three times greater than the industry standard Verifone Omni 3750 which enables it to run more and varied applications, and provides an enhanced display and a USB port. We expect this will spur a new generation of innovation for our value added providers and customers.
- Verifone announced it has been awarded a $7 million contract from RBS Lynk to provide payment solution systems and connectivity services for resale to U.S. merchants.
- Verifone and MICROS Systems, Inc. (NASDAQ: MCRS) recently announced a fully integrated solution comprised of our Vx 670 handheld payment system and MICROS' enterprise application for the hospitality and retail industry. MICROS will sell the integrated solution to its installed base of approximately forty thousand restaurants world-wide. We anticipate that we will commence shipments in the third quarter.
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 May 22, 2006 at 1:30 p.m. (PST) to discuss Verifone's second 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: 866-713-8562
International callers: 617-597-5310
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 May 29, 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 May 29, 2006. The access code for the replay is 55056102.
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 complete successfully, and realize the benefits we expect from, our pending acquisition of Lipman, our ability to identify and complete other 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.