Hypercom Corporation (NYSE: HYC), the high security electronic payment and digital transaction solutions provider, today announced financial results for the first quarter ended March 31, 2009.
Net revenue for the three months ended March 31, 2009 was $83.6 million, an increase of $13.1 million or 18.6% over first quarter 2008 revenue of $70.5 million. On a pro forma, constant currency basis including Thales e-Transactions ("TeT") activity in the first quarter of 2008, revenue declined approximately 14.5%.
Net revenues from the EMEA sales regions increased $31.6 million over the prior year period primarily as a result of $34.4 million of incremental revenue from the TeT acquisition. Net revenue from the Americas and Asia-Pacific decreased $17.2 million and $1.3 million respectively as a result of weak economic conditions and lower demand.
Gross profit for the three months ended March 31, 2009 was $24.3 million or 29.1% of revenuecompared to $19.6 million or 27.7% of revenue in the first quarter of 2008. Sequentially, the first quarter gross margin improved compared to the fourth quarter gross margin of 27.0% as a result of better contract manufacturing pricing and supply chain period cost reductions. Gross margin for the three months ended March 31, 2009 included 32.8% product gross margin and 23.3% service gross margin, compared to margins of 32.9% and 15.8%, respectively, for the prior year period, and 28.9% and 24.1% for the fourth quarter of 2008, respectively. The increase in service gross margin was primarily a result of the addition of higher margin service revenue in Northern and Southern Europe from the TeT acquisition.
Operating expenses for the three months ended March 31, 2009 were $30.8 million or 36.9% of revenue, compared to $21.8 million or 30.9% of revenue for the same period in 2008. The prior year figure did not include the operating expense of TeT. Sequentially, excluding the $67.8 million impairment of goodwill and intangible charge in the prior period, operating expenses were down $4.0 million compared to fourth quarter 2008 expenses of $34.8 million or 28.7% of revenue. The decrease related to reduced research and development costs from continued synergies from the TeT acquisition, selling and marketing expenses, as well as lower general and administrative costs.
The Company recorded a first quarter 2009 net loss of $9.9 million or ($0.19) per share versus a net loss of $0.3 million or ($0.01) per share in the first quarter of 2008.
EBITDAS (Earnings before interest, taxes, depreciation, amortization, and stock-based compensation) for the three months ended March 31, 2009 decreased $2.5 million from $1.3 million last year to ($1.2) million in the current year.
"First quarter revenue was, as expected, abnormally low both as a result of the period's traditional seasonality, and as result of poor global economic conditions and exchange rate fluctuations. On a pro forma basis, the revenue decline compared to the first quarter of 2008 was approximately 14.5%. That said, we continued to improve our gross margin, and continued to execute on lowering operating costs," said Philippe Tartavull, Chief Executive Officer and President. "Currently, we see improved order flow and market conditions. We are executing on our plan and are focused on continuing to gain market share, improve margins, reduce inventory and optimize operating expenses with a continual focus on security and quality."
New Initiatives and Appointments
As announced during the first quarter of 2009 and in April:
• Hypercom is one of the founding members of the Secure POS Vendor Alliance (SPVA: spva.org) and Hypercom's Vice President of Global Quality and Security, TK Cheung, serves as SPVA Vice Chairman and Chief Technology Officer. SPVA is an industry alliance set up by the three major players in the electronic payments industry. SPVA's purpose is to bring together all players along the electronic payments value chain to work on improvements in the security of payment systems, with the ultimate goal of increasing the protection of cardholder data and defending merchants and consumers.
• Hypercom introduced the HyperSafe(R) Remote Key System (HRKS), the industry's first standards-based remote key injection product that allows retailers to quickly and securely initiate on-site, in-store payment terminal key injection at the point-of-sale. The new system offers a fast and highly secure alternative to the industry's traditional secure room key injection process.
• RDM Corporation, a leading developer of specialized software and hardware products for electronic payment processing and Remote Deposit Capture solutions, selected Hypercom's HBNet to provide high speed transaction transport services.
• GBC (GIRO Bankkártya Zrt), the leading provider of payment and processing systems in Hungary and a subsidiary of SIA-SSB, selected Hypercom's Optimum T4200 card payment terminals to expand electronic payments in Hungary and other Central and Eastern European countries including Romania, Croatia, Slovenia, Slovakia and the Czech Republic.
• AXS Pte Ltd, the Singapore-based Electronic Service Delivery Network ("ESDN") operator, has selected Hypercom to provide a high security end-to-end technology upgrade for AXS' more than 560 automated self-service kiosks.
• Smart Transaction Systems(R), a leading US-based provider of gift card, customer loyalty and stored-value card payment systems, has selected Hypercom's Mobile Network service to extend the reach of its gift and loyalty card programs in the U.S. and abroad.
• Appointed Thomas B. Sabol as Chief Financial Officer.
• Appointed Jacques-Herve Maupin as Managing Director, Asia Pacific, with responsibility for directing and driving Hypercom's sales, service and support throughout the region.
• Appointed TK Cheung to the newly-created position of Vice President, Quality and Security. Mr. Cheung also serves as Vice Chairman and Chief Technology Officer of the Secure POS Vendor Alliance.
• Appointed Ulf Hönick as Vice President, Healthcare, with responsibility for driving sales and extending globally the Company's footprint in the fast growing healthcare sector.
• Appointed Stuart Taylor as Vice President, Global Marketing, with responsibility for all aspects of the Company's marketing activities, Hypercom's Global Solutions business unit and global strategic relationships.
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