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VeriFone Systems Inc.(PAY - Free Report) reported second-quarter fiscal 2016 adjusted earnings (including stock-based compensation) of 38 cents per share, missing the Zacks Consensus Estimate of 45 cents. Earnings improved a penny over the prior-year quarter. The company reported non-GAAP earnings of 47 cents a share.
The company also lowered its outlook for fiscal 2016 as a result of which shares tanked nearly 28% in the after-hours trading session yesterday.
Quarterly Details
Non-GAAP revenues of $532 million increased 8.6% year over year and surpassed the Zacks Consensus Estimate of $528 million. Sales were also better than management’s projection of $530 million.
On a GAAP basis, the company reported revenues of $526 million, up 7.4% year over year. System revenues (65.1% of total revenue) increased 5.6% year over year to $342.5 million. Rest of the revenues came from the Services division, which surged 10.9% year over year to $183.8 million.
Non-GAAP revenues from North America increased 11.6% year over year to $215.4 million. Revenues from Latin America increased 2.5% year over year to $69.8 million. Revenues from EMEA (Europe, Middle East and Africa) improved 9.7% from the year-ago quarter to $197 million. Asia Pacific revenues inched up 1.2% year over year to $50.2 million.
The company’s non-GAAP gross margin declined 40 basis points (bps) year over year to 42.4%.
Operating expenses, as a percentage of revenues, increased 70 bps year over year to 36.2%. VeriFone’s operating margin in the quarter was 3.8%, down from 6.1% in the prior-year quarter.
Liquidity
As of Apr 30, 2016, VeriFone had approximately $156.6 million in cash compared with $208.9 million as of Oct 31, 2015. Long-term debt totaled $899.5 million at the end of the quarter.
Cash flow from operations in the quarter was $51 million. Meanwhile, free cash flow was $23 million in the quarter.
Outlook
VeriFone provided its guidance for the third quarter and updated its outlook for fiscal 2016.
The company projects non-GAAP revenues of approximately $515 million and non-GAAP earnings per share of approximately 40 cents for the third quarter.
For fiscal 2016, the company estimates non-GAAP revenues of approximately $2.100 billion (earlier projection was $2.150 billion and $2.170 billion). Non-GAAP earnings per share are likely to be about $1.85 (down from the prior expectation of $2.21 and $2.24).
The company stated that fiscal 2016 results will be impacted due to the weakness in Latin America and Asian markets along with some unfavorable product mix in North America. In addition, a soft media business and increasing pricing pressure also remain concerns.
Restructuring Program
Along with the quarterly results, Verifone initiated a new restructuring plan aimed to streamline its operations and reduce costs. As CEO Paul Galant puts it "Q2 was a mixed quarter for Verifone as we grew our business, but experienced several difficult market dynamics. As a result, it is necessary for us to adjust for these risks and update our outlook for FY16 to $2.100 billion dollars of revenue and $1.85 of earnings per share. We are aggressively executing mitigating actions including a headcount restructuring and a review of underperforming businesses."
The company expects to generate approximately $30 million of savings in 2017 from these restructuring activities.
Currently, VeriFone has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the broader tech sector include Internap Corporation , Atlassian Corporation Plc (TEAM - Free Report) and Castlight Health, Inc. (CSLT - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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VeriFone (PAY) Q2 Earnings Miss, Stock Falls on Q3 View Cut
VeriFone Systems Inc.(PAY - Free Report) reported second-quarter fiscal 2016 adjusted earnings (including stock-based compensation) of 38 cents per share, missing the Zacks Consensus Estimate of 45 cents. Earnings improved a penny over the prior-year quarter. The company reported non-GAAP earnings of 47 cents a share.
The company also lowered its outlook for fiscal 2016 as a result of which shares tanked nearly 28% in the after-hours trading session yesterday.
Quarterly Details
Non-GAAP revenues of $532 million increased 8.6% year over year and surpassed the Zacks Consensus Estimate of $528 million. Sales were also better than management’s projection of $530 million.
On a GAAP basis, the company reported revenues of $526 million, up 7.4% year over year. System revenues (65.1% of total revenue) increased 5.6% year over year to $342.5 million. Rest of the revenues came from the Services division, which surged 10.9% year over year to $183.8 million.
Non-GAAP revenues from North America increased 11.6% year over year to $215.4 million. Revenues from Latin America increased 2.5% year over year to $69.8 million. Revenues from EMEA (Europe, Middle East and Africa) improved 9.7% from the year-ago quarter to $197 million. Asia Pacific revenues inched up 1.2% year over year to $50.2 million.
The company’s non-GAAP gross margin declined 40 basis points (bps) year over year to 42.4%.
Operating expenses, as a percentage of revenues, increased 70 bps year over year to 36.2%. VeriFone’s operating margin in the quarter was 3.8%, down from 6.1% in the prior-year quarter.
Liquidity
As of Apr 30, 2016, VeriFone had approximately $156.6 million in cash compared with $208.9 million as of Oct 31, 2015. Long-term debt totaled $899.5 million at the end of the quarter.
Cash flow from operations in the quarter was $51 million. Meanwhile, free cash flow was $23 million in the quarter.
Outlook
VeriFone provided its guidance for the third quarter and updated its outlook for fiscal 2016.
The company projects non-GAAP revenues of approximately $515 million and non-GAAP earnings per share of approximately 40 cents for the third quarter.
For fiscal 2016, the company estimates non-GAAP revenues of approximately $2.100 billion (earlier projection was $2.150 billion and $2.170 billion). Non-GAAP earnings per share are likely to be about $1.85 (down from the prior expectation of $2.21 and $2.24).
The company stated that fiscal 2016 results will be impacted due to the weakness in Latin America and Asian markets along with some unfavorable product mix in North America. In addition, a soft media business and increasing pricing pressure also remain concerns.
Restructuring Program
Along with the quarterly results, Verifone initiated a new restructuring plan aimed to streamline its operations and reduce costs. As CEO Paul Galant puts it "Q2 was a mixed quarter for Verifone as we grew our business, but experienced several difficult market dynamics. As a result, it is necessary for us to adjust for these risks and update our outlook for FY16 to $2.100 billion dollars of revenue and $1.85 of earnings per share. We are aggressively executing mitigating actions including a headcount restructuring and a review of underperforming businesses."
The company expects to generate approximately $30 million of savings in 2017 from these restructuring activities.
Currently, VeriFone has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the broader tech sector include Internap Corporation , Atlassian Corporation Plc (TEAM - Free Report) and Castlight Health, Inc. (CSLT - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>