VeriFone Holdings (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months ended January 31, 2007.
The Company's first quarter results reflect the November 1, 2006, acquisition of Lipman and, because of the integration of Lipman's products and distribution channels as well as the lack of comparable quarter ends of VeriFone and Lipman, are compared to pre-acquisition results of prior fiscal periods.
Net revenues, for the three months ended January 31, 2007, were $216.6 million, 61% higher than the net revenues of $134.6 million for the comparable period of 2006. The record revenues were driven by the Lipman acquisition and a strong performance internationally.
Gross margins, excluding non-cash acquisition related charges and stock-based compensation expense, were 47.1%, for the three months ended January 31, 2007, compared to 45.6% for the comparable period of 2006. GAAP gross margins for the three months ended January 31, 2007, were 37.6%, compared to 44.3% for the three months ended January 31, 2006, as a result of increased amortization of purchased technology assets and the step-up in inventory.
EBITDA, as adjusted, margins for the three months ended January 31, 2007, expanded for the tenth consecutive quarter and reached a record level of 25.7%, compared to the 21.0% recorded in the three months ended January 31, 2006.
GAAP EPS for the three months ended January 31, 2007, was a loss of ($0.01) per diluted share, compared to $0.20 per diluted share, for the comparable period of fiscal 2006, due to acquisition related charges and a higher GAAP tax rate. Net income, as adjusted, which excludes non-cash acquisition related charges and debt issuance costs, as well as non-cash stock-based compensation expense, for the three months ended January 31, 2007, increased 54% to $0.37 per diluted share, compared to $0.24 per diluted share, for the three months ended January 31, 2006.
"VeriFone has successfully completed its first quarter since our transformative acquisition of Lipman. I am delighted both with the progress that we have made in integrating Lipman's business into VeriFone and in generating another very strong quarter financially and operationally," said Douglas G. Bergeron, Chairman and Chief Executive Officer.
"VeriFone's newly configured worldwide sales force is serving customers through a fully integrated distribution channel and supply chain. At the same time we have been reducing inventory and generating considerable operating cash flow," continued Bergeron.
"Based on these results, we are increasing our second quarter internal expectations for net income, as adjusted, per share to be in the range of $0.36 to $0.37. We remain very confident of our prospects for fiscal 2007."
First Quarter Highlights
- VeriFone obtained the RBS Streamline Certification for its Vx Solutions product line with UK based Royal Bank of Scotland, further strengthening its relationship with the bank in the first quarter.
- In Germany, VeriFone obtained approval of the EMV7816 Interface with its ZKA extensions, enabling pilots with two major retail organizations.
- In Spain, VeriFone obtained certification for the Nurit 8210 from Sistema 4B, a major Spanish acquirer. This certification positions VeriFone to sell landline systems to all Sistema 4B banks.
- In Turkey, VeriFone's business made a significant comeback, and achieved a major milestone by supporting all the large bank applications for the "One POS Project".
- VeriFone's taxi initiatives continued to gain momentum during the quarter as MasterCard Worldwide and VeriFone announced the first U.S. acceptance of MasterCard PayPass "Tap & Go(TM)" contactless payments in taxicabs, making life easier for consumers in Philadelphia. In addition, VeriFone received an award to equip several thousand of Mexico City's taxis with its MX870 systems with GPS functionality.
- VeriFone announced two new systems in the MX Solutions payment platform, the MX830 and MX850. The two new systems are PCI PED-approved and join with the award-winning MX870 to provide multi-lane retailers with the broadest range of secure consumer-facing payment systems featuring the highest visual clarity in a durable, reliable and stylish form factor.
Reconciliations for 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.
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