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VeriFone 1Q 2014 Earnings Conference Call Highlights

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The following bullets are highlights from the VeriFone Systems (NYSE: PAY) first quarter 2014 conference call. The bullets begin with comments from CEO Paul Galant and conclude with comments from CFO Marc E. Rothman.

  • We've moved aggressively to fix how VeriFone is managed by executing our three top VeriFone initiatives: first, redefining our global product management processes and portfolio; second, reengineering our R&D function; and third, improving our cost structure.

  • We have identified at least 25 percent of SKUs for rationalization and replacement.

  • As we streamline our R&D organization, we will free up resources and begin directing approximately 10 percent of our R&D budget to focus on new commercial innovation.

  • We've begun the process of streamlining our existing 132 legal entities to 70.

  • In Western Europe, we've gained the MasterCard contactless approvals that are important in that region, especially in the UK.

  • We remain on track to introduce a new portable product in Brazil by late fiscal year 2014.

  • Today, we provide more than 50 percent of the world's EMV-capable terminals.

  • In Q1, 70 percent of terminals shipped by VeriFone in the U.S. were EMV-capable, and we expect this to trend higher.

  • We estimate over the next several years approximately 3 million additional EMV terminals will be added to the U.S. market on top of the current installed base.

  • VeriFone's encryption solution,VeriShield Protect, is the de facto standard for eight of the top 11 U.S. acquirers.

  • 170 national U.S. merchants have engaged us to encrypt data at the point of swipe with VeriFone solutions.

  • For the first fiscal quarter, we reported net revenues of $437 million, exceeding our guidance of $425 million to $430 million.

  • Our net revenues were up 2 percent from year ago and up 1 percent sequentially.

  • Non-GAAP earnings per share were $0.31 exceeding our expectations by $0.05.

  • North American revenues were $122 million compared to $124 million last quarter.

  • Turning to Latin America, revenues for the first quarter were $68 million, down 3 percent sequentially.

  • In Europe, the Middle East and Africa, revenues of $186 million were up 3 percent sequentially.

  • Turning to Asia, Q1 revenue of $60 million, were up 6 percent on a sequential basis.

  • Our consolidated gross margin first was 42.4 percent, an increase of 120 basis points from our fourth quarter.

  • For Q2, we're guiding non-GAAP revenues in the range of $440 million to $445 million and non-GAAP earnings of $0.30 to $0.32 per share.

  • For the full fiscal year 2014, we expect revenues in the range of $1.78 billion to $1.81 billion and earnings per share of $1.40.

Posted-In: Marc E. Rothman Paul GalantEarnings News


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