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VeriFone (PAY) Q1 Earnings In Line, Revenues Top Estimates

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VeriFone Systems Inc. PAY reported first-quarter fiscal 2017 adjusted earnings (excluding all one-time items including stock-based compensation) of 12 cents per share that came in line with the Zacks Consensus Estimate. Non GAAP revenues of $456.6 million topped the consensus mark of $449.1 million. On a year-over-year basis, non GAAP revenues fell 11.1%.

System revenues (58.5% of total revenue) decreased 21.4% year over year to $265.4 million. Rest of the revenues came from the Services division, which increased 7.2% year over year to $188.5 million.

Non-GAAP revenues from North America fell 28.5% from the prior-year quarter to $168.6 million while revenues from EMEA declined 1.3% year over year to $168.1 million. However, revenues from Latin America rose 4% to $57 million and Asia Pacific revenues increased 19.4% to $62.9 million.

The company’s non-GAAP gross margin dropped 60 basis points (bps) year over year to 38.9%.

Verifone Systems, Inc. Price, Consensus and EPS Surprise

Verifone Systems, Inc. Price, Consensus and EPS Surprise | Verifone Systems, Inc. Quote

Liquidity

As of Jan. 31, 2017, VeriFone had approximately $147 million in cash compared with $148.4 million as of Oct 31, 2016. Long-term debt totaled$836.6 million at the end of the quarter.

Cash flow from operations in the quarter was $44.7 million. Meanwhile, free cash flow totaled $25 million in the quarter.

Outlook

VeriFone provided guidance for the second quarter and reiterated its outlook for fiscal 2017.

The company projects non-GAAP revenues of approximately $470 million to $474 million. Non-GAAP earnings per share are expected to be 29 cents for the current quarter.

For fiscal 2017, the company estimates non-GAAP revenues within a range of 1.9 billion to $1.915 billion. Non-GAAP earnings per share are likely to be in the band of$1.35 to $1.39.

Zacks Rank & Share Price Movement

VeriFone carries a Zacks Rank #3 (Hold).

In the past one year, VeriFone has posted a negative return of 20.93% as against the Zacks Financial Transaction Services industry’s gain of 25.60%.

Stocks to Consider

Better-ranked stocks in the wider technology space include Tech Data Corp , Leaf Group Ltd. LFGR and PC Connection, Inc. CNXN. While Tech Datasports a Zacks Rank#1 (Strong Buy), Leaf Group and PC Connection carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the trailing four quarters, Tech Data, Leaf Group and PC Connectionhave yielded positive average earnings surprises of 8.73%, 27.94% and 1.22%, respectively.

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