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VeriFone (PAY) Q3 Earnings Beat, Stock Down on View Cut
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VeriFone Systems Inc. (PAY - Free Report) reported third-quarter fiscal 2016 adjusted earnings (including stock-based compensation) of 33 cents per share, beating the Zacks Consensus Estimate of 31 cents. In the prior-year quarter, the company reported adjusted earnings of 38 cents. Meanwhile, non-GAAP earnings were 42 cents a share in this quarter.
The company also lowered its outlook for fiscal 2016 again which resulted in a 15% decline in share price in the after-hours trading session.
Quarterly Details
Non-GAAP revenues of $493 million decreased 3.4% year over year and fell short of the Zacks Consensus Estimate of $519 million. Sales also lagged management’s projection of $515 million.
On a GAAP basis, the company reported revenues of $488 million, down 4.3% year over year. System revenues (59.8% of total revenue) decreased 12.3% year over year to $292.1 million. Rest of the revenues came from the Services division, which surged 10.8% year over year to $196 million.
Non-GAAP revenues from North America fell 6% year over year to $196 million. Revenues from Latin America dropped 25.2% year over year to $55.1 million. Revenues from EMEA (Europe, Middle East and Africa) however rose 10% from the year-ago quarter to $190 million. Asia Pacific revenues decreased 6.4% year over year to $51.5 million.
The company’s non-GAAP gross margin improved 50 basis points (bps) year over year to 42.2%.
Operating expenses, as a percentage of revenues, increased to 43.6% from 36.5% in the year-ago quarter.
The company reported operating loss of $22.3 million as against income of $20.3 million in the prior-year quarter.
Liquidity
As of Jul 31, 2016, VeriFone had approximately $156.6 million in cash compared with $208.9 million as of Oct 31, 2015. Long-term debt totaled $907.8 million at the end of the quarter.
Cash flow from operations in the quarter was $13 million. Meanwhile, free cash flow totaled $11 million in the quarter.
Outlook
VeriFone provided its guidance for the fourth quarter and updated its outlook for fiscal 2016.
The company projects non-GAAP revenues of approximately $460 million and non-GAAP earnings per share in the range of 28 cents to 29 cents for the fourth quarter.
For fiscal 2016, the company estimates non-GAAP revenues of approximately $2 billion (earlier projection was $2.100 billion). Non-GAAP earnings per share are likely to be about $1.64–$1.65 (down from the prior expectation of $1.85).
Other favorably ranked stocks in the broader tech sector include JetPay Corporation , WEX Inc. (WEX - Free Report) and Datalink Corporation , with a Zacks Rank #2.
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VeriFone (PAY) Q3 Earnings Beat, Stock Down on View Cut
VeriFone Systems Inc. (PAY - Free Report) reported third-quarter fiscal 2016 adjusted earnings (including stock-based compensation) of 33 cents per share, beating the Zacks Consensus Estimate of 31 cents. In the prior-year quarter, the company reported adjusted earnings of 38 cents. Meanwhile, non-GAAP earnings were 42 cents a share in this quarter.
The company also lowered its outlook for fiscal 2016 again which resulted in a 15% decline in share price in the after-hours trading session.
Quarterly Details
Non-GAAP revenues of $493 million decreased 3.4% year over year and fell short of the Zacks Consensus Estimate of $519 million. Sales also lagged management’s projection of $515 million.
On a GAAP basis, the company reported revenues of $488 million, down 4.3% year over year. System revenues (59.8% of total revenue) decreased 12.3% year over year to $292.1 million. Rest of the revenues came from the Services division, which surged 10.8% year over year to $196 million.
Non-GAAP revenues from North America fell 6% year over year to $196 million. Revenues from Latin America dropped 25.2% year over year to $55.1 million. Revenues from EMEA (Europe, Middle East and Africa) however rose 10% from the year-ago quarter to $190 million. Asia Pacific revenues decreased 6.4% year over year to $51.5 million.
The company’s non-GAAP gross margin improved 50 basis points (bps) year over year to 42.2%.
Operating expenses, as a percentage of revenues, increased to 43.6% from 36.5% in the year-ago quarter.
The company reported operating loss of $22.3 million as against income of $20.3 million in the prior-year quarter.
Liquidity
As of Jul 31, 2016, VeriFone had approximately $156.6 million in cash compared with $208.9 million as of Oct 31, 2015. Long-term debt totaled $907.8 million at the end of the quarter.
Cash flow from operations in the quarter was $13 million. Meanwhile, free cash flow totaled $11 million in the quarter.
Outlook
VeriFone provided its guidance for the fourth quarter and updated its outlook for fiscal 2016.
The company projects non-GAAP revenues of approximately $460 million and non-GAAP earnings per share in the range of 28 cents to 29 cents for the fourth quarter.
For fiscal 2016, the company estimates non-GAAP revenues of approximately $2 billion (earlier projection was $2.100 billion). Non-GAAP earnings per share are likely to be about $1.64–$1.65 (down from the prior expectation of $1.85).
Currently, VeriFone has a Zacks Rank #2 (Buy).
VERIFONE SYSTMS Price, Consensus and EPS Surprise
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Stocks to Consider
Other favorably ranked stocks in the broader tech sector include JetPay Corporation , WEX Inc. (WEX - Free Report) and Datalink Corporation , with a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>