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Verifone Systems, Inc. (PAY - Free Report) reported mixed financial results for second-quarter fiscal 2018 wherein the company’s top line surpassed the Zacks Consensus Estimate but the bottom line missed the same.
Adjusted earnings per share of 25 cents missed the consensus mark by 3 cents and were down 30.6% from the year-ago quarter. Net revenues of $438.4 million beat the Zacks Consensus Estimate of $435.5 million but were down 1.4% year over year on a non-GAAP basis and 4.8% on a constant currency basis.
We observe that shares of Verifone have gained 25.6% in the past three months, significantly outperforming the industry’s growth of 5.6%.
Revenues by Segment
While non-GAAP revenues from Systems (59% of total non-GAAP revenues) declined 8.5% year over year to $258.6 million, the same from services (41%) increased 11.1% to $179.8 million.
Revenues by Regions
Non-GAAP revenues from EMEA (Europe, the Middle East and Africa) increased 3.8% to $182.3 million but declined 5.4% on a constant currency basis.
Non-GAAP revenues of $84.5 million from Latin America increased 35.2% on a reported basis and 38.8% on a constant currency basis.
However, Non-GAAP revenues from North America fell 7.9% on a reported basis as well as constant currency basis to $122.9 million.
Non-GAAP revenues of $48.7 million from Asia Pacific fell 33.2% on a reported basis and 35.2% on a constant currency basis.
Operating Results
Gross income increased 3.3% to $178.5 million. Gross margin was 40.7% compared with 36.5% in the year-ago quarter
Operating income came in at $6.9 million against a loss of $81.4 million in the year-ago quarter. Total operating expenses declined 32.5% to $171.6 million.
Balance Sheet and Cash Flow
Verifone exited the second quarter with cash and cash equivalents of $168.4 million compared with $152.8 million at the end of the first quarter of fiscal 2018. Long-term debt was $835.7 million at the end of the quarter compared with $775.4 million at the end of the prior quarter.
The company generated $26.2 million of cash from operating activities in the quarter compared with $12.9 million in the year-ago quarter.
Merger Details
On Apr 9, Verifone entered into a definitive agreement with an investor group led by Francisco Partners and British Columbia Investment Management Corporation. Per the deal, the investor group will buy Verifone for $23.04 per share in cash, which represents a total consideration of approximately $3.4 billion, inclusive of Verifone’s net debt.
Verifone’s shareholders will receive $23.04 per share in cash, which is about 54% higher than the stock’s closing price of $15.00 as of Apr 9.
Subject to customary regulatory and shareholder approvals, the deal is expected to close in third-quarter fiscal 2018. Following the completion of the deal, Verifone will become a privately-held company.
Some other top-ranked stocks in the broader Business Services sector include Mastercard Incorporated (MA - Free Report) , FLEETCOR Technologies, Inc. and WEX Inc. (WEX - Free Report) . While Mastercard sports a Zacks Rank #1, FLEETCOR and WEX currently carry a Zacks Rank #2.
The long-term expected earnings per share growth rate for Mastercard, FLEETCOR Technologies and WEX is 19%, 16.5% and 14.3%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Verifone (PAY) Misses Q2 Earnings Estimates, Tops Revenues
Verifone Systems, Inc. (PAY - Free Report) reported mixed financial results for second-quarter fiscal 2018 wherein the company’s top line surpassed the Zacks Consensus Estimate but the bottom line missed the same.
Adjusted earnings per share of 25 cents missed the consensus mark by 3 cents and were down 30.6% from the year-ago quarter. Net revenues of $438.4 million beat the Zacks Consensus Estimate of $435.5 million but were down 1.4% year over year on a non-GAAP basis and 4.8% on a constant currency basis.
We observe that shares of Verifone have gained 25.6% in the past three months, significantly outperforming the industry’s growth of 5.6%.
Revenues by Segment
While non-GAAP revenues from Systems (59% of total non-GAAP revenues) declined 8.5% year over year to $258.6 million, the same from services (41%) increased 11.1% to $179.8 million.
Revenues by Regions
Non-GAAP revenues from EMEA (Europe, the Middle East and Africa) increased 3.8% to $182.3 million but declined 5.4% on a constant currency basis.
Non-GAAP revenues of $84.5 million from Latin America increased 35.2% on a reported basis and 38.8% on a constant currency basis.
However, Non-GAAP revenues from North America fell 7.9% on a reported basis as well as constant currency basis to $122.9 million.
Non-GAAP revenues of $48.7 million from Asia Pacific fell 33.2% on a reported basis and 35.2% on a constant currency basis.
Operating Results
Gross income increased 3.3% to $178.5 million. Gross margin was 40.7% compared with 36.5% in the year-ago quarter
Operating income came in at $6.9 million against a loss of $81.4 million in the year-ago quarter. Total operating expenses declined 32.5% to $171.6 million.
Balance Sheet and Cash Flow
Verifone exited the second quarter with cash and cash equivalents of $168.4 million compared with $152.8 million at the end of the first quarter of fiscal 2018. Long-term debt was $835.7 million at the end of the quarter compared with $775.4 million at the end of the prior quarter.
The company generated $26.2 million of cash from operating activities in the quarter compared with $12.9 million in the year-ago quarter.
Merger Details
On Apr 9, Verifone entered into a definitive agreement with an investor group led by Francisco Partners and British Columbia Investment Management Corporation. Per the deal, the investor group will buy Verifone for $23.04 per share in cash, which represents a total consideration of approximately $3.4 billion, inclusive of Verifone’s net debt.
Verifone’s shareholders will receive $23.04 per share in cash, which is about 54% higher than the stock’s closing price of $15.00 as of Apr 9.
Subject to customary regulatory and shareholder approvals, the deal is expected to close in third-quarter fiscal 2018. Following the completion of the deal, Verifone will become a privately-held company.
Zacks Rank and Other Stocks to Consider
Currently, Verifone has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the broader Business Services sector include Mastercard Incorporated (MA - Free Report) , FLEETCOR Technologies, Inc. and WEX Inc. (WEX - Free Report) . While Mastercard sports a Zacks Rank #1, FLEETCOR and WEX currently carry a Zacks Rank #2.
The long-term expected earnings per share growth rate for Mastercard, FLEETCOR Technologies and WEX is 19%, 16.5% and 14.3%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>